Preliminary Results
04/07/2023 07:00
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RNS Number : 8282E Mercia Asset Management PLC 04 July 2023
RNS 4 July 2023
Mercia Asset Management PLC
("Mercia" or the "Group" or the "Company")
Preliminary results for the year ended 31 March 2023
Consistently profitable fund management operations and a strong, debt-free
liquidity position underpins an increased proposed final dividend
Mercia Asset Management PLC (AIM: MERC), the proactive and regionally focused
specialist asset manager with c.£1.4billion of assets under management
("AuM") is pleased to announce its preliminary results for the year ended 31
March 2023.
Highlights
· Frontier Development Capital Limited ("FDC") acquired in December 2022
adding c.£415million of funds under management ("FuM"), funded from the
Group's own liquid resources. The acquisition is performing in line with
expectations
· Organic FuM inflows of c.£134million during the year and no
redemptions
· Strong liquidity across both the Group's balance sheet and managed
funds, with c.£378million of unrestricted cash
· c.£165million invested into 176 businesses, including 85 new
companies during the year
· Proposed final dividend increase of 6.0%
Financial results
31 March 31 March
2023 2022
Statutory results
Revenue £25.9m £23.2m
Realised (loss)/gains on sale of direct investments £(0.8)m £9.9m
Fair value movements in direct investments £1.2m £11.4m
Profit before taxation £2.4m £27.4m
Basic earnings per share 0.64p 5.93p
Interim dividend per share paid 0.33p 0.30p
Proposed final dividend per share (1) 0.53p 0.50p
Cash and short-term liquidity investments £37.8m £61.3m
Net assets £202.9m £200.6m
Alternative performance measures
Adjusted operating profit (2) £7.6m £8.4m
Net assets per share 45.4p 45.6p
AuM (3) £1,437.3m £959.2m
1 The proposed final dividend is subject to shareholder approval at the
Company's Annual General Meeting on 21 September 2023, and if approved, will
be paid on 27 October 2023 to shareholders on the register at close of
business on 29 September 2023.
2 Adjusted operating profit is defined as operating profit before
exceptional performance fees net of variable compensation, depreciation,
realised gains/(losses) on the sale of direct investments, fair value
movements in direct investments, share-based payments charge, amortisation of
intangible assets, movement in fair value of deferred consideration and
exceptional items. It includes net finance income. The reconciliation of
adjusted operating profit to operating profit is included in the Chief
Financial Officer's review.
3 Includes the Group's consolidated net assets.
Managed fund highlights
· Third-party FuM of c.£1,234million (2022: c.£758million)
contributed £24.7million in revenue for the year (2022: £19.5million)
· Cash distributed to fund investors of c.£38million (2022:
c.£87million)
· Venture FuM c.£630million (2022: c.£592million)
o £31.0million successfully raised across four Enterprise Investment
Schemes ("EIS") funds during the year
o £40.0million raised by the Northern Venture Capital Trusts ("VCTs") in
the year, in addition to £2.9million of shareholder dividend reinvestment
inflows
o Interim and final dividends totalling c.£20million paid by the three
Northern VCTs
o Total additional allocations from British Business Bank of £30.3million
during the year under the Northern Powerhouse Investment Fund Equity and
Midlands Engine Investment Fund Proof of Concept mandates
· Private equity FuM c.£48million (2022: c.£48million)
o Portfolio trading performance showing signs of improvement
· Debt FuM c.£556million (2022: c.£118million)
o £415.0million of FuM added to the Group through the acquisition of FDC
o Post acquisition, FDC successfully raised an additional £30.1million for
its FDC Debt LP fund
o Accreditation awarded to the Group to deliver debt funding under the third
phase of the Recovery Loan Scheme
Direct investment portfolio highlights
· Direct investment portfolio fair value of £136.6million (2022:
£119.6million), up c.14%
· Sale of the Group's equity holding in Intechnica Holdings Limited in
January 2023 generated cash receipts of £3.7million, with a further
£0.3million received in May 2023
· £20.7million net cash invested into 13 portfolio companies (2022:
£18.4million net invested into 16 portfolio companies), including new direct
investments into Nova Pangaea (Holdings) Limited, Axis Spine Technologies
Limited and Uniphy Limited
· Revenue growth at most of the direct investment portfolio, including
VirtTrade Limited and Invincibles Studio Limited, alongside continued
commercial traction at Warwick Acoustics Limited, principally drove fair value
increases totalling £11.3million
Post year end developments
· The three Northern VCTs successfully raised £18.0million, as well as
a further £5.0million allocated to the North East Venture Capital fund
mandate
· Mercia managed private equity fund, Enterprise Ventures Growth II LP,
sold it's holding in ParkVia, the Manchester-based company behind a leading
global parking reservation platform, to CAVU, part of the Manchester Airports
Group plc
· Warwick Acoustics secured its first production contract with a global
top 10 luxury vehicle manufacturer
· Significant opportunities identified within the next 12 months for
Mercia to generate additional FuM inflows
Mark Payton, Chief Executive Officer of Mercia, commented:
"Mercia is now an established impact investor operating from a number of key
cities across the UK, supporting ambitious founders who are seeking growth
capital. During a year of caution from many in our sector, we have increased
our levels of capital deployment, completed a successful acquisition and
achieved positive fund inflows, with total AuM growing by c.50%.
Debt-free and with only Sterling denominated assets, Mercia's hybrid
investment model of an evergreen balance sheet with maturing assets, coupled
to a highly synergistic and profitable fund management operation, puts us in a
strong position as we face FY24, with c.26% of our AuM in unrestricted cash
including £37.8million of our own cash reserves."
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018. Upon publication of this
announcement, this inside information is now considered to be in the public
domain.
-Ends-
For further information, please contact:
Mercia Asset Management PLC +44 (0)330 223 1430
Mark Payton, Chief Executive Officer
Martin Glanfield, Chief Financial Officer
www.mercia.co.uk (http://www.mercia.co.uk/)
Canaccord Genuity Limited (NOMAD and Joint Broker) +44 (0)20 7523 8000
Simon Bridges, Emma Gabriel
Singer Capital Markets (Joint Broker) +44 (0)20 7496 3000
Harry Gooden, James Moat
FTI Consulting +44 (0)20 3727 1051
Tom Blackwell, Immy Ransom
mercia@fticonsulting.com (mailto:mercia@fticonsulting.com)
Analyst briefing
An analyst webcast will be given by Dr Mark Payton, Chief Executive Officer,
Martin Glanfield, Chief Financial Officer, and Julian Viggars, Chief
Investment Officer, at 9.30am today, 4 July 2023. Analysts wishing to register
are asked to contact mercia@fticonsulting.com
(mailto:mercia@fticonsulting.com) . An audio webcast of this briefing will
subsequently be available later in the day via Mercia's website.
Investor presentation
In addition, as part of its commitment to appropriate and open communication
structures for all elements of its shareholder base, Mercia will provide a
live management presentation and Q&A via the Investor Meet Company ("IMC")
platform at 3.00pm today. Registration details can be accessed via:
https://www.investormeetcompany.com/mercia-asset-management-plc/register-investor
(https://www.investormeetcompany.com/mercia-asset-management-plc/register-investor)
About Mercia Asset Management PLC
Mercia is a debt free and proactive specialist asset manager focused on
supporting regional SMEs to achieve their growth aspirations. Mercia provides
capital across its four asset classes of venture, private equity, debt and
proprietary capital: the Group's 'Complete Connected Capital'. The Group
initially nurtures businesses via its third-party funds under management, then
over time Mercia can provide further funding to the most promising companies,
by deploying direct investment follow-on capital from its own balance sheet.
The Group has a strong UK footprint through its regional offices, university
partnerships and extensive personal networks, providing it with access to
high-quality deal flow.
Mercia Asset Management PLC is quoted on AIM with the EPIC "MERC".
Non-Executive Chair's statement
It is just over three years since we all heard those words "you must stay at
home" and it is sometimes easy to forget just how tough those early days and
months in particular were. In my Chair statement for the year ended 31 March
2020, I said that "times such as these can be challenging and difficult, but
they can also be defining moments". I am pleased to say that the latter has
proven to be the case for Mercia Asset Management PLC during the unprecedented
period of pandemic, economic and geo-political upheaval which has followed.
It is worth reflecting on the tangible progress that has been made by Mercia
during this three-year period, by comparing the following two reporting years:
31 March 31 March Movement
2023 2020 %
£'000 £'000
Assets under management 1,437,300 798,700 +80
Revenue 25,881 12,747 +103
Adjusted operating profit 7,586 518 +1,364
Operating cash inflow 3,019 136 +2,120
Unrestricted cash (incl. short-term liquidity investments) 37,834 30,653 +23
Net assets 202,921 141,460 +43
Net assets per share (pence) 45.4 32.1 +41
Dividends per share (interim paid and final proposed) (pence) 0.86 - -
Number of colleagues 142 93 +53
This material growth in all key metrics, in the face of the last three
challenging years, amply validates our business model.
Progressing our strategy despite market headwinds - Mercia 20:20
Launched on 1 April 2021, the Group's current three-year strategic plan is
known as Mercia 20:20. The Group's twin objectives are to:
· grow AuM by an average of 20% per annum over the three years to 31
March 2024; and
· deliver average pre-tax profits of £20million per annum over the same
three-year period.
The Group remains focused on seeking to achieve both of these objectives
during this, the final year of the current strategic plan. In relation to the
Group's AuM growth objective, in December 2022 we were pleased to welcome the
staff of FDC into our #OneMercia family. A highly respected and growing
regionally focused specialist lender, FDC complements our existing small and
medium-sized enterprise ("SME") lending operations. It has already grown its
own FuM in the first few months since acquisition. We not only welcome FDC's
staff to Mercia, but also their key fund investors and regional stakeholders,
whom we will ensure continue to receive the standard of professional
investment and service that they have come to expect from FDC.
