b'Mercia asset Management PLc11Annual Report and Accounts 2021This time last year valuations were falling ingovernance, sustainabilityour carbon footprint, contributing positively to many of our Funds under Managementand engagement societys needs, whilst continuing to be guided (FuM), in parallel with wider marketGood Board governance, cohesion and aby a strong governance culture in all our corrections. Those falls largely stabilisedsense of common purpose are vital whendealings. Since its inception in 2014, the Group during the autumn of 2020 and it is pleasing tonavigating any company through turbulenthas embedded a strong corporate governance see further material growth in our total Assetstimes. In November 2020, we welcomedethic in all its internal and external under Management (AuM) for the year as aDiane Seymour-Williams onto our Board.interactions. As a member of the Quoted whole. This is being driven both by new fundsDianes asset management background,Companies Alliance (QCA) since 2015,raised and improved fund performance.including with Venture Capital Trusts, is anand with its fund management operations excellent addition to our existing Boardregulated by the Financial Conduct Authority strategic updatenew skill-set and investment experience. Diane(FCA), Mercia always seeks to act in the best three-year targets settled in quickly and started making ainterests of its stakeholders. Proactive Set in March 2019, the Groups three-yearpositive contribution immediately. Inengagement with all stakeholder groups strategic objectives were centred on makingrecognition of her deep asset managementremains fundamentally important to our Mercia a self-sustaining investment group.expertise and experience, she has recentlyBoard. Whilst the intermittent lockdowns and The three principal objectives were: been appointed as the Boards Seniorremote working imperatives have curtailed to achieve operating profitability beforeIndependent Director. face-to-face engagement during the last year,realised gains, fair value movements andI look forward to furthering those relationships all non-cash charges; Throughout the year, the Executive Directorsfor the mutual benefit of all stakeholders to evergreen its balance sheet so that the(together with the Groups Chief Operatingduring the current financial year.Groups direct investment activities wouldOfficer, Peter Dines) and Non-executive be fully funded by periodic cash realisationsDirectors have worked constructively togetheroutlookfrom the existing portfolio; andand willingly pooled their varying talents andThese record financial results speak louder to expand the Groups AuM to at leastexperiences to steer Mercia through thethan words can about the quality of the 1.0billion. pandemic. We now wish to incentivise keybusiness which we have built and the calibreStrategic reportexecutives, aligning them with theof our people. We greatly appreciate the Two years in it is very pleasing to see the firstperformance of the business and shareholderscontinuing support and encouragement of two objectives comfortably achieved and interests. We are therefore intending to put inour shareholders and advisers and are the third within touching distance. Evenplace a new performance share plan, withpleased to be delivering on our potential for though the existing strategic objectivesstretching performance conditions, for certainshareholder value creation. Governance Financial statementshave one further year to run, Merciassenior executives. We believe this will both Board has recently agreed a new andincentivise those senior executives, and act as aWith signs of economic normality returning ambitious three-year plan: Mercia 20:20.powerful retention tool. and heightened interest in several of those sectors into which Mercia invests, the future Mercia 20:20: The Group will aim: These excellent financial results are testamentprospects for Mercia have never been better.to grow its AuM by an average of 20% perto the collective efforts of not just the Board, annum over the next three years; and but of each and every Mercia employee. Notwithstanding our excellent cash position, to deliver average pre-tax profits ofwe will maintain our investment discipline 20.0million per annum over the sameCritical to our increasing success, isand focus whilst expanding our regional three-year period. continuing to meet the investment objectivespresence and talent pool. Our new strategic agreed with our different asset class fundobjectives speak to our growing confidence The achievement of these two new strategicinvestors. Despite the economic shocks of theand ambition, and I look forward to updating objectives is expected to deliver substantiallast year, we have continued to meet ourshareholders this time next year.total shareholder returns during the nextcommitments to all our external three years. stakeholders. This has included continuing toMercia has grown significantly since its IPO hire and train new investment talent, furtheron AIM in December 2014, via a combination dividend develop the investment skills of the existingof organic initiatives and two successful On 1 December 2020, in conjunction with theteams whilst supporting them all with leadacquisitions. We anticipate that this announcement of its interim results, Merciageneration, marketing, investee recruitmentcombined approach will continue during the declared its maiden interim dividend of resource and in-house legal investmentnext three years, thereby increasing total 0.1 pence per share and the start of aadvice. In particular, we have furthershareholder returns.progressive dividend policy. The excellentdeveloped our relationships with the three second-half performance coupled with theVenture Capital Trust (VCT) boards andFinally, whilst the last 12 months have been Groups future prospects has enabledremain fully focused on, and committed to,challenging and difficult at times, they have Mercias Board to recommend a proposedinvesting in and supporting the VCTexemplified what Mercia represents. As Chair,final dividend of 0.3 pence per share. investment team in helping them to manageI am immensely proud to be part of and expand the VCT portfolios.#OneMercia, which continues to be a If approved by shareholders at Septemberscommunity of outstanding people who care Annual General Meeting, the dividend will beMercia has always been a responsible investorabout the funds we manage, the companies in paid on 12 October 2021 to shareholders onand many of its fund and balance sheetwhich we invest or to which we lend, and, most the register at close of business onportfolio companies are developingimportantly of all, who care about each other. 24 September 2021. technologies which help reduce carbonThe successful execution of Mercias strategy emissions. During the year, we asked by our staff during this tumultuous year has In anticipation of continued profitableJill Williams, one of our private equitymaterially grown shareholder value and progress in both trading and investmentInvestment Directors, to become our Head ofproved that the Mercia Model works for all realisations, the Boards objective is aEnvironmental, Social and Governance (ESG).stakeholders. Long may that continue.year-on-year progressive increase in both itsJills passion for ESG and her wide-ranging brief interim and proposed final dividends. will help Mercia to play its part in minimisingian r. MetcalfeNon-executive Chair'