Mercia Asset Management Plc · LSE:MERC
Mercia Asset Management — H1 2021 Earnings Presentation
29 slides from Mercia Asset Management's earnings presentation, Dec 1, 2020
Slide 1: Mercia Asset Management PLC Interim Results Presentation
Mercia Asset Management PLC Interim Results Presentation 30 September 2020
Slide 2: Important notice
Important notice • This document contains statements about Mercia Asset Management PLC that are or may be forward-looking statements. Forward-looking statements include statements relating to (i) future revenues, expenses, earnings, financial condition and future prospects; and (ii) business and man
Slide 3: A track record of value creation
A track record of value creation Dr Mark Payton Martin Glanfield Julian Viggars Chief Executive Chief Financial Chief Investment Officer Officer Officer Over 20 years’ experience Over 20 years’ CFO/FD Over 20 years’ venture in technology experience of listed and capital experience commercialisation
Slide 4: Highlights for H1 2021
Strong growth in adjusted operating profit and fair value movements (“FVM”); maiden dividend Strategic highlights Assets under Highlights for H1 2021 - Resilient, scalable business model management (“AuM”) - No use of Government support schemes c.£872m, +c.78% - Strong progress against three-year ob
Slide 5: Delivering shareholder value creation
Shareholder value creation through predictable fee income and capital growth • Fee income visibility via closed end and long duration funds • Growing profits from recurring fund management related fees Delivering underpins progressive dividend policy • Growth in NAV as direct investments mature • Su
Slide 6: Complete Connected Capital
Business model Proactive, regionally focused, specialist asset manager Complete Connected Capital Proprietary balance sheet capital Selectively: • Provides scale-up capital for portfolio companies emerging from third-party managed funds • Minority LP in four third-party managed funds Venture Private
Slide 7: Why the regions?
Target market and market trends Total equity Our regional coverage • We seek businesses investment • Our offices typically requiring across UK • University <£20m investment Why the regions? partners with exit • NEVF regions expectations of • MEIF regions • NPIF regions c.£20m - £200m 46% • Mercia pe
Slide 8: The next 18 months: Strategic objectives
Strategic objectives 1. Continued growth in adjusted operating profit The next 18 months 2. Grow AuM to ≥£1bn 3. ‘Evergreen’ the balance sheet 4. Progressive dividend policy 5. Become No.1 provider of capital in our target markets 8
Slide 9: Financial review
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Slide 10: Summarised results – H1 2021
Summarised results – H1 2021 • Revenue increased 51.0% to £8.4m (H1 2020: £5.5m) Financial information • Adjusted operating profit £1.1m (H1 2020: £0.6m loss) • Realised gain £1.7m (H1 2020: nil) from NAC disposal • Net fair value increase £6.7m (H1 2020: £3.2m) • Net assets £149.9m (H1 2020: £128.4
Slide 11: AuM movements in H1 2021
AuM movements in H1 2021 AuM AuM AuM 1 April Net 30 September 30 September 2020 fund flows Performance 2020 2019 Asset class £’m £’m £’m £’m £’m Venture 476 4 72 552 210 Private equity 60 (4) - 56 60 Debt 122 (8) - 114 91 Proprietary capital 142 - 8 150 128 Total 800 (8) 80 872 489 • Performance dri
Slide 12: Consolidated statement of comprehensive income
Consolidated statement of comprehensive income for the six months ended 30 September 2020 Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 September 30 September 31 March 2020 2019 2020 £’000 £’000 £’000 Revenue 8,362 5,537 12,747 Other administrative expenses (7,323) (6,2
Slide 13: Summarised consolidated balance sheet
Summarised consolidated balance sheet as at 30 September 2020 Unaudited Unaudited Audited As at As at As at 30 September 30 September 31 March 2020 2019 2020 £’000 £’000 £’000 Goodwill and intangible assets 35,538 10,762 36,705 Property, plant, equipment and right-of-use assets 642 801 723 Investmen
Slide 14: Summarised cash flow statement
Summarised cash flow statement for the six months ended 30 September 2020 Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 September 30 September 31 March 2020 2019 2020 £’000 £’000 £’000 Net cash generated from/(used in) operating activities 2,002 (1,121) 136 Purchase of
