b'Non-executive Chairs statement continuedStrategic reviewupdateSuccessful placing and acquisition Governance and engagementon progress On 3 December 2019 Mercia simultaneouslyThroughout the year the Board has focusedAs I referred to in my statement last year,announced a proposed placing to raiseon the strategic direction of the Group and on during the early part of 2019 the Board30.0million gross and the conditionalexecuting the priorities identified. The conducted a detailed strategic review of theagreement to acquire three venture capitalDirectors (together with the Groups Chief Groups progress to date, the aim being totrust (VCT) fund management contractsOperating Officer, Peter Dines) provide a continue to scale Mercia over the following(the Northern VCT contracts) from NVMbalanced leadership group with relevant three years to become a profitable andPrivate Equity LLP (NVM), together with theirexperience to drive the creation of self-sustaining investment group. The threeVCT investment team, for a total considerationshareholder value. Given the evolution of key pillars to achieving these strategicof up to 25.0million. On 20 December 2019,Mercia into a specialist asset manager, I said objectives are: shareholders overwhelmingly approved thelast year that the Board intended to appoint to achieve operating profitability beforeissue of 120.0million new Ordinary shares atan additional Non-executive Director with fair value movements, realised gains and25.0 pence per share via the placing, and therelevant specialist asset management all non-cash charges; acquisition of the VCT fund managementexperience. No sooner had the search to expand the Groups assets underbusiness was completed on 23 Decembercommenced than Mercia entered detailed management to at least 1.0billion; and 2019. Approximately half of the placingnegotiations with NVM and it was agreed that to evergreen its balance sheet so that theproceeds were used to fund the initial cashthe search would be paused until the outcome Groups direct investment activities areconsideration for the acquisition and theof the proposed fund raising and acquisition fully funded by periodic cash realisationsplacing expenses, whilst the remainder hasbecame known. That search has now from the existing portfolio. strengthened the Groups ability to continuerecommenced in earnest, although it is to invest in the most promising businesses,inevitable that lockdown and the need for During the year the Group made substantialboth in its direct investment portfolio andsocial distancing is elongating the selection progress towards the achievement of all threethose showing most promise in its managedprocess.of these objectives, most notably through thefunds. successful placing and acquisition inSince its inception in 2014, the Group has December 2019. Acquisitions compress timeThe three Northern VCTs are long-standing,embedded a strong corporate governance and successful ones enhance shareholderprofessionally-governed and successful listedethic in all of its internal and external value. The early signs for Mercias most recentinvestment trusts. The broadly regional focus,interactions. As a member of the Quoted acquisition are encouraging.inclusive culture and sound business values Companies Alliance (QCA) since 2015, and of NVM, and within it their talented VCTwith its fund management operations Since its inception, Mercia has been clear in itsinvestment team, chimed closely with Merciasregulated by the Financial Conduct Authority determination to trade profitably, so that itsown DNA. The Board was very pleased to be(FCA), Mercia always seeks to act in the best revenues exceed the total operating costs ofable to agree mutually satisfactory terms withinterests of its stakeholders. Proactive the Group. The key to reaching this objective isNVM and is most grateful to the boards of theengagement with all stakeholder groups is twofoldcontinuing to increase the quantumthree Northern VCTs for their agreement tofundamentally important to our Board and of funds which the Group manages on behalfnovate each of the fund managementyou will be able to read many examples ofof third-party stakeholders, whilst, at thecontracts to Mercia. A post-acquisitionhow we do this within this Annual Report. In same time, maintaining control of costs. 100-day integration plan was completed byrespect of the recently acquired VCT fund the financial year end, including welcomingmanagement business, I have engaged The Group is also determined to reach thethe VCT investment team into our #OneMerciadirectly with the chairs of each VCT boardpoint of balance sheet sustainability, such thatfamily. For the relatively short period ofand look forward to developing those regular realised cash returns from trade salesownership from acquisition to 31 March 2020,relationships for the mutual benefit of all and the unwinding of equity stakes in listednotwithstanding the COVID-19 impact onparties during the current financial year.companies are sufficient for its annual directcurrent VCT portfolio valuations and asset investment needs. value linked revenues, I am pleased to say that the financial performance of the acquired business met expectations.10 Mercia Asset Management PLCAnnual Report and Accounts 2020'