RIV Capital Annual Report 2014

FY2014 Annual Report · RIV Capital

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G R O U P

Improving
Outcomes

Annual report
and accounts
2014

River and Mercantile is an advisory
and investment solutions business
with a broad range of services,
from consulting and advisory
to fully-delegated fiduciary and
fund management.

River and Mercantile’s business model is a Client focused,
outcome orientated advisory and asset management
business.

River and Mercantile serves a Client base, predominantly
in the UK, which comprises institutional pension schemes,
retail financial intermediaries, insurance companies,
state funds and charitable institutions.

River and Mercantile is focused on creating investment
solutions for its Clients across its core markets:

–
–
–
–
–
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UK DB pension schemes;
UK DC pension schemes;
Insurance;
Retail financial intermediaries;
US pensions (DB and DC); and
Strategic relationships.

Forward looking statements
This Annual Report contains forward looking statements with respect to the financial
conditions, results and business of the Group. By their nature forward looking
statements relate to events and circumstances that could occur in the future and
therefore involve the risk and uncertainty that the Group’s actual results may differ
materially from the results expressed or implied in the forward looking statements.
Nothing in this Annual report should be construed as a profit forecast.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Highlights
Six months ended 30 June 2014

Mandated AUM/NUM 30 June 2014

Total Revenue

£18.09bn

(31 December 2013: £14.08bn)

£20.2m

(CY 2013: £30.6m)1

Adjusted net profit after tax2

Management and advisory fees

£4.3m

(CY 2013: £6.0m)

£17.5m

(CY 2013: £26.8m)

Adjusted Earnings Per Share

Performance fees

7.39pence

(CY 2013: 17.05 pence per share)

£2.4m

(CY 2013: £3.8m)

Proposed dividend3

Adjusted pre-tax margin4

2.3 pence

per share

(Including 1.0 pence special dividend)

28%

(CY 2013: 26%)

Aggregate Fee earning AUM/NUM was £17.35 billion at 30 June 2014, (including
AUM of £2.4 billion from RAMAM) an increase of 23% over 31 December 2013.

Statutory net loss after tax before discontinued operations was £1.2 million

(CY 2013: £6.0 million profit), after charging £4.6 million of expenses arising from
the IPO and £1.1 million amortisation of intangible assets.

Statutory earnings per share, before discounted operations was a loss of

2.22 pence per share for the six months ended 30 June 2014 (CY 2013: profit of
17.01 pence).

1. CY 2013: year ended 31 December 2013.
2. Adjusted net profit after tax represents net profit after tax, adjusted to add back the amortisation of intangible assets and

expenses arising from the IPO and the reorganisation, together ‘IPO costs’.

3. The dividend for the period ended 30 June 2014 represents 60% of Adjusted Profits after tax calculated as the net profit after
tax for the three months ended 30 June 2014, adjusted to add back the amortisation of intangible assets and the IPO costs.
4. Adjusted pre-tax margin is based on adjusted net profit before tax and represents net profit before tax, adjusted to add back

the amortisation of intangible assets and IPO costs, net of taxes.

01 Highlights
02 Chairman’s statement
03 Strategy and objectives
04 Group at a glance
06 Chief Executive’s statement
10 Our business model
11 Key Performance Indicators
12 Financial review
19 Corporate governance report
24 Board of Directors
26 Audit and Risk Committee report
28 Risk management
32 Remuneration Committee report
36 Directors’ remuneration policy
40 Annual report on remuneration
46 People
47 Directors’ report
49 Directors’ responsibilities
50
52

Independent Auditor’s report
Introduction to the consolidated financial
statements

53 Consolidated income statement
54 Consolidated statement of comprehensive

income

55 Consolidated statement of financial position
56 Consolidated statement of cash flows
57 Consolidated statement of changes in

shareholders’ equity

58 Notes to the consolidated financial statements
81 Parent company financial statements
89 Shareholder information and advisors

River and Mercantile Group PLC
Annual report and accounts 2014

Chairman’s statement

Strategic report

Paul Bradshaw
Non-Executive Chairman

It is a very real pleasure to welcome all our new
shareholders and to introduce the maiden set of
results for the merged businesses of River and
Mercantile Group PLC, our first as a public company.

We were admitted to the London Stock
Exchange on 26 June 2014 and, with these
results following the listing prospectus so
closely, there are no surprises from the
position described there.

In line with our commitments we are
proposing to shareholders a final
dividend of 2.3 pence per share, of
which 1.0 pence is a special dividend
and relates to net performance fees.

I would also like to highlight that, whilst
undergoing the challenges and distractions
of a merger and listing, we were still able to
report total mandates in transition as at
30 June of £854 million. I believe that speaks
volumes for the application and commitment
of our whole team as well as, of course, the
fundamental attraction of our proposition to
our Clients.

Personally, I am particularly delighted by
the strength of both our Executive and
Non-Executive Board. Very importantly,
my independent colleagues bring a wealth
of experience and wisdom from diverse
backgrounds.

Peter Warry, our Senior Independent Director
with such a breadth of public and private
experience, has already charmed and
challenged all of us with both his incisive
analysis and ready humour. His engineering

pedigree is particularly appropriate for our
outcomes focused business. His willingness
to join the Board is due in no small measure
to his personal experience and satisfaction
as a former company chairman and pension
fund trustee of one of our Clients.

Angela Crawford-Ingle has over 20 years’
investment management experience,
including leadership of PwC’s Insurance and
Investment Management Division. Angela’s
experience allows her to bring real challenge
as chair of our Audit and Risk Committee on
both technical and commercial issues.

Robin Minter-Kemp, the chair of the
Remuneration Committee, has over 25 years’
experience in the fund management industry,
no doubt seeing challenging times as well as
the tremendous success he latterly enjoyed
at Cazenove Capital Management as they
multiplied their funds by a factor of 20.

All of the independent Directors have, in a
short time, come to appreciate the depth of
wisdom and maturity that emanates from
our shareholder Directors who have
experienced the lifetime of both our core
businesses from their inception. Jonathan
Punter, Angus Samuels and Mark Johnson
each also bring considerable experience in
disciplines ranging from actuarial science to
investment management.

We operate in a huge, competitive but strongly
growing industry. A recent report from PwC
(Asset Management 2020) sees global assets
under management rising from $63.9 trillion
today to $101.7 trillion by 2020, a CAGR of 6%.

We are a sophisticated business with a total
Client focus. It is my personal conviction that
the future winners in this huge market will be
those with an unwavering commitment to
generating the outcomes desired by Clients.
The capability of delivering this commitment
sits at the heart of the original merger of
P-Solve Ltd and River and Mercantile Asset
Management LLP, which we believe created
a business well positioned to take advantage
of these shifting industry dynamics.

I believe that we have the team throughout
the business to meet the needs of all our
current stakeholders and very significantly
grow our business. The challenge over the
next few years will be to deliver results for all
our Clients and owners that fully utilise and
leverage the people and skills we have today.
We all anticipate the journey with relish.

Finally, I would like to thank all of my
colleagues. We have undergone significant
change over the last year and the
professionalism and dedication of all have
been exemplary. It will be a privilege to work
with you over the coming months and years.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Strategy and objectives

The focus on Client engagement
along with the ability to combine
advisory and investment
management skills differentiates
the business from other
investment firms.

Our markets
We operate across six core
markets all of which have
significant growth potential:

UK defined contribution pension schemes

UK defined benefit pension schemes

Insurance

US pensions (DB and DC)

UK retail

Strategic relationships

There are a number of trends in
the investment industry that affect
the Group’s core markets to
varying degrees. The key
trends are:

Increasing focus on outcomes

Higher standards of governance

Greater focus on risk control

Focus on meaningful levels of alpha

Key areas of growth and focus

Strong organic growth in
Fiduciary and Advisory

Equity mandates to
grow – wholesale
and institutional

We expect continued growth in our Advisory and Fiduciary
Management businesses, particularly in the UK defined benefit
market. Currently, demand is higher for Fiduciary
Management, but changes in market conditions may alter the
balance of demand for the two services. Strong near-term
growth in Fiduciary Management may dampen growth in
Advisory, if current Advisory Clients seek to change the basis of
their engagement. We would expect the aggregate of Advisory
and Fiduciary Management to grow strongly.

We expect our Equity business to continue strong growth,
through demand from:

• The UK wholesale market for specialist products. Our

Small Cap and Recovery strategies have performed
particularly strongly and experienced significant Client
growth. However, we also have strength in UK income and
broader equity strategies, which offer opportunities for
further growth within this market.

• Institutions for outcome-led equity strategies. We are
working with a number of larger institutions (primarily
pension funds) who are interested in outcome-led strategies
in general, and composite active equity and derivatives
mandates in particular.

Derivatives growth
further fuelled through
consultant relationships

Our Derivatives business should experience strong indirect
growth sourced from our Advisory, Fiduciary Management and
Equity lines, where derivatives are a component of the service.
In addition, we are expecting accelerated growth if we are
successful in developing relationships with consultancies to
distribute these services more widely.

New product launch to
accelerate growth

We have recently launched a Dynamic Asset Allocation Fund
and are aiming to distribute this service through a variety
of channels.

River and Mercantile Group PLC
Annual report and accounts 2014

Strategic report

Group at a glance
Strongly positioned for growth

All of the divisions operate within a
strong governance framework and
are complementary in nature,
allowing for the distribution of
multiple advisory and investment
solutions to Clients.

River and Mercantile leverages the skills of its four divisions,
combining Client understanding and relationship
management with outcome orientated investment
management.

The interconnected nature of the four divisions means that
the Group can seamlessly offer Clients a range of consulting
services in combination with investment management on an
advisory or fully discretionary Fiduciary Management basis.

Many Clients use multiple services and can transition
between Advisory services, Fiduciary Management,
Derivatives or Equity Solutions based on their changing
investment and risk requirements.

The ability to offer this range of services and solutions has
enabled the Group to establish long-term relationships with
its Client base. As a result, growth has occurred not only
through attracting new Clients but also through expanding
the number of services and solutions offered to each Client.

Total Mandated AUM/NUM at 30 June 2014

£18.09bn

Advisory
Division

The Advisory Division provides
advisory services to UK DB pension
schemes, UK DC pension schemes,
US pension schemes and insurance
firms. This includes investment,
actuarial and transaction advice.

Fiduciary
Management
Division

Derivative
Solutions
Division

Fiduciary Management involves the
delegation by Clients of a range of asset
allocation, hedging, manager selection
and transition management services
to the Group. Total Investment
Governance Solution (TIGS), the primary
Fiduciary Management product
currently has £6.58 billion of AUM and
has consistently outperformed its Client
outcome orientated benchmark over
the last 11 years.

Derivative Solutions comprises
liability-driven investment and
structured equity, which are offered to
institutional investors. The Notional
Under Management (NUM) of £8.97
billion comprises interest rate swaps,
inflation swaps, and structured Equity
Solutions, supported by collateral
management.

Equity
Solutions
Division

Equity Solutions is an active equity
management capability covering a
range of UK and global equity
strategies. These services are offered
on both a segregated and pooled
basis to both institutional and retail
intermediaries.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Key clients:

Trustees of the Cemex UK Defined Benefit
Scheme and Defined Contribution Scheme,
the trustees of Invensys Pension Scheme,
Time Warner UK Pension Plan and Time
Warner Money Purchase Pension Plan.

Trustees of the Nuffield Health Pension &
Life Assurance Scheme, Finmeccanica
Future Planner and Meggitt Pension Plan
Trustees Limited.

Comet Trustee Limited (as the trustee of
Comet Pension Scheme), Oxford
Instruments plc Pension Fund and The
Trustees of the Oxford University Press
Group Pension Scheme.

Advisory Revenues (£’000)

11,098

9,566

8,382

0
0
0
’
£

2011

2012

2013

5,240

2014
6 months

Net Advisory Revenue
(six months ended 30 June 2014)

£5.24m

Fiduciary Management (£m)

6,584

5,645

5,149

s
n
o
i
l
l
i

m
£

3,136

2011

2012

2013

2014
6 months

Derivative Solutions (NUM) (£m)

8,433

8,975

6,248

5,045

s
n
o
i
l
l
i

m
£

2011

2012

2013

2014
6 months

Fiduciary Management (AUM)1

£6.58bn

Derivative Solutions (NUM)1

£8.98bn

EDS Trustee Limited as trustee of EDS
Retirement Plan, the Mayor and Burgesses
of the London Borough of Wandsworth and
Unilever UK Pension Fund Trustees Limited
as trustees of the Unilever UK Pension Fund.

Equity Solutions (£m)

2,533

2,135

s
n
o
i
l
l
i

M
£

1,703

1,350

20112

20122

20131

2014
6 months

Equity Solutions (AUM)1

£2.53bn

1. Mandated AUM/NUM at 30 June 2014.
2. At 31 March.

River and Mercantile Group PLC
Annual report and accounts 2014

Strategic report

Chief Executive’s statement
Improving your outcome

Mike Faulkner
Chief Executive Officer

We are focused on delivering our Clients’
desired outcomes.

Our business model brings together advisory,
investment management and financial engineering
skills to deliver strong outcomes for Clients.

The IPO followed the merger earlier in the
year of P-Solve Ltd and River and Mercantile
Asset Management LLP (RAMAM), creating
River and Mercantile Group (R&M). As the
IPO is relatively recent and we do not have a
full year’s financial results, it makes sense
that I focus my report this year on the future.

The Group comprises four business lines –
Advisory, Fiduciary Management, Derivatives
and Equities – through which we report our
revenue. During the IPO process, a number
of questions emerged about why we merged
P-Solve and RAMAM, bringing these
business lines together. I therefore want to
address in this report what we are trying to
do with the Company and why we are so
excited about its potential. This starts with
the idea of delivering our Clients’ desired
outcomes.

We are focused on delivering our Clients’
desired outcomes
The investment industry is undergoing
significant change. Many of these changes
are occurring as a result of Clients and their
advisors defining much more explicitly what
they are trying to achieve. Three trends in
particular are influencing the way Clients
want to engage with investment houses
such as R&M.

Historically, the industry has typically defined
the products it wants to offer. These are not
necessarily what the Client or customer
actually needs. Outperforming a global equity
market index by 5% may not be helpful if that
market has fallen 20%. Clients have now
realised that their outcomes may not be met by
these products. They are now spending more
time understanding and defining the financial
outcomes they require, and then requiring
investment houses to deliver on them.
This move towards outcome orientated
management is the first key trend.

This is the reason why we are seeing strong
growth in Fiduciary Management and the use
of derivatives (to hedge both liability-related
risks and equity exposure). Separately, the
industry has often found it difficult to explain
to Clients whether or not the work they are
doing for them is going well. Many successful
investment strategies work very well over a
full market cycle, but Clients are not able to
ignore the quality of the journey on the way
to long-term success. They are therefore
evaluating more frequently and in more
detail whether the investment strategies they
are using are effective, or if there is cause
for concern. They are also considering more
carefully what role they want in the
investment decision-making process.
This intensifying of standards by which
investment buyers are governing their
assets is the second key trend.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

The trend for Clients to define their
requirements more exactly is leading to the
asset management service being broadened.
Whilst at the core of the service the need to
receive and invest money remains, Clients
are increasingly requiring other services too.
The precise nature of these services depends
on the Client, but they often include a variety
of advisory services, analytical support, risk
evaluation services, or investment views that
do not relate specifically to the mandate in
question. The third key trend is therefore
the move by Clients to require the provision
of other services alongside pure asset
management.

These trends are at different stages of
development. They by no means yet dominate
the industry, but they are likely to continue
because they are logical and in the interests
of Clients. It is rational for a Client to want an
investment manager to deliver on the Client’s
desired outcome. It’s rational for a Client
to define a basis for governing assets that
does not lead them to stay with an
underperforming manager for years, and it’s
rational for a Client to secure a broader
range of services within the same fee – this
shifting and evolving behaviour is the normal
course of events in other industries. The
ability to adapt to these trends successfully
will prove to be a competitive requirement.

Meeting these trends means a new business model, with more skills
These trends imply that the successful investment house will need five disciplines to deliver
on Client mandates, summarised below:

Alpha sources

Investment decision-making and execution skills to add value

Defining Client outcomes Working with a Client to define their financial objectives in
sufficient detail to understand how to engineer a portfolio
effectively

Portfolio engineering

Engineering together a variety of investment decision-making
skills to meet the financial objectives

Governance knowledge

Engaging with the Client in the context of their own governance
arrangements, to deliver the investment proposition

Additional services

Providing additional services where required alongside the
mandate

This is why R&M’s business model brings
together a range of advisory and asset
management services. Generally, detailed
understanding of Client outcomes and
governance knowledge are more the domain
of advisory businesses, and we are no
different. Our advisors deliver the second and
fourth disciplines above, and also the fifth
where necessary.

Portfolio engineering often requires
derivatives to hedge certain risks that
may come with a more traditional asset
management product. Asset allocation skills
are often useful in adjusting the weighting
to various alpha sources, depending on
the prevailing risks they bring. Hence the
asset allocation skills within the Fiduciary
Management business together with
derivative skills are required to execute
effectively on portfolio engineering.

Our Equity Solutions products are clearly
a strong alpha source, but we are also
delivering alpha from the Fiduciary
Management and Derivatives businesses.
Further, we can make use of alpha sources
from other organisations where it is
appropriate to do so.

Our business model brings together the
advisory skills required for three of the
above skill areas, with the investment
management and engineering skills
required for the other two. Our primary
objective is to use them to deliver strong
outcomes for Clients.

River and Mercantile Group PLC
Annual report and accounts 2014

Chief Executive’s statement continued

Strategic report

Our business model gives us a powerful
growth story
Our growth story is simple and consistent
with the evolving industry trends. It has three
elements:

• Continued strong growth through

positioning
In Client outcome-led markets and
services, we are experiencing strong
demand from DB, DC and insurance for
our Advisory and Fiduciary Management
Services. We have also experienced
strong growth from our UK retail activities
within Equity Solutions.

• Growth synergies

This relates mainly to our derivatives and
equities businesses, where the benefits of
the merger should be felt most strongly.

• New product launches

We are launching new products in the
outcome-led space, with the first being a
Dynamic Asset Allocation strategy where
there is strong demand in a number of
markets. The business has longstanding
strength in this area, having developed
some of the earliest DAA mandates and
managed multi-asset class mandates
since 2003.

It is worth spending some time on where we
see the growth synergies. From a revenue
perspective, we see two immediate
synergies:

• Development of derivatives

To date, our Derivatives business has
been built through direct relationships,
into one of the largest players in the UK by
number of Clients, for both LDI and equity
hedging activities. The growth in the
derivatives market within the industry is
strong, so working directly with
consultancies advising on these strategies
is critical. The ability to leverage the skills
within the legacy RAMAM business in
engaging with consultancies will allow us
to demonstrate the strength of the
Derivatives business and the value it can
add. This should allow us to accelerate the
growth of this business line.

• Outcome-led equity mandates

Our strong active equity management
skills have historically been delivered
through index-relative mandates. No
doubt these mandates will continue to be
in demand, but we also see strong initial
demand from larger Clients to consider
more outcome-led mandates within
equities, often with a significantly lower
risk profile. Delivery to these mandates
will often require us to combine some of
the component parts of our business;
active equity management skills with
derivatives and/or asset allocation skills.
We see this type of mandate as an
important opportunity for growth.

While we are seeking growth in a range of
markets, the UK defined benefit industry is
currently a significant part of our business.
Further, the strong success we are
experiencing in the market means it will
likely remain significant for some time. A
number of commentators are expressing the
view that the UK defined benefit market is
contracting, which might lead some to
question why we continue to focus on growth
within this market.

There are two elements to the answer – the
first, more simplistic, is that even if the
market is contracting, we expect that the
demand will increase for risk management
services and therefore we are well positioned
to grow our share (currently very small) in a
very large market. The second element,
which is more complex, is that we challenge
the basic premise that the market is
contracting currently. We think it is likely to
grow for some years yet.

Why UK DB is still a growth market for now
Given that DB schemes have progressively
been closing to new entrants, the number of
members has been contracting and
therefore the expectation is that this is
leading to a contraction in the assets within
the DB market. While in the long term this is
likely to be the case, we believe the market
will still grow in the coming years.

The reason for this is that the number of
members is not the only factor driving the
size of the liability attached to each member.
What we are concerned about in a DB
scheme is meeting the overall liability, not a
fixed amount per member. The average
liability per member has grown significantly
for four key reasons:

• Some members have continued to accrue
additional benefits as they continue in
active service (an extra year’s service
might give them, for example, 1/60th of
their salary at retirement in pension);
• The life expectancy of members has

increased, which in turn increases the
length of time a pension is expected to be
paid, and therefore the liability grows;

• The fall in bond yields, as liability

valuations are referenced to these, has
led to a significant rise in liabilities; and
• As the liability gets closer (which it will do
for a closed scheme) the liability grows by
the discount rate.

These factors have led the average liability
per member to grow significantly, more than
offsetting the effect of reducing membership.
The overall value of DB liabilities has
therefore risen, which ultimately need to be
backed by assets.

Currently, assets do not meet liabilities
(when liabilities are valued on a true
economic basis). This deficit will need to be
removed for each scheme over their recovery
period. The result will be net positive
contributions into the UK DB pension
industry for some time yet, primarily driven
by deficit recovery contributions.

Our message – the DB industry is here to
stay for some time yet and is growing.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Overall summary
We set out below our key areas of growth and focus:

Strong organic growth in
Fiduciary and Advisory

Equity mandates to
grow – wholesale
and institutional

We expect our Equity business to continue strong growth,
through demand from:

• The UK wholesale market for specialist products. Our

Derivatives growth
further fuelled through
consultant relationships

New product launch to
accelerate growth

We have recently launched a Dynamic Asset Allocation Fund
and are aiming to distribute this service through a variety
of channels.

These are our primary areas of focus, and
define where we see the strongest
opportunities to grow the business.

Institutional mandates tend to be relatively
significant in size, so the profile of growth is
influenced by the timing of these mandates
transitioning. For example, we indicated in
our interim management statement that we
had won net AUM of around £500 million in
Fiduciary Management, transitioning during
the third quarter. This is significantly more
than the previous quarter, and mainly a
function of a number of mandates closing at
the same time.

Overall, we are expecting growth in the
business and our pipeline of opportunities is
very healthy.

On behalf of all the Directors and employees
of R&M, I would like to take this opportunity
to thank all our Clients for their support
during the last year, and our partners and
employees for their continued loyalty and
hard work. This has been a significant period
for our business and we are indebted to
everyone who has supported us. We aim to
reward your support through positive
investment and shareholder returns.

Mike Faulkner
Chief Executive Officer

River and Mercantile Group PLC
Annual report and accounts 2014

Strategic report

Our business model
Client focused, outcome orientated

The Group’s business model is a Client focused,
outcome orientated advisory and investment
management business.

The Group’s strategic goal
is to deliver high, resilient
revenue growth and
attractive returns to
investors. It aims to
achieve this by applying
the business model
described above in its
core and new markets,
where it has real insight
into the underlying needs
of those Clients, and
where its skills are
fundamental in defining
outcome orientated
solutions to meet
these needs.

Establishing, developing
and maintaining Client
relationships: An
engagement process that
is aligned to the Client
allows for the management
of conflicts within their
governance process.
Trusted Client engagement
leads to sustained
Client relationships.

Advisors

Delivering effective
investment solutions and
products, with a particular
emphasis on well-defined
Client outcomes identified
through the Client
engagement process.

als
n
sio

s
e
f
o
r
p

t
n
e
m

Client focused,
outcome orientated

o
n
a
l

p
r
o
f
e
s

sio
n
als

Manageme n t

Infrastructure: A Client
responsive infrastructure
to support the Client
engagement.

A sustainable business
model built on a Client
engagement process
which results in low
attrition, growth in AUM/
NUM, stable margins and
growth in profitability.

KPI 1 & 2

KPI 3

Shareholder outcome orientated: A sustainable business
model which generates profits for distribution to shareholders
and long-term share price appreciation.

KPI 4

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Key Performance Indicators

1. Growth in AUM/NUM

2. Growth in Net Management and Advisory fees

The growth in AUM/NUM is a key indicator of the Client engagement
process. The growth in AUM/NUM is a function of new mandates,
low attrition rates, and aggregate investment performance.
New mandates include flows from existing Clients where we have
increased the breadth of our relationship or flows from new Clients.
Low attrition rates result from being able to retain previous Client
flows as a result of meeting their outcome expectations.

Aggregate investment performance arises from both asset and
liability investing. Negative investment performance can occur
provided it is within the outcome expectation of the Client. The
expectation is that in aggregate the investment performance has
to be positive to sustain the business.

Growth in AUM/NUM

29%

(CY 2013: £14.07 billion)

Mandated AUM/NUM at 30 June 2014 £18.09 billion,
including £2.5 billion from RAMAM.

3. Adjusted Underlying Pre-tax Margin

Adjusted underlying pre-tax margin represents net management
and advisory revenue less the related expense base, adjusted for
the amortisation of intangible assets and the cost arising from the
IPO. Pre-tax margin is an indication of the ability to achieve scale
though increased AUM/NUM and revenues, at a lower marginal
increase in related expenses. The progression over time is an
indication of the scale achieved. The target in the medium term
is to increase the Adjusted Underlying Pre-tax Margin to 30%.

Adjusted Underlying Pre-tax Margin

23%

(CY 2013: 21%)

Adjusted net profit before tax for the six months ended 30 June 2014
is £5.56 million. Performance fees and other revenue, net of
associated remuneration expense is £1.53 million. Adjusted
Underlying Pre-tax Profit is £4.0 million. Total net management
and advisory revenue is £17.5 million.

Adjusted net profit before tax for the year ended 31 December 2013
is £7.8 million, Performance fees and other revenue, net of
associated remuneration expense is £2.2 million. Adjusted
Underlying Pre-tax Profit is £5.6 million. Total net management
and advisory revenue is £26.8 million.

Management and Advisory fees net of rebates and third party
revenue shares, represent the underlying revenues generated by
the business. The growth of AUM/NUM at stable management fee
margins and the absolute growth in advisory Clients and revenue
per Client results in growth in management and advisory fees.
This metric measures the sustainability of the business.

Growth in Net Management and Advisory fees (annualised):

30%

Net Management and Advisory fees for the six months ended 30 June
2014 were £17.5 million, including RAMAM annualised as £35 million.
Net management and Advisory fees for the year ended 31 December
2013 were £26.8 million.

4. Percentage of Adjusted Earnings Per Share
Distributed

Distributions to shareholders include cash dividends and the cash
value of shares repurchases for cancellation.

Adjusted earnings per share represent the net profit after tax
adjusted to add back the amortisation of intangible assets and
expenses arising from the IPO, net of taxes.

The Group’s dividend policy is to pay at least 60% of the Group’s
Adjusted Underlying Profits available for distribution by way of
ordinary dividends. In addition, the Group expects to generate
surplus capital over time, primarily from net performance fee
earnings. The Group intends to distribute such available surpluses,
after taking into account regulatory capital requirements at the time
and potential strategic opportunities, to shareholders primarily by
way of special dividends. Whilst the Board considers dividends as the
primary method of returning capital to shareholders, it may execute
share repurchases, when advantageous to shareholders and
where permissible.

The Distributions as a percentage of Adjusted EPS reflects
the amount of the earnings per share actually distributed to
shareholders.

Percentage of Adjusted Earnings Per Share Distributed:

60%

Adjusted Basic Earnings Per share was 7.74 pence per share for the
six months ended 30 June 2014. For a three month period ended
30 June 2014 the Adjusted EPS was approximately 3.8 pence per
share. In accordance with the guidance in the Listing Prospectus
with regards to this interim period, the final dividend proposed for
the three month period ended 30 June 2014 is 2.3 pence per share.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Financial review
Reporting our outcome

Kevin Hayes
Chief Financial Officer

We are well positioned for growth and to deliver
strong outcomes for shareholders.

Financial highlights
The following highlights are based on the
audited consolidated financial statements on
pages 52 to 80. Decreases in the results as
compared against the comparative period are
generally the result of the shortened financial
period and partially offset by the inclusion of
RAMAM from the date of acquisition.

• Aggregated mandated AUM/NUM was

£18.1 billion, including AUM of £2.5 billion
from the acquisition of RAMAM, an
increase of 29% over 31 December 2013.
• Fee-earning AUM/NUM was £17.4 billion,
including £2.4 billion of AUM from the
acquisition of RAMAM, an increase of 23%
over 31 December 2013.

• Net management fees were £12.3 million
and net advisory fees were £5.2 million for
the six months ended 30 June 2014
(including £3.3 million from RAMAM
from Acquisition Date), compared to
£15.8 million and £11.1 million respectively
for year ended 31 December 2013.

• AUM/NUM net management fee margins
have remained stable over the periods
presented.

• Performance fees were £2.4 million for
the six months ended 30 June 2014 (no
performance fees were recorded from
RAMAM for the period from the
Acquisition Date), compared to £3.8
million for year ended 31 December 2013.

Description of River and Mercantile
Group PLC
Prior to the listing as a public company,
P-Solve Limited was a wholly owned
subsidiary of Punter Southall Group Limited
(PSG). On 27 March 2014 (Acquisition Date)
P-Solve Limited acquired River and
Mercantile Asset Management LLP
(RAMAM) in a share for Partner interest
exchange from the Partners of RAMAM LLP,
including Pacific Investments. The RAMAM
business has been consolidated as a wholly
owned subsidiary from 27 March 2014 and is
reported as the Equity Solutions Division. The
legacy P-Solve business is reported under
the Advisory, Fiduciary Management and
Derivative Solutions Divisions. P-Solve
changed its name to River and Mercantile
Group Limited on 9 April 2014 and registered
as a PLC on 2 June 2014. The P-Solve name
has been retained as a brand for the Advisory
and Fiduciary Management divisions.

Reporting periods
The accounting reference date of P-Solve
Limited and RAMAM had historically been
31 December and 31 March, respectively.
The Board of Directors decided that the
reporting periods should be aligned for both
entities to 30 June.

Comparability of reported results
The statutory financial statements presented
comprise the six months ended 30 June,
2014 of the Group, with the comparative
period being the year ended 31 December,
2013. The statutory financial statements
include the results of RAMAM for the three
months period from the date of the
acquisition to 30 June 2014.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Statutory and adjusted: pre-tax loss; net
loss and earnings per share
• Statutory pre-tax loss was £73,000 for the
six months ended 30 June 2014 (including
£1.1 million profit from RAMAM for the
period from the Acquisition Date)
primarily as a result of reporting £4.6
million of expenses arising from the IPO
and related reorganisation, and £1.09
million of intangible amortisation relating
to the acquisition of RAMAM. Pre-tax
profit was £7.8 million for year ended 31
December 2013.

• Statutory net profit after tax was a loss of
£1.2 million for the six months ended 30
June 2014 (including £0.9 million profit
from RAMAM for the period from the
Acquisition Date), compared to £6.0
million profit for the year ended 31
December 2013 (before discontinued
operations).

• Adjusted net profit after tax was £4.3

million for the six months ended 30 June
2014, compared to £6.0 million for year
ended 31 December 2013. Adjusted
pre-tax margin was 28% (2013: 26%).
• Statutory Earnings Per Share, before

discontinued operations was a loss of 2.22
pence per share for the six months ended
30 June 2014 compared to a profit of 17.01
pence per share for the year ended 31
December 2013.

• Adjusted diluted EPS was 7.39 pence per
share for the six months end 30 June
2014, compared with 17.05 pence for the
year ended 31 December 2013.

Capital and liquidity
• At 30 June 2014 the Group had net assets
of £64 million. The acquisition of RAMAM
resulted in an increase in assets of £44
million net of deferred taxes supported by
a merger reserve in shareholders’ equity
of £44 million. Tangible net assets were
£21 million.

• The new capital raised in the IPO has

increased shareholders’ funds by £14.6
million and liquidity by £10 million.
• The Group operates through three
regulated entities, each of which
maintains excess capital over the
regulatory requirement. There are no
significant regulatory changes anticipated
affecting the Group’s regulatory capital
requirements.

Dividends
• As outlined in the Chairman’s Report, the
Board of Directors has proposed a final
dividend of 2.3 pence per share of which
1.0 pence is a special dividend and relates
to net performance fees, representing
60% of the Adjusted Profits for three
months ended 30 June 2014. Adjusted
Profits was calculated as the net profit

after tax for the three months ended 30
June 2014, adjusted for the amortisation
of intangibles and the expenses arising
from the IPO.

Commentary on the consolidated financial
statements of the Group
The following is a review of the consolidated
financial statements for the six months ended
30 June 2014 as compared against the year
ended 31 December 2013 on pages 52 to 80.
The results for the six months ended 30 June
2014 include the results of RAMAM from the
Acquisition Date.

