Annual Report and Accounts 2020

Profitable trading achieved ahead of plan driven by AuM growth

We have strengthened our balance sheet, grown our assets under management, taken the Group to net revenues and readied the business to take full advantage of the opportunities that will emerge.

Times such as these can be challenging and difficult, but they can also be defining moments. I am proud to be part of #OneMercia.Ian Metcalfe, Non-executive Chair – Mercia

Ian Metcalfe, Non-executive Chair - Mercia

Non-executive Chair's statement

The year ended 31 March 2020 has seen continued positive progress towards the execution of the Group’s strategic plan. This is reflected in the underlying progress made by many of the businesses in the Group’s direct investment portfolio, as well as Mercia’s growing and profitable fund management operations. Notable events during a busy year for Mercia were the successful placing and acquisition, which were announced alongside the Group’s interim results on 3 December 2020.

Edison Group research report

Scaling, sustainable and evergreen by FY22

“Mercia’s management have set out a clear vision for the company, with the acquisition of NVM’s VCT business accelerating Mercia’s transition towards becoming a regionally focused specialist asset manager, managing fee-paying third-party funds and reducing its reliance on its own balance sheet. After a difficult 2019, investors have been seeing real value in the widened discounts to NAV in the sector as COVID-19 fears abate.”

To view the full research report visit edisongroup.com

We are on a rewarding journey, together

As we emerge from the current challenging environment, we are well placed with preserved capability and liquidity to sustain our highly selective investment strategy and the flexibility to continue to support and manage our portfolios as companies mature.

Assets under management (“AuM”)

c.£800m

2019: c.£507m

Funds under management (“FuM”)

c.£658m

2019: c.£381m

Portfolio developments

  • £17.5million gross invested into 18 portfolio
    companies during the year including one new direct investment, One Touch Apps, t/a Clear Review
  • Net fair value decrease of £15.8million – near-term
    COVID-19 impact (2019: £3.9million increase)
  • Direct investment portfolio decreased to
    £87.5million (2019: £87.7million)
  • 12 portfolio companies received new investment
    from external investment partners
  • Notwithstanding COVID-19 impact, continuing underlying commercial progress made by a number of portfolio companies including nDreams, which continues to be the Group’s largest direct investment

Operational highlights

  • Third-party FuM increased to c.£658million (2019:
    c.£381million) contributing £11.7million in revenue
  • FuM increase largely reflects the acquisition of
    NVM VCT fund management business that added
    c.£250million in managed funds
  • Venture FuM c.£476million (2019: c.£224million)
  • Private equity FuM c.£60million (2019: c.£61million)
  • Debt FuM c.£122million (2019: c.£96million)

Net assets

£141.5m

2019: £126.1m

Unrestricted cash

£30.2m

2019: £29.8m

Revenue

£12.7m

2019: £10.7m

Direct investment portfolio

£87.5m

2019: £87.7m

Net revenues

£0.1m

2019: £1.4m net expenses

Preliminary results analysis

The long-term potential of our direct investment portfolio, with its relatively modest capital needs, remains positive and we expect the value of this maturing portfolio to accelerate beyond the COVID-19 pandemic.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: 25
Total invested in 2020: £17.5m
Liquidity: £30.2m

Venture

£100k–£10m

Total portfolio: 233
Total invested in 2020: £34.4m
FuM: £475.6m

Private equity

Up to £10m

Total portfolio: 10
Total invested in 2020: £10.7m
FuM: £59.8m

Debt

£100k–£10m

Total portfolio: 119
Total loans in 2020: £14.5m
FuM: £121.8m

OXGENE

Over the course of this financial year, OXGENE has once again doubled its revenue, with a less than 50% increase in headcount. Mercia has continued to support and encourage us through this year of growth and transition.

Jocelyne Bath, Chief Operating Officer – OXGENE

 

nDreams

When we decided to partner with Mercia back in 2014 we couldn’t have chosen a better partner to support us and help us scale, as VR moved from being a great idea with huge potential to a fast-growing entertainment sector with tens of millions of active users.

Patrick O’Luanaigh, Founder & Chief Executive Officer – nDreams

Annual Report 2020

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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