Dividend
Mercia adopted its progressive dividend policy in December 2020, when the
Group declared its maiden interim dividend of 0.10 pence per share. Since
then, Mercia's continued progress has merited measured increases in both the
interim and final dividends. Last December, the Group paid an interim dividend
of 0.33 pence per share and is now recommending a final dividend of 0.53 pence
per share, making 0.86 pence per share for the full year (2022: 0.80 pence per
share), a 7.5% increase on the prior year.
Given the strength of Mercia's business model and its continuing excellent
cash position, the Board's objective remains to maintain this progressive
policy.
Governance and engagement
Good governance is fundamental to the long-term success of any company. Last
year, as part of our continuing commitment to the governance principles of the
Quoted Companies Alliance Corporate Governance Code, we commissioned our third
independent external Board effectiveness review, since our admission to the
AIM in December 2014. In May this year, we invited the independent reviewer
back to check on our progress against her recommendations, which she confirmed
have been positive.
Part of the Board's work during the past year has been the evolution and
composition of its governance structures. This has included Mercia's Senior
Independent Director, Diane Seymour-Williams, succeeding myself as Chair of
the Remuneration Committee and joining the Nominations Committee. The terms of
reference of each Committee have also been reviewed and where appropriate,
updated.
It remains critical to our future success that we continue to meet the
investment objectives agreed with our many asset class fund investors. This
includes our institutional investors, individual investors and the independent
boards of the three Northern VCTs. In order to continue to support the VCT
investment team in successfully managing and expanding the VCT portfolios and
respective net assets per share ("NAV"), Peter Dines has relinquished his
Chief Operating Officer role to dedicate himself to co-leading our national
venture team. We have begun the search for Peter's replacement as COO, and
have received many high-quality applications.
Proactive engagement with all of our stakeholder groups remains particularly
important to our Board. Hence, for the first time since our early years, we
will be holding our forthcoming Annual General Meeting in London. I look
forward to engaging with all of our leading stakeholders during the current
financial year.
Responsible investing and culture
For Mercia, responsible investing and company culture go hand-in-hand. We
invest with purpose to make a return for our investors, but in such a manner
that treats all of our stakeholders and the environment with respect. This
respect includes the careful management of any potential conflicts of
interest, be they perceived or actual. Culture should never be static and we
continue to look at ourselves to see how we can increase our own contribution
to the fundamentally important areas of employee well-being and support. We do
this through proactive engagement together with a commitment to diversity,
wider society and the environment. Our #OneMercia ethos embodies all of these
aspects of life. We have continued to adopt a flexible approach to the working
week, recognising the needs and mental well-being of our staff. We also
recognise the importance of face-to-face collaboration, side-by-side training
and the many psychological and social benefits of our friendly open-plan
office culture. We believe that team working is best achieved when everyone is
together, and we will continue to balance all of these aspects to provide the
best possible outcomes for our investors, investees and employees.
Although not yet mandatory for Mercia, we continue to measure and offset our
environmental impact. We are fortunate that our business model leaves a
relatively small carbon footprint, but we still want to play our part in
helping the environment. In terms of both good governance and good
citizenship, we believe in practising what we ask of our investee companies,
all as part of our mantra of 'responsible investing with purpose'. Carbon
offsetting is a positive step, and we will continue to seek ways to reduce our
carbon footprint over time.
Opportunity
The many varied and well documented challenges of the last three years have
shown the importance of our strong #OneMercia culture, which underpins all
that we do, particularly our strong overall financial performance. The
significant profitable and cash generative growth that we have achieved during
this period has been funded entirely from our own financial resources, without
dilutive recourse to shareholders or the need to borrow from third-parties. We
see no need for this to change in the foreseeable future.
These financial results clearly demonstrate the robustness and continued
maturing of our business model, which is now proven to work in both good and
tough times. As Chair, I remain immensely proud to be part of #OneMercia, and
on behalf of our Board, I sincerely thank each and every person connected in
one way or another with our Group for your continuing support. Notwithstanding
the uncertain backdrop, our carefully managed and healthy funds and balance
sheet cash positions allow us to remain entirely focused on our respective
fund mandates and our strategic priorities, and as a result, we are optimistic
for further near and long-term growth.
Ian R Metcalfe OBE
Non-executive Chair
Chief Executive Officer's Review
Introduction
With strong regional roots and an established track record, Mercia is a 'one
stop' responsible financial partner contributing towards the growth of the UK
economy. Our physical presence in some of the key cities across the UK,
including Birmingham, Manchester, Sheffield, Leeds, Bristol, Newcastle and
London, results in sight of a significant number of investment opportunities
in our sweet spot of ambitious business owners who are looking for between
£250,000 and £10million of investment. It is interesting to reflect on the
progress made in the last three years since COVID struck in March 2020, with
AuM up by c.80%, revenue up by c.103% and NAV per share up by c.41% and, with
the completion of FY23, our third consecutive year of adjusted operating
profits.
Strategy
Despite a challenging FY23 for specialist asset managers in general, Mercia
has nevertheless been able to continue with its growth journey. We are now two
years into our current three-year strategic plan, Mercia 20:20. Our strategy
is to grow our AuM by an average of 20% per annum and deliver average pre-tax
profits ("PBT") of £20million per annum over three years. Another way of
looking at this is reaching c.£1.6billion in AuM and achieving c.£60million
in cumulative PBT by the end of FY24.
Mercia 20:20 is set in parallel with our aspirations to also achieve top
quartile performance by our managed funds in their asset categories, plus
continued growth in the direct investment portfolio as the key element of our
consolidated balance sheet. We also remain focused on growing our third-party
funds under management resulting in further growth in adjusted operating
profit. To achieve these growth targets, we have established interconnected
pools of capital and a capability to invest from as little as £250,000
through to £10million. Our average investment size per investee continues to
grow, standing at £0.9million in FY23, and we are looking to increase this
further in FY24 as we continue to scale Mercia's capital deployment and AuM.
Our focused approach of only investing in domestic UK businesses with
relatively modest capital needs (typically less than £30million in their
entire growth journey to exit) as a generalist, but with several key sector
themes, means that we have a portfolio which we can, if necessary, support
entirely from within our own capital resources - thus protecting and
preserving value during periods of economic instability. The majority of our
AuM (c.86%) is in third-party managed funds, all of our direct investments
benefit from shared equity positions alongside one or more of the funds we
manage and, as a debt-free Group, we remain confident in Mercia's profitable
and cash generative investment model.
Positive progress during the year
Whilst the markets, both public and private, have cooled over the last 12
months, we have seen this as an opportunity to step forward with both
corporate and organic investment activity. Testament to this is the recent
acquisition of FDC, a business capable of lending up to £10million per
transaction, now with c.£441million in third-party FuM, headquartered in the
heart of Birmingham. In addition, in the last financial year we have supported
176 businesses and invested c.£165million, of which c.£21million was from
our own cash resources. Since Mercia's inception, we have backed countless
founders with their ambitious goals for growth and we will continue to do so,
as we seek to become one of the leading wealth enablers in the UK.
In addition to the acquisition of FDC, we have seen capital inflows of
c.£134million from the three pools of capital that we manage: retail
(c.£31million from EIS and c.£43million from VCT), British Business Bank
(c.£30million) and institutional capital (c.£30million). We are targeting
further organic growth from all three pools of capital during FY24.
Summary financials
The last 12 months have been tough for many, with the technology sector being
largely out of favour with investors, impacting confidence and valuations.
Despite the war in Ukraine, double-digit inflation, interest rates growing
almost six fold, and marked domestic liquidity reductions, it is pleasing to
report continued year-on-year growth, as summarised by:
· AuM of c.£1.4billion, a c.50% increase
· Revenue of c.£26million, a c.12% increase
· Final proposed dividend up 6.0% to 0.53 pence per share making, if
approved by shareholders, 0.86 pence per share for the year, an increase of
7.5%.
Outlook
Whilst the sector that we operate in has generally seen liquidity pressures
and material reductions in portfolio values, we see an opportunity during this
current financial year to increase our investment activity by taking advantage
of our strong, unrestricted liquidity of c.£378million across the Group.
Based on our physical presence across the UK and continued improvement in both
the quality and volume of investment opportunities, we have set an ambitious
target of increasing capital deployment to a record level of £250million in
FY24.
Since our IPO in December 2014, each year we have either met or beaten market
forecasts from a trading outturn perspective. To achieve this requires an
exceptional team at Mercia, as we look to deliver on our vision of being the
first choice for investors, investees and employees. At the top of our list of
'value drivers' for any acquisition that we make is cultural fit, and I warmly
welcome all FDC staff to Mercia, as we continue on our growth journey together
underpinned by our shared values. I am sincerely grateful to the entire team
at Mercia, our portfolio companies working tirelessly to fulfil their own
growth aspirations, our managed fund investors, and last but by no means
least, the continued belief and support of our shareholders.
Dr Mark Payton
Chief Executive Officer
Chief Investment Officer's review
Navigating challenges with strength
FY22 was a remarkable year for Mercia's portfolio companies, with
record-breaking fair value movements. But as we ventured into the spring of
2022, the landscape shifted. Geo-political conflicts, inflation and rising
interest rates ushered in uncertainty, casting a shadow over the public
markets. Technology and high-growth companies bore the brunt, witnessing
significant value decreases.