Revenues
For the six months ended 30 June 2014, net
total revenues were £20.2 million, compared
to £30.6 million for the year ended 31
December 2013. Performance fees for the six
months ended 30 June 2014 were £2.4
million (£3.8 million in CY 2013), reflecting the
continued strong performance from TIGS.
Other income includes the gain on the sale of
the equity interest in Manolete.

For the six months ended 30 June 2014 total
revenues from the P-Solve business
comprising the Fiduciary Management,
Derivative Solutions and the Advisory
business were £16.6 million compared to
£30.6 million for year ended 31 December
2013, reflecting both the growth in AUM/
NUM and increased performance fees. The
RAMAM business (described as the Equity
Solutions Division above) recorded net
revenues of £3.3 million from the Acquisition
Date.

Total expenses
Total expenses were £9.4 million for the
six months ended 30 June 2014 including
£4.6 million of expenses arising from the
IPO and £1.1 million of amortisation. Total
expenses for the year ended 31 December
2013 were £5.5 million. Adjusting for the
three months of RAMAM expenses, the
expense base has increased by
approximately £0.3 million on an annualised
basis from 31 December 2013 as a result of
increased IT and professional fees and
governance costs.

Approximately 65% of Administrative
expenses (excluding amortisation) are
generally fixed in nature and include office
facilities, IT and communications, support
services and professional fees. Marketing,
travel and entertainment, and fund related
legal fees and administration expenses are
generally variable with the volume of Client
activity. We anticipate that our operating
expenses will remain stable in the near term
as we have scalability in our infrastructure
and operating leverage as we grow AUM/
NUM and revenue.

Support services relate to functions
performed by PSG and charged as
intercompany allocations. These services are
now provided under a Transition Services
Agreement (TSA) with PSG and will be
transitioned to the Group or alternative
supplier arrangements within the next 18
months. As these services are transitioned
into the Group, additional headcount
resources may be required. It is anticipated
that in aggregate the cost after the transition
will be in line with the expense currently
incurred from PSG.

Office facilities include rental and other
related charges, primarily from PSG relating
to the London headquarters and other
facilities occupied by the business in London.

Fund Administration includes custodial and
fund accounting costs that cannot be
recovered from Equity Solutions Clients. The
Fund administration expense can increase
due to additional costs to close funds or to
subsidise new fund launches until the AUM is
at a target level to support the total expense
charges.

The IPO expenses of £4.05 million were
incurred to undertake the premium listing of
the Group on the London Stock Exchange.
These costs include the book runners,
lawyers, reporting accountants, consultants
and advisors and irrecoverable VAT. The IPO
costs are not deductible for corporate tax
purposes. The direct placement
commissions of £0.4 million associated with
the £15 million of new capital raised in the
IPO is charged directly to Shareholders’
equity. In addition we incurred £0.5 million of
expenses relating to activities to reorganise
the Group resulting from the IPO and to
integrate the business after the merger of
RAMAM, including rebranding. Both the
expenses relating to the IPO and the
expenses relating to the reorganisation and
integration are treated as Adjusting items.

Identifiable intangible assets of £36.1 million,
representing the fair value of the Investment
Management Agreements were recorded in
the RAMAM acquisition (RAMAM IMAs). The
value of these contracts is being amortised
into income over a period of between five to
ten years. The annual amortisation expense
is approximately £4.3 million. In the
Consolidated Financial Statements, Note 42
describes the allocation of the purchase
price to identifiable and intangible assets,
and goodwill. The amortisation is a non-cash
expense and is not deductible for corporate
tax purposes. A deferred tax liability was
recognised at the date of the acquisition and
is being charged to taxes in line with the
amortisation of the RAMAM IMAs. The
amortisation of the RAMAM IMAs is treated
as an Adjusting Item.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial review continued

Strategic report

Net loss after taxes for the six months ended
30 June 2014 was £1.2 million and included
net profit of £0.9 million from RAMAM. For
the year ended 31 December 2013 net profit
before discontinued operations was £6.0
million. The tax charge for the six months
ended 30 June 2014 includes the deferred
taxes relating to the non-tax deductible
amortisation of RAMAM IMAs.

Adjusted pre-tax and adjusted underlying
pre-tax net profit
Adjusted pre-tax profit was £5.6 million for
the six months ended 30 June 2014 and
included pre-tax profits of £1.1 million from
RAMAM. The Adjusted pre-tax margin for the
six months ended 30 June 2014 was 28%. For
the year ended 31 December 2013 there were
no adjusting items and pre-tax net profit was
£7.8 million. The pre-tax margin the year
ended 31 December 2013 was 26%. The
relative increase in the adjusted pre-tax
profit was the result of increased AUM/NUM
and the associated revenue and the inclusion
of the results of RAMAM from Acquisition
Date.

Adjusted underlying pre-tax margin
represents net management and advisory
fees less the related expense base, adjusted
for the amortisation of intangible assets and
costs arising from the IPO. The adjusted
underlying pre-tax margin for the six months
ended 30 June 2014 was 23% (CY 21%).
The increase is the result of increased net
management fees and a lower marginal
increase in expenses, primarily remuneration.
The target in the medium term is to increase
the Adjusted Underlying Pre Tax Margin to
30%, primarily through increased revenue
and a scalable expense base.

Adjusted net profit after tax, for the six
months ended 30 June 2014 was £4.3 million
and included net profit of £0.9 million from
RAMAM. For the year ended 31 December
2013 there were no adjusting items and net
profit after taxes was £6.0 million. The
relative increase in the underlying net profit
after taxes is the result of increased AUM/
NUM and associated revenue, and the
inclusion of the results of RAMAM from
Acquisition Date.

Remuneration
Remuneration expense includes base
salaries, benefits and variable bonus
compensation, including drawings and
performance profit share paid to the
Partners of RAMAM LLP. Total variable
remuneration includes contractual
arrangements linked to the performance of
the divisions or specific portfolios. For the six
months ended 30 June 2014 approximately
50% of variable remuneration was
discretionary.

Remuneration expense was £10.8 million for
the six months ended 30 June 2014
compared to £17.3 million for the year ended
31 December 2013. The percentage of
remuneration to total revenue for the six
months ended 30 June 2014 was 55% and for
the year ended 31 December 2013 was 55%.
The business has operating scale and
through increased total revenue, the level of
remuneration to total revenues is targeted at
between 45–50%, to be achieved in the next
three years.

The P-Solve business has historically paid
employees in a combination of cash and
deferred payments in the form of
performance shares. The intention in the
future is to pay a portion of employees’
remuneration in the form of performance
shares with vesting based on achieving
specific performance targets. Vested
performance shares issued under the
Performance Share Plan will be exchanged
for shares in the Group through the
Employee Benefit Trust. It is not intended that
performance shares issued under the PSP
will be dilutive.

Governance costs
The ongoing costs of the Non-Executive
Directors, advisors and the legal fees
relating to the governance framework of the
Group as a public listed company have been
classified in the Income Statement as
Governance Costs. For the six months ended
30 June 2014, these costs totalled £70,000
and for the year ending 30 June 2015 the
governance costs are expected to be
approximately £500,000.

Pre-tax and net loss
Pre-tax loss was £73,000 for the six months
ended June 2014 (CY 13: £7.8 million profit)
and included pre-tax profit of £1.1 million
from RAMAM. The reduction in pre-tax profit
was caused by the expenses for the IPO and
reorganisation and the amortisation of the
RAMAM IMAs.

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Assets and Notional amounts Under Management
Assets Under Management (AUM) and Notional amounts Under Management (NUM) are the
basis on which management fees are charged and in aggregate are reported as fee earning
AUM/NUM.

AUM and NUM represent the assets or derivatives contracts over which the Group acts either
as a discretionary investment manager on a partial or fully delegated basis in accordance
with an IMA.

In addition, we report Mandates in transition and Redemptions in transition which represent
the AUM/NUM of mandates which have been awarded by Clients or for which we have been
notified are to redeem and will transition into or from fee earning AUM/NUM.

The growth in mandated AUM/NUM is the driver for the growth of net management fee
revenue. Positive net flows are an indication of both our ability to retain previously mandated
assets, and our ability to win new mandates and increase allocation from existing Client
mandates.

The following table shows the AUM/NUM for the six month period ending 30 June 2014 with
the AUM of RAMAM shown as the Equity Solutions Division, from 1 January 2014.

£’m

Opening fee earning AUM/NUM
Sales
Redemptions

Net flow
Investment performance
Net rebalance

Closing fee earning AUM/NUM
Mandates in transition
Redemptions in transition

Total mandated AUM/NUM

Assets Under Management and Notional Under Management

Fiduciary
Management
(AUM)

Derivative
Solutions
(NUM)

Equity Solutions (AUM)

Retail

Institutional

Total

5,645
292
(91)

201
234
–

6,080
617
(113)

6,584

8,433
306
(74)

232
–
198

8,863
112
–

8,975

484
547
(157)

390
(28)
–

846
–
–

846

1,651
102
(203)

(101)
13
–

1,563
125
–

1,688

2,135
649
(360)

289
(15)
–

2,409
125
–

2,534

TOTAL
AUM/NUM

16,213
1,247
(525)

722
219
198

17,352
854
(113)

18,093

At June 2014 fee-earning AUM/NUM was £17.4 billion, an increase of 7% from 31 December
2013. Aggregate mandated AUM/NUM was £18.1 billion, an increase of 12% from 31
December 2013.

For the six months ended 30 June 2014 all divisions had positive net flows. Mandated Sales to
opening AUM/NUM were 13% for the six months ended 30 June 2014 compared to 18% for the
year ended 31 December 2013. Attrition to opening AUM/NUM was 4% for the six months
ended 30 June 2014 compared to 9% for the year ended 31 December 2013.

Investment performance added £219 million, primarily from strong performance from the
TIGS strategy for Fiduciary Management Clients. Net rebalancing in Derivative Solutions
added £198 million during the period due to Clients increasing their interest rate and inflation
hedges.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial review continued

Strategic report

Combined historical financial information
The following analysis shows the combined business at the divisional level as if the acquisition
of RAMAM had occurred on 1 January 2013. This information is based on the historical
information of the separate businesses, does not assume any revenue or cost synergies and
excludes IPO and reorganisation costs. Other income and amortisation have been excluded.
Management fees and advisory revenue are shown net of rebates and revenue share
arrangements.

Combined historical income statement (£’000)

Net management fees
Net advisory revenue

Performance fees

Total revenues
Administrative expenses
Remuneration

Pre-tax profit
Remuneration/revenue

Pre-tax margin

6 months
30 June
2014

6 months
31 December
2013

6 months
30 June
2013

12 months
31 December
2013

15,380
5,240

20,620
2,848

23,468
4,290
12,920

17,210

6,258
55%

27%

13,326
5,738

19,064
12,162

31,226
3,851
16,626

12,398
5,360

17,758
313

18,071
3,715
10,586

25,724
11,098

36,822
12,475

49,297
7,566
27,212

20,477

14,301

34,778

10,749
53%

34%

3,770
59%

21%

14,519
55%

29%

Combined historical total revenues
Total combined historical management fee and advisory revenue was £20.62 million for the six
months ended 30 June 2014, an increase of 8% and 16% compared to the six months ended
December 2013 and 30 June 2013 respectively.

Performance fees for the six months ended 31 December 2013 include £8.4 million of Equity
Solutions Division performance fees realised at the end of the calendar year performance
period.

Combined historical pre-tax profit
Pre-tax profit was £6.3 million for the six months ended 30 June 2014, compared with £10.7
million for the six months ended 31 December 2013. The decrease was the result of lower
performance fee revenue net of remuneration. Pre-tax profit for the six months ended 30
June 2014 increased by £2.5 million from £3.8 million for the six months ended 30 June 2013
primarily due to increased management and performance fees, net of remuneration.

Combined historical net management fee revenue and margins
Fiduciary Management, Derivatives Solutions and Equity Solutions earn net management fee
revenue based on the underlying AUM/NUM. As management fee margins have remained
stable the growth in revenues has been in line with the growth in average AUM/NUM.

Net management fee revenue (£’000)

Fiduciary Management
Derivative Solutions
Equity Solutions – Retail
Equity Solutions – Institutional

Total Equity Solutions

6 months
30 June
2014

6 months
31 December
2013

6 months
30 June
2013

12 months
31 December
2013

5,560
3,400
2,772
3,648

6,420

4,889
3,177
1,459
3,801

5,260

5,042
2,643
752
3,961

4,713

9,931
5,820
2,211
7,762

9,973

Total management fee revenue

15,380

13,326

12,398

25,724

Closing AUM/NUM
Average AUM/NUM

17,352
16,800

16,213
15,150

14,104
13,660

16,213
14,400

Strategic report

River and Mercantile Group PLC
Annual report and accounts 2014

Net management fee revenues for the six months ended June 2014 were £15.4 million, an
increase of 15% and 24% over the proceeding comparable periods. At June 2014 AUM/NUM
(excluding mandates in transition) was above the average AUM/NUM by approximately 3.5%,
indicating continued revenue growth from the in-force AUM/NUM.

Fiduciary Management revenues were £5.6 million for the six months ended June 2014, an
increase of 14% and 10% over the preceding comparable periods. Management fee margins
have remained stable at between 18bps to 20bps. Management fee margins are negotiated
with Clients and largely depend on the size of the mandates, with larger mandates at the
lower end of the stated range.

Derivative Solutions revenues were £3.4 million for the six months ended June 2014, an
increase of 7% and 29% over the preceding comparable periods. Average management fee
margins have remained stable at between 7bps and 8bps. Management fee margins are
negotiated with Clients based on the types of hedging instruments utilised. Generally
structured equity mandates have a higher margin than interest rate and inflation hedging.

Equity Solutions total net management fee revenues were £6.4 million for the six months
ended June 2014 an increase of 22% and 36% over the preceding comparable periods.

Equity Solutions – Retail net management fee revenues were £2.8 million for the six months
ended June 2014, an increase of 90% and 269% over the preceding comparable periods. The
increase in revenue reflects the growth in Retail AUM through the increased use of
intermediaries to access the retail channel. Average net management fee margins for the six
months ended 30 June 2014 were 83bps, compared to 76bps and 68bps for the proceeding
comparable period. The current retail products offered to Clients are the UK Recovery Fund
and the Small Companies Fund. The UK Recovery Fund has had very strong performance
and is near to optimal capacity. The Smaller Companies Fund has had strong performance
and has significant capacity. Continued success in raising AUM into to this strategy may
decrease overall average retail margins in the future.

Equity Solutions – Institutional net management fee revenues were £3.6 million for the six
months ended June 2014, a decrease of 4% and 8% over the comparable periods. This
reduction reflects the reduction in AUM as institutional investors reduced their allocations
generally to long only equity strategies. Average net management fee margins for Equity
Solutions for the six months ended 30 June 2014 were 45bps, compared to 45bps and 47bps
for the proceeding comparable period. Clients can choose between management fees only or
management fees with performance fees.

Net management fee margins
In the near term management fee margins are expected to be stable, however as noted
above, changes in the mix of products and changes in the Client fee arrangements could
cause a change in the average management fee margins.

Advisory Division
The Advisory Division earns revenue from Clients who engage us on a retained fee basis or
from fees based on undertaking specific projects. Net advisory fee revenues were £5.2
million for the six months ended 30 June 2014, and have generally been at a consistent level
over the comparable periods.

Advisory revenues (£’000)

Retainers
Project based revenues

Total net revenue before revenue share
Third party revenue share arrangements

Total net advisory revenues

6 months
30 June
2014

6 months
31 December
2013

6 months
30 June
2013

Year ended
31 December
2013

2,363
3,035

5,398
(158)

5,240

2,476
3,491

5,967
(229)

2,585
2,828

5,413
(53)

5,061
6,319

11,380
(282)

5,738

5,360

11,098

Project based revenues vary by the size and number of projects undertaken and include
implementation fees for derivative hedging strategies which have increased with the increase
in NUM mandates.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial review continued

Strategic report

Clients on retainer fees have generally been at a stable level over the last 18 months.
Changes from period to period in retainer fees are generally the result of Clients who
transition from advisory relationships to fully delegated Fiduciary Management, this generally
results in an increase in overall revenues to the Group.

Performance fee revenue
Performance fees are earned in Fiduciary Management and the Equity Solutions Divisions.
TIGS is the investment strategy within Fiduciary Management and performance fees are
recorded on the anniversary date of each mandate. In Equity Solutions – Institutional the
majority of performance fees are realised based on a calendar year performance period.

Performance fees revenue (£’000)

Fiduciary Management
Equity Solutions

Total performance fees

6 months
30 June
2014

6 months
31 December
2013

6 months
30 June
2013

2,350
498

3,761
8,401

2,848

12,162

–
314

314

Fiduciary Management
The majority of the performance fees in TIGS are subject to a deferral mechanism whereby
performance fees are reported to the Client at each anniversary date and are deferred and
can only be realised if performance continues above benchmark in aggregate across the
subsequent three years. If the Client were to redeem their mandate any deferred
performance fees are immediately crystallised. In the year ended 31 December 2013 £3.8
million of performance fees were earned, £2.7 million from previously deferred performance
fees and £1.1 million from AUM with high water marks.

At June 2014 the amount of performance fees that could be earned in the six months ended
31 December 2014 were £2.8 million, assuming continued performance above benchmark.

Equity Solutions – Institutional
In Equity Solutions – Institutional, performance fees are earned on outperformance relative
to a stated bench mark. Performance fees were £0.5 million for the six months ended 30 June
2014. In the year ended 31 December 2013 £8.4 million of performance fees were earned as a
result of strong investment out-performance in the calendar year.

From 1 January 2014 a number of Clients changed their performance fee structure to a ‘cap
and roll’ structure whereby performance in the calendar year over a cap is carried forward
and is added to the investment performance in the following year. Performance fees can be
earned if the performance, including the deferred performance from a previous period, is
above the benchmark in the subsequent year.

At 30 June 2014 total performance fee-eligible assets were £521 million. Of these assets £146
million were below their performance benchmark by less than 1% and £276 million were
above their performance bench mark (of which £41 million were in excess of 5% above the
benchmark). The weighted average rate of performance fees on the eligible AUM is 20%.

Combined historical Administrative expenses
Administrative expenses include the business expenses of the divisions, including
depreciation. The cost of the IPO and reorganisation costs have been excluded. The aggregate
amount of expenses for the six months ended June 2014 was £4.1 million compared to £3.9
million and £3.7 million for the six months ended 31 December 2013 and 30 June 2013,
respectively. The increase in expenses results from increased marketing, travel and legal
expenses resulting from increased business activity.

Combined historical Remuneration expense
Remuneration expense includes base salaries, benefits and variable bonus compensation,
including drawings and performance profit share paid to the Partners of RAMAM LLP.
Remuneration expense for the six months ended 31 December 2013 include performance
profit share on the performance fees earned in RAMAM.

The total remuneration to total revenue percentage is 55% in the six months ended June 2014
and 55% in year ended 31 December 2013. The average remuneration accrual rate on
performance fees is approximately 42%. As a result of the operating leverage of the combined
business it is anticipated that the remuneration to total revenue ratio will trend to a range of
45–50% of revenues over the next three years.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Corporate governance report

Compliance with the Code
The Board is committed to the principles of corporate governance
contained in the UK Corporate Governance Code (the Code), issued by
the Financial Reporting Council in September 2012. This section of
the annual financial report describes how the Company has applied
the Main Principles set out in the Code. By virtue of its admission to
the premium listing segment of the Official List on 26 June 2014, the
Company has been subject to (and has complied with) the Code for
four days during the period to 30 June 2014.

The UK Corporate Governance Code is available from
the Financial Reporting Council’s website at
https://www.frc.org.uk/corporate/ukcgcode.cfm.

The Board of Directors of the Company (the Board or the Directors)
considers that the Company has complied with the Code, save that
the Code recommends that at least half the Board (excluding the
Chairman) should comprise Non-Executive Directors determined by
the Board to be independent (B.1.2 of the Code). The Board consists
of 11 members: four Executive Directors, and seven Non-Executive
Directors, three of whom (excluding the Chairman) are regarded
as independent.

The Board considers that it is not currently practical for it to comply
with B.1.2 of the Code given the provisions of the Relationship
Agreement between the Company and Punter Southall Group
Limited (PSG) (further details of which are set out on page 23).
However, it is satisfied that the presence on the Board of the
Non-Executive Directors who do not meet the parameters of
independence is merited by their considerable experience and
corporate history and thus consistent with the principles of good
corporate governance.

In relation to compliance with C.2.1 of the Code, the Board has not
undertaken a formal internal control and risk management review,
however the Company was subject to a series of thorough reviews and
audits as part of the IPO process as described in the Audit and Risk
Committee Report on page 26. These processes combined with an
assessment of discussions with various stakeholders regarding the
internal control systems, satisfied the Board that such systems are
effective in providing reasonable assurance against material fraud
or loss.

Capital Structure
Details of the Company’s capital structure can be found in the
Directors Report on page 47.

The Board
Composition
As at the date of this Report, the Board comprises of:

Name

Position(s)

Paul Bradshaw

Independent Non-Executive Director
Chairman of the Board
Chair of Nominations Committee
Member of Remuneration Committee
Executive Director
Executive Director
Executive Director
Executive Director

Mike Faulkner
Kevin Hayes
James Barham
Jack Berry
Angela Crawford-Ingle Independent Non-Executive Director

Mark Johnson
Robin Minter-Kemp

Jonathan Punter
Angus Samuels
Peter Warry

Chair of Audit and Risk Committee
Member of Nominations Committee
Non-Executive Director
Independent Non-Executive Director
Chair of Remuneration Committee
Member of Nominations Committee
Member of Audit and Risk Committee
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Member of Nominations Committee
Member of Remuneration Committee
Member of Audit and Risk Committee

The Board does not consider Jonathan Punter or Angus Samuels
to be independent under B.1.1 of the Code by virtue of their
shareholdings and directorships in PSG, a controlling shareholder of
the Company. Mark Johnson is not considered to be independent for
the purposes of the Code as a result of being co-founder and director
of certain companies within Pacific Investments (as defined below), a
significant shareholder of the Company.

The Code recommends that a Chairman should meet the
independence criteria set out in the Code on appointment. The Board
concluded that Paul Bradshaw is an independent Chairman for Code
purposes and that his appointment as an independent Chairman is in
the best interests of shareholders. Although Mr Bradshaw serves as
a Non-Executive Director on the boards of Nucleus Financial Group
Limited and a number of Sanlam Limited’s UK subsidiaries together
with Angus Samuels, the other Directors have concluded that his
judgement, experience and challenging approach should ensure that
he makes a significant contribution to the work of the Board and its
committees. Therefore, the Board determined that Mr Bradshaw is of
independent character and judgement and may still be regarded as
an independent Chairman for the purposes of the Code.

River and Mercantile Group PLC
Annual report and accounts 2014

Corporate governance report continued

Governance

Roles and responsibilities
The Board is responsible for leading and controlling the Company and has overall authority
for the management and conduct of the Company’s business and the Company’s strategy and
development. The Board is also responsible for ensuring the maintenance of a sound system
of internal control and risk management (including financial, operational and compliance
controls, and for reviewing the overall effectiveness of systems in place), and for the approval
of any changes to the capital, corporate and/or management structure of the Company.

Certain matters are specifically reserved for the Board including, for example: approval of
the annual operating and capital expenditure budgets and any material changes to them,
approval of major capital projects and appointments to and removals from the Board,
following recommendations by the Nomination Committee. To achieve its objectives, the
Board may delegate certain of its duties and functions to various Board committees or
sub-committees, the Chief Executive Officer and executive management, without abdicating
its own responsibilities.

The Board has formally defined and documented, by way of terms of reference, the duties and
responsibilities delegated to the Board committees and these are available on the Company’s
website (http://www.riverandmercantile.com/about_the_group/board_committee_terms_
of_reference). In fulfilling its responsibilities, the Board is supported by management in
implementing the plans and strategies approved by the Board.

The Board meets formally at least four times a year.

The Chairman holds meetings with the Non-Executive Directors without the Executive
Directors being present.

Conflicts of Interests
The Companies Act 2006 (the Act) imposes a duty on Directors to avoid a situation in
which they have or could have a conflict of interest or possible conflict with the interests
of the Company.

The Company has adopted a policy relating to the handling by the Company of matters that
represent conflicts of interest or possible conflicts of interest involving the Directors. The
Board will review regularly all such matters and the Company’s handling of such matters,
save that only Directors not involved in the conflict or potential conflict may participate in any
discussions or authorisation process.

Directors are reminded at each Board meeting of their obligations to notify any changes in
their statement of conflicts and also to declare any benefits from third parties in their capacity
as a Director of the Company which might give rise to a conflict or potential conflict with the
Company’s interests.

The interests of the Directors in shares of the Company are set out in the Remuneration
Report (which can be found on pages 40 to 45 of this Report).

Performance Evaluation
In line with the Code, a formal evaluation of the Board and its Committees will be carried out
on an annual basis. The process will involve individual Directors meeting with the Chairman
to discuss an agreed list of topics designed to cover all key areas of Board effectiveness.
An internal performance evaluation process was not undertaken for the period ending
30 June 2014.

The Company did not undertake an externally facilitated Board and Committee evaluation
process during the period ending 30 June 2014.

Copies of the Executive Directors’ service contracts and letters of appointment of the
Non-Executive Directors are available for inspection at the Company’s registered office
11 Strand, London, WC2N 5HR during normal business hours (Saturdays, Sundays and
public holidays excepted).

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Board Committees
As envisaged by the Code, the Board has established Nomination, Remuneration and Audit
and Risk Committees, with formally delegated duties and responsibilities, and written terms
of reference which are available on the Company’s website. From time to time, separate
committees may be established by the Board to consider specific issues when the need
arises.

All the Committees are able to call on independent professional advisors, at the expense of
the Company, if they consider it necessary.

Nomination Committee
The Nomination Committee assists the Board in discharging its responsibilities relating to
the composition of the Board, performance of Board members, induction of new Directors,
appointment of Committee members and succession planning for senior management.
The Nomination Committee is responsible for evaluating the balance of skills, knowledge,
diversity and experience on the Board, the size, structure and composition of the Board,
retirements and appointments of additional and replacement Directors and makes
appropriate recommendations to the Board on such matters. The Nomination Committee
will prepare a description of the role and capabilities required for a particular appointment.

The Nomination Committee will meet formally at least twice a year and otherwise as required.

The Nomination Committee will give careful consideration to diversity and the balance of the
Board in making its recommendations to the Board.

The Nomination Committee will consider candidates from a wide range of backgrounds, on
merit, against objective criteria and with due regard for the benefits of diversity, (including
gender diversity), on the Board. Each member of the Board must have the skills, experience
and character that will enable him or her to contribute both individually, and collectively, to the
effectiveness of the Board and the success of the Company.

The Code requires that the Company provides an explanation where neither open advertising
nor an external search consultancy was used in the appointment of the Chairman or any
Non-Executive Director.

The Chairman and Independent Non-Executive Directors have considerable professional
experience relevant to the business of the Company. They are demonstrably strong
characters who have a challenging approach in Board meetings and exhibit good judgement
when required. The Company followed a rigorous selection process in their appointment.

Selection process
The Chairman – Paul Bradshaw
Mr Bradshaw was proposed by Mr Faulkner (CEO and Executive Director of the Company), on
behalf of the management shareholders of the newly merged entity, as a Non-Executive
Independent Director of the Company and Chairman of the Company. The proposal, after due
consideration, was seconded by PSG, subject to the considerations and approval of Pacific
Investments. The Chairman was interviewed by Pacific Investments, who were unknown to
him, to assess his suitability. In addition, he was interviewed by Canaccord Genuity Limited
and Numis Securities Limited as Joint Sponsors and Joint Bookrunners to the IPO. All
interested parties confirmed Mr Bradshaw’s appropriateness and independence for the role
of Chairman.

River and Mercantile Group PLC
Annual report and accounts 2014

Corporate governance report continued

Governance

Independent Non-Executive Directors
Peter Warry
Mr Warry was proposed as an Independent Director by Mr Faulkner (CEO and Executive
Director of the Company). He was then interviewed by the Chairman, who was unknown to
him. The Company engaged independent executive search consultants, the Zygos Partnership,
to assist with the selection and appointment of independent Directors. The Zygos Partnership
provided the Company with a number of candidates for consideration for the position of Senior
Independent Director and at the conclusion of the interview process, Mr Warry was agreed to
be the most suitable candidate.

Robin Minter-Kemp
Mr Minter-Kemp was proposed by Mr Barham (Executive Director of the Company) on behalf
of the management shareholders of the newly merged entity as an Independent Non-
Executive Director of the Company. The proposal, after due consideration, was seconded by
Pacific Investments and PSG, subject to consideration and approval by the Chairman. Mr
Minter-Kemp was interviewed and his suitability assessed by the Chairman and Canaccord
Genuity Limited and Numis Securities Limited as Joint Sponsors and Joint Bookrunners to
the IPO. All interested parties confirmed Mr Minter-Kemp’s appropriateness and
independence for the role of independent Non-Executive Director.

Non-Executive Directors
Mr Punter, Mr Samuels and Mr Johnson’s appointments as Non-Executive Directors are
subject to the relationship agreements detailed below.

Remuneration Committee
The Remuneration Committee assists the Board in determining its responsibilities in relation
to remuneration and has responsibility for setting the remuneration policy for each of the
Executive Directors and the Chairman, including pension rights and remuneration package,
and recommending and monitoring the level of remuneration for senior management below
Board level.

The Remuneration Committee meets formally at least twice each year and otherwise as
required. It considers all material elements of remuneration policy, remuneration and
incentives of Executive Directors and senior management with reference to independent
remuneration research and professional advice, where necessary, in accordance with the
Code and associated guidance. The Remuneration Committee is also responsible for
approving the design of, and determining targets for, any performance related pay schemes
including under the Company’s bonus and incentive arrangements. In accordance with the
Remuneration Committee’s terms of reference, no Director may participate in discussions
relating to his or her own terms and conditions of remuneration. Non-Executive Directors’
fees will be determined by the full Board, or where required by the articles of association of
the Company, the shareholders.

Audit and Risk Committee
The Audit and Risk Committee assists the Board in discharging its responsibilities with
regard to financial reporting, external and internal audits and controls, including monitoring
the integrity of the Company’s financial statements, monitoring and reviewing the extent of
the non-audit work undertaken by external auditors, advising on the appointment,
reappointment, removal, remuneration and terms of engagement of external auditors and
reviewing the effectiveness of the Company’s internal audit activities, internal controls and
risk management systems. The Audit and Risk Committee is also responsible for providing
oversight and advice to the Board in relation to current and potential risk exposures of the
Group and future risk strategy, reviewing and approving various formal reporting
requirements and promoting a risk awareness culture within the Group. The Company’s
external auditors are invited to attend meetings on a regular basis and other non-members of
the Audit and Risk Committee may be invited to attend as and when appropriate and
necessary.

The Audit and Risk Committee routinely reports to the Board on the discharge of its
responsibilities. The Audit and Risk Committee will formally meet at least four times per year
and otherwise as required. It considers and makes recommendations to the Board regarding
the appointment, reappointment and removal of the external auditors and must satisfy itself
that there are no relationships between the Company and the external auditor which could
adversely affect the auditor’s independence and objectivity. At least once every 10 years,
the Audit and Risk Committee shall ensure the audit services contract is put out to tender.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

The Relationship Agreement enables the Company to carry on its
business independently of PSG and its respective Group
undertakings and ensure that all agreements and transactions
between the Company on the one hand, and PSG and/or any of its
respective Group undertakings and/or persons acting in concert with
it or its Group undertakings on the other hand, will be at arm’s length
and on a normal commercial basis.

On 27 March 2014, the Company entered into a transitional services
agreement (TSA) with PSG pursuant to which PSG agreed, for a
transitional period, to provide certain IT, finance, human resources,
facilities management and legal and compliance services to the
Company and its subsidiaries. The services are provided to enable
the Company and its subsidiaries to continue to undertake their
day-to-day activities. The Company will pay PSG for the transitional
services on a monthly basis on arm’s length terms.

The Company has also adopted a conflicts policy that provides for
both the management of conflicts of interest, which includes the
representatives of PSG on the Board, as well as the flow of
information concerning the Group to such persons.

The Company has complied with the independence provisions in the
Relationship Agreement. So far as the Company is aware, the
independence provisions included in the Relationship Agreement
have been complied by PSG and its associates, and Pacific, and the
procurement obligation included in the Relationship Agreement has
been complied by PSG.

