Mercia Asset Management PLC, 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
- £165million invested into 176 businesses, including 85 new companies during the year
- Proposed final dividend increase of 6.0%
Financial results
| 31 March
2023 |
31 March
2022 |
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| 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 | |
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Alternative performance measures |
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| 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)
- £31.0million successfully raised across four Enterprise Investment Schemes (“EIS”) funds during the year
- £40.0million raised by the Northern Venture Capital Trusts (“VCTs”) in the year, in addition to £2.9million of shareholder dividend reinvestment inflows
- Interim and final dividends totalling c.£20million paid by the three Northern VCTs
- 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)
- Portfolio trading performance showing signs of improvement
- Debt FuM c.£556million (2022: c.£118million)
- £415.0million of FuM added to the Group through the acquisition of FDC
- Post acquisition, FDC successfully raised an additional £30.1million for its FDC Debt LP fund
- 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.”
Read the full RNS here
Visit our prelims FY2023 area here