Against this backdrop, I am pleased to confirm that Mercia's portfolio
companies have risen above the storm in this reporting period.
Our equity funds have realised an impressive c.£71million from 39 companies,
delivering an average return of 2x. This is another excellent performance, to
add to the c.£250million of realisations over the previous two years on
behalf of individual and Limited Partner ("LP") investors, alongside our own
balance sheet.
Investor confidence
The confidence placed in us is further evidenced by the inflow of an
additional c.£134million (including £30.1million inflow to FDC) of capital
to our FuM. Such inflows are only achieved when investors are pleased with our
performance, and we are delighted to see their commitments extended in this
manner.
Direct investments: Solid progress driven by advancing gaming portfolio
The table below lists Mercia's top 20 investments by fair value as at 31 March
2023, including the net cash invested, realisation proceeds, realised
gains/(loss), fair value movements and the fully diluted equity percentage
held.
Year of Net Net cash Investment Realised Fair value Net
first investment invested realisations gains/(loss) movement investment Percentage
direct investment value as at year to year to year to year to value as at held as at
1 April
31 March
2022
31 March 31 March 31 March 31 March 31 March
2023
£'000
2023 2023 2023 2023 2023
£'000
£'000 £'000 £'000 £'000 %
nDreams Ltd 2014 25,761 - - - - 25,761 33.2
Impression Technologies Ltd 2015 10,372 4,888 - - - 15,260 65.1
Netacea Group Ltd 2022 - 3,000 - - 8,693 11,693 24.1
Voxpopme Ltd 2018 10,511 625 - - (121) 11,015 16.6
Medherant Ltd 2016 8,989 1,709 - - 236 10,934 38.4
VirtTrade Ltd * 2015 5,387 550 - - 4,145 10,082 40.6
Warwick Acoustics Ltd 2014 6,306 1,450 - - 1,939 9,695 40.3
Invincibles Studio Ltd 2015 4,600 626 - - 3,471 8,697 35.5
Eyoto Group Ltd 2017 2,960 1,514 - - 1,013 5,487 24.7
Ton UK Ltd ** 2015 6,074 - - - (692) 5,382 29.9
Locate Bio Ltd 2018 4,858 - - - - 4,858 18.1
Axis Spine Technologies Ltd 2022 - 3,000 - - - 3,000 9.4
sureCore Ltd 2016 2,417 - - - - 2,417 22.0
Nova Pangaea (Holdings) Ltd 2022 - 2,250 - - - 2,250 -
Akamis Bio Ltd *** 2015 1,780 - - - - 1,780 1.4
Forensic Analytics Ltd 2021 1,750 - - - - 1,750 8.2
MIP Discovery Ltd 2020 1,449 - - - - 1,449 10.2
Pimberly Ltd 2021 1,375 - - - - 1,375 5.7
MyHealthChecked PLC 2016 1,632 - - - (663) 969 13.1
Uniphy Ltd 2022 - 550 - - - 550 -
Other direct investments n/a 8,926 491 (13) (2,642) (4,616) 2,146 n/a
Intechnica Holdings Ltd 2017 14,411 - (4,000) 1,793 (12,204) - -
Total 119,558 20,653 (4,013) (849) 1,201 136,550 n/a
* Trading as Avid Games.
** Trading as Intelligent Positioning.
*** Formerly PsiOxus Therapeutics Limited, prior to a change in
registered name to Akamis Bio Limited in January 2023.
As at 31 March 2023, the value of our direct investment portfolio was
£136.6million (2022: £119.6million). This reflects a net £20.7million
invested during the year, and a £1.2million fair value increase resulting
principally from the continued growth of our mobile and digital gaming
companies.
Amid the software sector's downward movement we had one successful realisation
in January 2023, the sale of Intechnica Holdings, a software and technology
consultancy business. Mercia's 25.5% direct holding generated £3.7million in
cash proceeds, achieving an internal rate of return ("IRR") of 27% and a 1.7x
multiple on its holding value.
We continue to provide support to our top 10 direct investments, with
£14.4million invested during the year. Our focus on evaluating new
opportunities has resulted in three new direct investments which exhibit
growth potential in exciting markets.
Whilst the fair value movements overall for the year appear modest, our core
companies continue to expand revenues and forge valuable partnerships, with
five of our direct investments seeing fair value uplifts.
Market challenges have inevitably impacted businesses across our direct
portfolio. Netacea experienced lower growth than forecast and, coupled with
market revenue multiples falling, has led to a £3.5million fair value
decrease (excluding the impact of the demerger from Intechnica). Intelligent
Positioning and W2 Global Data Solutions both experienced similar pressures
during the year. Furthermore, Edge Case Games was informed that Wargaming.net
Limited has ceased work on its original game that was subject to royalty
receipts, resulting in a downward fair value movement.
The caution from potential acquirers in purchasing relatively early-stage and
often loss-making assets has made them increasingly risk-averse. This approach
had noticeable effects throughout the financial year, particularly in the last
quarter when exit processes stalled and later-stage investors focused on their
existing portfolios. As a result, co-investors and acquirers scaled back or
withdrew from assets struggling for growth or exhibiting high cash-burn rates.
One such example was the exit process for Sense Biodetection, which was
ultimately sold through an accelerated process for a fraction of the initially
indicated amounts, when buyers and their US funders pulled back. This
disappointing outcome amounted to a £2.6million realised loss, as later-stage
investors were compelled to accept a minimal stake in the ultimate acquirer,
Sherlock Biosciences Inc., through a share-based deal.
Our equity performance
IRR 31 March 2023 31 March 2022
Proprietary capital 13% 16%
TVPI* Venture Private Equity Venture Private Equity
Institutional Funds
Legacy 188% 149% 193% 132%
Current 113% 119% 111% 109%
Retail EIS Funds
Legacy 108% n/a 139% n/a
Current 92% n/a 96% n/a
VCTs (pence per Ordinary share) NAV ** Total return ** NAV TOTAL return
Northern Venture Trust 62.1 250.6 68.4 252.9
Northern 2 VCT 59.0 195.0 64.4 196.8
Northern 3 VCT 91.6 205.0 97.9 206.3
* TVPI % defined as; distributions + total value + cash/capital paid in.
** VCT total return growth over 12 months, based on 31 March 2023 cumulative
total return, of -0.6% to -0.9%.
We use different performance measures across our asset classes. For our direct
portfolio, IRR is adopted because our proprietary capital is also used for
other activities. As at 31 March 2023, the direct portfolio IRR had decreased
to c.13%, with slower growth in fair values.
We measure 'Total Value to Paid In' ("TVPI") across our regional and private
equity ("PE") funds as it shows total value returned and accruing to investors
after fees; this naturally increases over time as more capital is returned and
the portfolio values grow. Our legacy venture funds, at a TVPI of 188%, are
largely flat year-on-year as several assets were marked down during FY23. Our
newest PE fund saw a recovery in asset values as the impact of the pandemic on
its portfolio businesses receded.
For our VCTs, 'total return' includes cumulative dividends paid alongside
current net asset value to give a true total performance measure. It has been
principally flat year-on-year.
Our continuing strong overall investment performance enables us to raise
additional inflows, with a further £30.3million allocated from additional
contributions to the Northern Powerhouse Investment Fund Equity and our
Midlands Engine Investment Fund Proof of Concept mandate by British Business
Bank. Alongside this, our EIS team raised new funds totalling £31.0million,
in addition to our Northern VCTs raising £40.0million, with investors
re-investing £2.9million of dividends paid during the year. Since year end, a
further £18.0million has been successfully raised by our Northern VCTs,
together with a £5.0million additional contribution to the North East Venture
Capital fund.
At the year end, we had c.£378million of liquidity across all our funds and
balance sheet, c.£128million of which sits within FDC's debt funds.
AuM Acquired Investor Performance Distributions AuM Post
1 April Inflows 31 March year-end inflows
2022 2023
Asset class £'m £'m £'m £'m £'m £'m £'m
Venture 592 - 104 (32) (34) 630 23
Private Equity 48 - - 1 (1) 48 -
Debt 118 415 30 (4) (3) 556 -
Total FuM 758 415 134 (35) (38) 1,234 23
Proprietary Capital 201 - - 6 (4) 203 -
Total AuM 959 415 134 (29) (42) 1,437 23
Our managed funds as at 31 March 2023 totalled £1.2billion. During the year,
we invested c.£165million into 176 businesses, including 85 new companies.
Venture
UK retail investor-focused VCT and EIS managers raised record amounts of
capital in FY23 for disruptive businesses, supporting high-quality management
teams. This has provided a solid foundation for entry valuations in the
pre-series A space where we operate. Our EIS, regional and VCT equity funds'
successful track records, supported by consistently high deployment rates and
profitable exits, has resulted in c.£104million of capital inflows. During
the year, EIS fundraising totalled c.£31million, with a further c.£30million
allocated from our LP partners to our regional funds and c.£43million in new
VCT subscriptions.
Notable realisations include robust returns from our investments in Ideagen
(9.8x return) and Lineup Systems (7.5x return) from the Northern VCT
portfolio, plus C7 (14.2x return) from the EIS portfolio.
The Group's overarching strategy is to make a positive impact through
investment in purpose-led companies. We have an investment track record in the
Life Sciences, Digital and Deep Tech sectors, aiming for a sustainable,
healthier and tech-enabled future. These innovative companies are largely
located in the regions outside of London.
Private equity
Tough economic times have presented a challenging terrain for lower
mid-market, regional PE investors. This has impacted deal volumes and raised
entry valuations as mid-market PE firms have been bidding on substantially
smaller deals. We have focused on improving performance within our portfolio,
yielding significant results with the portfolio fair value growing by 33%,
alongside the exit of D&P Group from one of our legacy funds, giving an
overall 3x return on the portfolio.