Dealing Code
The Company has established a Securities Dealing Code which sets
out the requirements to be followed by all restricted persons who
wish to deal in the Company’s securities. The Securities Dealing Code
also establishes a clear procedure to enable compliance with its
obligations as a company listed on the Official List of the Financial
Conduct Authority, including requirements to disclose certain
dealings in Company securities. The Securities Dealing Code is
applicable to all staff for the period of 12 months from 26 June 2014.

By order of the Board

Board and Committee member attendance for the period ended
30 June 2014

Director

Board

Audit

Remuneration

Nominations

Paul Bradshaw
Mike Faulkner
Kevin Hayes
James Barham
Jack Berry
Jonathan Punter
Angus Samuels
Mark Johnson
Peter Warry
Robin Minter-Kemp
Angela Crawford-Ingle

4/5
5/5
5/5
5/5
4/5
3/5
5/5
5/5
5/5
4/5
4/5

2/2
1/2
2/2

2/2

2/2
2/2

Shareholder relations
The Company places a great deal of importance on communication
with its stakeholders and is committed to establishing constructive
relationships with investors and potential investors in order to assist
it in developing an understanding of the views of its shareholders.

The Company maintains dialogue with institutional shareholders
through regular meetings with such shareholders to discuss
strategy, performance and governance matters and to obtain investor
feedback.

The Company’s annual general meeting (AGM) provides a forum for
investors to meet the Directors, both formally and informally.

The Group’s website (www.riverandmercantile.com) contains
regularly updated information regarding the Group, and is where all
announcements and shareholder reports are published.

Relationship Agreement
PSG currently holds 38.1% of the issued share capital of the
Company. By virtue of the size of its shareholding in the Company,
PSG is a controlling shareholder for the purposes of the Listing Rules
and was required to enter into an agreement with the Company to
ensure compliance with the independence provisions set out in the
Listing Rules (Relationship Agreement).

The Relationship Agreement regulates the ongoing relationship
between the Company and PSG. The Company and PSG have agreed,
inter alia, that PSG will be able to nominate two Non-Executive
Directors of the Company: (i) the first for a fixed term of 12 months
from admission of the Company’s shares to the premium listing
segment of the Official List of the Financial Conduct Authority and to
trading on the London Stock Exchange plc’s main market for listed
securities (Admission), to terminate automatically after the expiry of
such 12 month period unless the Directors determine otherwise; and
(ii) the second for an initial term of three years from Admission
subject to PSG (together with its subsidiary undertakings) holding at
least 10% of the ordinary shares in the Company (Ordinary Shares)
following Admission.

The Company also agreed with Pacific Investments Management
Limited, its subsidiary undertakings and controlling shareholder, Sir
John Beckwith (together Pacific Investments) that Pacific
Investments may appoint one Non-Executive Director to the Board
for a fixed term of 12 months from Admission. Such appointment will
automatically terminate after the expiry of the 12 month period unless
the Directors determine otherwise. Pacific Investments has
exercised its right to appoint one Non-Executive Director, and will
therefore have no further appointment rights in the future.

River and Mercantile Group PLC
Annual report and accounts 2014

Board of Directors

Governance

Paul Bradshaw
Non-Executive Chairman

Mike Faulkner
Chief Executive Officer

James Barham
Global Head of Distribution

Kevin Hayes
Chief Financial Officer

Jack Berry
Global Head of Solutions

Robin Minter-Kemp

Background and experience

Mike founded P-Solve in 2001 to
offer pro-active and strategic
advice to pension scheme
trustees and corporate Clients.
The Company became one of
the first investment consultants
in the UK to offer Fiduciary
Management to schemes.
He has 22 years of consulting
and asset management
experience, including senior
roles with what is now Towers
Watson Ltd and Gensec
International. Ranked top of
Financial News’s annual survey
of Europe’s most influential
asset managers in 2011, he has
a mathematics degree from
Imperial College, London.

James founded River and
Mercantile Asset Management
(RAMAM) in 2006 with the
backing of Pacific Investments
Management Ltd and was its
Chief Executive Officer. He was
previously part of the team
which floated Liontrust Asset
Management plc, where he
founded the institutional
business. This followed senior
roles with Shandwick
Consultants and James Capel
Investment Management and
was Marketing Director for
Intermediate Capital Group.
James served in the Royal
Welch Fusiliers after
Sandhurst.

Kevin is a proven FTSE 100 CFO
with over 20 years’ experience
leading global financial
institutions. Previously at Man
Group plc, he was Finance
Director and Company
Secretary. This followed senior
roles with Lehman Brothers
Holdings, including
International CFO, Head of
Productivity and Process and
Capital markets CFO. He
started his career with Ernst
and Young LLP and was a
financial services partner in
New York. He has degrees in
commerce and administration,
and law – from Victoria
University, Wellington, New
Zealand and is a certified public
accountant.

Jack established the use of
derivatives in liability-driven
investments to enable pension
schemes to hedge their
principal risks. With 25 years’
experience, he is a key
point-of-call for trustees and
sponsors. Jack began his
career at Ernst & Young LLP
and then Standard Chartered
Bank plc, before running his
own corporate finance
business in Zimbabwe. He has
an accountancy degree from
the University of South Africa
with a London Business School
masters in finance and is a
qualified chartered accountant.

Mr Bradshaw has a
Mathematics degree from
Nottingham University and is a
Fellow of the Institute of
Actuaries. He was a founder of
Skandia and was Chairman and
Managing Director of that
business before moving on to
various roles with J Rothschild
International Assurance Ltd
(now St James’s Place Wealth
Management). His executive
career was completed as CEO
of Abbey (now Santander)
Insurance and Asset
Management Division. He has
had extensive Non-Executive
experience over many years,
including Marks and Spencer
Money, Perpetual (now Invesco
Perpetual) Pensions and GE
Life. His current Non-Executive
roles include Sanlam Limited
and its UK controlled
subsidiaries, and
Non-Executive Chairman of
Nucleus Financial Group.

Committee membership

Board
Remuneration Committee
Nominations Committee

Board

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Chief Executive Officer

Chief Financial Officer

Peter Warry
Senior Independent
Non-Executive Director

Jonathan Punter
Non-Executive Director

Angus Samuels
Non-Executive Director

Mark Johnson
Non-Executive Director

Robin Minter-Kemp
Independent
Non-Executive Director

Angela Crawford-Ingle
Independent
Non-Executive Director

Background and experience

Chairman of The Royal
Mint and Chairman of
Keepmoat Group, Peter
has also served as
Chairman of BSS Group,
Victrex and Kier Group
and has held many
board-level roles.
A former special advisor
to the Prime Minister’s
policy unit, he is an
industrial professor at the
University of Warwick.
An engineering and
economics graduate and
honorary fellow of Merton
College, Oxford, Peter is
also a fellow of the Royal
Academy of Engineering.

Jonathan founded Punter
Southall Group Ltd with
Stuart Southall in 1988
and is the Group’s Chief
Executive. He has more
than 30 years in the
actuarial profession, with
particular expertise in UK
pensions and investment
strategy. He is a specialist
on the issues
surrounding pensions in
mergers, buy-outs and
due diligence deals.
A qualified actuary with a
mathematics degree
from Bristol University,
he began his career with
Duncan C Fraser, where
he was a partner.

Chairman of Punter
Southall Group, Angus
has held roles in the UK
and South Africa,
including chief executive
of Sanwa Asset
Management, Credit
Suisse Asset
Management and Sanlam
Investment Management.
His Non-Executive
Directorships include
Sanlam UK, Sanlam
Private Wealth Holdings,
Sanlam Life and
Pensions UK, Sanlam
Private Investments UK
Ltd and Nucleus
Financial Group. From
Zimbabwe, Angus’s
career began at
stockbrokers’ Fergusson
Bros and Hall Stewart
and Co in South Africa.

Mark co-founded Pacific
Investments with its
Chairman, Sir John
Beckwith, and is the
Chief Executive. He also
worked with Sir John as
Chief Executive of the
Riverside Group. He is a
partner of RiverCrest
Capital LLP and
Chairman of Argentex
Capital. He was a partner
of RAMAM. He was a
shareholder Director
of Liontrust Asset
Management and
Thames River Capital.
A graduate of University
College London, Mark is
also a qualified lawyer.

Robin has more than 25
years’ experience in the
fund management
industry, holding senior
positions with Henderson
Investors and HSBC
Asset Management
before joining Cazenove
Fund Management in
2001. Over the next
13 years, he was
instrumental in
developing Cazenove’s
specialised investment
business, building
external funds under
management from £300
million to £6.5 billion
ahead of the business’s
acquisition by Schroders
plc in July 2013. Robin
served in the Royal Welch
Fusiliers after Sandhurst.

Angela is a chartered
accountant with extensive
audit experience of
multinational and listed
companies. As a partner at
PricewaterhouseCoopers,
she specialised in
financial services for
20 years – leading the
Insurance and
Investment Management
Division. Retiring in 2008,
she is a partner in Ambre
Partners, advising private
equity firms and
entrepreneurial
companies. Angela is a
Non-Executive Director
of Beazley plc and
Swinton Group Ltd. She
chairs the Audit and Risk
Committee.

Committee membership

Board

Board
Audit Committee
Remuneration
Committee

Nominations Committee

Board
Audit Committee
Remuneration
Committee

Nominations Committee

Board
Audit Committee
Nominations Committee

River and Mercantile Group PLC
Annual report and accounts 2014

Governance

Audit and Risk Committee report (including Risk management)

Angela Crawford-Ingle
Chairman, Audit and Risk Committee

I am pleased to present the first report
of the Audit and Risk Committee and
thank all the members of the Board and
management for their cooperation and
assistance to the Committee during the
important transition of the business to a
publicly listed Group.

The outcomes expected of the Committee
The Audit and Risk Committee assists the Board in discharging its
responsibilities with regard to financial reporting, monitoring the
integrity of the Company’s financial statements, and reviewing the
effectiveness of the Company’s internal controls and risk
management systems. The Audit and Risk Committee is also
responsible for providing oversight and advice to the Board in relation
to current and potential risk exposures of the Group and future risk
strategy, reviewing and approving various formal reporting
requirements and promoting a risk awareness culture within the
Group. The Committee’s main focus during the reporting period with
regards to these responsibilities has been the completion of the
Financial Positions and Prospects Procedures as part of the
Admission process.

The Committee and our engagement process
In nominating Directors to the Committee, the Board has followed
the recommendations of the UK Corporate Governance Code and the
Committee comprises the three Independent Non-Executive
Directors. The Board appointed me as Chairman of the Committee
based on my relevant background and experience in financial
matters. The Group’s Chief Financial Officer attends the Committee
meetings and the Independent Auditor is invited to attend meetings
on a regular basis, including separate meetings without the Executive
Directors present.

The Committee meetings are open to all members of the Board to
attend and all papers are available to the full Board. This broadens
the engagement of the Board in risk and accounting matters, which
are critical areas of focus of the Board. While Jonathan, Angus and
Mark, as Non-Independent, Non-Executive Directors, are not
members of the Committee, we have benefited from their knowledge
and experience of the risk management and governance frameworks
that existed in the P-Solve and RAMAM businesses, and in
supporting the Committee through the IPO process and the transition
to becoming a public reporting group.

Prior to the establishment of the Committee, both P-Solve and
RAMAM had risk, compliance and governance frameworks in place
which have existed for the full reporting period. These processes
formed the basis on which the Group’s consolidated reporting
framework has been continued.

The Committee was formally established on 3 June 2014, and has
held seven meetings through to 23 September 2014. The majority of
these meetings have been focused on matters relating to the public
listing, establishing the additional controls process to facilitate the
public reporting of the Group and the review of the period end
financial results.

Areas of focus
The following are the key areas of focus of the Committee:

• The Financial Position and Prospects Procedures;
• Establishing an integrated controls framework for the

consolidated Group, leveraging the individual risk and control
frameworks of P-Solve and RAMAM;

• The significant areas of accounting judgement identified in the

business; and

• Independence of the external auditors, BDO LLP.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Independence of the auditors:
The Board is responsible for maintaining the integrity of the external
audit process. The independence and objectivity of our auditors is an
essential component.

The significant areas of accounting judgement
The significant areas of accounting judgement identified in the
business are detailed in the following places in the consolidated
financial statements:

• The determination of the fair value of consideration exchanged in

the acquisition of RAMAM (Note 42).

• Fair value of the Investment Management Agreements (IMAs)

identifiable intangible in the acquisition accounting for RAMAM,
including the discount rate used and the period over which the IMA
intangible will be amortised (Note 42).

• Consideration of whether previously recorded goodwill is

impaired, including the goodwill arising from the acquisition of
RAMAM (Note 42).

• The revenue recognition of management and performance fees

(Notes 8–10).

Each of these areas requires the exercise of professional judgement
and the Committee has reviewed the accounting judgements involved
with each of the areas. The Committee has worked in conjunction
with the Remuneration Committee with regards to the accounting for
the Performance Share Plans. These matters have then been
reported by the Committee to the Board for further discussion and
approval in the context of the published financial information.

Annual Report
The Committee has reviewed the content of the Annual Report and
financial statements and advised the Board that, taken as a whole, it
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s performance,
business model and strategy.

Forward calendar
The forward calendar of the Audit and Risk Committee includes the
following matters:

• Overseeing the migration of control functions currently supported

by PSG under the Transition Services Agreement;

• Overseeing the implementation and maintenance of an

aggregated systems of internal controls based on the three lines
of defence regime;

• Reviewing the Group’s risk assessment processes, including

risk appetite statements, and capability to identify and manage
new risks; and

• In the context of the risk assessment processes, reviewing the
individual capital adequacy assessment processes, for the
regulated entities and the Group as a whole.

BDO has been the independent auditors for PSG and P-Solve entities
and RAMAM. The audit partner has been the engagement partner
involved with the audit of PSG, P-Solve and RAMAM. In addition, BDO
was appointed as the Reporting Accountant for the IPO and has
provided a variety of advisory and tax services to both entities and
PSG. In aggregate, a total of £884,000 of fees have been paid to BDO
for various audit and non-attest services relating to the Group entities
over the previous 12 months ended 30 June 2014. Monitoring the
various activities of BDO has been a significant focus of the
Committee in determining the independence of the Group’ auditors.
The Committee has concluded that BDO, as the Group’s auditor, has
maintained its independence and objectivity throughout the IPO
process and the audit of the Group’s consolidated financial
statements. This conclusion is based on BDO’s adherence to the
Financial Reporting Council’s (FRC) Audit and Ethical Standards.
Professional Auditing Standards on Independence, the involvement of
an independent review partner in addition to the engagement
partners on the IPO engagement and the segregation of the teams
undertaking the responsibilities of Reporting Accountant and
Independent Auditor. The quantum of the Reporting Accountant work
was viewed as one-off in nature and is not ongoing in the future.

There are no contractual obligations that acted to restrict the
Committee’s choice of external auditor.

Financial position and prospects procedures
As part of the Admission process the Committee was responsible for
establishing procedures that provide a reasonable basis for making
proper judgements on an ongoing basis as to the financial position
and prospects of the Group.

In carrying out our responsibilities, we have conducted a risk
assessment of the nature and circumstances of the business and:

• the information needed to monitor the business and manage risk
so as to make proper judgements on the Group’s financial position
and prospects (FPP);

• the factors likely to impact on the Group’s FPP and the preparation

and communication of related information; and

• evaluated the Group’s FPP procedures having regard to ICAEW

Technical Release (TECH 01/13CFF).

The Committee concluded that there are procedures in place which
provide a reasonable basis for us to make proper judgements on an
ongoing basis as to the financial position and prospects of the Group
and advised the Board accordingly.

Prior to the IPO, RAMAM and P-Solve (both of whom are regulated
investment managers) maintained financial reporting and control
procedures to support their respective businesses. These procedures
included the maintenance of the control environment over financial
matters and the preparation of financial information. The financial
information was subject to review by the respective Executive and
Management Boards; in the case of RAMAM, the Executive
Committee of the LLP and in respect of P-Solve, the Board of PSG.

The Board has reviewed these procedures at the individual reporting
entities, which have continued throughout the period, in addition to
the procedures to support the financial reporting and control
procedures on a consolidated basis for the overall Group. This has
allowed the Board to make proper judgements on an ongoing basis
as to financial position and prospects of the Group and to fulfil its
responsibility to ensure that a sound system of internal controls and
risk management is in place during the period.

River and Mercantile Group PLC
Annual report and accounts 2014

Risk management
It’s all about the outcome...

Our business model brings together advice, with investment
management and portfolio engineering skills. In doing so, our primary
objective is to deliver strong outcomes for Clients.

The principal focus of risk management is related to limiting the risk
of not delivering the expected outcome to Clients. We consider this
objective to be strongly aligned to the outcomes expected by our
other constituents: our shareholders; employees; regulators and the
broader community.

This outcome orientated approach to risk management is applied
throughout the Group, from the corporate governance structure instilled
by the Board through to our employees.

Governance

Board of Directors
The Board is committed to the highest
standards of corporate governance and
maintaining a sound framework for the
control and management of the business.
The Board is responsible for leading and
controlling the Group and has overall
authority for the management and conduct of
the Group’s business and its strategy and
development.

The Remuneration Committee
The Remuneration Committee assists the
Board in determining its responsibilities
in relation to remuneration and has
responsibility for setting the remuneration
policy and recommending and monitoring
the level of remuneration for Executive
Directors and senior management. These
policies include consideration of risk
awareness, management and accountability
for risk. The key objective is that employee
incentives are aligned to the delivery of
strong Client outcomes.

The Executive Committee and
Senior Management
The Executive Committee is responsible
for setting and monitoring the Group’s risk
profile and is responsible for the operation of
the business in accordance with the Board
Risk Appetite statements. The divisions
and each business unit are the first line of
defence against unexpected outcomes and
are responsible for establishing sound
operational processes and control
procedures.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Legal and Company Secretarial
The Legal and Company Secretarial
department is responsible for managing and
mitigating the Group’s legal risk, ensuring
compliance with relevant legislation and
contractual obligations, and oversight of the
Group’s regulatory compliance. It is also
responsible for the corporate governance
matters of the Group. As well as providing
legal support to the advisory, investment and
distribution teams in relation to the Group’s
products, the Legal and Company Secretarial
department also provides legal support
in relation to other matters, such as
employment, trading, information
technology, intellectual property and finance.

Human Resources
The Human Resources department is
responsible for implementing the Group’s
human resource policies and practices with
the aim of achieving a working environment
which fosters a culture of cooperation,
respect and performance.

Key risks
The following table summarises the key risks
considered most relevant to our business.
See Note 47 to the consolidated financial
statements for further information on
financial risks.

Technology
The IT department is responsible for
providing and managing the Group’s IT
requirements in line with the Group’s
operations strategy. The Group’s IT
infrastructure combines both in-house and
outsourced arrangements. IT services
include the development and maintenance
of proprietary trading tools, hardware
maintenance, desktop support, data integrity
and security, including resilience, back-up
and recovery arrangements. Technology
enables automated processes that create
a repeatable, controlled and scalable
infrastructure which promotes predictability
and stability, and thereby enhances the ability
to identify and mitigate operational risks.

Compliance and Risk Management
The Compliance and Risk Management
functions are responsible for identifying,
assessing, evaluating, monitoring and
reporting on compliance and risk related
issues faced by the Group. For the most part
this involves strong regulatory intelligence
and forward-looking risk management.
Processes include assessing the impact to
the Group of specific issues, determining
their expected likelihood and consequences,
and developing and implementing
prioritisation and management strategies. In
a coordinated and collaborative approach,
the Compliance and Risk Management
functions also monitor and provide
assurance as to the adequacy and
effectiveness of the Group’s internal controls.
The Group continues to operate three
separate regulated entities, P-Solve
Investments Limited, P-Solve LLC and River
and Mercantile Asset Management LLP,
each of which has its own compliance officer
who reports to the Group’s Head of
Compliance, who attends the Audit and Risk
Committee meetings as required.

The Group has compliance policies and
procedures in place and all employees
receive ongoing training to instill a risk and
compliance awareness and Client orientated
culture.

Business support functions
The strategy of the support functions is to
provide high quality operational support,
assurance and risk management to the
Group’s business units through centralised
infrastructure and oversight. The Group
has developed infrastructure that enables
current operations to be supported in the
most efficient manner and this provides a
robust platform from which the Group can
bring new ideas to market, while delivering
a high level of service to its Clients.

Operations
The Group’s operational strategy is to provide
services in the most efficient manner for
each business line, either in-house or on an
outsourced basis. The Group keeps under
review the mix of in-house and outsourced
work and, where a business line can be more
effectively supported by outsourcing, it will
look to do so. The Group’s approach is to
build outsourcing relationships with strategic
partners who can provide quality service
utilising specialist resources at lower
medium and longer term running costs than
if such services were provided within the
Group. Operations works with the business
to develop processes and controls that
mitigate the risk of operational incidents.

Finance
The finance department is responsible for
managing and reporting the financial results
and financial position of the Group in
accordance with statutory and regulatory
requirements. Finance is responsible for
maintaining the internal control environment
to support the production of financial and
management information. It is also
responsible for tax reporting and
compliance, cash management, forecasting
and budgeting. Through robust processes
and effective control procedures the
finance department mitigates the risk of
misstatements and financial loss to the Group.

The Group ensures that there is adequate
internal control and risk management of the
financial reporting process through: hiring
and retention of appropriately skilled staff;
segregation of duties; budgeting and
forecasting; review of management
information by the business and the Board;
review of key control process including
reconciliations; and review of financial
information and controls by the Audit and
Risk Committee.

River and Mercantile Group PLC
Annual report and accounts 2014

Risk management continued

Governance

ACTIVITY

RISK

OUTCOME

MITIGATION

Client
engagement

We do not fully identify or
understand the Client’s desired
investment outcomes.

The Client’s investment strategy
does not meet the Client’s desired
outcomes. This could lead to a loss
of Clients, failure to win new
business and reputational issues.

Client
outcome

The design of the investment
strategy does not deliver
investment performance
consistent with the range of
articulated outcomes.

The investment performance is not
in line with Client expectations or
investment advice is poor. This
could lead to a loss of Clients,
failure to win new business and
reputational issues.

Execution of
the Client’s
investment
strategy

The execution of the investment
strategy is not in accordance with
the agreed investment strategy.

Failure to execute the investment
strategy in accordance with the
stated investment mandate, errors
and misconduct, as well as failure
to manage conflicts of interest. This
could lead to direct financial loss, a
loss of Clients, failure to win new
business and reputational issues.

The Client engagement process is based on engagement with
regulatory approved investment professionals and advisors
who develop with the Client their desired Client outcomes.

Through our existing Client base we have experience from
other similar Clients that informs us about the general trend in
particular segments of our Client base.

We have a long track record of investment performance which
allows us to model for the Client’s historical and hypothetical
performance scenarios under different market conditions
which informs our Clients of the range of possible outcomes
that they could expect.

A regular governance process provides for regular interaction
to identify changes in the Client’s desired outcomes and solicits
feedback on the actual outcomes experienced by the Client.

The Group’s Chief Investment Officer oversees the Group’s
investment views and there is a committee structure in place
to support the provision of consistent investment views across
the Group.

Investment opinions are subject to considerable evaluation and
discussion prior to implementation or presentation to Clients
as appropriate to their form of engagement with the Group.

Investment strategies are designed and back tested against
different historical market events to identify to the Client a
range of possible outcomes. Investment performance is
understood to vary within a range of outcomes and this helps
Clients understand the characteristics of different
strategy options.

The governance process with the Client provides a regular
interaction to report to the Client their investment performance
against the specified outcomes. This allows
the business to check the appropriateness of the strategy
design with Clients.

The Group fosters a culture that supports a business model,
behaviours and practices that have the fair treatment of Clients
at its core. This requires an open and honest dialogue
regarding investment performance relative to the stated
outcomes.

The investment management process is documented within
the investment mandates, including risk limits and
concentration limits. Investment guideline and restriction
metrics are monitored against mandate parameters to
maintain compliance. Variance triggers and thresholds are in
place, and breaches are promptly escalated.

Compliance and Risk Management, which operate alongside
the business but have independent reporting lines, act as a
second line of defence over the investment management
process.

A culture of Client engagement, based on conduct and
fairness, fosters an open and honest dialogue regarding
investment performance relative to the stated outcomes.

Operational

The risk of loss resulting from
inadequate or failed internal
processes, people and systems
or from external events.

Financial loss, forgone revenue,
fines and reputation damage.

Experienced and knowledgeable employees with appropriate
segregation of roles and responsibilities.

Workflows, internal control processes and escalation
protocols designed to achieve predictable outcomes.

Insurance covering errors and omission mitigating significant
financial loss.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

ACTIVITY

RISK

OUTCOME

MITIGATION

Market
environment

The Group and the investment
advisory and investment
management industries as a
whole are sensitive to adverse
economic, political and market
factors and volatility in financial
markets. A significant
deterioration or sustained decline
in economic conditions or
financial markets could impact
investor sentiment and adversely
affect the Group’s performance.

Significant withdrawals of AUM
and/or NUM at short notice and
loss of advisory mandates could
have an impact on management
fees and advisory fees.

Sustained underperformance
across a range of the Group’s
products and strategies could
result in reduced management fee
and performance fee income.

Regulatory
environment

The Group operates in an evolving
regulatory environment and is
subject to wide-ranging legal and
regulatory (including capital)
requirements and supervision;
changes to which may result in
additional compliance costs or
adverse changes in the Group’s
business. Failure to comply with
such requirements may result in
investigations, disciplinary action,
fines, reputational damage and
the revocation of the Group’s
licences, permissions, waivers or
authorisations.

Key
personnel

The Group is dependent on the
continued services of its senior
management and key personnel.
The loss of key individuals or a
failure to have effective
succession plans could reduce
our ability to service our Clients.

A breach of regulatory
requirements could result in fines
and sanctions which could diminish
the Group’s reputation with Clients
and the market generally.

The Group operates through a
number of regulated entities, and
therefore sanctions could limit our
ability to offer investment
strategies to existing and
prospective Clients.

Breach of regulatory requirements
could result in an increase in the
regulatory capital required to be
held by the regulated entities.

Changes in the regulatory
framework could make it more
costly or capital intensive to operate
in the market, reducing profitability
of the Group.

The loss of, or inability to train or
recruit, key personnel could have a
material adverse effect on the
Group’s business.

The Client engagement process gives the Group an opportunity
to maintain a relationship across market cycles both in
advisory and investment management. The engagement
process allows us to understand the risk appetite of the Client
and operate pro-actively to respond to a Client’s changing
outcomes.

A sustained reduction in AUM and/or NUM as a result of
adverse market movements could result in a corresponding
reduction in management and performance fee revenue. This
may be partly offset by an increase in our advisory revenues as
Clients re-evaluate their investment and hedging strategies. In
the short to medium terms we can adjust our cost base,
particularly remuneration which is variable with our overall
economics.

The Client engagement process necessitates understanding
the expected outcomes for the Client. This, along with related
processes and policies, is directed at the best possible Client
outcomes.

The Client engagement process necessitates identifying actual
or potential conflicts of interest between the Group and the
Client. These conflicts can be understood and discussed with
the Client and mitigating measures introduced where
appropriate. The group pays due regard to the interest of its
Clients and puts treating them fairly central and foremost.

The Group’s Compliance and Risk Management functions
operate alongside the business and provide guidance and
oversight of process and control procedures designed to
ensure compliance with governance and regulatory
requirements. Measures include a clear, consistent view on
risk and risk appetite, proactive and effective monitoring to
minimise unexpected incidents and a comprehensive
compliance monitoring programme.

Regulatory changes are monitored by the Group’s Compliance
and Risk Management functions and we maintain an active
dialogue both with our Clients and with regulatory bodies so
that we can understand and adapt business model and
strategy accordingly.

We have formal processes of training and accreditation to
advance and motivate our employees in order to support the
continuity of our Client engagement business model.

Our focus on Client outcomes aligns us with our Clients and
results in a business with low attrition rates. This creates a
sustainable business which is therefore less subject to cyclical
effects. This allows us to grow, attract and retain our Client and
investment talent.

Our remuneration structures are designed to motivate and
support the development of our employees and provide
incentives linked to their individual, divisional and Group
performance.

Reputation

Damage to the Group’s reputation
could affect the perception that
Clients and potential Clients have
of our abilities as an investment
partner.

Reputation damage could lead to a
loss of Clients, reduction in AUM
and/or NUM and a reduction in the
profitability of the Group.

Our ethos is centred on delivering against the outcomes of our
constituents. This fosters a culture of integrity and conduct that
is based on engagement with our Clients, shareholders,
regulators, employees and the broader community. Our
reputation is based on the quality of this engagement process.

River and Mercantile Group PLC
Annual report and accounts 2014

Remuneration Committee report

Governance

Robin Minter-Kemp,
Chairman, Remuneration Committee

In my first report it is important to clarify the role of the
Remuneration Committee in the context of the previous governance
regime over remuneration and the framework to be applied going
forward.

In my first report it is important to
clarify the role of the Remuneration
Committee in the context of the previous
governance regime over remuneration
and the regime to be applied going
forward.

The Committee’s responsibilities are:

• reviewing the Group’s remuneration strategy and recommending

to the Board the Directors’ remuneration policy;

• determining the remuneration of the Executive Directors within

the terms of the Directors’ remuneration policy;

• reviewing the remuneration of the heads of Compliance, Legal and

Risk Management, monitoring the level and structure of
remuneration for other senior employees and overseeing
employee compensation more broadly across the Group;

• reviewing the design and operation of performance based share

remuneration;

• reviewing our compliance with the required remuneration

disclosures; and

• receiving and considering feedback from shareholders and

representatives of shareholder bodies regarding their expected
outcomes.

Membership of the Committee and engagement
In appointing Directors to the Committee, the Board has followed the
recommendations of the UK Corporate Governance Code and the
Comittee therefore comprises the three Independent Non-Executive
Directors. In addition, Mark Johnson and Angus Samuels attend the
Committee meetings based on their knowledge and experience of the
remuneration policies that existed in the two predecessor entities:
P-Solve and RAMAM. Having a clear understanding of how the
organisation has been incentivised through remuneration in the past
and how this might be applied, in the context of a public company, has
been critical. Mark and Angus’ experience has been extremely
valuable in supporting the Committee through the IPO process and
the transition to a public company.

The Committee was formally established on 19 May 2014 and has
held six meetings through 19 September 2014. The majority of these
meetings have been focused on matters relating to the public listing
and establishing the remuneration policies and new Performance
Share Plans for the Group.

Prior to the establishment of the Committee, both P-Solve and
RAMAM had remuneration, compliance and governance frameworks
in place which have existed for the full reporting period. These
governance processes formed the basis on which the Group’s
remuneration policies have continued.

Change by its nature causes uncertainty. Making sure that our
employees understand that their remuneration arrangements will be
consistently applied post the acquisition of RAMAM and the IPO has
been a focus of Executive Management and the Committee.

Areas of focus
In the short time the Committee has been operating the following
have been the key areas of focus of the Committee:

• Share trading restrictions;
• Equity Ownership by Employees;
• Executive Remuneration Arrangements;
• The Executive Performance Share Plan (EPSP);
• Performance Share Plan (PSP); and
• Guidance regarding the Remuneration to Revenue ratio.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Use of independent experts
The Committee does not have a permanent external consultant but
has sought independent advice on remuneration matters and
appointed Ernst & Young LLP and Fox Williams to review the
compliance, market, and tax treatment of the EPSP and the PSP
which were adopted at the date of the IPO. Ernst & Young have been
engaged by the Committee to perform a valuation of the performance
shares granted under the EPSP.

Remuneration philosophy
The Group’s remuneration philosophy is based on rewarding people
for their individual performance, their division’s performance and the
overall performance of the Group. As a business that is outcome
orientated our remuneration philosophy reflects rewarding our
employees for achieving expected outcomes. We recognise that as a
people orientated business, remuneration is one of the outcomes
expected by our employees. Other outcomes such as professional
advancement opportunities and intellectual fulfilment are also
important, so while the focus of this report is remuneration we
consider that it is only one component in a range of expected
outcomes for our employees. As a business we are subject to
competitive pressures and this includes the competition for talent. In
order to remain competitive we have a talent management
philosophy that is linked to attracting, advancing and retaining
talented people.

Our remuneration structure
The Group is the combination of the two businesses which have had
different approaches to the structure of their remuneration. These
differences are based on the different market dynamics and the
different business models of the underlying businesses. As these
differences reflect the differences in the underlying businesses we do
not anticipate significant changes to the basis of remuneration. The
commonality of both regimes has been that they have provided clear
incentives that underpinned the success of both businesses.

