Annual Report and Accounts 2021

Supporting the regions’ thriving businesses

First choice for investors, investees and employees, Mercia’s hybrid investment model has now achieved critical mass as the synergies deliver both growth in underlying profit from the fund management operations and the returns from our proprietary investment activity. This self-financing model enables Mercia to compete domestically on a regional basis across the UK.

Download the Annual Report and Accounts 2021

The execution of Mercia’s strategy has materially grown shareholder value.Ian Metcalfe, Non-executive Chair – Mercia

Ian Metcalfe, Non-executive Chair - Mercia

Non-executive Chair's statement

Notwithstanding the COVID -19 pandemic backdrop, with all of the ensuing social and economic challenges, the year to 31 March 2021 has been one of positive and profitable progress for Mercia. No staff were furloughed or made redundant, no direct Government support was utilised and no payments were delayed.

Mercia by numbers

c.£940m

Assets under Management (“AuM”)
2020: c.£800m

£19.2m

Revenue
2020: c.£12.7m

£3.3m

Adjusted operating profit
2020: £0.5m

£34.5m

Profit after tax
2020: £17.5m loss

0.3 pence/share

Proposed final dividend
2020: Nil

£176.0m

Net Assets
2020: £141.5m

40.0 pence

Net assets per share
2020: 32.1 pence

10

Profitable exits
2020: 5

17

Shadow portfolio companies

£314.0m

Total liquidity
2020: c.£320m

Accelerating our ESG journey

Our vision is to be the first choice for our employees, investors and investees and we are proud of the progress that we have made on this journey that has seen us welcome a diverse and respected stakeholder base. Our investors, shareholders and team have responded to our commitment to build a culture, inclusive business model and innovative investment solutions capable of building a sustainable future for all our stakeholders.

 

 

 

Ambitious businesses

We provide venture capital, private equity and debt finance to thriving businesses in the regions.

The high-growth companies we support share our values and benefit from the provision of our sustained investment to accelerate value creation. Often overlooked by other capital providers, our focus never falters; to find great domestic businesses with global potential.

Regional growth

In the regions, from the regions, to the regions.

Our long-established relationships with embedded regional networks and the continued investment in Mercia as we scale our platform, ensure that we are resourced to realise our ambition to become the leading domestic venture capital investor.

Investing exclusively in the UK’s thriving regions, adding value through our talent and expertise and our proven hybrid investment strategy, have delivered 10 exits from our regional investments.

 

 

Empowered people

It is the people of #OneMercia who chart the course of our success.

We are defined by the people who work at Mercia and the values that they embody. They are the bedrock of our business, driving new efficiencies in the way we work together.

 

 

 

Preliminary results analysis

I would like to thank all those who have supported us as we moved through this transitional year to become the leading provider of support and capital to the thriving regional businesses that we have the great pleasure and privilege to work with.

Dr Mark Payton, Chief Executive Officer – Mercia

Complete Connected Capital

Mercia’s investments across its four asset classes are powering ambitious regional SMEs with the capital that they need to grow. Our business model is designed specifically to support the funding needs of companies through their journey from origin to exit.

Balance sheet

Up to £10m

Total portfolio: 23
Total invested in 2021: £15.4m
Unrestricted cash: £54.7m

Venture

£100k–£10m

Total portfolio: 245
Total invested in 2021: c.£56m
FuM: c.£600m

Private equity

Up to £10m

Total portfolio: 8
Total invested in 2021: £0.8m
FuM: c.£54m

Debt

£100k–£10m

Total portfolio: 150
Total invested in 2021: £16.8m
FuM: c.£110m

Edison Group research report

A breakthrough year and more to come

“FY21 was the year Mercia’s business model as a specialist asset manager matured. The group largely achieved its FY22 strategic goals a year ahead of target (assets under management, AUM, of c £1bn, evergreen balance sheet and sustainable profitability), with NAV per share climbing 24% y-o-y to 40p and AUM rising 18% y-o-y to £940m at year end. Given this progress, a new plan has been set, Mercia 20:20, aiming for average annual growth in AUM of 20% and average PBT of £20m between FY22 and FY24. Mercia is now profitable (FY21 EPS of 7.83p, a 4.8x P/E), with an FY21 dividend yield of 1.1%. Despite evident progress, Mercia’s shares continue to trade at a discount to NAV (0.94x), even before considering the embedded value of the third-party fund management business (c 6.9p/share at 4% of AUM).”

To view the full research report visit edisongroup.com

Annual Report 2021

The Group is now trading profitably as a result of its fund management activities, providing further positive momentum for the Group’s future prospects.

Martin Glanfield, Chief Financial Officer – Mercia

 

 

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