Debt
Leveraging a variety of government-backed schemes and privately raised funds,
we are a go-to lender in the regional SME debt market. Our recent acquisition
of FDC in the Midlands has extended our services to enable us to offer higher
loan values of up to £10million, which were previously capped at £1million.
With a strong performance, Mercia's Debt funds completed 82 deals, resulting
in a c.154% increase in the total amount invested to £34.1million (2022:
£13.4million). As a highly agile and flexible lender, our expansion has
further demonstrated our ability to meet the evolving needs of SMEs.
Post period events
Post year end, £4.2million has been invested into Voxpopme, Eyoto, Netacea,
Impression Technologies and TON UK t/a Intelligent Positioning.
Summary and look forward
In the current year, I have encouraged our investment staff to be bold and
unwavering in their support of teams and assets we believe in. We have
leveraged the expertise of our Mercia Nucleus network to provide experienced
advice to these entrepreneurial teams. At the same time, we have made
conscious decisions to allocate capital only to those whose models remain
differentiated and aligned with our investment strategy.
Over the past three extraordinary years, we have generated significant
realisations, surpassing £320million. This accomplishment not only solidifies
our business model and investment expertise, but also enhances our resilience
as a proactive specialist asset manager. By carefully selecting assets across
sectors, we have avoided overreliance on those specific tech sectors that
faced challenges during this period.
While our path to achieving Mercia 20:20 may not be a straight line across the
three years, our portfolios are well-run and contain incredibly promising
assets. I am confident that we are excellently positioned to deliver
significant value over the medium term.
I would like to thank all the team members of #OneMercia who have shown
unwavering dedication throughout another challenging year. They are the
driving force behind our achievements, and I am very grateful for their
continued commitment to our shared vision.
Mercia's journey is marked by strength, resilience and a commitment to
excellence. Despite the challenges faced, we have emerged with solid
performance, robust investments and an optimistic outlook. We stand ready to
navigate the ever-changing landscape, guided by our expertise and supported by
our exceptional team. Together, we will continue to unlock value for our
shareholders, investors and investees.
Julian Viggars
Chief Investment Officer
Chief Financial Officer's review
Overall financial performance
From a fund management profitability perspective, Mercia was able to maintain
its first-half momentum in the second half of the financial year, which was
supplemented by the first four months' profitable contribution from FDC, which
was acquired on 5 December 2022.
Whilst the Group's direct investment portfolio performance against a
challenging market backdrop was satisfactory overall, one material full-cash
exit was achieved and the Group finished the year in a strong liquidity
position, with no debt.
Acquisition of Frontier Development Capital Limited
Mercia acquired the entire issued share capital of the central-Birmingham
headquartered FDC on 5 December 2022, for a total consideration of up to
£9.5million plus net cash of £1.5million.
This strategic acquisition was for an initial consideration of £5.5million,
satisfied in cash and funded from Mercia's own liquid resources. In addition,
deferred consideration of up to £4.0million in cash will be payable,
contingent upon the achievement of future revenue and net new institutional
third-party fundraising targets, for the two years to 30 November 2024.
The acquisition is earnings enhancing and in the post-acquisition trading
period to 31 March 2023, FDC has performed in line with the Group's
expectations. Further details of the transaction are shown in note 12.
Proposed final dividend
The Board adopted Mercia's progressive dividend policy in December 2020, and
since then has announced interim dividends of 0.10 pence per share in December
2020 and 0.30 pence per share in December 2021. Shareholders also approved a
maiden final dividend of 0.30 pence per share in September 2021 and 0.50 pence
per share in September 2022.
Given the Group's twin sources of profitability and cash inflow, being
regionally focused, proactive specialist asset management, plus direct
investment and periodic cash realisations, the Group's dividend policy does
not need to be anchored to one or other source of liquidity, hence the Board's
intention to grow the total dividend year-on-year.
The continuing positive overall Group performance, coupled with its future
prospects, enables Mercia's Board to recommend a proposed final dividend of
0.53 pence per share. If approved by shareholders at the Annual General
Meeting in September 2023, the total dividend for the year will be 0.86 pence
per share (2022: 0.80 pence per share), a 7.5% total year-on-year increase.
If approved by shareholders, the final dividend will be paid on 27 October
2023 to shareholders on the register at close of business on 29 September
2023, with the total dividend payable being £2,367,000 (2022: £2,201,000).
Adjusted operating profit
The Directors believe that the reporting of adjusted operating profit assists
in providing a consistent measure of operating performance for businesses such
as Mercia and is an important alternative performance measure ("APM") of
interest to shareholders.
Adjusted operating profit is defined as operating profit before net
exceptional performance fees, depreciation, realised gains/(losses) on the
sale of direct investments, fair value movements in direct investments,
share-based payments charge, amortisation of intangible assets, movement in
fair value of deferred consideration and exceptional items. It includes net
finance income.
Results reported on an APM basis are denoted by(1) throughout this review.
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Revenue 25,881 20,576
Administrative expenses (20,692) (16,618)
Net finance income 2,397 4,437
Adjusted operating profit 7,586 8,395
Net exceptional performance fees - 1,592
Depreciation (309) (224)
Net finance income (2,397) (4,437)
Realised (loss)/gains on sale of direct investments (849) 9,878
Fair value movements in direct investments 1,201 11,385
Share-based payments charge (1,049) (1,109)
Amortisation of intangible assets (2,337) (2,033)
Movement in fair value of deferred consideration (1,462) (522)
Operating profit before exceptional item 384 22,925
Exceptional item (372) -
Operating profit 12 22,925
Net finance income 2,397 4,437
Profit before taxation 2,409 27,362
Taxation 427 (1,262)
Profit and total comprehensive income for the year 2,836 26,100
A reconciliation of these results prepared in accordance with International
Financial Reporting Standards ("IFRS") to those presented on an APM basis are
as follows:
Year ended 31 March 2023
IFRS as reported Performance fees Depreciation APM basis(1)
£'000 £'000 £'000 £'000
Revenue 25,881 - - 25,881
Administrative expenses (21,001) - 309 (20,692)
Depreciation - - (309) (309)
Year ended 31 March 2022
IFRS as reported Performance fees Depreciation APM basis(1)
£'000 £'000 £'000 £'000
Revenue 23,183 (2,607) - 20,576
Administrative expenses (17,857) 1,015 224 (16,618)
Depreciation - - (224) (224)
Revenue
Total revenue increased 11.6% to £25,881,000 (2022: £23,183,000) and
comprised fund management related fees, initial management and arrangement
fees from investment rounds, investment director monitoring fees, sundry
business services income and VCT share offer fees. Excluding the four-month
revenue contribution from FDC, the VCT share offer fees received in the year
and the exceptional performance fee revenue received in the prior year, the
like-for-like increase was 11.1%.
Administrative expenses
Total administrative expenses increased 17.6% to £21,001,000 (2022:
£17,857,000) and comprised predominantly staff-related, office, marketing,
cyber security and professional adviser costs. Excluding the impact of FDC's
staff and administrative expenses, VCT share offer-related costs incurred in
the year and the staff bonuses paid in the prior year in respect of the
exceptional performance fee revenue, the like-for-like increase was 10.0%.
Net finance income
Total gross finance income of £2,428,000 (2022: £4,452,000) arose primarily
from crystallised loan interest and redemption premiums received on
convertible loans within the direct investment portfolio. Gross finance income
also includes £449,000 (2022: £14,000) of interest received on cash
deposits, following Bank of England base rate rises during the year.
Finance costs of £31,000 (2022: £15,000) comprised interest payable on
office leases and the Groupʼs staff electric car scheme.
Realised gains/(loss) on sale of direct investments
During the year, a realised gain of £1,793,000 (2022: £9,878,000) arose on
the disposal of Mercia's direct investment in Intechnica Holdings. Total cash
proceeds of £3,731,000 were received upon completion, with a further
£269,000 released from escrow held by a third party in May 2023, following
finalisation of the completion accounts. A gain of £2,000 also arose on the
disposal of the Group's equity holding in Ventive.
In January 2023, the Group realised a loss of £2,644,000 on the disposal of
its direct investment in Sense Biodetection, further details of which are
given in Julian Viggars' CIO review.
Fair value movements in direct investments
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Investment movements excluding cash invested and realisations:
Unrealised gains on the revaluation of direct investments* 11,324 15,122
Unrealised losses on the revaluation of direct investments* (10,123) (3,737)
Net fair value movements 1,201 11,385
* Excluding the demerger of Netacea Group Limited from Intechnica Holdings
Limited during the year.
Net fair value movements during the year totalled £1,201,000 (2022:
£11,385,000) and as at 31 March 2023, the fair value of the Group's direct
investment portfolio was £136,550,000 (2022: £119,558,000).
For the year as a whole, and excluding the impact of the Netacea and
Intechnica demerger, unrealised fair value gains arose in five (2022: 10) of
the Group's direct investments. The largest fair value gain was in respect of
VirtTrade, which accounted for £4,145,000 of the total (2022: £6,734,000
fair value gain in respect of nDreams).
There were six (2022: three) fair value decreases, the largest being
£3,511,000 which arose in respect of Netacea Group (2022: £2,856,000 fair
value decrease in MyHealthChecked PLC).
Share-based payments charge
The £1,049,000 non-cash charge (2022: £1,109,000) arises from the issued
share options held by all employees throughout the Group, ranging from 28
January 2020 to 31 March 2023.