In RAMAM, partners have taken drawings and been paid a
performance based profit share, generally contractually based,
rather than discretionary. This gives a direct linkage between
performance and remuneration and is a transparent process. The
performance is not only measured by the investment performance
earned by way of performance fees but by the sustainability of the
AUM on which management fees are earned. All amounts were paid
in cash. In addition partners shared in the residual profits of the LLP.
After the merger these arrangements continued generally
unchanged. The capital interests in the LLP were exchanged for
shares in P-Solve and ultimately the Group, on which the partners
will now earn dividends as shareholders of the Group.

In P-Solve, the remuneration philosophy is based on arrangements
where base salary is a higher component of total remuneration. This
matches the dynamic of the Client engagement business model
of P-Solve.

In general, base salaries and benefits are targeted at the high to
medium quartile as compared to similar positions in the financial
services industry. This comparative analysis has been based on
information obtained from external consultants. Generally, base
salaries increase based on the advancement of the individual
and inflation.

The variable bonus remuneration has been paid in cash and deferred
performance share-based payments. Cash bonuses are focused on
rewarding the individual for their current contribution in excess of the
expected outcomes. The deferred arrangements reward the
individual for the collective performance of their business in the
context of the Division and the Group as a whole. The criteria for
vesting are defined outcomes that are measurable in terms of the
Group’s performance. As these arrangements are forward looking
they align the individual to the Group’s strategic direction.

In both these cases the remuneration arrangements match the
business models and these remuneration approaches will remain
generally unchanged.

Ratio of remuneration to revenue
The remuneration outcome expected by our employees is balanced
with the returns expected by our shareholders and this is a key
component of how we think about our remuneration philosophy.

The Directors have made the following statement regarding our
remuneration to revenue ratio in the future:

“… as a result of the operating leverage of the combined business and
the implementation of the PSPs, remuneration to total revenue will
trend to a range of 45–50% over the next three years, the higher end
of this range reflecting a higher proportion of performance fee
revenue to total revenue.”

As discussed in the CEO Report the growth in the pre-tax margin is a
key performance indicator for the business as it is the key outcome
for shareholders in determining the amount available for distribution
under the Group’s dividend policy. The remuneration to revenue ratio
is a component of that metric as it defines the relationship between
the remuneration paid to employees and the amount ultimately
available to shareholders as dividends.

For the six months ended 30 June 2014 the total remuneration paid to
Executive Directors and employees was £10.84 million, representing
54% of total revenues. The adjusted profits after tax were £4.30
million. A dividend of 2.3 pence per share (£1.88 million) has been
proposed by the Directors, (including 1.0 pence paid as a special
distribution relating to performance fees), representing 60% of the
Adjusted Profits for the three months ended 30 June 2014. This was
consistent with the statements made by the Board in the Listing
Prospectus. These statements regarding remuneration to revenue
ratio, pre tax margin and the dividend policy are the key metrics in
setting expected outcomes for shareholders and employees.

Equity ownership by employees
The Group has a long history and culture of management and
employees having significant equity ownership in the business. In
RAMAM this was directly through the partnership structure which
continues post the IPO through the partners having both invested
capital in the LLP at risk and profit sharing interests.

For P-Solve, the equity ownership was through performance shares,
the vesting of which were linked to the excess return the business
generated for the previous owner, PSG. These shares vested into
shares of PSG which is a private company and could be realised
through an annual exchange process.

River and Mercantile Group PLC
Annual report and accounts 2014

Remuneration Committee report continued

The Group’s remuneration philosophy will continue to be based on
granting performance shares which only vest if transparent and
measurable performance outcomes are achieved. A significant
difference compared to the previous arrangements is that as a public
company the potential shares that can vest have a transparent price
making the value of achieving the outcome more clearly measurable
for the employee.

Performance Share Plans
As noted earlier, ownership of the underlying outcomes of the
business through equity ownership has formed an important part of
the remuneration structures of both businesses and will continue in
the future. The Committee considered a number of alternative
share-based and Performance Share Plans and recommended to
the Board the establishment of two plans. At the date of the IPO the
EPSP and the PSP were established. The EPSP is specifically for the
Executive Directors and Senior Management which was granted at
the Admission date and a general Performance Share Plan under
which a number of different awards could be constructed. The plans
are described below.

The Executive Performance Share Plan
The EPSP has been established to grant the Executive Directors and
certain members of senior management performance shares at the
date of Admission. Two classes of performance shares were
awarded: Performance Condition A Awards and Performance
Condition B Awards. The aggregate number of shares which may be
issued under the EPSP is limited to 10% of the issued ordinary share
capital of the Company on Admission. The aggregate number of
shares that could be issued under Performance Condition A Awards
is 5,746,675 and 2,462,860 shares under Performance Condition B
Awards.

The vesting of Performance Condition A Awards is conditional on
achieving a Compound Annual Total Shareholder Return of at least
12% measured over the four-year performance period. Vesting will
start at 12% Compound Annual Total Shareholder Return and 100%
of the Performance Condition A Awards will vest at 24%. Vesting will
be pro rated on a straight-line basis between 12% and 24%
Compound Annual Total Shareholder Return.

Performance Condition B Awards are conditional on achieving a total
shareholder return of at least 25% Compound Annual Total
Shareholder Return measured over the four-year performance
period. Vesting will start at 25% Compound Annual Total Shareholder
Return and 100% of the Performance Condition B Awards will vest at
30%. Vesting will be pro rated on a straight-line basis between 25%
and 30% Compound Annual Total Shareholder Return.

The Committee, in reviewing the terms of the EPSP engaged Ernst &
Young LLP to advise them on the valuation and comparability to other
similar plans. The Committee concluded that the performance
conditions, based on the absolute return experienced by the
shareholders, was an appropriate measure given the dilutive nature
of the EPSP. The vesting period of four years was viewed by the
Committee as a significant period over which to generate sustained

Governance

returns for shareholders. Vesting of Performance Condition A
Awards only occurs after the shareholders have earned at least 12%
Compound Annual Total Shareholder Return measured over the
four-year performance period and at 25% Compound Annual Total
Shareholder Return for the Performance Condition B Awards. Both
of these hurdles are set above the historical medium return for FTSE
companies. In addition, the requirement to hold the vested shares for
a further one year period creates further incentive to generate
sustained returns for shareholders. We believe that the EPSP
complies with the guidelines of the ABI specifically with regards to
having challenging performance conditions and an alignment to
shareholders whereby the shareholder receives their return in
absolute terms before the Executives receive their remuneration.

The Committee therefore recommended the EPSP to the Board and
the Board confirmed that the EPSP performance conditions
represent a significant challenge for the executive management to
attain, and that these conditions can only be achieved through the
successful, long-term execution of the Board’s growth strategy. The
successful implementation of this growth strategy is measured on an
absolute basis by the returns experienced by shareholders. The
Board considers that the performance criteria therefore directly align
the reward for performance of the executive management with the
investment performance directly experienced by shareholders. The
key terms of the EPSP are described on page 62.

Performance Share Plan
The PSP has been established to grant employees including
Executive Directors three different types of awards over ordinary
shares. Awards under the PSP may comprise (i) nil-cost option
awards (Nil-Cost Option Awards) over ordinary shares, (ii) contingent
share awards (Contingent Share Awards) over ordinary shares and
(iii) forfeitable share awards (Forfeitable Share Awards) over ordinary
shares. Awards under the PSP are not intended to cause further
dilution on shareholders and will therefore be satisfied through share
purchases by the Employee Benefit Trust (EBT). As at 30 June 2014
no awards had been made under the PSP and no shares are held by
the EBT.

Share trading restrictions
As a result of the acquisition of RAMAM a trigger event occurred and
the unvested performance shares for certain P-Solve employees
vested and were converted into P-Solve shares. These shares
ultimately converted into shares in R&M and under the underwriting
agreement, up to 35% could be sold in the IPO. A focus of the
Committee, and the Board, was on the trading restrictions that would
apply to the unsold shares held by both the RAMAM LLP partners
whose capital interests were exchanged into R&M shares and the
P-Solve employees whose performance shares had been
accelerated by the trigger event. Under the Underwriting Agreement
employees and Executive Management are restricted from selling
their unsold shares for a period of at least two years. This provides a
strong alignment of interests between the existing shareholder
employees and our new shareholders. The lock up restrictions also
applied equally to new shares purchased by employees in the IPO.
The significant shareholding by employees, held on a long-term
basis, means that our employees continue to act and think as
shareholders and is therefore closely aligned to the outcomes
expected by all shareholders.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

The following table summarises the EPSP and the PSP.

Operation

Limits

Eligibility and Timing

Form of Award

Performance metrics and period

Executive
Performance
Share Plan
(EPSP)

Awards issued at
Admission.

Vesting conditional on
achievement of stated
levels of Compound Annual
Total Shareholder Return
(Compound Annual TSR)
over subsequent four-year
period.

Any shares which vest
are subject to a further
one-year holding period
following vesting.

Shares which do not
vest are forfeited.

Until an award vests,
participants have waived
rights to dividends.

Remuneration Committee
may vary terms of EPSP
(prior shareholder approval
required if proposed
changes are to the
advantage of participants).

Plan may be varied or
adjusted by RemCo
as appropriate, upon
corporate reconstruction/
amalgamation etc.

Subject to good leaver/
bad leaver provisions.

Up to 10% of the issued
ordinary share capital of the
Company at Admission to be
issued to certain Executives.

Performance
Condition A and/or
Performance
Condition B.

Awards granted to
named Executives
on Admission.

Remaining
Performance
Condition A shares
may be granted at
the Committee’s
discretion.

Performance period: four
years from date of Admission.

Performance metrics:

Performance Condition A
Vesting at threshold (at least
12% Compound Annual TSR
over performance period).

100% of Performance
Condition A Award will vest at
24% Compound Annual TSR
over performance period.

Vesting will be pro rated
on a straight-line basis
between 12% and 24%
Compound Annual TSR.

Performance Condition B
Vesting at threshold (at least
25% Compound Annual TSR
over performance period).

100% of Performance
Condition A Award will vest at
30% Compound Annual TSR
over performance period.

Vesting will be pro rated
on a straight-line basis
between 25% and 30%
Compound Annual TSR.

Operation

Limits

Eligibility and Timing

Form of Award

Performance metrics and period

Performance
Share Plan
(PSP)

Grants of nil-cost,
contingent share
or forfeitable share
awards can be made
at the discretion of
the Committee.

Participants may be
entitled to dividend
equivalent payment and
dividend reinvestment
in RemCo’s discretion.

Subject to good leaver/
bad leaver provisions.

May vest early
on occurrence of
corporate events.

Nil-Cost Option
Awards over
ordinary shares;

Contingent
Share Awards
over ordinary
shares; and

Forfeitable Share
Awards over
ordinary shares.

Remuneration Committee
has discretion at the date of
grant to determine the vesting
provisions for an award. It
is currently intended that,
provided participants are still
employed by the Group, awards
will vest on the third anniversary
of the date of grant to the extent
that testing performance
criteria, determined by the
Remuneration Committee at
the date of grant, have been
satisfied. In determining
performance conditions, the
Remuneration Committee will
take into account the prevailing
views of institutional investors
and current market practice.

Awards may
be granted:

(i) during the
period of 42 days
beginning with
the fourth dealing
day following the
date on which
the Company
announces its
results for any
period; or

(ii) at any other
time when the
Remuneration
Committee
considers that the
circumstances are
sufficient to justify
a grant, provided
that an award may
not be granted
after 30 June 2024.

No Awards may be granted
under the PSP on any date if, as
a result, either of the following
limits would be exceeded:

(i) the aggregate number of
ordinary shares issued or
remaining issuable pursuant
to awards made under the
PSP and pursuant to grants or
appropriations made during
the previous ten years under
any other employees’ share
incentive plan, including grants
made under the EPSP, would
exceed 10% of the issued
ordinary share capital of the
Company on that date; or

(ii) the aggregate number of
ordinary shares issued or
remaining issuable pursuant
to awards under the PSP
and pursuant to grants or
appropriations made during
the previous ten years under
any other discretionary
executive share incentive
plan, but excluding grants
made under the EPSP, would
exceed 5% of the issued
ordinary share capital of the
Company on that date.

River and Mercantile Group PLC
Annual report and accounts 2014

Directors’ remuneration policy

Director’s remuneration policy
The Director’s remuneration policy is set out as follows. Shareholders
will be asked to approve the policy at the 2014 Annual General
Meeting (resolution 3 contained in the Notice of Meeting). This policy
will take effect from the date it is approved and is expected to apply
for three years.

Engagement with shareholders
Understanding the expected outcomes of our constituents is central
to our business model. We have engaged with shareholders, (both
existing and prospective) to understand their expected outcomes with
regards to our Remuneration Policy. Our two major shareholders
PSG and Pacific Investments are represented on the Board and were
directly involved in developing the remuneration policy for the
Executive Directors and the combined Group. Our engagement with
prospective shareholders occurred as part of the listing process. In
the Listing Prospectus we made clear statements regarding
Executive Remuneration, the expected outcomes and in particular
the structure of the EPSP which was established and granted at the
admission date. The Remuneration Policy was discussed with
prospective shareholders in terms of the alignment of their actual
outcomes to the relevant components of remuneration, including
base salaries, cash discretionary bonuses and grants under the
EPSP and PSP. The EPSP was discussed with prospective
shareholders in terms of:

• the expected outcomes which would give rise to a dilution in their

shareholding;

• the alignment of interests between the Executive Directors and
shareholders in terms of absolute returns to shareholders; and

• the nature of the incentive it provides in the operation of the

sustainability of the business through outcome orientated Client
engagement.

Governance

A key consideration of our shareholders was that the return outcome to
the shareholders has to be achieved before any shares are vested
under the EPSP for the Executive Directors. The consultation with
shareholders included the level at which these vesting levels were set.

Remuneration policy for Executive Directors
Summary
The remuneration arrangements for Executive Directors are similar
to those applying to all employees. Executive Directors earn base
salaries and are entitled to benefits and pension contributions which
are set relative to market bench mark levels.

On an annual basis the Board will set performance objectives for the
Executive Directors for the forthcoming year. These outcomes are
based on performance objectives of the Executive Directors as a
leadership group, their individual performance objectives and the
Group’s overall growth and financial objectives. At the end of the year
the Committee will evaluate the Executive Directors against their
individual and collective objectives and determine whether satisfactory
progress has been achieved against the desired outcomes. The
Group’s business model is based on Client engagement and the
evaluation process by the Committee will include direct feedback from
Clients, employees, shareholders and our other constituents.

Executive Directors are eligible to receive up to 200% of their base
salary as a discretionary cash bonus based on the progress achieved
against these desired outcomes.

The Board and the Executive Management team have the responsibility
to set and communicate the cultural tone of the organisation. Our
culture is based on an engagement process to understand and deliver
against the outcomes expected by our constituents. The engagement
process is critical to the sustainability of the business. While not set as
a specific percentage a significant part of the annual cash bonus is
linked to the Board evaluation of how the Executive team has delivered
the outcome orientated culture of the Group.

The Board may also grant awards to Executive Directors under the
PSP. These awards are linked to specific strategic objectives,
generally outside the ordinary operation of the business. The
performance targets are set in relation to attaining certain desired
outcomes linked directly to creating or maintaining a sustainable
business. Generally, the amount of potential remuneration is linked
directly to the incremental value generated for shareholders and can
be up to four times salary for any individual for any year. PSP awards
generally have a two-year performance period and a further
one-year holding period. Vesting of the PSP awards is determined by
the Committee and vested awards may be subject to further hold
periods or malice provisions. All performance shares issued under
the PSP are not intended to be dilutive on shareholders.

Remuneration policy illustration
The chart below shows the relative split of fixed elements of remuneration, annual cash bonus award and PSP in line with the current policy.
The chart was calculated based upon the contractual agreements with Directors.

Mike Faulkner

£306,800

£1,227,200

Jack Berry

£280,800

£1,123,200

James Barham

£250,000

£1,000,000

Kevin Hayes

£250,000

£1,000,000

£0

£500,000

£1,000,000

£1,500,000

£2,000,000

■ Base Salary
■ Discretionary cash bonus (<1yr) Desired performance
■ Discretionary cash bonus (<1yr) Above expectation
■ Performance share plan (>1yr) Defined performance criteria

Taxable
Benefits Minimum

Maximum

£1,688

£308,488

£2,149,288

£1,920

£282,720

£1,967,520

£5,972

£255,972

£1,755,972

£1,920

£251,920

£1,751,920

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Directors’ remuneration policy continued

Remuneration policy for Executive Directors
The table below sets out the key elements of the remuneration policy for Executive Directors.

Component

Taxable benefits:
To enable the Executive Directors to undertake their role by ensuring
their wellbeing and security.

Base salary:
To reflect the Executive Directors’ responsibilities and level of expertise
and experience.

Executive Directors receive benefits on the same basis as other
employees. Benefits available include private healthcare; life
assurance; accidental death and income protection insurances.
Additional benefits may be provided if required, for example to
support international relocation.

Base salary is paid monthly in cash via payroll. Base salaries
are targeted at the medium level compared to other asset
management businesses and other listed financial services firms
in the FTSE 250. There is no prescribed maximum base salary.
Executive Directors’ base salaries are reviewed annually but
adjusted infrequently. Base salaries were last reviewed on 1 July
2014.

Annual cash bonus awards:
To reward the achievement of business priorities and desired outcomes
for the financial year.

Executive Directors are eligible to receive an annual cash bonus
award up to 200% of base salary. Awards in respect of each
financial year are discretionary and non-pensionable.

Performance Share Plan:
To incentivise medium-term performance and focus on strategic
priorities that deliver against measurable outcomes.

Executive Directors can be awarded grants under the PSP
(described on page 63) which vest on achieving measurable
outcomes associated with specific strategic objectives.

Pension:
To enable provision for personal and dependant retirement benefits.

Vesting of the PSP awards is determined by the Committee
and vested awards may be subject to further hold periods or
malice provisions. Grants under the PSP are in addition to the
outstanding grant under the EPSP. PSP awards can be up to
four times salary for any year and generally will have a two-
year performance period and a further one-year hold period.
Performance shares issued under the PSP are not intended to
be dilutive to shareholders. Awards made under the PSP may be
reduced or lapsed in the event of individual misconduct.

Executive Directors may participate in the UK defined contribution
pension arrangements on the same basis as other employees.
The Group’s contributions are currently 10%.

The normal retirement dates of the Directors are as follows:
Mike Faulkner: 2035; Jack Berry: 2034; James Barham: 2028;
and Kevin Hayes: 2025. There are no additional benefits on early
retirement.

River and Mercantile Group PLC
Annual report and accounts 2014

Directors’ remuneration policy continued

The Committee aims to pay Executive Directors’ remuneration that is
appropriate in level and structure to attract, motivate, retain and
reward Directors of the quality required to run the Group
successfully. On recruitment, the level of fixed remuneration is likely
to be set at the same level as applies to other Directors, based on
capability, skills and experience, and taking into account
remuneration in their most recent role, internal relativities and
external market rates for roles with similar responsibilities. Benefits
and pension entitlements will be provided on a similar basis as those
available to other employees.

New Executive Directors would be eligible to be considered for
annual bonus and PSP awards in the same way as existing Directors.
The Group would not normally award guaranteed annual bonuses. If,
by exception, the Committee believes this is necessary, it would be
limited to the first 12 months of service and would not exceed the
level of bonus the Committee considers commensurate with a full
year’s satisfactory performance in the role.

Where a candidate will forfeit remuneration as a result of leaving
their current employer, the Group may mitigate that loss by making
one-off awards as part of the recruitment arrangements. The
Committee will take reasonable steps to ensure that any such
awards are no more generous in either amount or terms than the
remuneration being forfeited. Any deferred remuneration awards will
be subject to appropriate performance adjustment requirements.

Directors’ service contracts, letters of appointment and
termination arrangements
Description of Executive Directors’ Service Agreements
Each of the Executive Directors is employed pursuant to a service
agreement with the Company. The Committee’s general policy is that
each Executive Director will have a rolling contract of employment
with mutual notice periods of 12 months. The Committee will
consider the appropriate notice period on appointing any new
Executive Director. If necessary to secure a new hire, a notice period
of up to 24 months may be offered, in which case this would reduce to
12 months or less after an initial period. When recruiting new
Executive Directors, the Committee’s policy is that contracts will not
contain any provision for compensation upon early termination,
unless this is necessary in exceptional circumstances.

When an Executive Director leaves the Group, the Committee will
review the circumstances and apply the treatment that it believes is
appropriate. Any payments will be determined in accordance with the
terms of the service contract between the Group and the employee,
as well as the rules of any deferred remuneration plans.

Salary and benefits will continue to be paid through the notice period.
In certain circumstances, the Committee also has the discretion to
make a payment in lieu of notice, normally based on salary only.
Departing Executive Directors do not have a contractual entitlement
to be awarded variable compensation. If a departing Director works
during the notice period to achieve the Group’s goals and supports an
effective transition of responsibilities, the Committee may
recommend to the Board that a discretionary payment be made to
reflect his or her contribution during the proportion of the financial
year worked.

Non-Executive Directors

Chairman

Paul Bradshaw
Angela Crawford-Ingle Chairman of Audit and Risk
Mark Johnson
Robin Minter-Kemp
Jonathan Punter
Angus Samuels
Peter Warry

Chairman of Remuneration

Senior Independent Director

Governance

The treatment of awards under the EPSP and the PSP and other
share plans will be in line with the relevant plan rules. In certain
circumstances, those rules permit participants to retain some or all
of their awards following the termination of their employment or if the
employee is leaving due to ill health or injury, or in other
circumstances at the discretion of the Committee, taking into account
the individual’s performance and the reason for leaving.

The Company may pay reasonable fees for independent legal advice
in relation to a Director’s termination arrangements and nominal
consideration for agreement to any contractual terms protecting the
Company’s rights following termination. Provided each of these does
not exceed £10,000 they will not be included in the itemised
disclosure in the Annual Report on remuneration. The Committee
may agree additional exit payments where such payments are made
in good faith to discharge an existing legal obligation, or as damages
for breach of such an obligation, or in settlement or compromise of
any claim arising on the termination of a Director’s office or
employment.

Remuneration for Non-Executive Directors
Fees for the Board Chairman and other Non-Executive Directors
were determined by the Board based on market information for
comparable asset managers and other financial services groups and
the constituent companies of the FTSE 250 Index. Non-Executive
Directors do not participate in decisions concerning their fees.

Fees will be reviewed annually. The total fees paid to the Non-
Executive Directors currently cannot exceed £302,500, as stated in
the Group Articles of Association.

Description of Non-Executive Directors’ Letters of Appointment
The Company has appointed an independent Non-Executive
Chairman, Paul Bradshaw, and six other Non-Executive Directors.
Jonathan Punter, Angus Samuels and Mark Johnson are Non-
Independent Non-Executive Directors and Angela Crawford-Ingle,
Robin Minter-Kemp and Peter Warry are Independent Non-Executive
Directors.

The Non-Executive Directors of the Company do not have service
agreements. They are each appointed by a letter of appointment
reflecting their responsibilities and commitments. Under the
Articles, all Directors must retire by rotation and seek re-election by
shareholders every three years; however, it is intended that the
Directors shall each retire and submit themselves for re-election by
shareholders annually.

Each Non-Executive Director will be entitled to an annual fee, details
of which are set out in the table below. The Independent Non-
Executive Directors will be entitled to additional fees in exceptional
circumstances if determined appropriate by the Chairman in
consultation with the CEO. The Independent Non-Executive Directors
have reciprocal three month notice of termination clauses but there
are no contractual provisions for Non-Executive Directors to receive
compensation upon termination.

Annual Fee £

70,000
40,000
32,500
32,500
32,500
32,500
42,500

Governance

Directors’ remuneration policy continued

River and Mercantile Group PLC
Annual report and accounts 2014

In addition, each Non-Executive Director will be entitled to be reimbursed for all reasonable expenses incurred by him or her in the course of
their duties to the Company. Although no maximum is imposed, expenses must be reasonable and appropriate.

The Group does not pay retirement or post-employment benefits to Non-Executive Directors and they do not participate in any of the Group’s
incentive arrangements.

Letters of appointment and service contracts are available for shareholders to view at the Company’s registered office on business days
between the hours of 9am and 5pm and will be available at the Annual General Meeting.

The following table provides detail of service contracts and the letters of appointment for Directors who served during 2014:

Title

Appointment date

Resignation date

Global Head of Sales
Global Head of Solutions
Chief Financial Officer
Chief Investment Officer
Chief Executive

Executive Directors
James Barham
Jack Berry
Kevin Hayes
Glyn Jones
Mike Faulkner

Non-Executive Directors
Paul Bradshaw
Angela Crawford-Ingle
Mark Johnson
Robin Minter-Kemp
Jonathan Punter
Angus Samuels
Peter Warry
Kenneth McKelvey

All Directors are standing for re-election at the next AGM.

27 March 2014

15 April 2014

27 March 2014
29 May 2014
27 March 2014
12 May 2014

1 June 2014

27 March 2014

Effective date of
current service
agreement

6 April 2014
27 March 2014
27 March 2014

27 March 2014

27 March 2014
29 May 2014
26 June 2014
12 May 2014
26 June 2014
26 June 2014
1 June 2014

Notice period

Initial term

12 months
12 months
12 months
–
12 months

Rolling
Rolling
Rolling

Rolling

3 months
3 months

3 years
3 years
N/A 12 months
3 months
3 years
3 months 12 months
3 years
3 years

N/A
3 months

River and Mercantile Group PLC
Annual report and accounts 2014

Annual report on remuneration

This section summarises the remuneration awarded to Executive
and Non-Executive Directors for services during the period ended
30 June 2014 and compares this to remuneration awarded for the
prior year. It begins by setting out the context for the remuneration
including some of the key performance metrics that the Committee
considered when setting the variable compensation pool and
determining Executive Directors’ cash bonus awards. Where
required, this information has been audited.

Business highlights
• Successfully negotiated and completed of the merger of River and

Mercantile Asset Management LLP.

• Successfully completed the IPO, including positive engagement

with prospective shareholders.

• Maintained a consistent level of Client engagement throughout the
corporate activity resulting in continued growth in mandates and
AUM.

• Integration of the senior management teams across the combined
organisation to leverage the combined infrastructure and talent.

• Positively reinforced the Groups strategy and culture during a

period of change and disruption in the organisation.

• Mitigated risks successfully during a period of change, both

through positive Client engagement and management of the staff.

Financial highlights
• Aggregated Mandated AUM/NUM was £18.1 billion at 30 June

2014, (including AUM of £2.5 billion from RAMAM) an increase of
29% over 31 December 2013.

• Statutory net profit after tax before discontinued operations was a
loss of £1.2 million, after charging £4.6 million of expenses arising
from the IPO in June 2014 (CY 2013: £6.0 million).

• Adjusted net profit after taxes was £4.3 million for the six months

ended 30 June 2014, compared to £6.0 million for CY 2013.

• Adjusted pre-tax margin was 28% (2013: 26%).
• Statutory earnings per share, before discontinued operations was
a loss of 2.22 pence per share for the six months ended 30 June
2014 compared to a profit of 17.01 pence per share for CY 2013.
• Adjusted diluted EPS was 7.39 pence per share for the six months

end June 2014, compared with 17.05 pence for CY 2013.

Overall compensation cost across the Group
An expected outcome of our shareholders is that we maintain a
sustainable competitive advantage though our people. Part of this
advantage is sustained through our remuneration structure. Our
remuneration process is therefore a balance between delivering the
expected outcomes for both our employees and our shareholders.
These outcomes are not mutually exclusive. In the medium term a
sustainable business generates enhanced returns for both the
employees and the shareholders. The remuneration process
considers the reward for the employee in terms of their environment
and opportunity (through challenging work and advancement
potential), as well as financial reward. While this remuneration report
focuses on the amount spent on remuneration we view this as only
one element of the outcomes expected by employees.

The Board received a report from the Chief Executive on the progress
of the business through the period which included the acquisition of
RAMAM and the IPO of the Group. Both events put an additional work
load on the organisation, in particular senior management. The
business highlights indicate continued growth in the underlying
business and despite the corporate activities during the period the
key business metrics: growth in AUM/NUM, growth in net
management and advisory fees, and the growth in adjusted pre-tax
margin indicated strong progress.

The Audit and Risk Committee has reviewed the risk and compliance
framework of the Group during the period, including treating
customers fairly, addressing conflicts of interest appropriately and
other compliance requirements. There were no significant Client
disputes or complaints during the period or outstanding, nor notice
of any pending litigation. There were no significant operational
incidences or regulatory compliance matters during the period.
The capital and regulatory position of the Group remains strong.

Governance

There has been active engagement with employees through the
changes that have occurred during the period and morale and the
culture of the Group has remained strong.

Overall the business continues to be well positioned for continued
growth and profitability.

As part of the period end employee appraisal process employees
have received feedback based on their individual performance
measured against their expected performance outcomes.
Performance is measured in terms of both quantitative and
qualitative metrics. The review, feedback and development planning
processes are important elements in determining advancement and
ultimately remuneration for the employees. The remuneration
proposals from managers have been reviewed by Human Resources
and the Chief Executive for alignment to performance, comparability
and fairness across the Group. Employees who have not performed
within expectations have been suitably counselled. For the senior
individuals in the Group the Committee has reviewed the basis for the
remuneration proposals and challenged the underlying performance
and the absolute and relative remuneration proposals. Senior
executives below Board level receive the same components of
remuneration as Executive Directors, including: base salary, taxable
benefits and cash bonuses. Senior executives are eligible for
performance share awards under the PSP.

The Committee has reviewed the overall remuneration proposal
from the Chief Executive against the financial performance of the
business. The total remuneration has been set at £10.8 million,
comprising £7.3 million of fixed base salaries and partner draws and
£3.5 million of variable compensation. The remuneration proposals
represent cash compensation and it is not proposed to grant awards
under the PSP for the period ended 30 June 2014.

The total remuneration to revenue ratio is one measure the
Committee has used to size the total remuneration paid. The Board
has stated guidance to the market that the remuneration to revenue
ratio is targeted to be between 45–50% within the next three years.
The Committee has therefore considered the progress towards this
guidance in setting the overall remuneration.

The Committee was satisfied that the process was rigorous and that
individual and divisional performance has been suitably differentiated
and rewarded. The allocation of the remuneration has considered
relevant financial and non-financial performance. In aggregate terms
the Committee is satisfied that the level of remuneration represents
an appropriate level to support the sustainability of the business and
maintain the Group’s competitive advantage. The Committee has
recommended the total remuneration, together with the proposals
for the Executive Management, to the Board.

Executive Directors’ remuneration
Executive Performance Share Plan
The Group adopted the Executive Performance Share Plan on 2 June
2014. The EPSP has been approved by the Remuneration Committee
and was unanimously approved by all the Directors of the Board. The
terms of the EPSP are explained on page 62.

The Directors consider that the performance conditions represent a
significant challenge for executive and senior management to attain,
and that these conditions can only be achieved through the
successful, long-term execution of the growth strategy of the Group.
The successful implementation of this growth strategy is measured
on an absolute basis by the returns experienced by shareholders
measured by both the increase in the value of their shareholdings in
the Company and the cash returned to them in the form of dividends
and other distributions, including share buybacks. The Board
considers the hurdle at which vesting starts to be the minimum
expected outcome for shareholders of the Group. Below this hurdle,
no performance shares vest. Above this hurdle the Executives start
to share, with the shareholders, in the excess returns generated.

Governance

Above the higher hurdle the excess returns go to the shareholders,
including the Executive Directors as shareholders in the vested
Performance shares. The Board considers that the performance
criteria therefore directly align the reward for performance of the
Executives with the investment performance directly experienced by
shareholders. A total of 903,048 Performance A shares have not
been allocated. The Directors do not intend any additional grants to
be awarded to the existing Executive Directors under the EPSP and
these shares are reserved for future potential allocation to new
Executive Directors or senior management.

In determining the allocation of the EPSP between the Executive
Directors the Committee considered:

• the relative seniority between the Executive Directors and their

experience;

• their individual ability to influence the execution of the Board’s

growth strategy;

• the drivers for the growth required to achieve the expected
outcomes and their relative ability to influence that growth;
• their responsibilities to maintain control and scalability of the

organisation to enhance returns to shareholders;

• their influence over and ability to maintain the governance

structure of the Group; and

• their ability to manage and mitigate risk and the effective

deployment of capital and resources.

The Committee decided that all the Executive Directors should be
allocated Performance A shares as the successful delivery of the
Board’s strategy would involve a significant contribution both
individually and as a collective team.

The Committee awarded the Performance B shares, which have a
higher return hurdle, to Mike Faulkner and James Barham as they
have the strongest ability to influence the expected outcomes through
growth in management fees.

