b'Mercia asset Management PLc47Annual Report and Accounts 2021On 1 April 2020, the Group adopted adjusted operating profit as a more generally recognised APM for specialist asset managers, compared to its historic net revenues APM. Adjusted operating profit is defined as operating profit before performance fees net of variable compensation, realised gains on disposal of investments, fair value movements in investments, share-based payments charge, depreciation, amortisation of intangible assets, movement in fair value of contingent consideration and exceptional items.From Mercias perspective and for comparison purposes, the difference between the historic measurement of net revenues and adjusted operating profit, is that the latter includes net finance income and excludes depreciation.Results reported on an APM basis are denoted bythroughout this review. The table below provides a bridge between the two APMs for the years ended 31 March 2021 and 2020. Year ended Year ended31 March 31 March2021 2020000 000Revenue 1 19,186 12,747Administrative expenses 1 (15,897) (12,449)Depreciation (212) (212)net revenues 3,077 86Depreciation 212 212 Strategic reportNet finance income 48 220adjusted operating profit 3,337 518The Directors believe that the reporting of adjusted operating profit assists in providing a consistent measure of operating performance,Governance Financial statementsexcluding distortions which can be caused by the reconciling items set out below for both the current and comparative years.Year ended Year ended31 March 31 March2021 2020000 000adjusted operating profit 3,337 518Performance fees (gross) 4,224 Variable compensation attributable to performance fees (445) Performance fees net of costs 3,779 adjusted operating profit including performance fees net of costs 7,116 518Depreciation (212) (212)Net finance income(48)(220)Realised gains on disposal of investments 20,251 Fair value movements in investments 10,088 (15,844)Share-based payments charge (543) (528)Amortisation of intangible assets (2,317) (852)Movement in fair value of contingent consideration (365) operating profit/(loss) before exceptional items 33,970 (17,138)Exceptional items(695)operating profit/(loss) 33,970 (17,833)A reconciliation of results reported on an APM basis to International Financial Reporting Standards (IFRS) is as follows:Year ended 31 March 2021 Year ended 31 March 2020aPM PerformanceiFrs as APM IFRS as basis 1 fees depreciation reported basis1 Depreciation reported000 000 000 000 000 000 000Revenue 19,186 4,22423,410 12,74712,747Administrative expenses (15,897) (445) (212) (16,554) (12,449) (212) (12,661)Depreciation (212)212(212) 212 '