Amortisation of intangible assets
The amortisation charge for the year of £2,337,000 (2022: £2,033,000)
represents amortisation of the intangible assets recognised on both the recent
acquisition of FDC, and the VCT fund management contracts in 2019.
Movement in fair value of deferred consideration
FDC's total purchase price includes £4,000,000 of contingent deferred
consideration, which is subject to a number of targets being met in the
two-year period to 30 November 2024. Movement in the fair value of contingent
consideration from 5 December 2022 to 31 March 2023 has resulted in a charge
to the income statement of £131,000.
The VCT fund management contracts' total purchase price included a number of
contingent deferred consideration elements payable over a three-year period.
The total deferred consideration was fair valued at the date of acquisition in
December 2019. A charge to the income statement of £1,331,000 (2022:
£522,000) represents the unwinding of the discount on the final deferred
consideration payment settled in cash in December 2022, and new Mercia Asset
Management PLC Ordinary shares issued in January 2023.
Exceptional item
The exceptional item for the year ended 31 March 2023 relates to professional
fees incurred in respect of the acquisition of FDC in December 2022.
Taxation
The components of the Group's tax charge are shown in note 9 of the summary
financial information.
Profit and total comprehensive income for the year
The adjusted operating profit, net realised loss on the sale of direct
investments and net fair value increase, all contributed to a consolidated
total profit and comprehensive income of £2,836,000 (2022: £26,100,000).
This has resulted in basic earnings per Ordinary share of 0.64 pence (2022:
5.93 pence).
Summarised statement of financial position
As at As at
31 March 31 March
2023 2022
£'000 £'000
Goodwill and intangible assets 39,051 32,355
Direct investment portfolio 136,550 119,558
Other non-current assets, trade and other receivables 4,751 1,604
Cash and short-term liquidity investments 37,834 61,284
Total assets 218,186 214,801
Trade, other payables and lease liabilities (7,720) (7,415)
Deferred consideration (3,005) (2,869)
Deferred taxation (4,540) (3,928)
Total liabilities (15,265) (14,212)
Net assets 202,921 200,589
Net assets per share (pence) ** 45.4p 45.6p
** In settlement of the final deferred consideration liability in respect of
the VCT fund management business acquired in 2019, 6,471,495 Mercia Asset
Management PLC Ordinary shares were admitted to trading on the AIM Market of
the London Stock Exchange on 31 January 2023. Subsequent to this, 446,581,202
Ordinary shares were in issue and therefore used as the denominator for
calculating net assets per share as at 31 March 2023. 440,109,707 Ordinary
shares were in issue as at 31 March 2022.
Intangible assets
Details of the Group's intangible assets, including the intangible asset
recognised following the acquisition of FDC, are shown in notes 13 and 14.
Direct investment portfolio
During the year under review, Mercia's direct investment portfolio grew from
£119,558,000 as at 1 April 2022 (2022: £96,220,000 as at 1 April 2021) to
£136,550,000 as at 31 March 2023 (2022: £119,558,000), a c.14% increase
notwithstanding the sale of Intechnica Holdings during the year (2022: c.24%
increase).
The Group invested £20,653,000 net (2022: £18,384,000) into 10 existing and
three new direct investments (2022: 14 and two respectively), with the top 20
direct investments representing 98.4% of the total direct investment portfolio
by value (2022: 98.6%).
Further detail on the fair value movements of individual direct portfolio
companies are included within Julian Viggars' CIO review.
Cash and short-term liquidity investments
At the year end, Mercia had cash and short-term liquidity investments (which
is cash on deposit with maturities of between 32 days and three months)
totalling £37,834,000 (2022: £61,284,000), comprising cash of £37,555,000
(2022: £56,049,000) and short-term liquidity investments of £279,000 (2022:
£5,235,000).
The Group continues to have limited working capital needs due to the nature of
its business and generated operating cash inflow of £3,019,000 (2022:
£9,150,000 inflow).
The overriding priorities of the Group's treasury policy remains firstly the
preservation of its shareholders' cash for investment, corporate and working
capital purposes, secondly timely availability and finally yield. As at 31
March 2023, the Group's cash and short-term liquidity investments were spread
across four leading United Kingdom banks.
Notwithstanding the Group's overarching treasury priority, namely
preservation, the Board has recently approved a measured focus on yield in the
current year.
The summarised movements in the Group's cash and short-term liquidity
investments position during the year are shown below.
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Opening cash and short-term liquidity investments 61,284 54,725
Cash generated from operating activities 3,019 9,150
Corporation tax paid (1,819) -
Net cash (used in)/generated from direct investment activities (14,930) 2,363
Acquisition of Frontier Development Capital Limited (6,951) -
Cash acquired with Frontier Development Capital Limited 2,882 -
Purchase of VCT fund management contracts (deferred consideration) (2,100) (2,100)
Cash inflow/(outflow) from other investing activities 371 (62)
Net cash used in financing activities (3,922) (2,792)
Closing cash and short-term liquidity investments 37,834 61,284
Outlook
Despite a challenging year for the specialist asset management sector, and
venture capital in particular, Mercia has remained profitable, operating cash
flow generative and debt free, and as a result is able to continue to support
and maximise value from its direct investment portfolio uninhibited by any
liquidity constraints.
Mercia's third acquisition since its IPO in December 2014, FDC, has been
integrated into the Group and is performing well, having already secured
£30.1million of additional funds to manage, in the short post-acquisition
period to 31 March 2023.
Overall therefore, these results demonstrate Mercia's robust business
fundamentals, during a year of significant market and economic instability. In
financial terms, Mercia's focus for the current financial year is centred on
organic growth in its funds under management and continued disciplined support
for its direct investment portfolio.
Martin Glanfield
Chief Financial Officer
Summary Financial Information
Consolidated statement of comprehensive income
For the year ended 31 March 2023
Year ended Year ended
31 March 31 March
2023 2022
Note £'000 £'000
Revenue 5 25,881 23,183
Administrative expenses 7 (21,001) (17,857)
Realised (loss)/gains on sale of direct investments 15 (849) 9,878
Fair value movements in direct investments 15 1,201 11,385
Share-based payments charge (1,049) (1,109)
Amortisation of intangible assets 14 (2,337) (2,033)
Movement in fair value of deferred consideration (1,462) (522)
Operating profit before exceptional item 384 22,925
Exceptional item (372) -
Operating profit 12 22,925
Finance income 8 2,428 4,452
Finance expense (31) (15)
Profit before taxation 2,409 27,362
Taxation 9 427 (1,262)
Profit and total comprehensive income for the year 2,836 26,100
Basic earnings per Ordinary share (pence) 10 0.64 5.93
Diluted earnings per Ordinary share (pence) 10 0.63 5.82
All results derive from continuing operations.
Consolidated statement of financial position
As at 31 March 2023
As at As at
31 March 31 March
2023 2022
Note £'000 £'000
Assets
Non-current assets
Goodwill 13 20,892 16,642
Intangible assets 14 18,159 15,713
Property, plant and equipment 122 113
Right-of-use assets 842 417
Investments 15 136,550 119,558
Total non-current assets 176,565 152,443
Current assets
Trade and other receivables 3,787 1,074
Short-term liquidity investments 16 279 5,235
Cash and cash equivalents 16 37,555 56,049
Total current assets 41,621 62,358
Total assets 218,186 214,801
Current liabilities
Trade and other payables (6,813) (6,963)
Lease liabilities (333) (157)
Deferred consideration 17 (1,227) (2,869)
Total current liabilities (8,373) (9,989)
Non-current liabilities
Lease liabilities (574) (295)
Deferred consideration 17 (1,778) -
Deferred taxation 18 (4,540) (3,928)
Total non-current liabilities (6,892) (4,223)
Total liabilities (15,265) (14,212)
Net assets 202,921 200,589
Equity
Issued share capital 19 4 4
Share premium 20 83,744 81,644
Other distributable reserve 21 63,266 66,919
Retained earnings 51,341 48,505
Share-based payments reserve 4,566 3,517
Total equity 202,921 200,589
Consolidated statement of cash flows
For the year ended 31 March 2023
Year ended Year ended
31 March 31 March
2023 2022
Note £'000 £'000
Cash flows from operating activities:
Operating profit 12 22,925
Adjustments to reconcile operating profit to net cash generated from operating
activities:
Depreciation of property, plant and equipment 68 70
Depreciation of right-of-use assets 239 154
Loss/(gains) on sale of direct investments 15 849 (9,878)
Fair value movements in direct investments 15 (1,201) (11,385)
Share-based payments charge 1,049 1,109
Amortisation of intangible assets 14 2,337 2,033
Movement in fair value of contingent consideration 17 1,462 522
Working capital adjustments:
(Increase)/decrease in trade and other receivables (1,087) 2,986
(Decrease)/increase in trade and other payables (709) 614
Cash generated from operating activities 3,019 9,150
Corporation tax paid (1,819) -
Net cash generated from operating activities 1,200 9,150
Cash flows from direct investment activities:
Sale of direct investments 15 3,744 16,309
Purchase of direct investments 15 (20,778) (19,884)
Investee company loan repayments 15 125 1,500
Investee company loan redemption premiums and interest received 8 1,979 4,438
Net cash (used in)/generated from direct investment activities (14,930) 2,363
Cash flows from other investing activities:
Interest received from cash deposits 404 13
Purchase of property, plant and equipment (77) (76)
Acquisition of a subsidiary undertaking (6,951) -
Cash acquired with purchase of a subsidiary undertaking 2,882 -
Purchase of fund management contracts 17 (2,100) (2,100)
Decrease/(increase) in short-term liquidity investments 5,000 (5,000)
Net cash used in other investing activities (842) (7,163)
Net cash used in total investing activities (15,772) (4,800)
Cash flows from financing activities:
Dividends paid 11 (3,653) (2,641)
Interest paid (31) (15)
Payment of lease liabilities (238) (136)
Net cash used in financing activities (3,922) (2,792)
Net (decrease)/increase in cash and cash equivalents (18,494) 1,558
Cash and cash equivalents at the beginning of the year 56,049 54,491
Cash and cash equivalents at the end of the year 16 37,555 56,049
Consolidated statement of changes in equity
For the year ended 31 March 2023
Issued Other Share-based
share Share distributable Retained payments
capital premium reserve earnings reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2021 4 81,644 69,560 22,405 2,408 176,021
Profit and total comprehensive income for the year - - - 26,100 - 26,100
Dividends paid - - (2,641) - - (2,641)
Share-based payments charge - - - - 1,109 1,109
As at 31 March 2022 4 81,644 66,919 48,505 3,517 200,589
Issue of share capital - 2,100 - - - 2,100
Profit and total comprehensive income for the year - - - 2,836 - 2,836
Dividends paid - - (3,653) - - (3,653)
Share-based payments charge - - - - 1,049 1,049
As at 31 March 2023 4 83,744 63,266 51,341 4,566 202,921
1. General information
Mercia Asset Management PLC (the "Group", "Mercia") is a public limited
company, incorporated and domiciled in England, United Kingdom, and registered
in England and Wales with registered number 09223445. Its Ordinary shares are
admitted to trading on the AIM market of the London Stock Exchange. The
registered office address is Mercia Asset Management PLC, Forward House, 17
High Street, Henley-in-Arden, Warwickshire B95 5AA.