Executive Performance Share Plan

No.
Performance A shares

Mike Faulkner
Jack Berry
James Barham
Kevin Hayes

Performance B shares

Mike Faulkner
James Barham

Total EPSP Shares

6 months ended 30 June 2014

Opening
shares

Grant

Closing
shares

820,954

–
820,954
– 1,395,621 1,395,621
– 1,231,430 1,231,430
– 1,395,621 1,395,621

– 4,843,626 4,843,626

6 months ended 30 June 2014

Opening
shares

Grant

Closing
shares

– 1,231,430 1,231,430
– 1,231,430 1,231,430

– 2,462,860 2,462,860

– 7,306,486 7,306,486

River and Mercantile Group PLC
Annual report and accounts 2014

Valued at
Grant Date
Fair Value

Valued at
Grant date
share price

£ 0.38

£1.83

311,962 1,502,345
530,335 2,553,986
467,943 2,253,516
530,335 2,553,986

1,840,575 8,863,833

£0.17

£1.83
209,343 2,253,516
209,343 2,253,516

418,686 4,507,032

Executive Performance Share Plan

Fair value/Grant date share price
Performance A shares – No.
Mike Faulkner
Jack Berry
James Barham
Kevin Hayes

Performance B shares – No.
Fair value/Grant date share price
Mike Faulkner
James Barham

The fair values of the performance shares at grant date were
calculated by Ernst & Young LLP.

Remuneration for the six months ended 30 June 2014
In determining the level of remuneration for the Executive Directors
the Committee considered the financial performance during the
period and the successful completion of the merger with RAMAM
and the IPO. James Barham joined the Group on the completion of
the merger with RAMAM. Kevin Hayes joined the Group on 27 March
2014. James and Kevin’s compensation has been based on the three
month period ended 30 June 2014. James Barham’s remuneration
has been set based on his leadership role in successfully delivering
the RAMAM franchise through the completion of the merger and
through the combination of the two businesses. At the same time he
has made progress on distribution initiatives of the combined
organisation. Kevin Hayes remuneration was set at 200% of paid base
salary for the three months ended 30 June 2014, primarily based on
his contribution to the successful execution of the IPO and the
preparation of the Group as a public company.

With regards to Mike Faulkner and Jack Berry, the Committee
considered their performance for the six months ended 30 June 2014.
During the period the business has continued to perform well and all
financial metrics, adjusted for the expenses arising from the IPO,
have shown a continued growth trend. Client satisfaction, as
measured by low attrition rates during the period have continued to
be strong and has resulted in continued positive net flows.
Management fee margins have remained stable during the period.
Both Mike and Jack have demonstrated strong leadership during a
period of significant change. The morale of the organisation is high
and employees have seen advancement in their careers and have
been suitably rewarded. The business overall continues to be well
positioned for sustainable growth.

The Committee recognises that significant progress has been
achieved in the six month period in delivering the strategy of the
Board, in particular the completion of the merger and the IPO.
The remuneration awarded to the Executive Directors has had to
be matched to the available financial results in the shortened
reporting period.

Glyn Jones who is the Group’s Chief Investment Officer was previous
a Board member of P-Solve Limited (subsequently renamed River
and Mercantile Group PLC) and resigned from the Board on 27 March
2014. Glyn continues as an employee of P-Solve Investments Limited.
Base salary and benefits were paid to Glyn in his capacity as an
Executive Director up to the date of his resignation from the Board.

Audited parts of the report are signified by a box with a solid black line.

River and Mercantile Group PLC
Annual report and accounts 2014

Annual report on remuneration continued

Governance

The table below shows the remuneration of Executive Directors for the six months ended 30 June 2014.

Executive Directors
Mike Faulkner
Jack Berry
James Barham
Kevin Hayes
Glyn Jones1

6 months ended 30 June 2014

Base
salary

Taxable
benefits

Annual
bonus

Pension
contribution

Total

153,400
140,400
43,750
65,476
59,800

844
960
1,493
480
192

100,000
100,000
60,829
125,000
–

–
14,040
875
6,250
4,186

254,244
255,400
106,947
197,206
64,178

1. Glyn Jones resigned from the Board on 27 March 2014. Glyn continues as an employee of P-Solve Investments Limited. Base salary and benefits were paid to Glyn in his capacity as an

Executive Director up to the date of his resignation from the Board.

The following table shows the remuneration paid for the year ended 31 December 2013:

Executive Directors
Mike Faulkner
Jack Berry
Glyn Jones

Year ended 31 December 2013

Base
salary

Taxable
benefits

Annual
bonus

Performance
shares award

Pension
contribution

Total

306,800
280,800
239,200

1,497
1,920
768

581,013
370,000
630,466

–
–
–

–
28,080
16,744

889,310
680,800
887,178

Review of Executive Director base salaries
The Committee has reviewed the base salaries of the Executive Directors against comparable market information. The Committee has
recommended and the Board has approved that James Barham’s salary be increased from £175,000 to £250,000 with effect from 1 July 2014.
This increase reflects his change in responsibilities as Global Head of Distribution for the Group and his change of status from being a Limited
Partner in RAMAM to an employee of the Group. No other changes were proposed with regards to the base salaries of Executive Directors.

Performance share grants
Prior to Admission as a public company the Group operated an equity-settled, share-based remuneration plan in which participation was at
the discretion of the Directors. The shares issued under this remuneration scheme had performance conditions dependent on the growth of
the Company and its subsidiaries adjusted enterprise value over a two to three year period. Under this scheme each performance share could
be exchanged for shares in Punter Southall Group Limited under certain performance conditions. The number of shares was quantified
following an independent valuation of the Company and its subsidiaries. PSG had the option to acquire the performance shares, if an individual
ceased employment before the valuation date.

The fair value of the performance shares over and above the price paid for them by the employees was charged to the income statement. The
charge was spread over the period from their date of grant to the end of the vesting period.

During the year ended 31 December 2013, the Group issued a total of 3,000,000 ‘D’ class performance shares at 3.54 pence per share and
1,000,000 ‘E’ class performance shares at 3.63 pence per share. The fair value of each ‘D’ performance share issued during the year was
5.91 pence and the fair value of each ‘E’ performance share during the year was 6.13 pence.

During the year ended 31 December 2012, the Group issued a total of 1,507,229 ‘C’ class performance shares at 3.58 pence per share. The fair
value of each ‘C’ class performance share issued in 2012 was 5.77 pence.

The following table shows the performance shares outstanding at 1 January 2013 for each of the Executive Directors and the performance
shares issued during the year ended 31 December 2013. No performance shares vested or were forfeited during the year ended 31 December
2013.

Year ended 31 December 2013

Performance shares

Number of shares

Mike Faulkner
Jack Berry
Glyn Jones

Opening

Closing

Opening

Closing

Opening

Granted

Closing

Opening

Granted

Closing

183,611
183,611
183,611

–
289,347
619,595

–
–
–

827,738
827,737
378,388

–
–
–

773,312
226,688
–

550,833

908,942

– 2,033,863 2,033,863

– 1,000,000 1,000,000

In the six months ended 30 June 2014 all the outstanding performance shares were converted to shares in P-Solve Limited upon the
completion of the acquisition of RAMAM, which was considered a trigger event under the Performance Share Plan. At conversion date the
number of performance shares considered to vest in accordance with the original performance conditions was assessed by reference to the
valuation of the combined Group after the completion of the merger of RAMAM. The increase in value of the combined Group was compared
against the grant date value of the Group and the excess of value over a return threshold formed the basis of incremental value generated.
The incremental value was divided by the aggregate value of PSG to determine the number of shares in PSG Participants received. At the
option of PSG shares vesting in the six months period ended 30 June 2014 were converted into an equivalent value in the Group’s shares.

Governance

6 months ended 30 June 2014

Number of shares

Mike Faulkner
Jack Berry
Glyn Jones

6 months ended 30 June 2014

Number of shares

Mike Faulkner
Jack Berry

River and Mercantile Group PLC
Annual report and accounts 2014

Performance shares

Opening

Vested

Closing

Opening

Vested

Closing

Opening

Vested

Closing

183,611
183,611
183,611

550,833

–
–
–

–

–
289,347
619,595

–
–
–

827,738
827,737
378,388

908,942

– 2,033,863 2,033,863

Opening
shares

773,312
226,688

1,000,000

E Performance shares

Grant

Forfeiture

Vested

–
–

–

–
–

773,312
226,688

– 1,000,000

–
–
–

–

Closing
shares

–
–

–

Single figure remuneration
The single total remuneration figure has been determined as follows:

Base salary: represents the value of salary earned and paid during the periods presented.

Taxable benefits: represents the value of benefits received as outlined on page 37.

Annual bonus: represents the total value of cash bonus awarded for performance during the relevant period presented.

Performance share awards: represents the value of the performance share awards that vested in the period presented. Performance
shares vesting in 2013 were exchanged into shares in PSG. As the shares of PSG do not have an observable market value a valuation is
performed annually for PSG by an independent valuation agent. The value of performance share awards represents the number of shares
vested multiplied by the value of each share of PSG.

For the period ended 30 June 2014 the acquisition of RAMAM was a trigger event under the Performance Share Plan and the determination of
the number of shares vesting under the Plan was determined by reference to the valuation of the combined entity as at the date of the
acquisition of RAMAM, as described above. All outstanding performance shares converted into shares of the Group. The value of the vested
shares in the Group was based on the value per share of the combined Group at 27 March 2014. Performance B, C, D and E shares vested at a
price per share of £5.66, £6.14, £2.16 and £6.10, respectively.

Pension: represents the value of contributions to defined contribution pension arrangements and in the case of Jack Berry the amount
contributed to a self-directed pension plan.

The following table shows the total remuneration of each Executive Director for the six months ended 30 June 2013 and the total remuneration
for the previous year.

Single figure remuneration for the year ended 31 December 2013

Executive Directors
Mike Faulkner
Jack Berry
Glyn Jones

Single figure remuneration for the six months ended 30 June 2014

Executive Directors
Mike Faulkner
Jack Berry
James Barham
Kevin Hayes
Glyn Jones1

Year ended 31 December 2013

Base
salary

Taxable
benefits2

Annual
bonus

Performance
shares award

Pension
contribution

Total

306,800
280,800
239,200

1,497
1,920
768

581,013
370,000
630,466

–
–
–

–
28,080
16,744

889,310
680,800
887,178

6 months ended 30 June 2014

Base
salary

Taxable
benefits2

Annual
bonus

Performance
shares award

Pension
contribution

Total

153,400
140,400
43,750
65,476
59,800

844
960
1,493
480
192

100,000 7,547,016
100,000 5,987,258
–
60,829
–
125,000
– 5,660,688

– 7,801,260
14,040 6,242,658
106,947
875
6,250
197,206
4,186 5,724,866

1. Glyn Jones resigned from the Board on 27 March 2014. Glyn continues as an employee of P-Solve Investments Limited. Base salary and benefits were paid to Glyn in his capacity as an

Executive Director up to the date of his resignation from the Board.

2. See page 37 for types of taxable benefits.

River and Mercantile Group PLC
Annual report and accounts 2014

Annual report on remuneration continued

Governance

The CEO’s base salary has not increased since the prior year. Average base salaries have increased approximately 2% compared to the
prior year.

The CEO’s cash bonus (excluding the vesting of previously issued performance shares) has decreased from £581,000 for the year ended
31 December 2013 to £100,000 for the six months ended 30 June 2014, a decrease of 83%. The total variable compensation of the Group
has decreased from £4.88 million to £3.55 million during the same period, a decrease of 38%.

Total remuneration for the 6 months ended 30 June 2014 was £10.8 million. The total dividend proposed to shareholder is £1.9 million.
Total remuneration for the year ended 31 December 2013 was £17.3 million. The total dividend paid to shareholders was £20.4 million.

Non-Executive Directors remuneration
The table below shows the total remuneration of the Non-Executive Directors paid from their respective date of appointment to 30 June 2014.
In addition to their fees, a payment was made to the Independent Non-Executive Directors for work undertaken relating to the IPO. This fee
was an additional fee approved by the Chairman in consultation with the Chief Executive.

Non-Executive Directors

Paul Bradshaw
Angela Crawford-Ingle
Mark Johnson
Robin Minter-Kemp
Jonathan Punter
Angus Samuels
Peter Warry

6 months ended 30 June 2014

Fees

IPO fee

Total fees

5,833
3,636
451
4,555
451
451
3,542

–
5,000
–
5,000
–
–
5,000

5,833
8,636
451
9,555
451
451
8,542

Jonathan Punter and Angus Samuels were Directors prior to the date of admission and received no fees during the year ended 31 December
2013 or for the period prior to Admission. Jonathan Punter, Angus Samuels and Mark Johnson are shareholder representatives and their fees
are paid directly to the respective shareholding entity. Kenneth McKelvey resigned from the Board on 27 March 2014 and was not paid any fees
during the year ended 31 December 2013 or for the period prior to his resignation.

Non-Executive Director fee review
The Non-Executive Director’s fees were set prior to Admission based on fees for comparable listed companies and after consultation with the
major shareholders. The Board have agreed that the fees paid to Robin Minter-Kemp will be increased from £32,500 to £40,000 to reflect his
appointment as Chairman of the Remuneration Committee, which occurred subsequent to his joining the Board.

Personal shareholding policy
The Company does not have a specific policy with regards to minimum share holdings by Executive or Non-Executive Directors. The table
below shows the shareholding of the Executive and Non-Executive Directors as at 30 June 2014 and the date of this report:

Shareholding

Mike Faulkner
Jack Berry
James Barham
Kevin Hayes
Paul Bradshaw
Angela Crawford-Ingle
Mark Johnson
Robin Minter-Kemp
Jonathan Punter1
Angus Samuels2
Peter Warry

The Company was listed on 26 June 2014 at a
share price of 183 pence per share. At 30 June
2014 the share price was 209 pence. Due to
the short period for which the Company has
been listed, an historical share price charts is
not presented. In future years the charts will
be presented together with the FTSE All Share
as a comparative index.

30 June 2014

Number of
ordinary
shares

Percentage of
issued share
capital

3,706,823
2,211,206
1,095,843
54,645
13,661
13,661
783,298
13,661
–
–
13,661

4.50%
2.70%
1.30%
0.10%
0.00%
0.00%
1.00%
0.00%
0.00%
0.00%
0.00%

1. Jonathan Punter has 7.77% interest in PSG. PSG has a 38.1% interest in the Company following Admission.
2. Angus Samuels has a 1.97% interest in PSG. PSG has a 38.1% interest in the Company following Admission.

As at 19 September 2014, the shareholdings above were unchanged, aside from James Barham, whose interest increased as a result of a
purchase of 1,000 shares by a connected party.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Compliance and risk management in remuneration
The Chairman of the Committee also serves on the Audit and Risk
Committee.

The Group’s remuneration policies and practices take account of
applicable law and regulations, corporate governance standards,
best practice and guidance issued by regulators and by
representative shareholder bodies.

Accordingly, the Group’s EPSP provides that, at the discretion of the
Committee, deferred awards may be reduced or lapsed in the event
of a material misstatement of the Group’s financial results or
misconduct by an individual. As discussed on page 23, employees
have signed or are covered by the Share Dealing Code that restricts
the sale or hedging of their shares in the Company for a period of two
years from the date of Admission.

Implementation of remuneration policy for 2015
The Committee does not anticipate making changes to the way in
which the remuneration policy is implemented during 2015, with the
exception that consideration will be given for the granting of
performance share awards under the PSP in 2015 as outlined on
page 34. Executive Directors’ bonuses will be based on broadly the
same performance metrics as were considered for the six months
ended 30 June 2014.

Approved and signed on behalf of the Board:

Robin Minter-Kemp
Chairman of the Remuneration Committee
26 September 2014

River and Mercantile Group PLC
Annual report and accounts 2014

People

Governance

Our people, their development and advancement,
are critical to the success of our Client lead business.
Our business model is based on Client engagement.
The skills required by our people are a balance of
interpersonal and analytical – to listen, understand
and act.

As a business we are subject to competitive pressures and this
includes the competition for talent. In order to remain competitive
we have a talent management philosophy that is linked to attracting,
advancing and retaining talented people.

Our talent management philosophy is based on:

Principles
Our principles are the things that define what, and who, we are.

Integrity: We understand that any sense of us operating without
integrity will destroy our business; Clients don’t want to engage with
people they can’t trust.

Authenticity: One of the important things that already differentiates us
is our authenticity. Many of our new employees have commented on
how genuine they find our people. We encourage a sense that people
are straight and clear about what they believe.

Respect: We expect people to be candid with others, this must be done
with respect. Our people think about how they frame their views in a
way that is respectful to other team members.

Community
Internally, our people are helpful in supporting the good of the
organisation and, externally, we encourage people to do things that
have genuine benefit for others; we aim to make a difference through
the things we do, including charitable work and contributions.

Diversity
We value a work force that is diverse. Our recruitment and talent
management is based on merit and performance. Of the 187 Directors
and employees at period end: one of eleven Directors; five of 17 senior
managers; and 49 of 159 staff were females.

Values
Values describe the behaviours that the business considers to be
critical to success. Behaviour consistent with the values should
be rewarded.

Passionate
about Client
success

We expect our people to be passionate about Client
success. We care about our Clients. We gauge this
by whether Clients believe our commitment.

Creative
– involving,
challenging
and
convincing
others

Open,
candid and
constructive

Demanding
of our best

Commercial
in all that
we do

Creativity is critical to our Client proposition.
We aim to keep reinventing ourselves to achieve
our business objectives of growth and to avoid
becoming commoditised. This is best achieved by
bringing together diverse people to debate issues.
We therefore seek to hire and advance people who
are creative, who involve others to get higher quality
input and are comfortable challenging. In debate,
we do not recognise hierarchy, only the quality of
the argument.

We expect our people to be open with information
and their views. We expect people to be candid,
particularly in the management of others and want
all interaction to be constructive.

We aim to be stretching ourselves and each other,
to be the best we can. We are demanding of our
people and we are committed to helping them
achieve excellence.

We expect people to express constructively their
disappointment for anything that is mediocre, be it
Client work, performance or internal processes.

Commerciality means more than just profitability.
We aim to engage in Client relationships in a way
that works for both the Client and our business.
Ultimately, commerciality is about how we balance
risk and cost against potential reward.

Recruitment
Our policies instill in our hiring managers our commitment of
fair and equitable treatment of all employees and applicants in
the recruitment process.

Advancement
All employees have an equal opportunity for advancement, including
training and development.

Governance

Directors’ report

River and Mercantile Group PLC
Annual report and accounts 2014

The Directors present their Report, together with the audited
consolidated financial statements of River and Mercantile Group PLC
(the Company) and its subsidiaries (collectively, the Group) for the
period ended 30 June 2014.

The Company is incorporated in England and Wales under registered
number 04035248 and with its registered office at 11 Strand, London,
WC2N 5HR.

Directors
The current Directors are listed with their biographies in the
Governance section on pages 24 and 25. The names of those
Directors along with names of the persons who, at any time during
the financial year were Directors, and the date of their appointment to
the Board of Directors is set out below.

Director

Date of appointment

Date of resignation

James Barham
Jack Berry
Paul Bradshaw
Angela Crawford-Ingle
Mike Faulkner
Kevin Hayes
Mark Johnson
Robin Minter-Kemp
Jonathan Punter
Angus Samuels
Peter Warry
Glyn Jones
Kenneth McKelvey

27 March 2014
30 June 2009
27 March 2014
29 May 2014
30 June 2009
15 April 2014
27 March 2014
12 May 2014
30 June 2009
30 June 2009
01 June 2014
18 April 2011
27 March 2002

–
–
–
–
–
–
–
–
–
–
–
27 March 2014
27 March 2014

In accordance with the principles of the UK Corporate Governance
Code, each of the Directors will stand for re-election on an
annual basis.

Strategy Report
The Strategy Report disclosures are included on pages 1–18, 28–31
and 46 and have been approved by the Board.

Dividends
The Directors have proposed a final dividend of 2.3 pence per ordinary
share, of which 1.0 pence is a special dividend and relates to net
performance fees. Payment of this dividend is subject to approval by
shareholders at the Company’s 2014 Annual General Meeting (AGM)
and, if approved, will be paid on 7 November 2014 to shareholders on
the register at the close of business on 10 October 2014.

Employee Share Schemes
The Group has established a trust constituted as an employees’ share
scheme under section 1166 of the Companies Act 2006. Heritage
Corporate Trustees Limited, a Guernsey-based company, is the trustee
of the River and Mercantile Group Employee Benefit Trust.

Details of the employee share schemes operated by the Group can be
found in notes 22 and 23 of the financial statements and this
information is, accordingly, incorporated into this report by reference.

Capital structure and related matters
The capital structure of the Company is detailed on pages 72–75 of
this Report and this information is, accordingly, incorporated into this
report by reference.

On 26 June 2014, the Company’s entire issued ordinary share capital,
comprising 82,095,346 ordinary shares of £0.003 each, were admitted
to the premium listing segment of the Official List of the Financial
Conduct Authority and to trading on the London Stock Exchange plc’s
main market for listed securities under the ticker ‘RIV’.

The Company is subject to the UK City Code on Takeovers and
Mergers.

Each of the Company, the Directors and the shareholders of the
Company who sold ordinary shares as part of the IPO (other than
those who are no longer employed by the Group) has agreed to
certain lock-up arrangements.

Pursuant to an underwriting Agreement entered into on 23 June 2014
between the Company, the Directors, Punter Southall Group Limited
(PSG) and Pacific Investments Management Limited, its subsidiary
undertakings and its controlling shareholder, Sir John Beckwith
(‘Pacific Investments’ and, together with PSG, the Major Selling
Shareholders), and Canaccord Genuity Limited and Numis Securities
Limited (together the Joint Bookrunners), each of the Directors and
pre-IPO major shareholders agreed that, subject to certain exceptions,
during the period of 12 months (and in the case of each of the Executive
Directors only, 24 months) from the date of admission of the Company’s
shares to the premium listing segment of the Official List of the
Financial Conduct Authority and to trading on the London Stock
Exchange plc’s main market for listed securities (Admission), they
would not, without the prior written consent of the Joint Bookrunners,
offer, lend, mortgage, assign, charge, sell or contract to sell, or
otherwise dispose of (or publicly announce any such offer, loan,
mortgage, assignments, charge, sale or disposal) directly or indirectly,
any ordinary shares (or any interest therein or in respect thereof) or
enter into any transaction with the same economic effect as any of the
foregoing.

In addition, each of the selling shareholders (other than the Major
Selling Shareholders) employed or engaged by the Group agreed not
to dispose of any of the ordinary shares that they retained following
Admission for a period of 12 months from Admission (and in the case
of senior management only, 24 months) without the prior written
consent of the Company. The Company agreed not to provide such
consent without obtaining the prior written consent of the Joint
Bookrunners.

Each ordinary share in the capital of the Company ranks equally in all
respects. No shareholder holds shares carrying special rights relating
to the control of the Company. However, the Company has entered into
a relationship agreement with Punter Southall Group Limited in
connection with the exercise of their rights as major shareholders in
the Company and their right to appoint Directors to the Board. The
Company has also entered into an agreement with Pacific
Investments relating to the appointment of a Director. These
agreements are further detailed in the Corporate Governance Report
in the Relationship Agreement section on page 23.

Amendment to the Company’s Articles of Association
The Company’s Articles of Association may only be amended by a
special resolution of its shareholders passed at a general meeting of
its shareholders.

Power of Directors in respect of share capital
The Directors may exercise all the powers of the Company (including,
subject to obtaining the required authority from the shareholders in
general meeting, the power to authorise the issue of new shares and
the purchase of the Company’s shares). Since its shares were listed
on the London Stock Exchange on 26 June 2014, the Directors have
not exercised any of the powers to issue or purchase shares in the
Company.

Auditor
BDO LLP, the external auditor of the Company, has advised of its
willingness to continue in office and a resolution to reappoint them
will be proposed at the forthcoming AGM.

River and Mercantile Group PLC
Annual report and accounts 2014

Governance

Substantial shareholdings
As at 19 September 2014, the Company had received the notifications
of control of 3% or more over the Company’s total voting rights and
capital in issue as set out below:

Punter Southall Group Limited
Heritage Corporate Trustees

Limited

Sir John Beckwith
Vidacos Nominees Limited
Mike Faulkner
Beckwith Investment
Management Limited

Nortrust Nominees Limited
HSBC Global Custody Nominee

No. of
ordinary
shares

% of
total issued
share capital

31,302,321

38.13

10,390,547
5,252,163
3,932,522
3,706,823

3,130,990
3,100,151

12.66
6.4
4.8
4.5

3.81
3.78

Direct/
indirect

Direct

Direct
Direct
Direct
Indirect

Direct
Direct

(UK) Limited

2,732,241

3.33

Direct

As at 30 June 2014

Punter Southall Group Limited
Pacific Investments
Aviva Investors Global Services

Limited

Mike Faulkner
Legal & General Investment

No. of
ordinary
shares

% of
total issued
share capital

31,302,321
8,385,445

38.13
10.2

3,932,521
3,706,823

4.8
4.0

4.0

Direct/
indirect

Direct
Direct

Direct

Management Limited

3,360,656

Unicorn Asset Management

Limited

3,278,689

4.0

Indirect

Financial instruments
Details of the financial instruments used by the Group and the risks
associated with them are set out on pages 75–78 and this information
is, accordingly, incorporated into this report by reference.

Audit information
So far as the Directors are aware, there is no relevant audit
information of which the auditor is unaware. The Directors have taken
all reasonable steps to ascertain any relevant audit information and
ensure the auditor is aware of such information.

Change of control
The Company does not have agreements with any Director or employee
that would provide compensation for loss of office or employment
resulting from a change of control following a takeover bid.

Directors’ indemnities
The Company’s Articles of Association permit the provision of
indemnities to the Directors. In accordance with the Articles of
Association, qualifying third party indemnity provisions (as defined in
the Companies Act 2006) are in force for the benefit of Directors and
former Directors who held office during the year to 30 June 2014 and
up to the signing of the Annual Report. In addition, during the year the
Company has maintained liability insurance for Directors.

Approval of annual report
The Corporate Governance Report, the Strategic Report and the
Directors’ Report were approved by the Board on 26 September 2014.

The Directors consider that the annual report and accounts, taken
as a whole is fair, balanced and understandable, and provides the
information necessary to assess the Group’s performance, business
model and strategy.

Environmental Matters: Greenhouse gases
We have offices in the London and Boston, US. Our UK Client base
is predominantly in and around London and in the north of
England. Our US Client base is predominantly in Boston and New
York. We have 187 staff including Directors, 155 of whom live in
and around London and 32 who live in and around Boston.

Other than travel and our office accommodation we do not have a
significant direct impact on the environment, including
greenhouse gases water usage, and general refuse.

We estimate that 85% of our employees utilise public transport on
a daily basis to commute to work. Approximately 10% of our
employees cycle to work daily and we have facilities in our office to
encourage this activity, including a ‘bike to work’ scheme.

Our offices have video conference facilities which are used
extensively for Client meetings to reduce travel for us and our
Clients. We use standard technology systems so that documents
can be transmitted electronically.

Our travel reimbursement policy encourages staff to use public
transport, where available, when attending Client meetings.

We estimate that our direct incremental greenhouse gas emission
over the six month period ended 30 June 2014 resulting from
international and domestic air travel and the use of cars was 55
tonnes of CO2.

We are tenants in lease facilities in London and the US where we
estimate the greenhouse gas emissions primarily from heating
and cooling are 18 tonnes for the period.

We are conscious of our impact on the environment and have
recycling programmes for paper and plastics and encourage
conservation of water and other resources.

In selecting suppliers we consider their environmental policies as
a factor in selection. The largest suppliers in the period have been
professional service firms.

We estimated our greenhouse gas emissions based on our
number of staff and their work and travel patterns, and publicly
available carbon footprint data.

The total emissions for the period equate to 0.4 tonnes per employee.

In addition to current conservation efforts, we will introduce a
carbon offset programme in the forthcoming year.

Going concern
Details of the going concern basis of the financial statements can be
found in note 2 on page 58.

Annual General Meeting (AGM)
The AGM will be held at the Charing Cross Hotel, The Strand, London,
WC2N 5HX on 23 October 2014, starting at 10.30am. The Notice of
Meeting convening the AGM is contained in a separate circular to be
sent to shareholders. The Notice of Meeting also includes a
commentary on the business of the AGM.

By order of the Board

Paul Bradshaw
Chairman
26 September 2014

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

Website publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company’s website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company’s website is the responsibility of the Directors.
The Directors’ responsibility also extends to the ongoing integrity
of the financial statements contained therein.

Directors’ responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:

• The Group financial statements have been prepared in accordance
with IFRSs as adopted by the European Union and Article 4 of the
IAS Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group.

• The Annual Report includes a fair review of the development and
performance of the business and the financial position of the
Group and the Parent Company, together with a description of the
principal risks and uncertainties that they face.

Directors’ responsibilities

The Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable law and
regulations.

Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors are required to
prepare the Group financial statements and have elected to prepare
the Company financial statements in accordance with IFRSs as
adopted by the European Union. Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss for the Group and Company for
that period.

In preparing these financial statements, the Directors are required
to:

• select suitable accounting policies and then apply them

consistently;

• make judgements and accounting estimates that are reasonable

and prudent;

• state whether they have been prepared in accordance with IFRSs

as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and

• prepare a Director’s Report, Director’s Remuneration Report and

Strategic Report which comply with the requirements of the
Companies Act 2006.

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act 2006
and, as regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

River and Mercantile Group PLC
Annual report and accounts 2014

Governance

Independent Auditor’s report to the members
of River and Mercantile Group PLC

We have audited the financial statements of River and Mercantile
Group PLC for the period from 1 January 2014 to 30 June 2014 which
comprise the Group income statement, the Group statement of
comprehensive income, the Group and parent company statement
of financial position, the Group and parent company statements of
cash flows, the Group and parent company statements of changes in
equity and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted
by the European Union.

Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the
Group’s and the parent company’s affairs as at 30 June 2014 and
of the Group’s loss for the period then ended;

• the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly

prepared in accordance with IFRSs as adopted by the European
Union and as applied by the provisions of the Companies Act 2006;
and

• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.

Our assessment of risks of material misstatement
We identified the following risks that we believe have had the greatest
impact on our audit strategy and scope:
• Revenue recognition – the Group generates revenue from several
different distinct revenue streams, including management fees,
consulting fees and performance fees. Management fees are
accounted for on an accruals basis and payable quarterly.
Performance fees are recognised when they can be measured
reliably and only when it is probable that economic benefits
associated with the transaction will flow to the entity.
Performance fees are subject to a deferral mechanism whereby
annual performance fees are deferred and are realised if
performance continues above the benchmark in aggregate,
usually across three years. There is therefore a risk that revenue
may not be calculated in accordance with the agreements or may
be recognised in the wrong period.
_ We have assessed the level of management fees against the
movements in Assets Under Management/ Notional Under
Management (AUM/NUM). We have checked a sample of
management fee percentages back to contracts and verified
the quantity of period end AUM/NUM to external confirmations
and third party pricing sources. We have corroborated a
sample of management fees to both invoice and bank receipts.
_ We have obtained a sample of contracts and recalculated the
performance fee in relation to the outperformance of the
Investment and/or Matching Fund. We have checked that
where appropriate performance fees have been deferred in
accordance with the Client remuneration schedule and based
on the specific contractual terms only recognised when they
can be measured reliably and when it is probable that
economic benefits will flow to the entity, where they are subject
to future performance conditions. A sample of performance
fees have also been agreed to bank receipts and invoice.
_ We have performed analytical review over consulting fees in
comparison to the prior year and agreed a sample to invoice
and bank receipts.

• Costs associated with the initial public offering – IAS 32 and the
Companies Act 2006 requires that only those costs directly
attributable to new capital raised can be allocated against share
premium in shareholders Equity. The Group has incurred £4.9
million of costs in relation to the IPO of which only a portion can be
directly attributable to the new capital raised. The judgement of
what costs can be directly attributable results in a risk of

misstatement in the recognition of these expenses within the
income statement and statement of financial position. The
corporation tax and VAT treatment of such costs are also subject
to specific rules and there is a risk these have not been
appropriately applied in estimating the relevant tax provisions and
balances.
_ We have checked the detailed breakdown of transaction costs
and reviewed each invoice to ensure the apportionment of
costs to new capital of £360,000 are in accordance with IAS 32.
We have ensured that all remaining costs have been charged
to the income statement.

_ We have ensured that costs treated as tax deductible and
irrecoverable for VAT purposes are materially correct.

• Intangible assets and goodwill – included in the statement of
financial position is goodwill from the acquisition of River and
Mercantile Asset Management LLP (c£13 million) and intangibles
assets (c£36 million) acquired in relation to the Investment
Management Agreements. The initial calculation based on the fair
value of the consideration and identifiable assets and liabilities
acquired and also the ongoing impairment and amortisation
require certain judgements by management and therefore give
rise to a risk of misstatement.
_ We reviewed the impairment test undertaken by management
and assessed compliance with the requirements of IAS 36. We
also reviewed the assets under management at period end
compared with those on acquisition.

