Mercia Asset Management Plc · LSE:MERC
Mercia Asset Management — FY2024 Earnings Presentation
26 slides from Mercia Asset Management's earnings presentation, Jul 2, 2024
Slide 1: Preliminary Results: A natural evolution
2 July 2024 Preliminary Results A natural evolution 1
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 ma
Slide 3: Executive team
Dr Mark Payton Chief Executive Officer Co-founder of Mercia, with a PhD in Life Sciences and over 25 years’ experience in tech, commercialisation and investing. Martin Glanfield Chief Financial Officer Executive team KPMG trained chartered accountant with over 25 years’ CFO experience of multiple li
Slide 4: FY24 Highlights
£30.4m +17.6% £46.9m Revenue Cash on hand* – no debt (2023: £25.9m) (2023: £37.8m) £5.5m +6.7% £1.8bn +26.6% FY24 EBITDA Assets under management Highlights (2023: £5.2m) (2023: £1.4bn) 0.55p +3.8% £0.6bn Proposed final dividend Organic funds under management inflows (2023: 0.53p) (2023: £0.1bn) 4 4
Slide 5: Mercia 20:20
Mercia 20:20 AuM PBT Progressive dividend three-year outturn FY22: £959m £27.4m 0.80p / share FY23: £1.4bn £2.4m 0.86p / share FY24: £1.8bn (£8.2m) 0.90p / share Result: £1.8bn £21.6m Three-year cumulative c.£1.6bn c.£60m target: 5
Slide 6: Direct portfolio – a history of value creation and realisations
Direct portfolio – a history of value creation and realisations Total invested Exit value Return £’m £’m 2017 Abzena plc 0.2 0.2 1.0x Allinea Software Limited 1.5 3.0 2.0x 2018 Science Warehouse Limited 9.2 10.5 1.1x 2021 The Native Antigen Company Limited 0.6 5.2 8.7x Clear Review Limited 0.5 1.0 2
Slide 7: Financial review
Financial review Martin Glanfield 7
Slide 8: Sustained growth in AuM and EBITDA
Sustained growth in AuM and EBITDA AuM growth Revenue and EBITDA growth 2,100 35 1,800 30 1,500 25 1,200 20 900 15 600 10 300 5 0 0 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 FuM (£'m) Proprietary capital (£'m) Total (£'m) Revenue* (£'m) EBITDA* (£'m) * Excluding the impact of exceptional performance f
Slide 9: FY24 AuM growth: organic momentum
FY24 AuM growth: organic momentum 2,500 • Funds raised across asset classes: • Retail: c.£66m (EIS and 2,000 VCT) • Public sector: c.£496m (British Business Bank, AuM (£’m) 1,500 North East Venture Fund and Brownfield Regeneration Fund) 1,000 • No redemptions 500 • Post-year end inflows: • c.£44m (E
Slide 10: Long-dated, diversified AuM
Long-dated, diversified AuM • Regional specialist in SME capital • Enables recurring revenues, with • Long-dated funds comprising provision across the UK, delivered blended fee margin of c.2% evergreen or 10-year LP type through a physical presence in structures – all closed end key regional cities
Slide 11: Consolidated statement of comprehensive income
Consolidated statement of comprehensive income For the year ended 31 March 2024 Year ended Year ended 31 March 31 March 2024 2023 £’000 £’000 Revenue 30,434 25,881 • Revenue increase 17.6% Administrative expenses (25,386) (21,001) Realised gain/(loss) on sale of direct investment 4,450 (849) Fair va
Slide 12: Consolidated statement of financial position
Consolidated statement of financial position As at 31 March 2024 31 March 31 March 2024 2023 £’000 £’000 Goodwill and intangible assets 36,296 39,285 Property, plant, equipment and right-of use assets 839 964 Investments 116,861 136,550 • Direct portfolio: Total non-current assets 153,996 176,799 -
Slide 13: Consolidated statement of cash flows
Consolidated statement of cash flows For the year ended 31 March 2024 Year ended Year ended 31 March 31 March 2024 2023 £’000 £’000 Net cash generated from operating activities 7,084 1,200 • Cash generative, profitable fund Sale of direct investments 26,696 3,744 management operations Purchase of di
Slide 14: Investment performance
Investment performance Built for long-term sustainable growth 14
Slide 15: Enduring partner for investors and investees
