b'Strategic report Governance Financial statementsThe execution of Mercias strategy is making good progressThe year ended 31 March 2020 has seenThe Board remains focused on the progress ofLivingcontinued positive progress towards thethe largest balance sheet direct investments, execution of the Groups strategic plan.as well as the successful stewardship of theour valuesThis is reflected in the underlying progressGroups growing fund management activities. made by many of the businesses in theThe near-term impact on fair values, andWe recruit exceptional people who Groups direct investment portfolio, astherefore the Groups net asset value perare bright, creative, with a credible well as Mercias growing and profitableshare, is frustrating. However, Mercias strongtrack record and a passion for what fund management operations. Notableliquidity position, both within its managedwe do and getting things done.events during a busy year for Mercia werefunds and within its own balance sheet, the successful placing and acquisition,provides the Group with considerable which were announced alongside investment capacity to take advantage ofGrowth focused: the Groups interim results on anticipated lower entry prices as the currentWe seek to optimise 3 December 2020. financial year unfolds. Investment returns byperformance and growth at an a portfolio are often driven more by entryindividual, team, Group and Direct investment portfolio prices than by exit prices and Mercia intendsinvestee level.Valuing the direct investment portfolio onto take full advantage of the investment 31 March 2020, so soon into the Unitedopportunities, which it anticipates will arise Kingdoms COVID-19 related lockdown, during the coming months. Responsive: is inevitably difficult. The Group hasWe think deeply, always meeting consistently complied with the InternationalThe investment teams across all of our assetcommitments and aiming to Private Equity and Venture Capital Valuationclasses, being balance sheet, venture, privateexceed expectations.Guidelines (IPEVCVG). This has resulted inequity and debt, have been working closely an overall fair value reduction in the directwith their portfolio companies to help as portfolio of 15.3%. It is important to note thatmany as possible through the currentKnowledgeable: these fair values have been determined at aunprecedented economic slowdown. Mercias moment of global economic crisis which willmarketing team has also hosted a number ofWe are recognised as experts in ease over time, and that within the portfolioimpressive and insightful webinars on a wideour field, sharing knowledge for are companies which are still making rapidrange of relevant business support topics,the benefit of others.commercial progress. Whilst it is possible thataimed specifically at helping our c.390 not all of the existing portfolio companies willportfolio companies.Trusted: survive current sector-specific challenges, most will, and we expect their fair values toWe are trusted partners, known recover over time. Furthermore, for some offor being honest, professional, the portfolio companies this period willreliable and fair.actually see their fair values accelerate faster than would have been the case under normalSee more on economic conditions. page 43Mercia Asset Management PLC 09Annual Report and Accounts 2020'