_ We challenged and assessed the reasonableness of the

assumptions and inputs in both the initial calculations and
impairment workings through discussions with management,
the use of valuations experts as part of the audit team,
recalculation of management workings using alternative
inputs where appropriate, comparison to industry
benchmarks, reviewing the historical accuracy of forecasting
and agreement of information and explanations obtained to
supporting documentation and historical information where
applicable.

_ The disclosures made in the financial statements were

reviewed for compliance with IAS 36.

_ In relation to intangibles, we have agreed that the appropriate

amortisation rate has been applied.

The Audit Committee’s consideration of these risks is set out on
page 26.

Purpose of this report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as
a body, for our audit work, for this report, or for the opinions we
have formed.

Respective responsibilities of Directors and auditor
As explained more fully in the statement of Directors’ responsibilities,
the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Financial Reporting Council’s (FRC’s) Ethical
Standards for Auditors.

Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the FRC’s website at www.frc.org.uk/
auditscopeukprivate.

Governance

River and Mercantile Group PLC
Annual report and accounts 2014

In particular, we are required to consider whether we have identified
any inconsistencies between our knowledge acquired during the audit
and the Directors’ statement that they consider the annual report is
fair, balanced and understandable and whether the annual report
appropriately discloses those matters that we communicated to the
Audit Committee which we consider should have been disclosed.

Under the Companies Act 2006 we are required to report to you if, in
our opinion:

• adequate accounting records have not been kept by the parent

company, or returns adequate for our audit have not been received
from branches not visited by us; or

• the financial statements and the part of the Directors’

remuneration report to be audited are not in agreement with the
accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law

are not made; or

• we have not received all the information and explanations we

require for our audit; or

• a Corporate Governance Statement has not been prepared by the

Company.

Under the Listing Rules we are required to review:
• the Directors’ statement, set out on page 48, in relation to going

concern; and

• the part of the corporate governance statement relating to the
Company’s compliance with the nine provisions of the UK
Corporate Governance Code specified for our review.

We have nothing to report in respect of these matters.

Neil Fung-On (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
26 September 2014

BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).

Our application of materiality
We apply the concept of materiality both in planning and performing
our audit, and in evaluating the effect of misstatements on our audit
and on the financial statements. We define planning materiality as the
magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken
on the basis of the financial statements. We also determine a level of
performance materiality which we use to determine the extent of
testing needed to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.

We determined planning materiality for the financial statements as a
whole to be £205,000. In determining this, we based our assessment
on a level of 1% of total turnover this is a revenue-focused group. On
the basis of our risk assessment, together with our assessment of the
Company’s control environment, our judgement is that performance
materiality for the financial statements should be 60% of materiality,
i.e. £125,000. Our objective in adopting this approach is to ensure that
total detected and undetected audit differences do not exceed our
materiality of £205,000 for the financial statements as a whole.

We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £20,000, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.

An overview of the scope of our Group audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group level.
Based on that assessment, we focused our Group audit scope
primarily on the audit work at three key operating locations two of
which were subject to full scope audit procedures. The operating
location in the US was subject to specified audit procedures on
certain balances. All of these procedures were undertaken by BDO
Member firms. Together with the Group Functions, which were also
subject to full scope audit procedures, these locations represented
the Company’s operating segment and 100% of the Group’s net
assets, revenue and profit before tax.

Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
• the part of the Directors’ remuneration report to be audited has
been properly prepared in accordance with the Companies Act
2006;

• the information given in the strategic report and the Directors’

report for the financial period for which the financial statements
are prepared is consistent with the financial statements; and
• the information given in the Corporate Governance Statement set
out on pages 19–23 of the annual report with respect to internal
control and risk management systems in relation to financial
reporting processes and about share capital structures is
consistent with the financial statements.

Matters on which we are required to report by exception
Under the ISAs (UK and Ireland), we are required to report to you if, in
our opinion, information in the annual report is:

• materially inconsistent with the information in the audited financial

statements; or

• apparently materially incorrect based on, or materially

inconsistent with, our knowledge of the Company acquired in the
course of performing our audit; or

• is otherwise misleading.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Introduction to the consolidated financial statements of
River and Mercantile Group PLC

On 27 March 2014, the acquisition of RAMAM was completed in
a share for LLP interest exchange by P-Solve Limited. The results of
operations of RAMAM have been consolidated as a 100% owned
entity from the date of acquisition. P-Solve Limited (P-Solve) changed
its name to River and Mercantile Group Limited (R&M) on 9 April 2014
and registered as a public limited company on 2 June 2014. On 26
June 2014 the Group was admitted to the London Stock Exchange as
a public listed company.

P-Solve and RAMAM’s accounting reference dates were 31 December
and 31 March, respectively. R&M changed its accounting reference
date to 30 June. Accordingly, the Group’s consolidated financial
statements include the results of operations for the six-month period
ending 30 June 2014 with the comparative period being the 12 months
ended 31 December 2013. RAMAM is consolidated for the three-
month period from the date of the acquisition to 30 June 2014.

The Financial review gives an explanation of the financial information
contained in the financial statements together with information
regarding AUM/NUM, revenue margins, non-statutory measures and
historical combined financial information which are helpful to the
reader to understand the performance of the business.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

Consolidated financial statements of River and Mercantile Group PLC

Consolidated income statement

Revenue:
Net management fees
Net advisory fees
Performance fees
Other income

Total revenue

Administrative expenses:
Marketing
Travel and entertainment
Office facilities
Technology and communications
Professional fees
Governance expenses
Fund administration
Other

Expenses associated with the IPO
Expenses associated with corporate reorganisation and integration

Impairment of goodwill
Gains on changes in fair value of the contingent consideration
Depreciation
Amortisation

Total expenses

Remuneration and benefits
Fixed remuneration and benefits
Variable remuneration
Total remuneration and benefits

(Loss)/profit before interest and tax
Finance income
Finance expense

(Loss)/profit before taxation

Tax charge
Current tax charge
Deferred tax (credit)/charge

Net (loss)/profit after tax, before discontinued operations
Discontinued operations, net of taxes

Net (loss)/profit for the period attributable to owners of the Parent

6 months
ended
30 June
2014
£’000

12 months
ended
31 December
2013
£’000

Notes

8
9
10
11

16
17

18
19

39
20
20
20

12,285
5,240
2,350
287

20,162

15,751
11,098
3,761
–

30,610

269
242
772
930
703
70
96
641

3,723
4,045
507

4,552
–
–
24
1,087

9,386

323
259
1,454
1,234
1,972
–
–
182

5,424
–
–

–
262
(261)
25
15

5,465

14, 21

7,292
3,547
10,839

12,385
4,882
17,267

25
25

(63)
2
(12)

(10)

(73)

1,337
(176)

(1,234)
–

(1,234)

7,878
40
(115)

(75)

7,803

1,760
21

6,022
1,161

7,183

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

Consolidated income statement continued

Earnings per share
Continuing operations:
Basic (pence)
Diluted (pence)
Discontinued operations:
Basic/diluted (pence)

Total earnings per share
Basic (pence)
Diluted (pence)

Adjusted earnings per share
Adjusted net profit before tax
Adjusted net profit after tax, before discontinued operations

Adjusted EPS:
Basic (pence)
Diluted (pence)

Consolidated statement of comprehensive income

(Loss)/profit for the period
Items that may be reclassified within profit or loss
Foreign currency translation adjustments

Total comprehensive (loss)/income for the period attributable to the owners of the Parent

Notes

6 months
ended
30 June
2014
£’000

12 months
ended
31 December
2013
£’000

(2.22)
(2.22)

17.01
17.01

–

3.28

(2.22)
(2.22)

20.29
20.29

5,566
4,299

7.74
7.39

7,818
6,037

17.05
17.05

6 months
ended
30 June
2014
£000

Year
ended
31 December
2013
£000

(1,234)
–
(13)

(1,247)

7,183
–
(18)

7,165

The Notes to the consolidated financial statements form part of and should be read in conjunction with these financial statements.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

Consolidated statement of financial position

ASSETS
Cash and cash equivalents
Investment management balances
Fee receivables
Asset held for sale – CAMRADATA
Corporation tax
Other assets (including other financial assets)
Fixed assets and leasehold improvements
Intangible assets

Total assets

LIABILITIES
Investment management balances
Corporation tax
Creditors
Borrowings
Held for sale – CAMRADATA
Deferred tax liability relating to intangibles

Total liabilities

NET ASSETS

EQUITY
Share capital
Share premium
Foreign exchange reserve
Merger reserve
Capital redemption reserve
Capital contribution
Retained earnings

30 June
2014
£’000

31 December
2013
£’000

1 January
2013
£’000

Notes

29
31
30
27
26
32
34
43

31
26
36
37
27
33

45
45
46
42
46
46
46

19,388
8,744
2,664
–
–
10,336
230
50,087

91,449

9,810
1,337
9,148
–
–
7,010

5,192
–
4,483
–
–
7,884
49
1,836

3,005
–
1,996
1,747
259
12,633
69
1,986

19,444

21,695

–
–
7,418
9,687
–
–

–
–
4,436
–
1,809
–

27,305

64,144

17,105

6,245

2,339

15,450

246
14,688
(92)
44,433
84
4,442
343

64,144

86
292
(79)
–
–
575
1,465

2,339

46
14,597
(61)
–
–
4,308
(3,440)

15,450

The Notes to the consolidated financial statements form part of and should be read in conjunction with these financial statements.

The financial statements were approved by the Board of Directors on 26 September 2014 and signed on its behalf by:

Mike Faulkner
Chief Executive

Kevin Hayes
Chief Finance Officer

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

Consolidated statement of cash flows

Cash flow from operating activities
(Loss)/profit before interest and tax
Adjustments for:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Impairment of goodwill
Share-based payment expense
Changes in the fair value of contingent consideration
Foreign exchange (losses)/gains on operating activities

Operating cash flow before movement in working capital
Decrease/(increase) in fee and other receivables
(Decrease)/increase in payables

Cash generated from operations
Taxation

Net cash generated from operations
Cash flow from investing activities
Interest received
Purchases of equipment and leasehold improvements
Business acquisitions, net of cash acquired
Contingent consideration paid on business acquisitions
Other investment
Loan repayments received from related parties
Disposal of discontinued operations

Net cash generated from investing activities
Cash flow from financing activities
Interest received/(paid)
Proceeds on issue of shares
Dividends paid
Drawdown of borrowings
Loan repayments paid to related parties

Net cash generated from/(used in) financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes

Cash and cash equivalents at end of period

6 months
ended
30 June
2014
£’000

Year ended
31 December
2013
£’000

(63)

7,878

Notes

1,087
24
–
112
–
(10)

1,150
16,934
(16,882)

1,202
–

19
25
262
25
(261)
101

8,049
(3,919)
3,352

7,482
(1,501)

1,202

5,981

–
(10)
4,019
(71)
234
–
–

41
–
(170)
(321)
–
6,372
1,100

4,172

7,022

2
14,640
–
–
(5,820)

(23)
142
(20,414)
10,520
(869)

8,822

(10,644)

14,196

2,359

5,192
–

19,388

3,005
(172)

5,192

The Notes to the consolidated financial statements form part of and should be read in conjunction with these financial statements.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

Consolidated statement of changes in shareholders’ equity

£’000

Balance at 1 January 2013
Comprehensive income for the year
Profit
Other comprehensive income
Contributions and distributions
Dividends
Share premium on performance shares
Share-based payment expense
Capital reduction
Capital contribution from Parent
Issue of performance shares

Balance at 31 December 2013

£’000

Balance at 31 December 2013
Comprehensive income for the period
Loss
Other comprehensive income
Contributions and distributions
Dividends
Ordinary shares issued in the year
Capitalisation of share premium
Share-based payment expense
Performance shares converted into deferred

Issue of shares in listing
Capital contribution from Parent
Shares purchased for cancellation
Underwriting commission

Balance at 30 June 2014

Share
premium

14,597

–
–

–
–
–
(14,407)
–
102

Share
capital

–
–

–
–
–
–
–
40

FX
reserve

Merger
reserve

Capital
redemption
reserve

Capital
contribution

Retained
earnings

Total
attributable to
equity holders
of Parent

(61)

–
(18)

–
–
–
–
–
–

–

–
–

–
–
–
–
–
–

–

–
–

–
–
–
–
–
–

–

4,308

(3,440)

15,450

–
–

–
–
–

(3,733)
–

7,183
–

7,183
(18)

(20,414)
–
25
14,407
3,704
–

(20,414)
–
25
–
(29)
142

575

1,465

2,339

292

(79)

Share
capital

Share
premium

FX
reserve

Merger
reserve

Capital
redemption
reserve

–
–

–
–
219
–

(84)
25
–
–
–

292

–
–

–
–
(219)
–

–
14,975
–
–
(360)

(79)

–
(13)

–
–
–
–

–
–
–
–
–

–

–
–

–
44,433
–
–

–
–
–
–
–

246

14,688

(92)

44,433

–

–
–

–
–
–
–

–
–
–
84
–

Capital
contribution

575

–
–

–
–
–
–

–
–
3,867
–
–

4,442

Total
attributable to
equity holders
of Parent

2,339

(1,234)
(13)

–
44,433
–
112

(84)
15,000
3,867
84
(360)

Retained
earnings

1,465

(1,234)
–

–
–
–
112

–
–
–
–
–

343

64,144

The Notes to the consolidated financial statements form part of and should be read in conjunction with these financial statements.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

Notes to the consolidated financial statements

1. Accounting standards
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards, International
Accounting Standards and interpretations, International Financial Reporting Interpretation Committee interpretations, and with those parts of
the 2006 Act applicable to groups reporting under IFRS as issued by the International Accounting Standards Board as adopted by the
European Union (IFRS) that are relevant to its operations and effective for accounting periods beginning on 1 January 2014.

IFRS was adopted effective for the period commencing 1 January 2013, the comparative consolidated statement of financial position as at
31 December 2013 has been prepared in accordance with IFRS.

The impact of new accounting standards and amendments applicable to the Group’s six month period ended 30 June 2014, that are not yet
effective is not expected to be material to the consolidated financial statements. New standards and interpretations are described in Note 50.

2. The business is considered as a going concern
The Directors have reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the
foreseeable future. In reaching this conclusion the Board have considered the following: budgeted and projected results of the business,
projected cash flow and regulatory capital requirements, and the risks that could impact on the Group’s liquidity and solvency over the next 12
months. Accordingly, the Group and Parent financial statements have been prepared on a going concern basis using the historical cost
convention, except for the measurement at fair value of certain financial instruments that are held at fair value through income.

3. Consolidated financial statements of the Group
The consolidated financial statements include the Company and entities controlled by the Group (its subsidiaries). River and Mercantile Asset
Management LLP (RAMAM) was acquired on 27 March 2014 and is consolidated from that date. Note 42 describes the acquisition accounting
for RAMAM. CAMRADATA was sold to Punter Southall Group Limited on 20 December 2013 and is shown as discontinued operations in the
consolidated financial statements for year ended 31 December 2013 and in the statement of financial position as at 31 December 2013 is
treated as held for sale. Note 27 contains details of the financial result and net assets for the years presented.

All transactions and balances between entities within the Group have been eliminated in the preparation of the consolidated financial
statements.

The Consolidated statement of financial position has been presented on the basis of the liquidity of the assets and liabilities presented.

4. R&M relationship with fund entities
The Group entities act as the investment managers to funds and segregated managed accounts, and the Authorised Corporate Director (ACD)
of River and Mercantile Funds ICVC (collectively; ‘Investment Management Entities’ (IMEs)). Considering all significant aspects of the Group’s
relationship with the IMEs, the Directors are of the opinion that although R&M manages the investment resources of the IMEs, the existence
of: termination provisions in the Investment Management Agreements which allow for the removal of the Group as the investment manager;
the influence exercised by investors in the control of their IME and the arm’s length nature of the Group’s contracts with the IME; and
independent Boards of Directors of the IME, R&M does not control the IME and therefore the assets, liabilities and net profit are not
consolidated into the Group’s financial statements.

5. Significant accounting policies
A description of the accounting policies used in the preparation of the consolidated financial statements is included in the relevant notes to the
financial statement items and are referenced from the relevant financial statements. The significant accounting policies are:

Accounting for business acquisitions, described in Note 38.

Impairment of intangible assets and goodwill recorded in previous acquisitions, described in Notes 38 to 40.

Recognition of management fee and performance fee revenues, described in Notes 8 to 11.

Disclosure of related party transactions with the significant shareholders of the Group, described in Note 48.

The accounting for performance share-based remuneration, described in Notes 22 and 23.

6. Foreign currencies
The majority of revenues, assets, liabilities and funding are denominated in UK Pound Sterling (GBP/£), and therefore the functional and
presentation currency of the Group is GBP.

Monetary items which are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was
determined. Non-monetary items which are measured in terms of historical cost in a foreign currency are not retranslated.

The functional currency of the US based business entities is US Dollars and is translated into the presentational currency as follows:

(i) assets and liabilities are translated at the closing rate at the date of the respective balance sheet;
(ii) income and expenses for each period presented are translated at the average exchange rate for that period presented; and
(iii) all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

7. Judgemental areas and accounting estimates
The Group is required to use judgements in making estimates and assumptions regarding the recorded values of assets and liabilities and the
recognition of income and expenses in the preparation of the consolidated financial statements. These estimates and assumptions could give
rise to the risk of a material adjustment.

The following areas are considered critical accounting estimates, assumptions and judgements, together with the reference to Notes in the
financial statements:

• The determination of the fair value of consideration exchanged in the acquisition of RAMAM (Note 42).
• Fair value of the Investment Management Agreements (IMAs) identifiable intangible asset in the acquisition accounting for RAMAM,

including the discount rate used and the period over which the IMA intangibles will be amortised (Note 42).

• Consideration of whether previously recorded goodwill is impaired, including the goodwill arising from the acquisition of RAMAM (Note 42).
• The revenue recognition of management and performance fees (Notes 8 and 10).

8. Net management fee revenue
Net management fee revenue represents the fees charged pursuant to an Investment Management Agreement (IMA) with Clients. Fees are
reported net of rebates paid to intermediaries and are charged as a percentage of the Client’s Assets under Management (AUM) or Notional
Amounts under Management (NUM). The fees are generally accrued on a daily basis and charged to the Client either monthly or quarterly.

9. Net advisory fees
Advisory revenues represent fees charged under Investment Advisory Agreements (IAA) and are typically charged on a fixed retainer fee basis
or through a fee for the delivery of a defined consulting or advisory project. Approximately one half of the revenue is from fixed retainers.
Advisory revenue is reported net of revenue share arrangements with other advisory partners. During the six months ended 30 June 2014,
£109,000 (2013: £195,000) was paid to a subsidiary of PSG and £49,000 (2013: £87,000) was paid to a third party, under revenue sharing
arrangements. Fees are accrued monthly and charged when the project has been completed.

10. Performance fees
Performance fees are fees paid under the IMAs for generating investment performance either on an absolute basis, subject to a high water
mark or relative to a benchmark. Performance fees are calculated as a percentage of the investment performance and may be subject to
deferral and continued performance in future periods. Performance fees are recognised in income when the quantum of the fee can be
estimated reliably and it is probable that the fee will be realised. The Client is invoiced for the performance fees at the end of the performance
period which is generally annually either on the anniversary of their IMA or on a calendar year basis.

11. Other income
Other income includes the gain on the sale of the equity investment in Manolete which was sold for £300,000 generating a net gain of £292,500.
Other income also includes the realised gains and fair value movement relating to the ACD balances (Note 12).

12. Fair value movement on investment
As the ACD of the River and Mercantile Funds ICVC, the Group is required to maintain a box position for each share class issued. The box
positions act as a float for investors and enables them to make or divest investments denominated as a cash amount, as opposed to a number
of shares. The fair value of the box position of each share class is determined by the underlying value of the respective fund as determined by
the third party Fund Administrator. These values are the values at which investors would subscribe or redeem their holdings in the funds, and
are not based on observable market data but on what IFRS 13 Fair Value Measurement refers to as Level 3 inputs. The gain or loss on the
value of the box positions is included in Other income in the Consolidated Income Statement.

6 months
ended
30 June
2014
£’000

Market value at 1 January 2014
Acquisition of RAMAM
Sales of fund units
Realised gains
Fair value movement in period

Market value at end of period

–
451
(227)
3
(8)

219

The market value of the investments is included in Other assets in Note 32. At 1 January and 31 December 2013 there were no investments
that were recorded at fair value.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

13. Segmental reporting
The business operates through four divisions. The net revenue for the six months ended 30 June 2014 and the year ended 31 December 2013
together with the period end assets under management (AUM) and the notional under management (NUM), reflect the measure of the
products’ activities of the respective divisions.

Fiduciary Management
Derivative Solutions
Equity Solutions
Advisory

Total net management and advisory fees

2014

2013

Net revenue
£’000

AUM/NUM
£ million

Net revenue
£’000

AUM/NUM
£ million

5,561
3,400
3,324
5,240

6,584
8,975
2,534
N/A

17,525

18,093

9,931
5,820
–
11,098

26,849

5,645
8,433
–
N/A

14,078

In addition performance fees of £2.35 million (2013: £3.76 million) were earned by the Fiduciary Management Division. No one Client accounts
for more than 10% of the revenue or profits of the Group.

Non-current assets held by the US business include £1.4 million (2013: £1.4 million) of goodwill arising from the acquisition of Cassidy and
Palisades (Notes 40 and 41) and property plant and equipment of £54,000 (2013: £48,000).

On a geographic basis the majority of the revenues are earned in the UK. The Group has an advisory and fiduciary management business in
the US and net revenue earned in the US for the six months ended 30 June 2014 was £2.4 million (2013: £4.2 million). The net AUM of the US
business is £575 million (2013: £434 million).

14. Staff costs

The average number of employees (including Directors) employed was:
Advisory Division
Fiduciary Management Division
Derivative Solutions Division
Equity Solutions Division
Corporate

Total average headcount

The aggregate remuneration of the above employees (including Directors) comprised:
Wages and salaries
Social security costs
Pension costs
Employee share-based payment charge (Note 22)

All pension cost relate to defined contribution schemes.

Wages and salaries includes fixed drawings, profit shares and variable remuneration.

6 months
ended
30 June
2014
No.

Year ended
31 December
2013
No.

52
53
14
12
30

49
47
14
–
29

161

139

6 months
ended
30 June
2014
£’000

Year ended
31 December
2013
£’000

9,672
815
240
112

10,839

15,296
1,532
414
25

17,267

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

15. Administrative expenses
The majority of Administrative expenses are generally fixed in nature and comprise our office facilities, IT and communications costs.
Included in Administrative expenses are the following allocated charges from PSG for administrative and support services:

Office facilities
Technology and communications
Professional fees:
Accounting services
Legal, compliance and regulatory
Human resources

Total

Administrative expenses also include the remunerations of the external auditors for the following services:

Statutory audit
Corporate finance
Audit related assurance services
Tax advisory services
Non-audit related assurance services

6 months
ended
30 June
2014
£000

Year
ended
31 December
2013
£000

516
342

132
233
87

1,172
739

326
313
167

1,310

2,717

6 months
ended
30 June
2014
£

88,750
751,549
11,500
11,900
20,000

883,699

Year ended
31 December
2013
£

34,911
–
40,000
11,754
–

86,665

16. Governance expenses
Governance expenses represent the remuneration of the Non-Executive Directors and the costs of advisors and legal fees relating to the
governance framework of being a public listed company.

17. Fund administration
Fund administration includes custodial and fund accounting costs that cannot be recovered from the funds or Clients. The Fund
administration cost can increase on new fund launches until the AUM is at a viable level to support the total expense charges.

18. Expenses associated with the initial public offering
On 26 June 2014 the Company was admitted to the main market of the London Stock Exchange. The costs to undertake the IPO includes fees
and expenses paid to lawyers, reporting accountants, brokers, consultants and advisors. These costs are not deductible for corporate tax
purposes. Included in these costs is £600,000 paid to a subsidiary of PSG for advisory services relating to the IPO. Only the costs directly
associated with the new capital raised in the IPO can be charged directly to share premium. An amount of £360,000, relating to underwriting
commission has been charged to the share premium account in the Statement of Changes in Shareholders Equity.

19. Expenses associated with reorganisation and integration
Prior to the acquisition of RAMAM and the IPO, a number of steps were taken to reorganise the capital structure of the Group pending the
completion of the acquisition of RAMAM, including establishing a Group structure for the two regulated entities. After the completion of the
acquisition of RAMAM, costs were incurred relating to the rebranding of the business under the River and Mercantile name and the merger of
technology infrastructure including the web sites. As a result of the completion of the IPO, costs were also incurred to establish separate
facilities arrangements, transition service agreements and a new Performance Share Plan, as a consequence of the separation from PSG.
The merger costs associated with undertaking the acquisition of RAMAM were paid directly by PSG and were not recharged to the Group.

20. Depreciation, changes in contingent consideration and Amortisation
Depreciation charges primarily relate to IT and communications equipment. The fixed assets and the depreciation accounting policy are
described in Note 34.

The change in the value of contingent consideration in 2013 and the impairment of goodwill relate to the acquisition of Meridian is described in
Note 39.

The amortisation charge relates to the Investment Management Agreements (IMAs) recorded in the acquisition of RAMAM and described in
Note 42. The RAMAM IMA intangibles are amortised over their expected useful life of between five to ten years based on an analysis of the
respective Client channels. The amortisation is not deductible for tax purposes. At the date of the acquisition a deferred tax liability was
recognised and is being charged to taxes in line with the amortisation of the related RAMAM IMAs (Notes 26 and 33).

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

21. Remuneration
The level of remuneration is variable with the level of revenues, in particular performance fee revenue.

Fixed remuneration represents contractual base salaries and partner drawings, which comprise the majority of the expense. The Group
operates a defined contribution plan under which the Group pays fixed contributions into a separate entity.

Variable remuneration relates to discretionary bonuses, profit share paid to the Partners of RAMAM and associated taxes.

Variable remuneration expenses include a charge of £16,000 (2013: £25,000) relating to the amortisation of previously issued performance
share awards. Included in 2014 is a charge of £96,000 relating to the vesting of the performance share awards upon the acquisition of
RAMAM, which was a trigger event under the Plan.

22. Share-based payments
The Group has historically operated a share-based remuneration scheme for employees, in which participation was at the discretion of the
Directors. Shares granted had performance conditions linked to the growth of the adjusted enterprise value of P-Solve and its subsidiaries
over a two to three year period. Each vested performance share was exchanged for shares in Punter Southall Group Limited. The growth of
the Company and its subsidiaries and the number of shares to be vested at the valuation date were determined by the Directors of PSG. PSG
had the option to acquire the performance shares, if an individual ceased employment before the valuation date.

During the year ended 31 December 2013, the Group issued a total of 3,000,000 ‘D’ class performance shares at 3.54 pence per share and
1,000,000 ‘E’ class performance shares at 3.63 pence per share. The fair value of each ‘D’ performance share issued during the year was 5.91
pence and of each ‘E’ performance share was 6.13 pence.

The fair value of shares granted under the share-based remuneration scheme is based on a Black-Scholes model using an expected volatility
of 20% and a risk fee rate of 1%. The fair value of the performance shares, net of the price paid for them by the employees was amortised over
the period from their date of grant to the end of the vesting period.

The total expense recognised in the consolidated income statement for the performance shares granted in the year ended 31 December 2013
was £2,600.

The Performance Share Plan was modified on 20 December 2013 to provide that performance shares could, at the option of PSG, convert
either into PSG shares or P-Solve shares and any unconverted performance shares would automatically convert on the occurrence of a
corporate transaction. This modification had no effect on the fair value of the performance shares. On 27 March 2014 upon the completion of
the acquisition of RAMAM all performance shares were converted, at an equivalent fair value, into P-Solve B ordinary shares and ultimately,
as a result of the corporate reorganisation, the deferred shares were cancelled and the B ordinary shares were converted into ordinary
shares in the Group. At that date the remaining unamortised fair value of all performances shares of £96,000 was charged to remuneration
expense.

23. Executive Performance Share Plan
Prior to Admission, the Board of Directors established the Executive Performance Share Plan (EPSP) to grant the Executive Directors and
certain members of senior management performance shares. At the date of admission two classes of performance shares were awarded:
Performance Condition A Awards and Performance Condition B Awards. The maximum aggregate number of Performance Condition A
Awards and Performance Condition B Awards which may be issued under the EPSP is limited to 10% of the issued ordinary share capital of
the Company on Admission. The maximum aggregate ordinary shares of the Company that could be issued is 5,746,674 under Performance
Condition A Awards and 2,462,860 under Performance Condition B Awards.

The vesting of Performance Condition A Awards is conditional upon achieving a total shareholder return of at least 12% compounded over the
four-year performance period. Vesting starts at 12% compound annual total shareholder return and 100% vests at 24% compound annual
total shareholder return over the four-year period. Vesting will be pro-rated on a straight-line basis between 12% and 24%. The shares vest at
no cost to the participants.

The vesting of Performance Condition B Awards is conditional on achieving a total shareholder return of at least 25% compounded over the
four-year performance period. Vesting starts at 25% compound annual total shareholder return and 100% vests at 30% compound annual
total shareholder return over the four-year period. Vesting will be pro-rated on a straight-line basis between 25% and 30%. The shares vest at
no cost to the participants. Performance Condition A and B Awards are not eligible for dividends during the vesting period.

Any shares which vest are subject to a holding period of 12 months following the vesting date. Shares which do not vest will be forfeited. The
vesting is also subject to the participant’s continued employment by the Group during the vesting and holding period or, if employment ceases,
being classified as a good leaver at the discretion of the Remuneration Committee. As at 30 June 2014, no shares had vested under either the
A or B Awards.

The fair value of the Performance shares was determined by an independent valuation undertaken by Ernst & Young LLP on behalf of the
Remuneration Committee of the Board. This fair value was based on a Monte Carlo simulation of possible outcomes based on the returns and
volatility characteristics of comparable publicly listed investment management businesses in the FTSE. The simulation is referred to by IFRS
13 Fair Value Measurement as a Level 3 input.

The key assumptions used in the valuation were: a mean expected total shareholder return (TSR) growth rate in line with the risk free rate
(1.72%), a TSR volatility derived from the TSR volatilities of listed comparable companies of 30%, and a dividend yield of 4.5%.

The fair value of the Performance A shares is 38 pence and the Performance B shares 17 pence. The fair value of Performance Condition A
Awards is estimated at £2.18 million and Performance Condition B Awards at £0.42 million. The fair value will be amortised into variable
remuneration expense over the vesting period. The annual charge is approximately £650,000 and will be treated as a non-cash adjusting item.
Any shares that vest may be subject to applicable employment taxes at the date of vesting.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

23. Executive Performance Share Plan continued
The Performance Share Plan (PSP) was also established prior to admission. The Plan allows for the grant of: Nil Cost Options, Contingent
Share Awards or Forfeitable Share Awards. As at 30 June 2014 no grants had been made under the PSP. The Board of Directors have stated
an intention that grants of performance shares under the PSP would not be dilutive on shareholders.

At the date of Admission the Group established an Employee Benefit Trust to hold unvested shares on behalf of the employees and to
purchase shares to meet the future obligation to deliver shares upon vesting. At 30 June 2014 the EBT did not hold any ordinary shares of the
Company.

24. Directors’ remuneration and key management remuneration
The aggregate remuneration and fees payable to Executive and Non-Executive Directors for the six months ended 30 June 2014 and the year
ended 31 December 2013 was £912,527 and £2,455,156, respectively. Fees payable for the six months ended 30 June 2014 to Directors of PSG
aggregated £774 and to Pacific Investments £387 (2013: £Nil and £Nil, respectively).

Key management remuneration
Key management includes the Executive Directors and key management personnel. The remuneration paid or payable to key management
for employee services is shown below:

Wages and salaries
Social security costs
Pension costs
Employee share-based payment charge

6 months
ended
30 June
2014
£000

Year
ended
31 December
2013
£000

2,109
291
42
112

2,554

1,384
185
45
13

1,627

Further details can be found in the audited section of the Remuneration Report on pages 40 to 45.

25. Finance income and finance expense
Finance income comprises £2,000 (2013: £40,000) from deposits with PSG. Finance expense comprises £12,000 (2013: £19,000) relating to the
unwind of discounts on contingent consideration from previous acquisitions and £Nil (2013: £96,000) due to PSG under the intercompany loan
arrangement.

26. Current and deferred tax
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit reported in the consolidated income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group’s liability for current tax is calculated using the statutory tax rates at the balance sheet date.

Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. The most significant deferred tax item is the
deferred tax liability established against the IMA intangible asset arising from the acquisition of RAMAM. The amortisation is not tax
deductible for corporate tax purposes therefore the deferred tax liability is released into the Consolidated Income Statement to match the tax
credit on amortisation of the IMA intangibles.

Current tax
Deferred tax

Tax charge on profit on ordinary activities

The current tax charge in respect of the year ended 31 December 2013 was paid by PSG.

6 months
ended
30 June
2014
£’000

1,337
(176)

1,161

Year ended
31 December
2013
£’000

1,760
21

1,781

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

26. Current and deferred tax continued
The tax assessed for the year is higher (2013: lower) than the average standard rate of corporation tax in the UK. The differences are explained
below:

(Loss)/profit before tax
(Loss)/profit before tax multiplied by the average rate of corporation tax in the UK of 22% (2013: 23.25%)

Effects of:
Transfer pricing adjustments
Expenses not deductible for tax purposes
Amortisation of RAMAM goodwill (Note 33)
Income not subject to tax
Adjustment in respect of prior years
Other timing differences

6 months
ended
30 June
2014
£’000

Year ended
31 December
2013
£’000

(73)
(16)

7,803
1,814

51
1,170
(216)
181
(19)
10

1,161

(108)
(15)
–
86
(1)
5

1,781

For information on deferred tax balances, see Note 33.

27. Discontinued operations
CAMRADATA Analytical Services Limited was sold to Punter Southall Group Limited on 20 December 2013 for cash consideration of £1.1
million. The net carrying value of the investment in CAMRADATA at 1 January 2013 comprised assets of £1,747,000 and liabilities of £1,809,000.
The results of operations of CAMRADATA for the period from 1 January 2013 to 20 December 2013 were a loss of £70,000 which, together with
the gain on the sale £1,231,000 net of tax, have been classified as discontinued operations in the financial statements of the Group for the year
ended 31 December 2013.

The post-tax gain on disposal of discontinued operations was determined as follows:

Cash consideration received
Total consideration received
Cash disposed of

Net cash inflow on disposal of discontinued operation

Net liabilities disposed of (other than cash):
Goodwill
Trade and other receivables
Trade and other payables

Pre-tax gain on disposal of discontinued operation
Disposal of goodwill arising on consolidation
Tax on disposal of discontinued operation

Post-tax gain on disposal of discontinued operation

Year ended
31 December
2013
£’000

1,100
1,100
(70)

1,030

(639)
(361)
1,339

339

1,369
(138)
–

1,231

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

27. Discontinued operations continued
The following table summarises the balance sheet, income statement and cash flows for CAMRADATA for the period from 1 January 2013 to
the date of disposal.

Result of discontinued operations for the year ended 31 December 2013

Revenue
Expenses other than finance costs
Finance cost
Tax expense
Gain from selling discontinued operations after tax
Minority interest

Profit for the year

Statement of cash flows for the year ended 31 December 2013
The statement of cash flows includes the following amounts relating to discontinued operations:

Operating activities
Investing activities
Financing activities
Net cash from discontinued operations

£’000

2,388
(2,441)
(17)
(3)
1,231
3

1,161

2013
£’000

(30)
1,100
(17)
1,053

28. Earnings per share
The basic and diluted earnings per share are calculated by dividing the profit attributable to equity holders of the Group by the weighted
average number of ordinary shares of the Group in issue during the period.

To the extent that any of the EPSP performance shares (Note 23) vest they will have a dilutive effect on the equity holders of the Group. The
potential dilution effect of the EPSP performance shares will be considered in the calculation of diluted earnings per shares. The compound
return to shareholders based on share price and dividends received by shareholders from the date of grant until the reporting date will be
compared against the respective performance criteria of the performance shares to determine if the shares are dilutive as of the reporting
date. No dividends have been paid to shareholders between the date of grant and the reporting period end. Based on the Group’s share price
at 30 June 2014, none of the EPSP performance shares would have met the vesting criteria and were therefore not considered dilutive for
purposes of calculating diluted earnings per share.

Earnings per share

(Loss)/profit from continuing operations attributable to owners of the Parent, before discontinued operations (£’000)
Net (loss)/profit attributable to owners of the Parent (£’000)
Weighted average number of shares in issue (’000)
Weighted average number of diluted shares (’000)

Earnings per share (pence)
Earnings per share – continuing operations
Basic (pence)
Diluted (pence)

Total earnings per share (pence)
Basic (pence)
Diluted (pence)

6 months
ended
30 June
2014

(1,234)
(1,234)
55,560
58,157

Year ended
31 December
2013

6,022
7,183
35,412
35,412

(2.22)
(2.22)

17.01
17.01

(2.22)
(2.22)

20.29
20.29

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

28. Earnings per share continued
Adjusted net profit after tax before discontinued operations
Adjusted net profit after tax represents net profit after tax before discontinued operations, adjusted to add back the amortisation of intangible
assets and IPO costs, net of taxes.

Net (loss)/profit before tax
Adjustments:
Amortisation of intangible assets
Expenses associated with the initial public offering
Expenses associated with the corporate reorganisation and integration

Adjusted net profit before tax
Tax

Adjusted net profit after tax, before discontinued operations

Weighted average shares
Weighted average diluted shares

Adjusted EPS:
Basic (pence)
Diluted (pence)

Reconciliation between weighted average shares in issue

Weighted average number of shares in issue – basic
Timing effect of performance share conversion to ordinary shares
Weighted average number of shares in issue – diluted

6 months
ended
30 June
2014
£’000

Year ended
31 December
2013
£’000

(73)

7,803

1,087
4,045
507

5,566
(1,267)

4,299

55,560
58,157

15
–
–

7,818
(1,781)

6,037

35,412
35,412

7.74
7.39

17.05
17.05

6 months
ended
30 June
2014
’000

55,560
2,597
58,157

Year ended
31 December
2013
’000

35,412
–
35,412

As at 30 June 2014, there were no shares which were antidilutive during the six months ended 30 June 2014 but which may be dilutive in future
periods. The performance shares which were antidilutive during the six months ended 30 June 2014 were converted to ordinary shares before
the period end, at which point they were included in basic shares in issue.

29. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits. At period end all cash balances were held by banks with credit
ratings of at least single A.

30. Fee receivables
Fee receivables are recorded initially at the invoiced value, which is the estimated fair value of the receivables and are subsequently held at
amortised cost. The collectability of the fee receivables is reviewed periodically and if there is evidence to indicate that that amount may not be
collectable a specific provision is established against the receivable. At 30 June 2014, a provision of £59,000 (1 January and 31 December 2013:
£Nil) has been established against doubtful receivable balances and the total balance is reported in the consolidated statement of financial
position net of this provision. On confirmation that the fee receivables will not be collectable, the gross carrying value of the asset is written off
against the associated provision.

The ageing of fee receivables is shown below:

Neither past due nor impaired
Past due but not impaired:
Between one and two months
Between two and three months
More than three months

30 June
2014
£’000

1,489

434
400
341

31 December
2013
£’000

1 January
2013
£’000

3,337

1,131

856
107
183

524
198
143

2,664

4,483

1,996

The average credit period on fees is 47 days (2013: 52 days). The Directors believe that the carrying value of fee receivables, net of the
provision for doubtful receivables balances, represents their fair value and is the maximum credit risk value.

Financial statements

31. Investment management balances

Investment management assets
Investment management liabilities

River and Mercantile Group PLC
Annual report and accounts 2014

30 June
2014
£’000

31 December
2013
£’000

1 January
2013
£’000

8,744
9,810

–
–

As Authorised Corporate Director (ACD) of River and Mercantile Funds ICVC (the Fund) the Group is required to settle transactions between
investors and the depositary of the Fund. The Group is exposed to the short-term liquidity requirements to settle with the depositary of the
Fund before receiving funds from the investor and mitigates this risk by holding cash in its ACD account. The Group has credit risk if an
investor defaults on a contract. Under such a default, the Group is required to settle the investor’s contract with the depositary of the Fund.
The Group is then able to redeem the shares in the Fund. The Group bears the risk that the price of the shares may vary between the initial
settlement and redemption of the shares.

The investment management assets and liabilities are valued at the contractually agreed subscription or redemption values.

32. Other assets (including other financial assets)

Prepayments and accrued income
Deferred tax
Other financial assets
Loans to PSG
Receivable from PSG

30 June
2014
£’000

31 December
2013
£’000

1 January
2013
£’000

9,653
95
588
–
–

10,336

5,990
135
59
1,683
17

7,884

4,297
155
30
8,131
20

12,633

Accrued income relates to management fees that have been earned but are invoiced to Clients in arrears on a quarterly basis. Loans to PSG
include free cash balances transferred to PSG. Included in other financial assets is £219,000 of fund units held at fair value as described in
Note 12 (1 January and 31 December 2013: £Nil). Also included is £18,000 (31 December 2013: £17,000, 1 January 2013: £20,000) of receivables
from PSG, held at amortised cost. The remainder comprises sundry balances arising in the course of trading, held at amortised cost.

33. Deferred tax liabilities
In the acquisition accounting for RAMAM, the purchase price was allocated between identifiable assets and goodwill. The existing Investment
Management Agreements (IMAs) were recorded as identifiable intangible assets and will be amortised into income over their useful life. This
amortisation is not deductible for tax purposes. A deferred tax liability is recorded and will be charged to the tax line to match the tax effect of
this amortisation. The deferred tax is calculated at the tax rates that are expected to apply to the period when the liability is settled based upon
tax rates that have been enacted at period end.

Deferred tax liabilities

At 1 January 2013 and 31 December 2013

Deferred tax liability on Intangible Assets (Note 26)
Credit to the income statement

At 30 June 2014

Total
£’000

–

7,226
(216)

7,010

Deferred tax asset
Deferred tax is the tax expected to be payable or receivable on differences between the carrying amounts of assets and liabilities in the
financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. This balance is disclosed within
other assets (Note 32).

At 1 January 2013
Charge to the income statement
At 31 December 2013
Charge to the income statement

At 30 June 2014

Accelerated
capital
allowance
£’000

Short-term
timing
differences
£’000

67
(9)
58
(4)

89
(12)
77
(36)

Total
£’000

156
(21)
135
(40)

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

34. Fixed assets and leasehold improvements
Property, plant and equipment is stated at historical cost less accumulated depreciation. Depreciation charges the cost of the assets over
their expected useful lives. Computer equipment is depreciated over three years and fixtures, fitting and equipment over seven years. The
assets from the acquisition of RAMAM are recorded at their fair value and are depreciated over their expected remaining lives. Leasehold
improvements are amortised over the remaining term of the leases.

Office
equipment
£’000

Leasehold
improvements
£’000

Cost:
At 1 January 2013
Exchange difference

At 31 December 2013
Additions
Exchange difference
Additions at fair value RAMAM

At 30 June 2014

Accumulated depreciation:
At 1 January 2013
Depreciation charge
Exchange difference

At 31 December 2013
Depreciation charge
Exchange difference

At 30 June 2014

Net book value:

At 1 January 2013
At 31 December 2013

At 30 June 2014

506
2

508
10
6
36

560

437
25
(3)

459
15
(6)

468

69
49

–
–

–
–
–
147

147

–
–
–

–
9
–

–
–

138

Total
£’000

506
2

508
10
6
183

707

437
25
(3)

459
24
(6)

477

69
49

230

Included in the office facilities charges from PSG are operating expenses related to leasehold improvements and other costs that are charged
by PSG on a periodic basis (Note 15).

35. Operating leases
Office facilities are leased under operating leases. The rental is charged to the consolidated income statement on a straight-line basis over
the lease term. Rent rebates are accounted for over the period of the lease term. The Group entered into a non-cancellable operating lease on
26 June 2014 with PSG for the Group’s primary office facilities in London until December 2021. The Group receives a rent rebate from PSG
amounting to £131,000, payable monthly until 2016. The future aggregate minimum lease payments under all non-cancellable operating
leases, net of rent rebates are as follows:

At
30 June
2014
£’000

At
31 December
2013
£’000

No later than one year
Later than one year and no later than five years
Later than five years

582
2,484
600

3,666

98
258
–

356

The rent charge during the period of £516,000 (2013: £1,172,000) is included in Administrative expenses (Note 15).

36. Creditors

Taxes and social security
Accruals and other payables
Contingent consideration
Payables to PSG
Other creditors

Total payables

Details of contingent consideration are disclosed in Notes 38 and 39.

30 June
2014
£’000

30 December
2013
£’000

1 January
2013
£’000

1,019
8,081
48
–
–

9,148

1,624
5,155
106
312
221

7,418

1,085
2,521
708
101
21

4,436

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

37. Borrowing facility
On 29 November 2013 the Group agreed an unsecured borrowing facility with Punter Southall Group Limited of £10,520,000 and drew down
the full amount immediately. The facility had an interest rate of LIBOR plus 2.99%. The Group repaid £869,000 of the principal and interest by
31 December 2013 and a further £5.82 million during the period. The balance of the facility was forgiven by Punter Southall Group Limited
on 27 March 2014 and the amount was recorded as a capital contribution to the Group. The following table shows the movements in
the borrowings:

At 1 January
Loan received during the year
Loan repaid
Interest accrued
Loan forgiveness

At 30 June
2014
£’000

9,687
–
(5,820)
–
(3,867)

–

At
31 December
2013
£’000

–
10,520
(869)
36
–

9,687

38. Business combinations
The Group applies the acquisition method of accounting to account for business combinations.

Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in the
fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree.

Goodwill is not amortised but is reviewed for impairment annually, or more frequently when there is an indication of impairment. For the
purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Group’s cash generating units (CGUs)
expected to benefit from the synergies of the combination. Each unit to which the goodwill is allocated represents the lowest level within the
entity at which the goodwill is monitored for internal management purposes. If the recoverable amount of the CGU is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the carrying value of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised is not reversed in a
subsequent period.

Identifiable intangible assets
Investment Management Agreements and customer relationships
Investment Management Agreements and customer relationships acquired in a business combination are recognised separately from
goodwill at their fair value at the acquisition date. Customer relationships have an estimated useful life of 20 years and Investment
Management Agreements estimated useful lives of five to ten years. The identified intangible assets are carried at cost less accumulated
amortisation calculated on a straight-line basis.

Impairment of tangible and intangible assets, excluding goodwill
At each statement of financial position date or whenever there is an indication that the asset may be impaired, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. Recoverable amount is the higher of the fair value less costs to sell, and the value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have
not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, an impairment loss is
recognised as an expense immediately. For assets other than goodwill, where conditions giving rise to impairment subsequently reverse, the
effect of the impairment charge is also reversed as a credit to the statement of comprehensive income, net of any depreciation or amortisation
that would have been charged since the impairment.

Contingent consideration payable for business combinations
On acquisition date, the key estimate in determining the fair value of the contingent consideration is the Directors’ best estimate of expected
profit levels of the acquired businesses. These inputs are not based on observable market data. IFRS 13 Fair Value Measurement refers to
such inputs as ‘Level 3’ inputs. These estimates are reassessed at each reporting date and adjustments are made to the fair value of the
contingent consideration where necessary. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset
or liability is recognised either in profit or loss or as a change to other comprehensive income if required by IAS 39.

If contingent consideration is payable after more than one year from the statement of financial position date the expected amounts of
contingent consideration are discounted using discount rates that reflect the current market assessment of the time value of money and the
risks specific to the acquired business.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

39. Meridian Performance Services Limited
On 19 September 2011 the Group acquired the trade and assets of Meridian Performance Services Limited. The purchase consideration for
the acquisition included amounts payable to the former owners which was contingent on the continued performance of the business. The
initial goodwill of £395,000 arising from the acquisition consisted largely of the synergies and the increase in revenue expected from
incorporating the business of Meridian Performance Services Limited into the Group.

The contingent consideration arrangement required the Group to pay, in cash, to the former owners of Meridian a share of the revenue
generated from the business for three years from 2012 to 2014. At the date of the acquisition the estimated fair value of the contingent
consideration by applying the income approach was £733,000. In the subsequent periods the business did not generate expected levels of
additional revenue which led to the impairment of the carrying amount of goodwill and a reduction in the fair value of the contingent
consideration payable to the sellers. During 2013 the remaining goodwill of £262,000 was impaired. The fair value of contingent consideration
was reduced to £107,000 at 31 December 2013. As at 30 June 2014 the fair value of the contingent consideration payable is £48,000 as a result
of a payment of consideration of £71,000 made during the period, net of £12,000 relating to the unwind of the discount on the consideration. All
of the goodwill recognised was deductible for corporation tax purposes.

The contingent consideration is valued using models applying inputs which are not based on observable market data, but those which IFRS 13
Fair Value Measurement refers to as Level 3 inputs. The key input is the expected revenues generated by the business as the contingent
payments are directly tied to revenues.

40. Cassidy Retirement Group Inc.
On 1 February 2012 the Group acquired Cassidy Retirement Group Inc. in the US. The consideration transferred for the acquisition consisted
of 133,552 shares of Punter Southall Group Limited valued at £3.14 per share and represent a capital contribution to the Group. In addition, the
Group was to pay a mixture of cash and shares to the former owners based on a share of the revenue generated from the business for one
year post acquisition.

The fair value of the contingent consideration arrangement was estimated at £419,000 by applying the income approach using inputs which
are not based on observable market data, which IFRS 13 Fair Value Measurement refers to as Level 3 inputs. The key input was the expected
revenues generated by the business as contingent payments were directly tied to revenues. A total of £229,000 has been paid to the former
owners and as at 30 June 2014 no further payments are required to be made. The goodwill of £1,218,000 arising from the acquisition consisted
largely of the synergies and the increase in revenue expected from incorporating the business of Cassidy Retirement Group, Inc. into the
Group. All of the goodwill recognised is expected to be deductible for corporation tax purposes.

41. Palisades Capital Advisors LLC
On 11 March 2013 the Group acquired the trade and assets of Palisades Capital Advisors LLC for cash consideration of £170,000 resulting in
goodwill on acquisition of £170,000. All of the goodwill recognised is expected to be deductible for corporation tax purposes. Due to the full
integration of the business into the Group it is not practicable to determine the post-acquisition results to the end of the reporting periods.

42. River and Mercantile Asset Management LLP (RAMAM)
On 27 March 2014, the Company completed the acquisition of RAMAM (an equity asset management business) in order to combine RAMAM’s
equity management with the Group’s asset allocation and derivative management capabilities to offer outcome-focused mandates for both
the retail and institutional markets. 100% of the membership interests of RAMAM were transferred to the Company in return for a 31%
shareholding in the capital of the Company. In aggregate a total of 7,636,191 new ordinary shares were issued at nominal value to RAMAM
members. At the date of the acquisition the shares in P-Solve Limited did not have a readily determined market value. The fair value of the
shares was determined using assumptions and judgements regarding the value of the combined Group after the acquisition.

The fair value of the shares in P-Solve transferred as consideration for the acquisition was determined using inputs which are not based on
observable market data which IFRS 13 Fair Value Measurement refers to as Level 3 inputs. The key estimate in determining the fair value of
the consideration transferred is the Director’s best estimate of the value of the combined business based on the projected earnings and
valuation multiples observable in the public markets. The value calculated was discounted to reflect the private company status of the
combined business at the time. The net value of the Group was determined to be £141.6 million, representing a fair value of the consideration
transferred for the purchase as £44.43 million. The consideration for the acquisition was a non-cash item.

A merger reserve was established of £44.43 million that represents the difference between the nominal value and the fair value of the new
shares issued by the Company to the members of RAMAM as consideration for the acquisition of RAMAM, in accordance with Section 612 of
the Companies Act 2006.

The identifiable assets include the fair value of the Investment Management Agreements (IMAs) acquired. The expected future cash flows are
based on assumptions and estimates including the level of future sales, redemptions, and investment performance. Costs associated with the
IMAs are also estimated. The after tax net cash flows were discounted to the current period using a discount rate that reflects the risk
associated with the net cash flows. The resulting intangible asset will be amortised over the useful life of the contracts ranging from five to ten
years, depending on the nature of the distribution channel. The amortisable values of the IMAs were calculated using forecast cash flows into
perpetuity with a pre-tax discount rate of 11.25% and a medium-term net growth rate of 5–7% for Institutional mandates and 2% for Retail.
The amortisation will not be deductible for corporate tax purposes and therefore a deferred tax liability has been raised on the value of the
intangible assets.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

42. River and Mercantile Asset Management LLP (RAMAM) continued
The provisional values for the acquired business at the date of the acquisition are as set out in the table below.

Cash
Receivables
Payables
Property, plant and equipment
Investment Management Agreements
Deferred tax recognised on the intangible assets acquired

Total identifiable assets
Goodwill

Total consideration

£’000

4,019
26,800
(28,696)
183
36,129
(7,226)

31,209
13,224

44,433

The fair value of receivables is equal to their gross contractual value and management expect to collect all of the contractual cash flows.

As the discounted cash flow model uses historical AUM and fee margin assumptions with projected growth and performance, there is
uncertainty arising from whether these assumptions are met.

RAMAM Goodwill
The excess of the consideration over the provisional fair value of the identifiable net assets acquired represents goodwill of £13.2 million
arising from the acquisition. The goodwill consisted largely of the synergies and the increase in revenue expected from incorporating the
business of RAMAM into the Group.

As the initial accounting for a business combination can be determined only provisionally by the end of the reporting period, the business
combination has been accounted for using provisional amounts.

As the RAMAM acquisition was completed on 27 March 2014, a full evaluation of the goodwill of RAMAM to determine if the goodwill is
impaired is not required, unless factors subsequent to the acquisition indicate that impairment may have occurred. The strategic rationale for
the acquisition and expectations of revenue synergies are still valid. In particular, all the portfolio manager teams are still in place and the key
institutional and retail distribution relationships have been maintained. The Directors therefore consider that there is no indication that an
impairment has occurred.

The revenues of RAMAM and the post-tax results for the period since the acquisition date are £3.3 million and £0.9 million, respectively. If the
Acquisition had taken place at the beginning of the financial year, revenues of RAMAM and the post tax results would have been £6.9 million
and £1.8 million, respectively. These results do not include any benefit from revenue synergies.

From a capital management perspective all the acquisition intangibles, net of the deferred tax, and amounts recorded as goodwill are
supported by the merger reserve in shareholders’ equity. This approach is consistent with our regulatory capital treatment.

43. Intangible assets
Goodwill and Investment Management Agreements

Cost:
At 1 January 2013
Addition
Exchange difference

At 31 December 2013
Addition
Exchange difference

At 30 June 2014

Accumulated amortisation and impairment:
At 1 January 2013
Amortisation charge
Impairment charge

At 31 December 2013
Amortisation charge

At 30 June 2014

Net book value:
At 30 June 2014
At 31 December 2013
At 1 January 2013

Customer
lists and
IMAs
£’000

381
–
–

381
36,129
–

Goodwill
£’000

1,762
170
(39)

1,893
13,224
(15)

Total
£’000

2,143
170
(39)

2,274
49,353
(15)

15,102

36,510

51,612

(133)
–
(262)

(395)
–

(24)
(19)
–

(43)
(1,087)

(157)
(19)
(262)

(438)
(1,087)

(395)

(1,130)

(1,525)

14,707
1,498
1,629

35,380
338
357

50,087
1,836
1,986

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

44. Notes to consolidated cash flow statement
The following table summarises the operating, investing and financing cash flows:

Net cash generated from operations
Net cash used in investing activities
Net cash generated from/(used in) financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes

Cash and cash equivalents at end of the year

6 months
ended
30 June
2014
£’000

1,202
4,172
8,822

14,196

5,192
–

19,388

Year ended
31 December
2013
£’000

5,981
7,022
(10,644)

2,359

3,005
(172)

5,192

Net cash generated from operations for the six months ended 30 June 2014 was £1.2 million, (2013: £6.0 million) compared to a net loss after
tax of £1.2 million (2013: £6.0 million). The primary difference between the pre-tax net loss and cash flows from operations relates to the
non-cash amortisation of IMA intangibles acquired in the acquisition of RAMAM.

Cash flows from investing activities for the six months ended 30 June 2014 were £4.17 million, (2013: £7.02 million). The acquisition of RAMAM
involved a non-cash share for partner interest exchange with a fair value of £44.4 million. The cash from investing activities is primarily the
cash balance in RAMAM at the date of the acquisition. For the year ended 31 December 2013, the proceeds of the sale of CAMRADATA of
£1.1 million are partially offset by the payment of contingent consideration for the Meridian acquisition.

Cash flows generated from financing activities for the six months ended 30 June 2014 were £8.8 million (2013: cash used £10.6 million)
reflecting the cash raised in the IPO, net of the underwriting fees, partially offset by the repayment of the intercompany loan from Punter
Southall Group Limited (PSG). PSG forgave a balance of £3.9 million on the intercompany borrowing facility that had been established during
2013. The amount was recorded as a capital contribution to the Group and is not reflected in investing activity as it is a non-cash item. For the
year ended 31 December 2013 cash from financing activities reflects the borrowing from PSG of £10.5 million and the payment of £20.4
million in dividends to PSG.

45. Share capital and share premium
The Group had the following share capital at the balance sheet date.

Allotted, called up and fully paid
Ordinary shares of £0.003/£0.0001 each
A performance shares of £0.01 each
B performance shares of £0.01 each
C performance shares of £0.01 each
D performance shares of £0.01 each
E performance share of £0.01 each
A ordinary shares of £0.003
B ordinary shares of £0.003

30 June
2014
Number

31 December
2013
Number

1 January
2013
Number

30 June
2014
£

31 December
2013
£

1 January
2013
£

82,095,346 11,804,027 11,804,027
– 1,479,972
1,479,972
– 1,479,829
1,479,829
– 1,507,229
1,507,229
– 3,000,000
–
– 1,000,000
–
–
–
–
–
–
–

246,286
–
–
–
–
–
–
–

1,180
14,800
14,798
15,072
30,000
10,000
–
–

1,180
14,800
14,798
15,072
–
–
–
–

82,095,346 20,271,057 16,271,057

246,286

85,850

45,850

The ordinary shares carry the right vote per and rank pari passu for dividends.

A, B, C, D and E performance shares and deferred shares carried no right to vote or entitlement to dividend.

The A and B ordinary shares carried the right to vote and within each class, each share ranked pari passu for dividends.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

45. Share capital and share premium continued
The movement of shares during the period was as follows.

Number of shares

Ordinary
shares

A
ordinary
shares

B
ordinary
shares

A
performance
shares

B
performance
shares

C
performance
shares

D
performance
shares

E
performance
shares

Deferred
shares

Total number
of shares

As at 1 January 2013 11,804,027
D performance
shares issued
E performance
shares issued

–

As at 31 December
2013/1 January
2014

Ordinary shares

11,804,027

issued in the year

7,636,191

–

(11,804,027) 11,804,027

–

1,479,972

1,479,829

1,507,229

–

3,000,000

–

1,000,000

1,479,972

1,479,829

1,507,229

3,000,000

1,000,000

–

16,271,057

3,000,000

1,000,000

20,271,057

7,636,191

–

1,479,969

316

–

1,465,435

1,425,014

–

1,491,326

1,574,447

–

(1,507,229)

–

319

(1,479,972)

–

1,439,408

–

(1,479,829)

–

1,590,350

–

1,113,671

–

1,048,909

537,057

(537,057)

–

Ordinary shares

converted into A
ordinary shares

A performance

shares converted
into B ordinary/
deferred shares

B performance

shares converted
into B ordinary/
deferred shares

C performance

shares converted
into B ordinary/
deferred shares

D performance

shares converted
into B ordinary/
deferred shares

E performance

shares converted
into B ordinary/
deferred shares
B ordinary shares
converted into A
ordinary shares
Deferred shares

cancelled

No of shares prior
to conversion
Conversion of
ordinary/
A ordinary/B
ordinary shares
into £0.003 shares

Capitalisation of

A ordinary shares
converted into
ordinary shares
B ordinary shares
converted into
ordinary shares
Ordinary shares

issued in the year
– Listing

share premium 22,654,033 36,611,882 13,811,614

7,636,191 12,341,084

4,655,600

254,541

411,370

155,185

37,023,252

(37,023,252)

–

13,966,799

– (13,966,799)

8,196,721

As at 30 June 2014 82,095,346

–

(3,000,000)

–

2,988,863

1,102,534

–

(1,000,000)

989,511

1,038,420

–

(8,415,104)

–

24,632,875

–

821,096

73,077,529

–

8,196,721

– 82,095,346

–

Nominal value £

0.003

0.01

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

45. Share capital and share premium continued

A
ordinary
shares

B
ordinary
shares

A
performance
shares

B
performance
shares

C
performance
shares

D
performance
shares

E
performance
shares

Deferred
shares

Total value
of shares

As at 1 January 2013
D performance
shares issued
E performance
shares issued

As at 31 December

2013/
1 January 2014
Ordinary shares

Ordinary
shares

1,180

–

1,180

issued in the year

764

–

144

159

111

105

(54)

–

(1,180)

1,180

–

764

1,234

465

764

1,234

465

67,962

109,836

41,435

111,070

(111,070)

–

41,900

24,590

–

(41,900)

–

Ordinary shares

converted into A
ordinary shares

A performance

shares converted
into B ordinary/
deferred shares

B performance

shares converted
into B ordinary/
deferred shares

C performance

shares converted
into B ordinary/
deferred shares

D performance

shares converted
into B ordinary/
deferred shares

E performance

shares converted
into B ordinary/
deferred shares
B ordinary shares
converted into A
ordinary shares
Deferred shares

cancelled

No of shares prior
to conversion
Conversion of
ordinary/
A ordinary/B
ordinary shares
into £0.003 shares

Capitalisation of
share premium
A ordinary shares
converted into
ordinary shares
B ordinary shares
converted into
ordinary shares
Ordinary shares

issued in the year
– Listing

14,800

14,798

15,072

–

30,000

–

10,000

14,800

14,798

15,072

30,000

10,000

–

(14,800)

–

(14,798)

–

(15,072)

–

(30,000)

–

14,800

14,654

14,913

29,889

45,850

30,000

10,000

85,850

764

–

(84,151)

–

2,463

219,233

–

24,590

246,286

(10,000)

9,895

As at 30 June 2014

246,286

During the year ended 31 December 2013, the Company issued 4,000,000 performance shares.

On 27 March 2014, the Company completed a merger with RAMAM whereby the membership interests of RAMAM were transferred to the
Company in return for a 31% shareholding in the capital of the Company. In aggregate a total of 7,636,191 new ordinary shares in P-Solve were
issued at nominal value to RAMAM members.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

45. Share capital and share premium continued
During the three month period to 31 March 2014 the Company performed a number of share conversions. The share conversions had no
impact on the total value of the Company’s share premium and share capital reported as at 31 December 2013.

On 27 March 2014 PSG forgave a balance of £3,867,000 on an intercompany borrowing facility that had been established during 2013. The
amount was recorded as a capital contribution to the Group (Note 37).

On 28 May 2014, the Company capitalised £219,233 of the total share premium reserve at 31 March 2014 through a new share issue. The new
shares were issued at nominal value on the basis of 89 A ordinary shares for each A ordinary share held; and 89 B ordinary shares for each B
ordinary share held; and 89 ordinary shares for each ordinary share held.

In aggregate a total of 2,216,958,750 A ordinary shares, B ordinary shares and ordinary shares were in issue immediately after the capitalisation.

On the same day, a consolidation of share capital was then undertaken so that 30 A ordinary shares were consolidated into one A ordinary
share with a nominal value of £0.003; and 30 B ordinary shares were consolidated into one B ordinary share with a nominal value of £0.003;
and 30 ordinary shares were consolidated into one ordinary share with a nominal value of £0.003.

In aggregate a total of 73,898,625 A ordinary shares, B ordinary shares and ordinary shares were in issue immediately after consolidation.

On 28 May 2014, all of the Deferred performance shares were cancelled for nil consideration, so share capital comprised only of A ordinary
shares, B ordinary shares and ordinary shares.

On 2 June 2014, the Company was re-registered as a public limited company and on 26 June 2014 issued 8,196,721 new shares as part of the
initial public offering. At 30 June 2014 the total number of shares outstanding was 82,095,346 shares.

Included in share premium is £360,000 of underwriting commissions (1 January and 31 December 2013: £Nil). The movements in the share
premium account are included in the statement of changes in equity.

46. Reserves
Foreign exchange reserve represents the cumulative unrealised foreign exchange differences arising on US Dollar denominated businesses
in the Group as well as currency differences on goodwill and fair value adjustments on the acquisition of foreign subsidiaries, as detailed in
Note 6.

The Merger reserve arose on the merger with RAMAM as detailed in Note 42.

The Capital redemption reserve was created as a result of the Group purchasing its own shares for cancellation.