2. Basis of preparation
The summary financial information included in this announcement has been
extracted from the audited financial statements of the Group for the year
ended 31 March 2023, which have been approved by the Board of Directors. The
Group's auditor has consented to the publication of this announcement. The
summary financial information does not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006 (the "Act"). The auditor's
report on the financial statements for the year ended 31 March 2023 was
unqualified and did not contain any statement under section 498 of the Act.
The Group's Annual Report and financial statements will be delivered to the
Registrar of Companies in due course.
The financial statements have been prepared on an historical cost basis, as
modified by the revaluation of certain financial assets and financial
liabilities in accordance with International Financial Reporting Standard
("IFRS") 9 Financial Instruments. The accounting policies presented in the
summary financial information are consistent with those set out in the audited
financial statements.
3. Going concern
Based on the Group's balance sheet, including its strong liquidity position at
the year end, its forecast future operating and investment activities, the
Directors have a reasonable expectation that the Group has adequate financial
resources to manage business risks in the current economic environment, and
continue in operational existence for a period of at least 12 months from the
date of this announcement. Accordingly, the Directors continue to adopt the
going concern basis in preparing these consolidated financial statements.
4. Significant accounting policies
Basis of consolidation
Subsidiary undertakings are consolidated from the date of their acquisition,
being the date on which the Group obtains control, and continue to be
consolidated until the date that such control ceases. The financial statements
of entities held within the Group's direct investment portfolio are not
included within the consolidated financial statements as the Group accounts
for these in accordance with the IFRS 10 Investment Entity exemption.
The Group accounts for business combinations using the acquisition method from
the date that control is transferred to the Group. Both the identifiable net
assets and the consideration transferred in the acquisition are measured at
fair value and transaction costs are expensed as incurred. Goodwill arising on
acquisitions is tested annually for impairment. Deferred consideration payable
to vendors is measured at fair value at acquisition and re-assessed annually,
with particular reference to the conditions upon which the consideration is
contingent.
New standards, interpretations and amendments effective in the current
financial year
No new standards, interpretations and amendments effective in the year have
had a material effect on the Group's financial statements.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The Directors have made the following judgements and estimates, which have had
the most significant effect on the carrying amounts of the assets and
liabilities in this summary financial information.
Fair value measurements and valuation processes
The judgements required to determine the appropriate valuation methodology of
unquoted equity investments mean there is risk of a material adjustment to the
carrying amounts of assets and liabilities. These judgements include a
decision on whether or not to impair or uplift investment valuations.
The fair value of unlisted securities is established using the International
Private Equity and Venture Capital Valuation Guidelines ("IPEVCVG") as updated
in December 2022.
Investments are measured at fair value at each measurement date. Fair value is
the price that would be received to sell an asset in an orderly transaction
between market participants at the measurement date. A fair value measurement
assumes that a hypothetical transaction to sell an asset takes place in the
principal market or, in its absence, the most advantageous market for the
asset. For quoted investments, available market prices will be the exclusive
basis for the measurement of fair value for identical instruments. For
unquoted investments, the measurement of fair value requires the valuer to
assume the underlying business or instrument is realised or sold at the
measurement date, appropriately allocated to the various interests, regardless
of whether the underlying business is prepared for sale or whether its
shareholders intend to sell in the near future.
In estimating fair value for an investment, the valuer should apply a
methodology that is appropriate in light of the nature, facts and
circumstances of the investment in the context of the total investment
portfolio and should use reasonable current market data and inputs, combined
with reasonable market participant assumptions.
The price of recent investment can be used to estimate the enterprise value,
before allocating to the various interests. The Group believes that this is
still the most relevant technique to measure fair value for early-stage
investments. However, it has also taken into consideration time elapsed,
performance since the investment round and external market events to help
inform its judgements.
0-6 months post last funding round
The Group will apply the price of a recent investment for up to six months
post the last funding round, subject to there being no material change to the
investee company's prospects (which would include the prospects of drawing
down the next tranche or raising the next round of funding).
7-18 months post last funding round
Beyond the six months point, the Group seeks assurance that the investee
company is progressing against the development milestones which were set out
in the initial assessment. Failing to hit milestones will not necessarily
impact the valuation - this may simply be an indicator that incremental value
will take longer to deliver, but the performance against milestones is
assessed as an indicator of a potential change in value. The Group will be
cautious about increasing the valuation of an early-stage investee company
unless it is based on a new market price or maintainable revenues and/or
earnings.
19+ months post last funding round
From this point onwards, the Group looks for additional support for the 'price
of recent investment' by calibrating back to that using a discounted cash flow
("DCF") methodology. However, unless the investee company has become
established with maintainable revenues and/or earnings and can be valued on an
earnings basis, given the inherent risk in early-stage investing and the lack
of reliability of using estimates yet to be delivered a number of years into
the future, the Group is unlikely to increase the fair value, even if a DCF
calculation suggests a higher value. Nevertheless, the DCF calculation helps
support the proposed fair value at the valuation point.
The recent macroeconomic uncertainty has created uncertainty in the fair value
of the direct investment portfolio. The Directors believe that they have
reflected this uncertainty in a balanced way through the assumptions used in
the valuation of each investee company. The Directors have assessed the
estimates made in relation to each individual valuation and do not believe
that a reasonable possible change in estimate would result in a material
change in the value of each investment.
Accounting for the acquisition of Frontier Development Capital Limited
On 5 December 2022 Mercia acquired the entire issued share capital of Frontier
Development Capital Limited ("FDC"), including its wholly owned subsidiaries,
FDC General Partner Limited and FDC SPV Limited.
The fund management contracts held by FDC have been fair valued on a
discounted cash flow basis. A post-tax discount rate of 15.0% has been used
and is considered a significant assumption. Should this discount rate be
increased by 1.0%, the value of the fund management contracts would reduce by
£101,000, with goodwill increasing by a corresponding amount.
The expected useful life of five years is derived from the weighted average
remaining life of FDC's fund management contracts on 5 December 2022. Should
it be increased by one year, the value of the fund management contracts would
increase by £520,000 with goodwill decreasing by a corresponding amount.
Should the cash flows associated with these contracts increase by 5.0%, the
value of the fund management contracts would increase by £44,000 with
goodwill decreasing by a corresponding amount.
Goodwill has been recognised as the difference between the fair value of
consideration paid and the intangible asset recognised upon acquisition.
Further details are included in note 12.
Valuation of deferred contingent consideration
The fair value of deferred contingent consideration payable in respect of the
acquisition of FDC is conditional upon certain conditions being met.
The fair value has been derived from the assessed probability of each
contingent consideration condition occurring being 90.0%, discounted at an
annual rate of 15.0%. Should the probability be reduced by 10.0% across all
three conditions, the discounted value of contingent consideration as at 31
March 2023 would reduce by £319,000.
The discount rate used to fair value the contingent consideration liability is
reflective of the risks surrounding the conditions being met. Should the
discount rate be increased by 1.0%, the fair value of deferred contingent
consideration as at 31 March 2023 would reduce by £39,000.
Further detail on the deferred contingent consideration conditions is included
in note 17.
5. Segmental reporting
The Group's revenue and profits are derived from its principal activity within
the United Kingdom.
IFRS 8 Operating Segments defines operating segments as those activities of an
entity about which separate financial information is available and which are
evaluated by the Chief Operating Decision Maker to assess performance and
determine the allocation of resources. The Chief Operating Decision Maker has
been identified as the Board of Directors. The Directors are of the opinion
that under IFRS 8 Operating Segments the Group has only one operating segment,
being proactive specialist asset management, because the results of the Group
are monitored on a Groupwide basis. The Board of Directors assesses the
performance of the operating segment using financial information which is
measured and presented in a consistent manner.
