Mercia Asset Management Plc · LSE:MERC
Mercia Asset Management — FY2018 Earnings Presentation
28 slides from Mercia Asset Management's earnings presentation, Jul 2, 2018
Slide 1: Preliminary results for the year ended 31 March 2018
Preliminary results for the year ended 31 March 2018 Realising value Mark Payton - CEO Martin Glanfield - CFO Julian Viggars - CIO
Slide 2: Important notice
Important notice This document has been prepared by and is the sole responsibility of Mercia Technologies (the “Company”), comprises these presentation slides for the sole use at a presentation and any question and answer session and any document or material distributed at or in connection with the
Slide 3: Highlights
Highlights • Continued good progress with direct investment portfolio: - £21.1million invested in 17 portfolio companies, with three new Emerging Stars - Net fair value gains of £2.8million - Third cash realisation, Science Warehouse, for £10.5million including a realisation of £0.6million - Portfol
Slide 4: Our journey: The start, December 2014
Our journey: The start, December 2014 £0.7million turnover ~£31.1million AuM: • ~£22.0million FuM (portfolio of 36 companies) • ~£9.0million portfolio valuation (11 direct investments) • ~£100,000 cash 1 office, West Midlands based Ambition to expand FuM to provide a funnel for direct investments an
Slide 5: Our journey: Just over three years later
Our journey: Just over three years later £10.2million turnover ~£500.0million AuM: • ~£400.0m FuM (portfolio of >190 companies) March 2018 • ~£66.1million portfolio valuation (26 direct investments) • ~£49.4million unrestricted cash 3 cash realisations 9 offices in the Midlands, the North of England
Slide 6: The Board and Investment Team
The Board and Investment Team The Board Dr Mark Payton Martin Glanfield Julian Viggars Susan Searle Ian Metcalfe Ray Chamberlain Dr Jonathan Pell Caroline Plumb OBE CEO CFO CIO Non-executive Snr Independent Non-executive Non-executive Non-executive Chair Director Director Director Director Sector In
Slide 7: Regional presence, national business
Regional presence, national business Regional: - NEVF (Gold: equity) - NPIF (Green: debt & equity) - Rosebud (Green: debt & equity) - MEIF (Turquoise: equity) National: - EVGF II (equity) - SME Loans (debt) - EIS (equity) - Balance sheet (equity) 7
Slide 8: Complete capital solution
Complete capital solution ~ £230.0m 10-30% equity stake 20-40% equity stake 8
Slide 9: University partnerships delivering value
University partnerships delivering value The Midlands Scotland Delivering ~50 innovative opportunities The North of England 9
Slide 10: Starting to deliver both balance sheet and funds value
Starting to deliver both balance sheet and funds value Cumulative fair value net gains (£’million) 14 • Midlands/University of Warwick • Sold in December 2016 12 • ~£2.9million full cash realisation 10 8 6 4 • North of England/Leeds University 2 • Sold in March 2018 • ~£10.5million full cash realisa
Slide 11: Focused
Focused Software & the Digital & Digital Internet Entertainment Portfolio composition • Artificial intelligence • Virtual reality (values above £1.0million) • Cybersecurity • Augmented reality • Software as a service • Gaming/content • Analytical tools • Serious games • Adtech Digital & Digital Soft
Slide 12: Robust and growing FuM pipeline
Robust and growing FuM pipeline Electronics, Materials, Manufacturing / Engineering Life Sciences & Biosciences Digital & Digital Entertainment Software & the Internet 12
Slide 13: Key sector companies: Software & the Internet
Key sector companies Dr Alistair Forbes – Sector Head Investment Director 15+ years in the sector Software & the Co-founder of HoundDog Technology, acquired by GFI Software in 2009. He Internet then held the position of GM for a division that grew from $6.0million ARR to $100.0million ARR in a perio
Slide 14: Key sector companies: Digital & Digital Entertainment
Key sector companies Mike Hayes – Sector Head Investment Director 20+ years in the sector Digital & Digital Formerly CEO at SEGA Europe & America, sales & marketing Entertainment director at Nintendo and marketing director at Codemasters nDreams VirtTrade Edge Case Games Soccer Manager Equity stake:
Slide 15: Key sector companies: Electronics, Materials, Manufacturing / Engineering
Key sector companies Electronics, Dr Mark Volanthen – Sector Head Investment Director 20+ years in the sector Materials, Named on 65 patents. Founding Manufacturing / employee at Kymata, acquired by Alcatel for $118.0million Engineering Warwick Audio Impression Smart Antenna Faradion Technologies Te
Slide 16: Key sector companies: Life Sciences & Biosciences
Key sector companies Peter Dines – Sector Head Investment Director 20+ years in the sector Life Sciences & Former MD of Surgicraft, led MBO Biosciences of UK business Surgi C during which time sales tripled, sold to Livingbridge Medherant The Native Concepta Oxford Genetics Antigen Company Equity st
Slide 17: Summary financial information
Summary financial information Year to Year to 31 March 2018 31 March 2017 £’000 £’000 Income statement - key items Revenue 10,197 6,660 Administrative expenses (10,633) (9,143) Net expenses (436) (2,483) Realised gains on disposal of investments 871 839 Fair value movements in investments 2,823 4,26
Slide 18: Direct investment holdings
Direct investment holdings Net Net investment Net cash Investment Fair value investment Percentage value invested realisations movements value held As at Year to Year to Year to As at As at 1 April 31 March 31 March 31 March 31 March 31 March 2017 2018 2018 2018 2018 2018 Investment £'000 £'000 £'00
Slide 19: Valuation policy and portfolio summary
Valuation policy and portfolio summary • All £66.1million of investments are held at fair values based on IPEVCV Guidelines • Early-stage companies often have Listed bid price: 2% no current/short-term future earnings or positive cash flows Price of recent round: 68% • Consequently, the most C
Slide 20: A share in Mercia; sum of the parts
A share in Mercia; sum of the parts Other value drivers NAV: 40.7p/share £4.5m - Future fair value uplifts and realised gains in MFM: 9.0p/share (1.5p/share) existing balance sheet portfolio 3.1% - Growing number, strength and breadth of future de-risked Emerging Stars from FuM - 19 university partn
Slide 21: Mercia is in a secure financial position
Mercia is in a secure financial position • Cash in hand is ~£50.0million • ~£230.0million ‘dry powder’ in managed funds • Group’s net expenses are reducing • 2018/19 balance sheet investment ~£25.0million • ‘Group’ annual investment rates (funds and balance sheet): • In 2016/17: ~£20.0million • In 2
Slide 22: Built to realise value
Built to realise value NAV growth Minimisation of cash Leverage partnerships and Realise value erosion business model Business built, now Increasing revenue and In last 12 months: Cash returns strong focus on reducing net expenses • >1,700 plans received (~5% through trade sales accelerated growth i
Slide 23: Appendix
ercld Appendix chnologies
Slide 24: Movements in portfolio: IPO to 31 March 2018
Movements in portfolio: IPO to 31 March 2018 £23.3m £(11.4)m At IPO £66.1m Net investments made £45.2m during the period Unrealised gains on the revaluation of investments Unrealised losses on the revaluation of investments Valuation as at 31 March 2018 £9.0m 24
Slide 25: Movements in portfolio: Year ended 31 March 2018
Movements in portfolio: Year ended 31 March 2018 £8.7m £(5.8)m £66.1m Valuation as at £11.2m 1 April 2017 Net investments made during the year £52.0m Unrealised gains on the revaluation of investments Unrealised losses on the revaluation of investments Valuation as at 31 March 2018 25
Slide 26: Movements in net assets: IPO to 31 March 2018
Movements in net assets: IPO to 31 March 2018 £52.8m £(6.8)m £123.5m Pre IPO net assets Goodwill and intangible assets arising on EV acquisition Portfolio value increase £57.1m Increase in cash and short-term liquidity investments Decrease in working capital Net assets as at 31 March 2018 £8.8m £11.
Slide 27: Movements in net assets: Year ended 31 March 2018
Movements in net assets: Year ended 31 March 2018 £14.0m £(10.9)m £(1.0)m £123.5m Net assets as at £121.4m 1 April 2017 Portfolio value increase Reduction in cash and short-term liquidity investments Other net asset movements Net assets as at 31 March 2018 27
Slide 28: Contact details
0330 223 1430 info@merciatech.co.uk www.merciatech.co.uk
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