The Capital contribution arose on the acquisition of Cassidy (Note 40), whereby PSG awarded shares to the seller in respect of the sale. The
movement in the period relates to the forgiveness of the loan from PSG (see Note 37).

The movement in all reserves is detailed in the Consolidated statement of changes in equity.

47. Financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, together with the Note reference for the
description of the balance, the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised,
are shown below:

Note

Fair value through profit and loss:
Contingent consideration of acquisition
ACD fair value instruments
Investment management balances
Loans and receivables:
Cash and cash equivalents
Fee receivables
Other assets
Financial liability at amortised cost:
Creditors
Borrowings

38, 39 and 40
12
31

29
30
32

36
37

Financial risk management
The risks of the business are measured and monitored in accordance with the Board’s risk appetite and policies and procedures covering
specific risk areas, such as: market, credit, liquidity and business risk.

The Group is exposed to credit risk, market risk (including interest rate and foreign currency risks) and liquidity risks from the financial
instruments identified above. This Note describes the objectives, policies and processes of the Group for managing those risks and the
methods used to measure them.

Credit management
Credit risk refers to the risk that a counter party defaults on their contractual obligations resulting in financial loss to the Group. The carrying
amount of financial assets recorded in the financial information represents the Group’s maximum exposure to credit risk. The Group held no

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

47. Financial instruments continued
collateral as security against any financial asset. Credit risk arises principally from the Group’s fee receivables and cash balances. The Group
managed its credit risk through monitoring the credit quality of the counterparties with which we do business. The aging of outstanding fee
receivables at the balance sheet date is given in Note 30.

As Authorised Corporate Director (ACD) of River and Mercantile Funds ICVC (the Fund) the Group is required to settle transactions between
investors and the depositary of the Fund (see Note 12). The Group is exposed to the short-term liquidity requirements to settle with the
depositary of the Fund before receiving funds from the investor and mitigates this risk by holding cash in its ACD account. The Group is
exposed to credit risk if an investor defaults on a contract. Under such a default, the Group is required to settle the investor’s contract with the
depositary of the Fund. The Group is then able to redeem the shares in the Fund. The Group bears the risk that the price of the shares may
vary between the initial settlement and redemption of the shares.

The Group had no fee receivable balances at period end that were individually greater than £500,000. At 31 December 2013 the Group had two
Clients with outstanding balances over £500,000. Both balances were settled post year-end.

At period end there were no balances outstanding with Punter Southall Group Limited. At 31 December 2013 the outstanding balance was
£1,683,000 (1 January 2013: £8,131,000). Subsequent to the year end all balances have been received in full.

The Banks with whom we deposit cash and cash equivalent balances are monitored on a regular basis including their credit ratings.

The Group bears risk in relation to the box position held in respect of the River and Mercantile Funds ICVC (Note 12). If any debtor failed to pay,
the Group would redeem the underlying positions in respect of that debtor, however it would be subject to risk that the value of the underlying
positions had fallen. The maximum theoretical risk exposure is the full value of the box position as reported in Note 12, however this is highly
improbable to occur in practice. Management monitor the performance and aging of box position balances and take corrective action as
appropriate.

Foreign currency management
The Group has foreign currency denominated assets and liabilities primarily arising from the US business and is therefore exposed to
exchange rate fluctuations on these balances. The carrying amount of the Group’s foreign currency denominated monetary assets and
liabilities all in US Dollars, are shown below in the Group’s functional currency:

Fee receivables
Cash and cash equivalents
Creditors

At
30 June
2014
£’000

At
31 December
2013
£’000

At
1 January
2013
£’000

932
390
(751)

571

1,076
945
(909)

1,112

658
221
(588)

291

A 10% fluctuation in the exchange rate between US Dollars and UK Pound Sterling on the outstanding foreign currency denominated
monetary items at period end balances would result in a post-tax increase/decrease in profit of £57,000, £111,000 and £29,000 at 30 June 2014,
31 December 2013 and 1 January 2013, respectively.

Foreign exchange risk arising from transactions denominated in foreign currencies are monitored and where appropriate the currency
required to settle the transaction may be purchased ahead of the settlement date.

Interest rate management
The Group has minimal exposure to interest rate risk. The Group has no external borrowings at period end. The borrowing facility with PSG
had a variable interest rate of LIBOR + 2.99% and was settled on 27 March 2014. Cash deposit with banks earn a floating rate of interest and
the interest income is not significant in either period.

Liquidity management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. This risk relates to the Group’s prudent
liquidity risk management and implies maintaining sufficient cash reserves to meet the Group’s working capital requirements. Management
monitors forecasts of the Group’s liquidity and cash and cash equivalents on the basis of expected cash flow. The business is cash generative
and has cash and cash equivalent balances that support the business working capital requirements. The fee receivable invoicing cycle is
generally quarterly, as a result working capital balances are maintained to meet the ongoing expenses of the business during the quarterly
cycles. The Group’s capital expenditure requirements have not been significant and have been limited to office and IT equipment. The Group
has entered into an operating lease over its premises. Note 35 discloses the future aggregate minimum lease payments, net of rebates over
the next five years. The future fair value of contingent consideration payable at 30 June 2014 is £48,000 (31 December 2013: £107,000,
1 January 2013: £733,000) detailed in Note 39. At 30 June the Group had cash and cash equivalents of £19.4 million (2013: £5.2 million,
31 December 2012: £3.0 million). The increase in cash results from the net proceeds of £10.0 million from the issuance of £15.0 million of new
shares as part of the IPO. In September 2014 the Group made a seeding investment in the River and Mercantile Dynamic Asset Allocation
Fund of £5.0 million funded from cash balances.

As ACD of River and Mercantile Funds ICVC (the Fund) the majority of the operating cash balance of RAMAM are held in the ACD operating
account into which the management fees from the ICVC are paid on a monthly basis. Of the ACD account balance at each period end, the
proportion attributable to Client fund transactions (i.e. the difference between investment management balances (refer to Note 31) is
controlled by Bank of New York Mellon, and cannot be utilised by RAMAM. At 30 June 2014 £1.1 million of the cash and cash equivalents
balance was restricted.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

47. Financial instruments continued
Non-derivative cash flows
The table below presents the cash flows receivable and payable by the Group under non-derivative financial assets and liabilities by remaining
contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual, undiscounted cash flows.

The net liquidity positions in the table below relate to cash flows on contractual obligations existing at the balance sheet date. They do not take
account of any cash flows generated from profits on normal trading activities.

As at 30 June 2014
Assets
Cash and cash equivalents
Investment management balances
Fee income receivables
Asset held for sale
Other receivables

Total financial assets

Liabilities
Investment management balances
Borrowings
Creditors
Held for sale

Total financial liabilities

Net liquidity surplus/(deficit)

As at 30 December 2013
Assets
Cash and cash equivalents
Investment management balances
Fee income receivables
Asset held for sale
Other receivables

Total financial assets

Liabilities
Investment management balances
Borrowings
Creditors
Held for sale

Total financial liabilities

Net liquidity surplus/(deficit)

As at 1 January 2013
Assets
Cash and cash equivalents
Investment management balances
Fee income receivables
Asset held for sale
Other receivables

Total financial assets

Liabilities
Investment management balances
Borrowings
Trade and other payables
Held for sale

Total financial liabilities

Net liquidity surplus/(deficit)

On demand
£’000

< 3 months
£’000

3-12 months
£’000

1-5 years
£’000

> 5 years
£’000

19,388
–
–
–
–

19,388

–
–
–
–

–

19,388

–
8,744
2,664
–
571

11,979

9,810
–
1,019
–

10,829

1,150

–
–
–
–
–

–

–
–
48
–

–
–
–
–
17

–
–
–
–

–

(48)

–
–
–
–
–

–

–
–
–
–

–

On demand
£’000

< 3 months
£’000

3-12 months
£’000

1-5 years
£’000

> 5 years
£’000

5,192
–
–
–
1,700

6,892

–
9,687
312
–

9,999

(3,107)

–
–
4,483
–
15

4,498

–
–
1,845
–

1,845

2,653

–
–
–
–
28

–
–
59
–

–
–
–
–
16

–
–
48
–

(31)

(32)

–
–
–
–
–

–

–
–
–
–

–

On demand
£’000

< 3 months
£’000

3-12 months
£’000

1-5 years
£’000

> 5 years
£’000

3,005
–
–
–
8,331

11,336

–
–
101
–

101

–
–
–
–
14

–
–
1,106
–

1,106

–
–
–
1,747
–

1,747

–
–
553
1,809

2,362

–
–
–
–
16

–
–
155
–

155

11,235

(1,092)

(615)

(139)

–
–
–
–
–

–

–
–

–

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

47. Financial instruments continued
Capital management
The Group manages its capital to ensure that it will be able to continue as a going concern. The Group funds its expenditures on commitments
from existing cash and cash equivalent balances. The Group operates through three regulated entities: P-Solve Investments Limited, and
River and Mercantile Asset Management LLP, both authorised and regulated by the UK FCA and P-Solve LLC registered as investment
advisor with, and regulated by, the SEC in the United States. These entities are required to maintain minimum levels of capital and reserve
that are sufficient to meet their regulatory capital requirements. The Group operates a comprehensive risk management framework that
identifies areas of risk, establishes risk appetites and mitigating controls and monitors compliance within the risk limits. The Group has
complied with its regulatory capital required throughout the period under review.

There have been no changes from the prior year in the risks faced by the Group in relation to its financial instruments.

48. Related party transactions
Punter Southall Group Limited and subsidiaries, and Pacific Investments are considered significant related parties.

Punter Southall Group, and subsidiaries (PSG)
Related party balances and transactions with PSG for the six months ended 30 June 2014 and for the year ended 31 December 2013 are
described in the following notes:

• Corporation tax (Note 26)
• Creditors (Note 36)
• Borrowings (Note 37)
• Other assets (Note 32)
• Advisory fee revenue shares (Note 9)
• Expenses charged by PSG as intercompany charges included in Administrative expenses (Note 15)
• Expenses associated with the initial public offering (Note 18)
• Finance income and Finance expense (Note 25)
• Sale of CAMRADATA to PSG (Note 27)
• Director remunerations (Note 24)

The costs related to the acquisition of RAMAM comprising legal and due diligence costs were paid by PSG.

Pacific investments
Related party transactions with Pacific Investments for the six months ended 30 June 2014 relate to Director’s remuneration in Note 24.

Material contracts with related parties
Operating lease
The details of the a non-cancellable operating leases relating to the London corporate headquarters entered into with PSG is described in
Operating Leases (Note 35).

Transition Services agreement with Punter Southall Group Limited
On 27 March 2014, the Company entered into a transitional services agreement with PSG (the Transitional Services Agreement or TSA)
pursuant to which PSG agreed, for a transitional period to provide certain IT, finance, human resources, facilities management and legal and
compliance services to the Group.

The TSA terminates on 30 June 2017. The Group may terminate one or more transitional service upon at least one month’s written notice. PSG
may terminate one or more transitional services upon at least 12 months’ written notice.

The Directors intend that the majority of these services will be migrated in the medium term.

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

49. Ultimate controlling party and subsidiary undertakings
Up until 26 June 2014 the ultimate controlling party of R&M was PSG. The Group became a publicly listed company on 26 June 2014.

Subsidiary undertakings
The following subsidiaries have been included in the consolidated financial information of the Group:

Name

P-Solve Investments Limited
P-Solve Holdings Limited
P-Solve LLC
River and Mercantile Holding Limited
River and Mercantile Asset Management LLP
River and Mercantile Asset Management LLC

Country of incorporation
of registration

Proportion of voting rights/
ordinary share capital held %

Nature of business

England
England
USA
UK
UK
US

100/100
Investment management
100/65 Holding company for the US business
Actuarial and consulting
100/100
Holding company
100/100
Investment management
100/100
Marketing
100/100

The Company holds 18,878,569 ordinary shares in P-Solve Holdings which carry 100% of the voting rights. A further 10,165,383 A ordinary
shares of P-Solve Holdings (representing 35% of the total issued ordinary share capital) are held by employees of P-Solve LLC (through PSG
Trustees, which PSG Trustees will transfer to the R&M EBT on Admission). The A ordinary shares of P-Solve Holdings do not carry any voting
rights, but rank equally with the ordinary shares in respect of dividend rights and capital rights above a hurdle of £1.8 million.

During the six months ended 30 June 2014, the Group made changes to its corporate structure. These are detailed in Note 3 of the Company
financial statements. None of the changes led to a loss of control of subsidiaries and therefore did not affect the equity attributable to owners.

50. New standards and interpretations
The following standards have not been early adopted. Their impact has not yet been fully assessed:

• IFRS 9 ‘Financial instruments’ addresses the classification, measurement and recognition of financial assets and financial liabilities and

hedge accounting and impairments. It replaces IAS 39.

• IFRS 15 ‘Revenue from Contracts with Customers’ which is intended to clarify the principles of revenue recognition and establish a single

framework for revenue recognition.

51. IFRS 1 First-time adoption
The Group has determined that the financial statements for the six months ended 30 June 2014 constitute the first set of full financial
statements to be prepared under IFRS. IFRS 1 First-time adoption of IFRS sets out additional reporting requirements for the first set of
financial statements prepared under IFRS. The IFRS transition date is deemed to be 1 January 2013 in accordance with IFRS 1. The additional
disclosure required is:

a) A statement of financial position for the adoption date (1 January 2013), with Notes;
b) A reconciliation of reported equity between UK GAAP and IFRS for

i) The adoption date (1 January 2013); and
ii) The end of the latest period reported under UK GAAP (31 December 2013);

c) A reconciliation of total comprehensive income between UK GAAP and IFRS for the latest period reported under UK GAAP (12 months

ended 31 December 2013).

The statement of financial position and accompanying Notes have been included in the primary statements and related Notes of these
consolidated financial statements.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Consolidated financial statements of River and Mercantile Group PLC continued

51. IFRS 1 First-time adoption continued
Reconciliation of reported equity:

ASSETS
Cash and cash equivalents
Investment management balances
Fee income receivables
Asset held for sale
Corporation tax
Other receivables
Fixed assets and leasehold improvements
Intangible Assets

Total assets

LIABILITIES
Investment management balances
Corporation tax
Creditors
Borrowings
Liabilities held for sale
Deferred tax liability relating to intangibles

Total liabilities

NET ASSETS

EQUITY
Share capital
Share premium
Foreign exchange reserve
Merger reserve
Capital redemption reserve
Capital contribution
Retained earnings

UK GAAP
31 December
2013
£’000

Effect of
transition to
IFRS
£’000

IFRS
31 December
2013
£’000

UK GAAP
1 January
2013

Effect of
transition
to IFRS

–
–
–
–
–
–
–
544

544

–
–
–
–
–
–

–

5,192
–
4,483
–
–
7,884
49
1,836

3,005
–
1,996
1,747
259
12,633
69
1,682

19,444

21,391

–
–
7,418
9,687
–
–

17,105

–
–
4,436
–
1,809
–

6,245

–
–
–
–
–
–
–
304

304

–
–
–
–
–
–

–

IFRS
1 January
2013
£’000

3,005
–
1,996
1,747
259
12,633
69
1,986

21,695

–
–
4,436
–
1,809
–

6,245

554

2,339

15,146

304

15,450

–
–
(73)
–
–
–
627

554

86
292
(79)
–
–
575
1,465

46
14,597
(28)
–
–
4,308
(3,777)

–
–
(33)
–
–
–
337

46
14,597
(61)
–
–
4,308
(3,440)

2,339

15,146

304

15,450

5,192
–
4,483
–
–
7,884
49
1,282

18,890

–
–
7,418
9,687
–
–

17,105

1,785

86
292
(6)
–
–
575
838

Capital and reserves attributable to owners of the Parent

1,785

All differences relate to amortisation of goodwill under IFRS and foreign exchange differences arising on the revised goodwill balances.

Reconciliation of total comprehensive income:

Total comprehensive income under UK GAAP
Adjustment to reflect amortisation of goodwill under IFRS
Foreign exchange differences arising on revised goodwill
Other
Total comprehensive income as reported under IFRS

Year ended
31 December
2013
£’000

6,914
290
(40)
1
7,165

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

Parent Company River and Mercantile Group PLC

Company statement of financial position

ASSETS
Cash and cash equivalents
Investments
Other receivables

Total assets

LIABILITIES
Payables
Corporation tax
Borrowings

Total liabilities

Net Tangible Assets

NET ASSETS

EQUITY
Share capital
Share premium
Merger reserve
Capital redemption reserve
Capital contribution
Retained earnings

Capital and reserves attributable to owners of the Parent

30 June
2014
£’000

31 December
2013
£’000

1 January
2013
£’000

Notes

2
3
4

5
6
7

8
9
10
10
10
10

13,008
55,571
1,360

69,939

4,034
123
–

4,157

65,782

246
14,688
44,433
84
3,867
2,464

65,782

320
11,145
28

11,493

853
–
9,687

10,540

953

86
292
–
–
–
575

953

369
14,900
470

15,739

1,084
–
–

1,084

14,655

46
14,597
–
–
–
12

14,655

River and Mercantile Group PLC
Annual report and accounts 2014

Parent Company River and Mercantile Group PLC continued

Company statement of cash flows

Cash flow from operating activities
Operating (loss)/profit
Operating cash flow before movement in working capital
(Increase)/decrease in receivables
Decrease/(increase) in payables
Cash (used in)/generated from operations
Taxation
Net cash (used in)/generated from operations
Cash flow from investing activities
Interest received/(paid)
Dividend from subsidiaries
Disposal of CAMRADATA
Net cash generated from investing activities
Cash flow from financing activities
Ordinary share issue for listing
Performance share issue in the year
Loan from PSG related to capitalisation of share premium
Loan from PSG repaid
Loan repayment to PSG
Dividends paid
Net cash generated from/(used in) financing activities
Management of liquidity resources
Other
Cash and cash equivalents at beginning of year
Change in cash
Cash and cash equivalents at end of year

Financial statements

6 months
ended
30 June 2014
£’000

Year ended
31 December
2013
£’000

(3,793)
(3,793)
(1,032)
3,192
(1,633)
–
(1,633)

2
5,500
–
5,502

14,640
–
–
–
(5,820)
–
8,820

(1)
320
12,688
13,008

–
–
470
(231)
239
–
239

(4)
9,264
1,100
10,360

–
115
10,520
(869)
–
(20,414)
(10,648)

–
369
(49)
320

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

Company statement of changes in equity

2014

Balance at 31 December 2013
Comprehensive income for the year
Profit

Contributions by and distributions to owner
Ordinary shares issued in the year
Capitalisation of share premium
Performance shares converted into deferred shares
Capital contribution from loan from Parent capitalised
Issue of shares in listing
Shares purchased for cancellation
Underwriting commissions

Share
capital
£’000

Share
premium
£’000

Merger
reserve
£’000

Capital
redemption
reserve
£’000

Capital
contribution
£’000

–

–
219
(84)
–
25
–
–

292

–

–
(219)
–
–
14,975
–
(360)

–

44,433
–
–
–
–
–
–

–

–
–
–
3,867
–
–
–

–

–
–
–
–
–
84
–

Total
attributable
to equity
holders
of Parent
£’000

953

Retained
earnings
£’000

575

1,889

–
–
–
–
–
–
–

44,433
–
(84)
3,867
15,000
84
(360)

Balance at 30 June 2014

246

14,688

44,433

3,867

2,464

65,782

2013

Balance at 1 January 2013
Comprehensive income for the year
Profit

Contributions by and distributions to owner
Dividends
Capital reduction
Issue of performance shares

Balance at 31 December 2013

Share
capital
£’000

–

–
–
40

Share
premium
£’000

14,597

–

–
(14,407)
102

292

Merger
reserve
£’000

Capital
redemption
reserve
£’000

Capital
contribution
£’000

Retained
earnings
£’000

Total
attributable
to equity
holders
of Parent
£’000

–

–
–
–

–

–
–
–

–

–
–
–

–

14,655

6,570

(20,414)
14,407
–

(20,414)
–
142

575

953

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Parent Company River and Mercantile Group PLC continued

Notes to the Company financial statements

1. Basis of preparation
The Company’s financial statements have been prepared in accordance with the International Financial Reporting Standards, International
Accounting Standards and interpretations, International Financial Reporting Interpretation Committee interpretations, and with those parts of
the 2006 Act applicable to companies reporting under IFRS as issued by the International Accounting Standards Board as adopted by the
European Union (IFRS) that are relevant to its operations and effective for accounting periods beginning on 1 January 2014.

IFRS was adopted effective for the period commencing 1 January 2013, the comparative consolidated statement of financial position as
at 31 December 2013 have been prepared in accordance with IFRS. The Company’s financial statements have been prepared on a going
concern basis.

Initial public offering
The Company’ shares were admitted for trading on the London Stock Exchange on 26 June 2014.

Name changes
On 28 March 2014 the Company changed its name from P-Solve Limited to River & Mercantile Group Limited. On 9 April 2014 the Company
changed its name to River and Mercantile Group Limited. On 2 June 2014 the Company changed its name to River and Mercantile Group PLC
after registering as a PLC.

Result for the period
The profit after tax for the six months ended 30 June 2014 was £1,889,000 (2013: £6,570,000) which included £5,500,000 (2013: £9,265,000) of
dividend income.

In accordance with s408 of the Companies Act 2006 a separate profit and loss account has not been presented for the Company. There are no
items of comprehensive income other than the result for the period and therefore no statement of comprehensive income has been prepared
for the Company.

Foreign currencies
To the extent that the Company undertakes transactions in currencies other than GBP, the transactions are translated into GBP using the
exchange rate prevailing at the date of the transaction. Balances denominated in foreign currencies are translated into GBP using the
exchange rate prevailing at the balance sheet date. All foreign exchange differences arising from the settlement of transactions or the
translation of balances are recognised in operating expenses in the income statement.

Dividends
The Directors proposed a dividend of 2.3 pence per share for the period ended 30 June 2014.

2. Cash and cash equivalents
Cash and cash equivalents comprise balances held at banks available on demand.

3. Investments in subsidiaries

At start of period/year
Additions
Disposals
Impairment of investment in P-Solve Holdings Ltd

At end of period/year

At
30 June
2014
£’000

At
31 December
2013
£’000

11,145
99,997
(55,571)
–

55,571

14,900
–
(485)
(3,270)

11,145

The Company’s investments in subsidiaries and associates are stated at cost less provision for any impairment incurred.

Pursuant to the acquisition of RAMAM, during the period the Company acquired a 100% interest in River and Mercantile Asset Management
LLP. Further details including IFRS 3 disclosures on the RAMAM acquisition is contained in Note 42 of the consolidated financial statements.
Subsequently, all investments held by the Company were then contributed to River and Mercantile Holdings Limited at book value of
£55,571,000 in return for a further investment in River and Mercantile Holdings Limited.

In the prior year, the Company disposed of its holding in CAMRADATA.

Details of the Group’s subsidiaries are given in Note 49 of the consolidated financial statements.

Financial statements

4. Other receivables

Taxes and social security
Prepayments and accrued income
Amounts owed from Group undertakings
Other debtors

River and Mercantile Group PLC
Annual report and accounts 2014

At
30 June
2014
£ ’000

At
31 December
2013
£’000

At 1 January
2013
£’000

364
81
616
299

1,360

–
–
–
28

–
–
470
–

470

Included in other debtors at 31 December 2013 was £28,000 relating to the issue of E performance shares.

Amounts owed from Group undertakings represent balances incurred in the course of trade and are payable on demand.

5. Payables

Accruals and deferred income
Amounts owed to Group undertakings

At
30 June
2014
£’000

1,957
2,077

4,034

At
31 December
2013
£’000

At 1 January
2013
£’000

–
853

853

–
1,084

1,084

Amounts owed to Group undertakings represent balances incurred in the course of trade and are payable on demand.

6. Corporation tax
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit reported in the consolidated income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group’s liability for current tax is calculated using the statutory tax rates at the balance sheet date.

Current tax

Tax charge on profit on ordinary activities

6 months
ended
30 June
2014
£’000

123

Year ended
31 December
2013
£’000

–

The current tax charge in respect of the year ended 31 December 2013 was paid by PSG.

The tax assessed for the years is lower than the average standard rate of corporation tax in the UK. The differences are explained below:

Profit before tax
Profit before tax multiplied by the average rate of corporation tax in the UK of 22% (2013: 23.25%)

Effects of:
Income not assessable to tax
Group relief surrendered
Expenses not deductible for tax purposes

6 months
ended
30 June
2014
£’000

1,889
416

–
–
(293)

123

Year ended
31 December
2013
£’000

6,570
1,528

(2,297)
9
760

–

7. Borrowings
Borrowings relate to the unsecured borrowing facility with Punter Southall Group. Full details can be found in Note 37 of the consolidated
financial statements.

8. Share capital
Full details of the Company’s share capital can be found in Note 45 of the consolidated financial statements.

9. Share premium
A reconciliation of the movements in share premium can be found in the Company statement of changes in equity.

River and Mercantile Group PLC
Annual report and accounts 2014

Financial statements

Parent Company River and Mercantile Group PLC continued

10. Reserves
A reconciliation of the movements in reserves can be found in the Company statement of changes in equity.

The merger reserve arose on the acquisition of River and Mercantile Asset Management LLP. Full details can be found in Note 46 of the
consolidated financial statements.

Full details on the nature of the other reserves in the Company can be found in Note 46 of the consolidated financial statements.

11. Financial instruments
A discussion of the financial risks and associated financial risk management, which applies to all of the companies in the Group, can be found
in Note 47 of the consolidated financial statements.

The financial assets and liabilities of the Company are categorised under IAS 39 as follows.

Financial assets
£’000s

Cash and cash equivalents
Other receivables

Total financial assets

Other receivables excludes prepayments and accrued income.

Financial Liabilities
£’000s

Payables
Borrowings

Total financial liabilities

Payables excludes accruals and deferred income.

Fair value through profit or loss

Loans and receivables

30 June
2014

31 December
2013

1 January
2013

30 June
2014

31 December
2013

1 January
2013

–
–

–

–
–

–

–
–

–

13,008
1,279

14,287

320
28

348

369
470

839

Fair value through profit or loss

Amortised cost

30 June
2014

31 December
2013

1 January
2013

30 June
2014

31 December
2013

1 January
2013

–
–

–

–
–

–

–
–

–

2,077
–

2,077

853
9,687

10,540

1,084
–

1,084

The table below presents the cash flows receivable and payable by the Company under non-derivative financial assets and liabilities by
remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual, undiscounted cash flows.

At 30 June 2014
£’000s

Assets
Cash and cash equivalents
Other receivables

Total financial assets

Liabilities
Creditors
Borrowings

Total financial liabilities

Net liquidity surplus

At 31 December 2013
£’000s

Assets
Cash and cash equivalents
Other receivables

Total financial assets

Liabilities
Creditors
Borrowings

Total financial liabilities

Net liquidity surplus/(deficit)

On demand

< 3 months

3-12 months

1-5 years

> 5 years

13,008
616

13,624

2,077
–

2,077

–
663

663

–
–

–

11,547

663

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

On demand

< 3 months

3-12 months

1-5 years

> 5 years

320
–

320

853
9,687

10,540

(10,220)

–
28

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

Financial statements

River and Mercantile Group PLC
Annual report and accounts 2014

11. Financial instruments continued
At 1 January 2013
£’000s

Assets
Cash and cash equivalents
Other receivables

Total financial assets

Liabilities
Payables
Borrowings

Total financial liabilities

Net liquidity deficit

On demand

< 3 months

3-12 months

1-5 years

> 5 years

369
470

839

1,084
–

1,084

(245)

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

–
–

–

Other receivables excludes prepayments and accrued income and payables excludes accruals and deferred income.

12. Directors’ remuneration
Details of the individual Directors’ remuneration is given in the Directors’ Remuneration Report on pages 40 to 45.

13. Related parties
The Company entered into the following transactions with related parties:

£’000s
Related party

Punter Southall Group

River and Mercantile Group undertakings

Type of transaction

Borrowing facility
IPO costs
Group interest paid
Inter company balances
Group cost sharing
Dividends received

Transaction amount

Balance owed/(owing)

2014

9,687
600
12

1,577
5,500

2013

9,687
–
40

–
9,265

30 June
2014

31 December
2013

1 January
2013

–
–
–
(1,460)
–
–

(9,687)
–
–
(10,540)
–
–

–
–
–
(614)
–
–

14. IFRS 1 – First time adoption
The Company has determined that the financial statements for the six months ended 30 June 2014 constitute the first set of full financial
statements to be prepared under IFRS. IFRS 1 First-time adoption of IFRS sets out additional reporting requirements for the first set of
financial statements prepared under IFRS. The IFRS transition date is deemed to be 1 January 2013 in accordance with IFRS 1. The additional
disclosure required is:

a) A statement of financial position for the adoption date (1 January 2013), with notes;
b) A reconciliation of reported equity between UK GAAP and IFRS for

i) The adoption date (1 January 2013); and
ii) The end of the latest period reported under UK GAAP (31 December 2013);

c) A reconciliation of total comprehensive income between UK GAAP and IFRS for the latest period reported under UK GAAP (12 months

ended 31 December 2013).

There are no differences in reported equity for the Company between UK GAAP and IFRS at either 1 January or 31 December 2013.

There is no difference in comprehensive income between UK GAAP and IFRS for the 12 months ended 31 December 2013.

15. Other information
The Company has four employees (2013: 0), who are the Executive Directors of the Group. The Company has taken the exemption under
s408(2) of the Companies Act 2006 to not present their remuneration separately in these financial statements.

The have been no events after the balance sheet date which the Directors feel should be disclosed in these financial statements.

The Company has not entered into any significant commitments or contingent liabilities after the balance sheet date.

River and Mercantile Group PLC
Annual report and accounts 2014

Notes

Other Information

River and Mercantile Group PLC
Annual report and accounts 2014

River and Mercantile Group PLC
Shareholder Information and Advisors

Company No.
04035248

Registered office
11 Strand
London
WC2N 5HR

Tel: 020 3327 5100

Company Secretary
Elizabeth Weston

Website
www.riverandmercantile.com

Annual General Meeting
23 October 2014 at 10.30am
Charing Cross Hotel
Strand
London
WC2N 5HX

Auditors
BDO LLP
55 Baker Street
London
W1U 7EU

Legal Advisors to the Company
Ashurst LLP
Broadwalk House
5 Appold Street
London

Joint Brokers and Advisors
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR

Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT

Dividends
Where possible, it is recommended that dividend payments are made
directly into a bank account to provide improved security and faster
access to funds. You may give instruction via the Registrar’s website
www.shareview.co.uk or in writing.

Share listing
River and Mercantile Group PLC‘s ordinary shares of £0.003 are
admitted to trading on the main market of the London Stock
Exchange under ticker RIV.

Information on the share price and the Company can be accessed via
the Company’s website or at www.londonstockexchange.com

Bloomberg
0994474D:LN

ISIN
GB00BLZH7X42

SEDOL code
BLZH7X4

Ticker
RIV

Dividend
For the financial year ended 30 June 2014

Amount
2.3 pence per ordinary share

Ex-dividend date
8 October 2014

Record date
10 October 2014

Payment date
7 November 2014

Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

Shareholder helpline
0800 876 6660
(+44 121 415 7047)

www.shareview.co.uk

Other Information

River and Mercantile Group PLC
Annual report and accounts 2014

River and Mercantile Group PLC
Shareholder Information and Advisors

Company No.
04035248

Registered office
11 Strand
London
WC2N 5HR

Tel: 020 3327 5100

Company Secretary
Elizabeth Weston

Website
www.riverandmercantile.com

Annual General Meeting
23 October 2014 at 10.30am
Charing Cross Hotel
Strand
London
WC2N 5HX

Auditors
BDO LLP
55 Baker Street
London
W1U 7EU

Legal Advisors to the Company
Ashurst LLP
Broadwalk House
5 Appold Street
London

Joint Brokers and Advisors
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR

Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT

Share listing
River and Mercantile Group PLC‘s ordinary shares of £0.003 are
admitted to trading on the main market of the London Stock
Exchange under ticker RIV.

Information on the share price and the Company can be accessed via
the Company’s website or at www.londonstockexchange.com

Bloomberg
0994474D:LN

ISIN
GB00BLZH7X42

SEDOL code
BLZH7X4

Ticker
RIV

Dividend
For the financial year ended 30 June 2014

Amount
2.3 pence per ordinary share

Ex-dividend date
8 October 2014

Record date
10 October 2014

Payment date
7 November 2014

Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

Shareholder helpline
0800 876 6660
(+44 121 415 7047)

www.shareview.co.uk

G R O U P

River and Mercantile Group PLC
11 Strand, London
WC2N 5HR
T: 020 3327 5100
www.riverandmercantile.com