An analysis of the Group's revenue is as follows:
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Fund management fees 17,593 14,957
Initial management fees 3,680 2,456
Portfolio directors' fees 2,934 2,969
Other revenue 343 194
VCTs share offer fees 1,331 -
Exceptional performance fees - 2,607
25,881 23,183
6. Fair value movements in direct investments
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Net fair value movements in direct investments (note 15) 1,201 11,385
7. Operating profit
Operating profit is stated after charging:
Year ended Year ended
31 March 31 March
2023 2022
£'000 £'000
Staff costs 14,366 12,961
Other administrative expenses 6,635 4,896
Total administrative expenses 21,001 17,857
8. Finance income
Finance income is derived from:
Year ended Year ended
31 March 31 March
2023 2022
Cash deposits 404 12
Short-term liquidity investments 45 2
Investee company loans (interest and redemption premiums) 1,979 4,438
Total finance income 2,428 4,452
9. Taxation
Year ended Year ended
31 March 31 March
2023 2022
Current tax
UK Corporation tax (157) (706)
Deferred tax
Origination and reversal of temporary timing differences 584 508
Effects of changes in tax rates - (1,064)
Total tax credit/(charge) 427 (1,262)
The UK standard rate of corporation tax is 19% (2022: 19%). The deferred tax
credit of £584,000 (2022: £508,000) represents the unwinding of the deferred
tax liability recognised in respect of the intangible assets arising on the
acquisition of the VCT fund management business and Frontier Development
Capital Limited.
A reconciliation from the reported profit to the total tax credit/(charge) is
shown below:
Year ended Year ended
31 March 31 March
2023 2022
Profit before taxation 2,409 27,362
Taxation at the standard rate of corporation tax in the UK of 19% (2022: 19%) (458) (5,199)
Effects of:
Income not subject to tax 589 4,039
Expenses not deductible for tax purposes (318) (314)
Share of partnership profits (509) (513)
Capital losses 234 -
Remeasurement of deferred tax for changes in tax rates 140 252
Other timing differences not recognised 749 473
Total tax credit/(charge) 427 (1,262)
An increase in the UK corporation tax rate from 19% to 25%, with effect from 1
April 2023, was substantively enacted on 24 May 2022. The Group's deferred tax
liability has been calculated at a rate of 25% as at 31 March 2023 (2022:
25%).
A total deferred tax liability of £4,540,000 (2022: £3,928,000) as at 31
March 2023 relates to the intangible asset recognised on the acquisition of
FDC in December 2022, and the continued recognition of the intangible asset
arising on the acquisition of the VCT fund management business in 2019.
A potential deferred tax asset of £3,436,000 (2022: £4,442,000) for
cumulative unrelieved management expenses and other tax losses has not been
recognised in these consolidated financial statements as their future use is
uncertain.
10. Earnings per share
Basic earnings per share is calculated by dividing the profit for the
financial year by the weighted average number of Ordinary shares in issue
during the year. Diluted earnings per share is calculated by dividing the
profit for the financial year by the weighted average number of Ordinary
shares outstanding and, when dilutive, adjusted for the effect of all
potentially dilutive shares, including share options, on an as-if-converted
basis. The potential dilutive shares are included in diluted earnings per
share calculations on a weighted average basis for the year. The profit and
weighted average number of shares used in the calculations are set out below:
Year ended Year ended
31 March 31 March
2023 2022
Profit for the financial year (£'000) 2,836 26,100
Basic weighted average number of Ordinary shares ('000) 441,156 440,110
Basic earnings per Ordinary share (pence) 0.64 5.93
Diluted weighted average number of Ordinary shares ('000) 449,348 448,466
Diluted earnings per Ordinary share (pence) 0.63 5.82
The calculation of basic and diluted earnings per share is based on the
following weighted average number of Ordinary shares:
Year ended Year ended
31 March 31 March
2023 2022
'000 '000
Weighted average number of shares
Basic 441,156 440,110
Dilutive impact of employee share options 8,192 8,356
Diluted weighted average number of Ordinary shares 449,348 448,466
11. Dividends
Year ended 31 March 2023 Year ended 31 March 2022
Pence per share £'000 Pence per share £'000
Dividends declared/proposed in respect of the year
Interim dividend declared in relation to year ended 31 March 2022 - - 0.30 1,320
Final dividend declared in relation to year ended 31 March 2022 - - 0.50 2,201
Interim dividend declared in relation to year ended 31 March 2023 0.33 1,452 - -
Final dividend proposed in relation to year ended 31 March 2023 0.53 2,367 - -
0.86 3,819 0.80 3,521
Year ended 31 March 2023 Year ended 31 March 2022
Pence per share £'000 Pence per share £'000
Dividends paid during the year
Final dividend paid in relation to year ended 31 March 2021 - - 0.30 1,320
Interim dividend paid in relation to year ended 31 March 2022 - - 0.30 1,321
Final dividend paid in relation to year ended 31 March 2022 0.50 2,201 - -
Interim dividend paid in relation to year ended 31 March 2023 0.33 1,452 - -
0.83 3,653 0.60 2,641
The final dividend for the year ended 31 March 2023 proposed by the Board of
0.53 pence per share, totalling £2,367,000, is subject to shareholder
approval at the Annual General Meeting on 21 September 2023, and as such has
not been included as a liability in these financial statement in accordance
with IAS 10.
12. Business Combination
On 5 December 2022 the Group acquired the entire issued share capital of
Frontier Development Capital Limited ("FDC"), including its wholly owned
subsidiaries FDC General Partner Limited and FDC SPV Limited, all of which are
registered in England. The fair value of the identifiable net assets acquired
and the consideration paid under IFRS 3 are as follows:
Provisional policy
Pre-acquisition alignment and fair
carrying value value adjustments Total
£'000 £'000 £'000
Intangible asset - 4,783 4,783
Tangible fixed assets 20 - 20
Right-of-use asset - 566 566
Investments - 42 42
Cash 2,882 - 2,882
Trade and other receivables 428 (42) 386
Trade and other payables (1,341) - (1,341)
Lease liability - (566) (566)
Deferred tax liability - (1,196) (1,196)
Total identifiable net assets 1,989 3,587 5,576
Under the terms of the acquisition agreement, the fair value of consideration
paid to the vendors was:
£'000
Cash - initial consideration 5,500
Cash - net cash position 1,451
Cash consideration as shown in the Consolidated statement of cash flows 6,951
Fair value of contingent consideration 2,875
Less total identifiable net assets (5,576)
Goodwill 4,250
Revenue and profits
The Group has recognised the following results in respect of the
post-acquisition period from 6 December 2022 to 31 March 2023.
£'000
Revenue 1,698
Operating profit 401
Prior to the acquisition by the Group, FDC had a 30 November year end. The
disclosure of the Group's revenue and profit, had the acquisition occurred on
1 April 2022, has not been presented as the determination of these amounts is
impracticable.
Fair value
The fair value of fund management contracts held by FDC has been estimated
using a discounted cash flow model. The estimated cash flows have been valued
at a discount of 15.0%, with the recognised intangible asset amortised over
five years.
13. Goodwill
Goodwill arising on the businesses acquired to date is set out in the table
below.
Enterprise Ventures Group VCT fund management business Frontier Development Capital Total
Mercia Fund Management
£'000 £'000 £'000 £'000 £'000
Cost
As at 1 April 2021 and 31 March 2022 2,455 7,873 6,314 - 16,642
Addition - - - 4,250 4,250
As at 31 March 2023 2,455 7,873 6,314 4,250 20,892
Goodwill for each business acquired has been assessed for impairment as at 31
March 2023. Recoverable amounts for each cash generating unit ("CGU") are
based on the higher of value in use and fair value, less costs of disposal
("FVLCD").
The value in use calculations are based on future expected cash flows
generated by each CGU, as derived from the approved budget for the year ended
31 March 2024. Key assumptions are a discount rate of 12.0% and the growth
rates used in forecasting future operating results. Where the fund management
contracts are 'evergreen', a value into perpetuity has been used based on a
zero growth rate beyond a five-year forecast period.
The review concluded that the value in use of each CGU exceeds its carrying
value. The Directors do not consider that a reasonably possible change in a
key assumption would reduce the recoverable amount of the CGUs to below their
carrying value.
14. Intangible assets
Intangible assets represent contractual arrangements in respect of the
acquisition of Enterprise Ventures Group in 2016, the acquired VCT fund
management business in 2019 and the acquisition of FDC in December 2022, where
it is probable that the future economic benefits that are attributable to
those assets will flow to the Group and the fair value of the assets can be
measured reliably.
£'000
Cost
As at 1 April 2021 and 31 March 2022 21,835
Acquisition of a subsidiary 4,783
As at 31 March 2023 26,618
Accumulated amortisation
As at 1 April 2021 4,089
Charge for the year 2,033
As at 31 March 2022 6,122
Charge for the year 2,337
As at 31 March 2023 8,459
Net book value
As at 1 April 2021 17,746
As at 31 March 2022 15,713
As at 31 March 2023 18,159
15. Investments
The net change in the value of investments for the year is an increase of
£16,992,000 (2022: increase of £23,338,000). The tables below reconcile the
opening to closing value of investments.
Level 1 Level 3 Total financial assets
financial financial
assets assets
£'000 £'000 £'000
As at 1 April 2021 4,488 91,732 96,220
Investments made during the year - 19,884 19,884
Investee company loan repayment - (1,500) (1,500)
Disposals - (6,431) (6,431)
Unrealised fair value gains on investments - 15,122 15,122
Unrealised fair value losses on investments (2,856) (881) (3,737)
As at 31 March 2022 1,632 117,926 119,558
Investments made during the year - 20,736 20,736
Investments acquired during the year - 42 42
Investee company loan repayment - (125) (125)
Disposals - (4,862) (4,862)
Unrealised fair value gains on investments - 20,017 20,017
Unrealised fair value losses on investments (663) (18,153) (18,816)
As at 31 March 2023 969 135,581 136,550
On 4 January 2022, the Group completed the sale of its investment in Faradion
Limited, generating a realised gain of £9,878,000. Total cash proceeds of
£19,402,000 were received upon completion, comprising £16,309,000 from the
sale of the Group's equity holding, a loan repayment of £1,500,000, a loan
redemption premium of £1,500,000 and loan interest of £93,000. Additional
loan redemption premiums and interest, totalling £738,000, converted into
equity immediately prior to disposal of the Group's total equity holding.
