Direct Investments

Covid-19 Business Update

25th March, 2020

Today Mercia has provided an update via the Regulated New Service in relation to Covid-19 including a comment from CEO, Mark Payton.

“Mercia was established with the knowledge that capital supply and market performance is cyclical in nature. Over more than a decade we have built a proactive, supportive ecosystem where we have invested in businesses with relatively modest capital needs and sensible entry valuations. I have the privilege of working with an exceptionally talented and experienced team who themselves have successfully invested through such cycles. I am confident that we will come out of this cycle in good health. We are well prepared with strong liquidity (c.£220million of uninvested cash across our asset classes) and long-term, supportive fund investors. Mercia has only invested on a domestic and largely regional basis, and we are here to support our portfolio companies as we chart our way together through these difficult times.”

In response to the challenges posed by COVID-19, the Group’s focus is on three priorities: the safety of our employees, the continued support for our portfolio companies and maintaining long-term value creation potential for our shareholders and investors in our managed funds.”

·     Business continuity plan implemented with previously tested remote working capabilities functioning well

·     Assessing and supporting c.400 portfolio companies in own and third-party managed funds

·     Strong balance sheet with £30.4million unrestricted cash as at 20 March 2020

·     No bank or other indebtedness and c.£190million of available fund capital from long-term investors to selectively support portfolio companies and provide financial stability

·     Short-term impact to asset management revenues and portfolio valuations as a result of the drop in asset values across all markets and overall economic conditions.

Outlook

The Group will continue to invest carefully to preserve the significant potential future value in all portfolios and has the necessary capital to do so. Whilst it is not possible to provide more explicit guidance at this time we do now expect revenues over the next financial year to be lower than originally anticipated. The Group remains very well placed financially, however, and has a degree of flexibility in its cost base, to partially mitigate lower anticipated revenues.

As a result of these key strengths, Mercia’s medium-term future prospects remain unchanged.

To read the full RNS please visit – https://www.mercia.co.uk/investor-relations/regulatory-news/

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