b'Strategic report Governance Financial statementsA leadingand trusted provider of regional capitalOverview The 30.0million placing in December 2019 These results close the first year into ourallowed us to complete the VCT acquisition three-year strategic plan as a proactive,and has provided us with additional capital to regionally focused, specialist asset managersupport our objective of achieving evergreen where we set three measurable targets: (i) status for our direct investment portfolio.to achieve operating profitability before fair value movements, realised gains and allIn 2020, revenue increased by 19.4% to non-cash charges; (ii) to expand the Groups12.7million (2019: 10.7million), which assets under management (AuM) to at leastenabled the Group to move from net 1.0billion; and (iii) to evergreen Merciasexpenses of 1.4million in 2019 to net balance sheet so that the Groups directrevenues of 0.1million, an improvement of investment activities are fully funded by1.5million. Unrestricted cash increased to periodic cash realisations from the 30.2million (2019: 29.8million). Largelyexisting portfolio.as a result of the impact of COVID-19 on asset prices, the direct investment portfolios fair During the last 12 months we completed thevalue decreased by 15.3%. This reduction acquisition of the three VCT fund managementalso contributed to net assets at the year end contracts (the Northern VCT contracts) frombeing 141.5million (2019: 126.1million). NVM Private Equity LLP, increasing our AuM by c.58% to c.800million. These contractsCOVID-19brought with them additional recurringThe initial outbreak in China in December revenues, which have helped bring us to our2019 immediately impacted on certain supply goal of trading profitably on a net revenueschains within our direct portfolio and, in basis, one year earlier than planned. Theaddition, the subsequent lockdown of circa transaction also resulted in the talented VCTone third of the planet resulted in lost or investment team joining Mercia. reduced customer demand. Following the acquisition, 82% of Mercias AuMWe now face the possibility of one of the is now in third-party funds under managementlargest global economic recessions since the (FuM) (up from 23% of AuM at our IPO in1930s, with domestic debt exceeding that of 2014) with the balance of 18% represented byWorld War I. It is my strong belief that there our consolidated balance sheet. We expect thiswill be a gradual recovery over a 12 to shift towards FuM to continue as our fund24-month period and that experienced management business develops further. investors with liquidity and preserved capability will be well placed. Mercia Asset Management PLC 17Annual Report and Accounts 2020'