Mercia Asset Management PLC, is pleased to announce its preliminary results for the year ended 31 March 2024.
Set against another year of subdued inflows by the asset management sector, Mercia achieved record fund inflows of c.£562million during the year and increased revenues, EBITDA, adjusted operating profit, dividends and cash.
| 31 March
2024 |
31 March
2023 |
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| Statutory results | ||||
| Revenue | £30.4m | £25.9m | ||
| Realised gain/(loss) on sale of direct investments | £4.5m | £(0.8)m | ||
| Fair value movement in direct investments | £(17.3)m | £1.2m | ||
| (Loss)/profit before taxation | £(8.2)m | £2.4m | ||
| Basic (loss)/earnings per share | (1.71)p | 0.64p | ||
| Interim dividend paid per share | 0.35p | 0.33p | ||
| Proposed final dividend per share1 | 0.55p | 0.53p | ||
| Cash and cash equivalents | £46.9m | £37.8m | ||
| Net assets | £189.2m | £202.9m | ||
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Alternative performance measures |
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| AuM 2 | £1,818.8m | £1,437.3m | ||
| EBITDA 3 | £5.5m | £5.2m | ||
| Adjusted operating profit 4 | £9.7m | £7.6m | ||
| Net assets per share | 43.4p | 45.4p | ||
1 The proposed final dividend is subject to shareholder approval at the Company’s Annual General Meeting on 26 September 2024, and if approved, will be paid on 1 November 2024 to shareholders on the register at the close of business on 4 October 2024.
2 AuM is defined as the value of funds under management from which the Group earns fund management revenues, plus the Group’s consolidated net assets.
3 EBITDA is defined as operating (loss)/profit before exceptional item, depreciation, realised gains/(losses) on the sale of direct investments, fair value movement in direct investments, share-based payments charge, amortisation of intangible assets and movement in fair value of deferred consideration.
4 Adjusted operating profit is defined as EBITDA plus net finance income.
Managed fund movements
- Third-party funds under management (“FuM”) increased by c.32% to c.£1,630million (2023: c.£1,234million), with no redemptions
- Venture FuM of c.£913million (2023: c.£630million)
- Three new British Business Bank (“BBB”) fund mandates secured with c.£263million to be invested across the West Midlands, Yorkshire and the Humber regions
- Additional allocations totalling £20.0million under the Northern Powerhouse Investment Fund Equity and Midlands Engine Investment Fund Proof of Concept mandates, with a further £15.7million allocated to the North East Venture Capital fund mandate in the year
- Shares totalling c.£49million allotted by the three Northern Venture Capital Trusts (“VCTs”) in the financial year, in addition to £2.7million of shareholder dividend reinvestment inflows
- Three Enterprise Investment Scheme (“EIS”) funds closed in the financial year, raising a total of £14.4million
- £47million downward movement in FuM for the Northern Powerhouse Investment Fund Equity and Midlands Engine Investment Fund Proof of Concept which both transitioned from their investment phase to realisation phase during the year.
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- Debt FuM of c.£687million (2023 c.£556million)
- Two new BBB fund mandates totalling £97.0million to be lent across the West Midlands, Yorkshire and the Humber regions
- Frontier Development Capital Limited (“FDC”) awarded a £100.0million Brownfield Regeneration Fund for the West Midlands
- £65million downward movement in FuM as the Northern Powerhouse Investment Fund Debt transitioned from its investment phase to realisation phase in the year.
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- Private equity FuM of c.£30million (2023: c.£48million)
- £16million downward movement in FuM as the EV Growth Fund II transitioned from its investment phase to realisation phase in the year.
Direct investment portfolio movements
- Direct investment portfolio fair value of £116.9million (2023: £136.6million)
- Profitable sale of nDreams Limited (“nDreams”) to Aonic AB (“Aonic”) for an enterprise value of £90.3million ($110million). Mercia held a 33.2% direct stake in nDreams, resulting in a total consideration of £30.2million, split between £26.4million in cash and a £3.8million investment in Aonic Founder SCS. This exit resulted in a 2.7x return on invested capital and an 18.4% IRR
- £19.6million net invested into 11 portfolio companies (2023: £20.7million net invested into 13 portfolio companies)
- £17.3million net fair value decrease in the portfolio during the year (2023: £1.2million increase), largely resulting from the impairment of the Group’s direct investment in Impression Technologies Limited (“Impression Technologies”).
Future strategy and proposed reclassification as a trading company
- Mercia’s intention is to now focus on its profitable and fast-growing FuM
- The Board will propose a resolution at the 2024 Annual General Meeting that Mercia reclassifies as a trading company and ceases to be an investing company under the AIM Rules.
Post-period end developments
- The Northern VCTs allotted shares totalling c.£29million on 4 April 2024, concluding the second half of their £60.0million fundraise which closed to investors on 13 March 2024
- £15million raised by Mercia’s EIS Knowledge-intensive 2023/24 fund at the start of April 2024
- On 29 May 2024, the Company completed the £5.0million share buyback programme announced on 28 November 2023.
Mark Payton, Chief Executive Officer of Mercia, commented:
“The year to 31 March 2024 was characterised by market volatility, high inflation and high interest rates driving up the costs of doing business, alongside geopolitical uncertainty and a thankfully short-lived recession. It is therefore pleasing to have come through these universal headwinds with record organic growth in our assets under management, driven by Mercia’s diversified and differentiated approach to making a positive impact for our investors and investees.
Read the full Preliminary Results here