Enduring partner for investors and investees Unrestricted FuM cash Early-stage venture £557m: £0.5m - £5m Mercia Ventures £913m £404m National / scaleup venture £356m: £3m – £10m Mercia Debt £687m £262m Regional debt £146m: £0.2m - £1m National debt Mercia Private Equity £30m - £541m: £1m - £20m PE
Slide 16: Direct investment portfolio - as at 31 March 2024
Direct investment portfolio - as at 31 March 2024 Net investment Net cash Investment Realised Fair value Net investment Equity percentage value invested realisation gain movement value held Year of first direct as at year to year to year to year to as at as at investment 1 April 2023 31 March 2024 3
Slide 17: Top holdings, by value (1-5)
Top 10 holdings, by value (1-5) Investment value £15.8m £14.7m £11.9m £10.9m £10.2m % direct holding (excludes FuM) 20.4% 34.2% 37.3% 33.3% 61.4% Initial year of investment 2018 2022 2014 2016 2015 Description Video Bot Flat speaker Mobile digital Patch delivery analytics management tech trading car
Slide 18: Top holdings, by value (6-10)
Top 10 holdings, by value (6-10) Investment value £8.6m £7.8m £7.1m £6.6m £3.8m % direct holding (excludes FuM) 35.5% 20.1% 24.7% 40.4% - Initial year of investment 2015 2018 2017 2015 2023 Description Mobile soccer Optical Business VR/AR gaming management Orthobiologics solutions intelligence group
Slide 19: Valuation methodology
Valuation methodology Direct investment portfolio by valuation methodology • Follow IPEVCV Guidelines • c.68% of the portfolio value based on price of Listed investments - 1% last investment round Price of last investment round - 68% Cost - 6% • c.25% of the portfolio value based on Enterprise value
Slide 20: Investment case
Investment case “= mercia
Slide 21: Long-term stability and liquidity
Long-term stability and liquidity Third party FuM Dry powder c.£1.6bn Estimated 3-year funds’ portfolio c.£0.7bn (YoY c.32% growth) need c.£0.7bn (YoY c.89% growth) Balance sheet direct investment portfolio Balance sheet dry power 3-year direct portfolio need c.£117m c.£47m c.£25m Direct investments
Slide 22: Mercia is a responsible impact investor
Mercia is a responsible impact investor • Environmental responsibility - Active reduction in carbon footprint through resource conservation, use of public transport and company EV scheme - Proactive engagement with investment portfolio - Growing venture portfolio focused on sustainability • Social i
Slide 23: Differentiated investment strategies and asset classes
Differentiated investment strategies and asset classes Intermediary Balance Sheet Private Private Private Real Asset (incl. direct Total Venture Debt Equity Finance investments) AuM: £913m £377m £30m £310m £189m £1.8bn National and - Real economy & - Real economy & - Real economy & - Infrastructure
Slide 24: Proposed reclassification as a trading company
Proposed reclassification as a trading company A natural evolution • At admission to AIM Mercia was classified as an investing company - Net assets of c.£81million and c.£23million of FuM • As at 31 March 2024: - Net assets of c.£189million and c.£1.6billion of FuM • Mercia’s intention is to now foc
Slide 25: Mercia share register: 69% free float
Mercia share register: 69% free float (2023: 69%) • Board, management and employees (c.17%) • Invesco (c.14%) • Retail (c.10%) • Fidelity (c.10%) Others of note: • Ruffer (c.6%) • Liontrust • Columbia Threadneedle Investments (c.4%) • West Yorkshire Pension Fund • Chelverton Asset Management (c.4%)
Slide 26: The first choice for investors, investees and employees
• A record year with c.£562m of organic fund inflows • Strong liquidity: - £46.9m debt-free balance sheet cash position - Additional c.£666m unrestricted FuM cash • Progressive dividend - proposed final dividend up c.4% • c.90% of AuM is third-party FuM, 100% are closed-end • Blended c.2% fee margin
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