On 18 January 2023, the Group sold its entire equity holding in Intechnica
Holdings Limited, generating a realised gain of £1,793,000. Proceeds of
£3,731,000 were received on completion, with £269,000 held in escrow as at
31 March 2023 by a third party, pending finalisation of the completion
accounts. In May 2023, the amount held in escrow was received by the Group.
On 28 January 2023, the Group sold its entire equity holding in Sense
Biodetection Limited resulting in a realised loss of £2,644,000. Proceeds
received were in the form of an equity shareholding in Sherlock Biosciences
Inc.
During the year ended 31 March 2023, the Group sold its equity holding in two
other portfolio companies with total proceeds of £13,000, resulting in a
£2,000 realised gain.
Investments held as part of the Group's direct investment portfolio are
carried at fair value in accordance with the IFRS 10 Investment Entity
exemption.
The measurement basis for determining the fair value of investments held at 31
March is as follows:
As at As at
31 March 2023 31 March 2022
£'000 £'000
Listed investment 969 1,632
Price of recent investment round 79,522 62,233
Enterprise value 52,912 37,772
Cost 3,147 5,625
Impaired value(1) - 12,296
136,550 119,558
(1) Valued using valuation methodologies consistent with the Group's
accounting policy.
16. Cash, cash equivalents and short-term liquidity investments
As at As at
31 March 31 March 2022
2023 £'000
£'000
Total cash and cash equivalents 37,555 56,049
Total short-term liquidity investments 279 5,235
17. Deferred consideration
As at As at
31 March 31 March
2023 2022
£'000 £'000
Payable within one year 1,227 2,869
Payable within two to five years 1,778 -
3,005 2,869
In the year to 31 March 2023, the two final deferred consideration conditions
included as part of the acquisition of the VCT fund management business in
2019, were met. In settlement of the deferred consideration therefore due, a
cash payment of £2,100,000 was made to the vendors in December 2022, in
addition to the issue of Mercia Asset Management PLC Ordinary shares in
January 2023, also with a value of £2,100,000. Settlement of both of these
final deferred consideration amounts resulted in a fair value charge to the
income statement of £1,331,000.
On 5 December 2022, Mercia completed the acquisition of FDC for a total
maximum cash consideration of £9,500,000, comprising an initial cash
consideration of £5,500,000, plus up to a maximum of £4,000,000 contingent
consideration payable upon certain post-acquisition conditions being met.
The deferred consideration has a fair value of £3,005,000 as at 31 March
2023, and is payable upon satisfaction of the following conditions:
· The first condition is met if revenue for the 12-month period to 30
November 2023 exceeds a year-one revenue target. The value of contingent
consideration payable is up to a maximum of £1,500,000.
· The second condition is satisfied if revenue for the 12-month period
to 30 November 2024 exceeds a year-two revenue target. The value of contingent
consideration payable is up to a maximum of £1,000,000.
· The final condition is met if a net new institutional third-party
fundraising target, over a two-year period to 30 November 2024, is achieved.
Satisfaction of this target triggers £1,500,000 contingent consideration
payable to the vendors.
The undiscounted value of contingent consideration payments that the Group
could be required to make is up to £4,000,000. Movement in the fair value of
the FDC deferred consideration from 5 December 2022 to 31 March 2023 has
resulted in a charge to the income statement of £131,000.
18. Deferred taxation
As at As at
31 March 31 March
2023 2022
£'000 £'000
Deferred tax liability 4,540 3,928
Under IAS 12 Income Taxes, provision is made for the deferred tax liability
associated with the recognition of the intangible asset arising on the
acquisitions of the VCT fund management contracts and FDC. As at 31 March
2023, the deferred tax liability has been calculated using the substantively
enacted tax rate of 25% - see note 9 for further detail.
19. Issued share capital
As at 31 March 2023 As at 31 March 2022
Number £'000 Number £'000
Allotted and fully paid
As at the beginning of the year 440,109,707 4 440,109,707 4
Issue of share capital during the year 6,471,495 - - -
As at the end of the year 446,581,202 4 440,109,707 4
On 26 January 2023, 6,471,495 new Ordinary shares were issued at a price of
32.45 pence per share to satisfy the final deferred consideration element due
in respect of the acquisition of the VCT fund management business in 2019.
These new shares were admitted to trading on the AIM market of the London
Stock Exchange on 31 January 2023.
Each Ordinary share is entitled to one vote and has equal rights as to
dividends. The Ordinary shares are not redeemable.
20. Share premium
As at As at
31 March 31 March
2023 2022
£'000 £'000
As at the beginning of the year 81,644 81,644
Premium arising on the issue of Ordinary shares 2,100 -
As at the end of the year 83,744 81,644
The premium on the issue of Ordinary shares arises from 6,471,495 new Ordinary
shares of £0.00001 each issued at a price of 32.45 pence per share on 26
January 2023.
21. Other distributable reserve
As at As at
31 March 31 March
2023 2022
£'000 £'000
As at the beginning of the year 66,919 69,560
Dividends paid (note 11) (3,653) (2,641)
As at the end of the year 63,266 66,919
22. Fair value measurements
The fair values of the Group's financial assets and liabilities are considered
a reasonable approximation to the carrying values shown in the consolidated
statement of financial position. Subsequent to their initial recognition at
fair value, measurements of movements in fair values of financial instruments
are grouped into Levels 1 to 3, based on the degree to which the fair value is
observable.
The following table gives information about how the fair values of these
financial assets and financial liabilities are determined and presents the
Group's assets that are measured at fair value. There have been no movements
in financial assets or financial liabilities between levels during the current
or prior years. The table in note 15 sets out the movement in the Level 1 and
3 financial assets during the year.
As at As at
31 March 31 March
2023 2022
£'000 £'000
Assets:
Financial assets at fair value through profit or loss - direct investment
portfolio
Level 1 969 1,632
Level 2 - -
Level 3 135,581 117,926
136,550 119,558
As at As at
31 March 31 March
2023 2022
£'000 £'000
Liabilities:
Financial liabilities at fair value through profit or loss - deferred
consideration
Level 1 - -
Level 2 - -
Level 3 3,005 2,869
3,005 2,869
The Directors consider that the carrying amounts of financial assets and
financial liabilities recorded at amortised cost in the consolidated financial
statements approximate to their fair values.
Financial instruments in Level 1
The Group had one direct investment listed on AIM, MyHealthChecked PLC, which
is valued using the closing bid price as at 31 March 2023.
Financial instruments in Level 3
If one or more of the significant inputs required to fair value an instrument
is not based on observable market data, the instrument is included in Level 3.
Apart from the one investment classified in Level 1, all other investments
held in the Group's direct investment portfolio have been classified in Level
3 of the fair value hierarchy and the individual valuations for each of the
companies have been arrived at using appropriate valuation techniques.
The Group has adopted the IPEVCVG for determining its valuation techniques,
which specify that the price of a recent investment represents one of a number
of inputs used to arrive at fair value, and uses a single classification for
all Level 3 investments.
Note 4 of this summary financial information provides further information on
the Group's valuation methodology, including a detailed explanation of the
valuation techniques used for Level 3 financial instruments.
23. Availability of Annual Report
The Annual Report of Mercia Asset Management PLC will be posted to all
shareholders on 28 July 2023. An electronic copy will also be available on
Mercia Asset Management PLC's website at www.mercia.co.uk
(http://www.mercia.co.uk) .
24. Annual General Meeting
The Annual General Meeting of Mercia Asset Management PLC will be held at the
offices of Reed Smith LLP at The Broadgate Tower, 20 Primrose Street, London,
EC2A 2RS on 21 September 2023 at 10:00 am.
Directors, secretary and advisers
Directors
Ian Roland Metcalfe OBE
(Non-executive Chair)
Dr Mark Andrew Payton
(Chief Executive Officer)
Martin James Glanfield (Chief
Financial Officer)
Julian George Viggars (Chief
Investment Officer)
Diane Seymour-Williams
(Senior Independent Director)
Raymond Kenneth Chamberlain (Non-executive Director)
Dr Jonathan David
Pell
(Non-executive Director)
Caroline Bayantai Plumb OBE (Non-executive
Director)
Company secretary Company registration number
Sarah-Louise Anne Williams 09223445
Company website Company registrar
www.mercia.co.uk SLC Registrars
Highdown House
Registered office Yeoman Way
Forward House Worthing
17 High Street West Sussex BN99 3HH
Henley-in-Arden
Warwickshire B95 5AA Solicitors
Gowling WLG (UK) LLP
Independent auditor 4 More London Riverside
BDO LLP London SE1 2AU
55 Baker Street
Marylebone Nominated adviser and joint broker
London W1U 7EU Canaccord Genuity Ltd
88 Wood Street
Principal bankers London EC2V 7QR
Barclays Bank PLC
One Snowhill Joint broker
Snow Hill Queensway Singer Capital Markets Advisory LLP
Birmingham B4 6GN 1 Bartholomew Lane
London EC2N 2AX
Lloyds Bank plc
125 Colmore Row Investor relations adviser
Birmingham B3 3SD FTI Consulting Ltd
200 Aldersgate
London EC2A 4HD
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