Slide 15: Investment review
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Slide 16: Proactive regional deal origination
Proactive regional deal origination Across all asset classes in H1 2021 Key regional investor • 1,163 investment enquiries • c.£42m invested in existing and new portfolio companies: - into 81 companies - of which 26 are new - 398 portfolio companies Private Balance Venture equity Debt sheet Total To
Slide 17: FuM progress
Third-party funds under management (“FuM”) FuM: - Rapid, decisive COVID-19 response o Long term outlook, providing shorter term help FuM progress - Meeting or exceeding fund client expectations - Institutional: o CBILS accredited (BBB** NPIF debt fund) o New debt fund (GMPF* as investor) launched in
Slide 18: Direct investments
Proprietary capital • Effort concentrated on larger investments, top 10 represent c.80% of portfolio value Direct investments • 15 of top 20 (75%) companies funded through FY 2021 and beyond • £10.9m net invested in 14 companies (6 alongside FuM) • MIP Diagnostics added in the period, Sense Biodetec
Slide 19: Direct investment portfolio
Direct investment portfolio as at 30 September 2020 Investment Net cash Investment Fair value Investment Percentage value invested realisations movement value held As at Six months to Six months to Six months to As at As at 1 April 30 September 30 September 30 September 30 September 30 September 202
Slide 20: Top holdings by value (1-5)
Top 10 holdings by value (1-5) Investment value £17.7m £16.1m £10.0m £8.1m £7.0m Direct investments % direct holding (excludes FuM) 36.4% 30.2% 27.5% 30.1% 17.1% Initial investment date 2014 2016 2017 2017 2018 Description Biotech Ecommerce VR developer Patch delivery Video analytics gene therapy se
Slide 21: Top holdings by value (6-10)
Top 10 holdings by value (6-10) Investment value £6.0m £4.9m £4.5m £4.2m £3.0m Direct investments % direct holding 25.9% 29.9% 15.6% 48.3% 16.7% (excludes FuM) Initial 2015 2015 2018 2014 2018 investment date Description Aluminium Sodium-ion Flat speaker Orthobiologics SEO platform pressing battery
Slide 22: Summary
Strongly positioned for long term sustainable growth and shareholder value creation ✓ Continued fee income growth with c.87% contracted recurring (fund and monitoring fees) ✓ Broad range of closed end, third-party funds under management, some ‘evergreen’ Summary ✓ Scale: c.£872m AuM and growing ✓ We
Slide 23: Appendices
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Slide 24: Responsible business
Environmental, Social and Governance (“ESG”) • Mercia is a responsible employer and investor Responsible business • We incorporate ESG factors while building and managing our portfolios and our Group • We are guided in our approach by the UN Principles of Responsible Investment • Our in-house ESG te
Slide 25: Mercia: share register – c.69% free float
Mercia: share register – c.69% free float (H1 2020: c.28%) As at 30 September 2020 • Board, management and employees (c.17%) • Invesco (c.14%) • Retail (c.12%) • Librae Holdings (c.6%) • Ruffer (c.6%) • Ninety One (Investec Asset Management) (c.4%) • NVM Private Equity (c.4%) • Chelverton Asset Mana
Slide 26: Valuation methodology
Valuation methodology • Calibration of valuation approaches under IPEVCVG • Some use of DCF due to updated valuation guidelines • COVID-19 discounts still applied where appropriate • But, still adopt a ‘hand on heart’ final sense check Direct investment portfolio by primary valuation methodology £0.
Slide 27: Non-executive Directors
Strong corporate governance combined with deep investment and capital management experience Non-executive Directors Ian Metcalfe Ray Dr Jonathan Caroline Diane Chair Chamberlain Pell Plumb OBE Seymour- Williams 27
Slide 28: Responding to market conditions: COVID-19 update
Responding to market conditions COVID-19 update and learnings • Wellbeing of our team remains the key priority • Remote working successful Our Company • No use of Government furlough or CBILS • Accelerated switch to digital operations, efficiency gains • ESG principles central to Mercia’s investment
Slide 29: Mercia Asset Management PLC contact
0330 223 1430 @Mercia_PLC info@mercia.co.uk Mercia Asset Management PLC mercia.co.uk
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