TIDMMERC
RNS Number : 6045H
Mercia Asset Management PLC
25 March 2020
RNS
The information contained within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be
in the public domain.
For immediate release 25 March 2020
Mercia Asset Management PLC
("Mercia", the "Group" or the "Company")
COVID-19 Business Update
Mercia Asset Management PLC (AIM: MERC), the proactive,
regionally focused specialist asset manager, provides the following
business update in light of COVID-19.
-- Business continuity plan implemented with previously tested
remote working capabilities functioning well
-- Assessing and supporting c.400 portfolio companies in own and third-party managed funds
-- Strong balance sheet with GBP30.4million unrestricted cash as at 20 March 2020
-- No bank or other indebtedness and c.GBP190million of
available fund capital from long-term investors to selectively
support portfolio companies and provide financial stability
-- Short-term impact to asset management revenues and portfolio
valuations as a result of the drop in asset values across all
markets and overall economic conditions
COVID-19 priorities and actions
In response to the challenges posed by COVID-19, the Group's
focus is on three priorities: the safety of our employees, the
continued support for our portfolio companies and maintaining
long-term value creation potential for our shareholders and
investors in our managed funds.
Mercia's employees are our strength
Our first priority is the wellbeing and safety of our employees
and their families. Well in advance of government guidance Mercia
had developed full virtual systems (including end-to-end investment
and fund transfer processes) to operate in a remote environment and
we had already closed all eight offices for a day to trial this
virtual operating in real time. We have no staff overseas and all
of our employees are now working remotely. We have established
regular, coordinated investment and support team video check-ins as
we anticipate an extended period of remote working to ensure that
our employees' welfare, and that of their families, is catered for.
We are passionate about our #OneMercia community which now, more
than ever, is critical to Mercia's continued and efficient
operations.
Commitment to regional SMEs
In addition to promoting employee safety, our remote working
capabilities allow us to provide ongoing support to our portfolio
companies at this critical time. The Group has c.400 companies
within its venture, private equity, debt and balance sheet
investment portfolios and we are deploying our operational
specialists and platform of services to assess their needs. We have
a talented, committed and experienced investment and support team
across all of Mercia's asset classes and they are actively engaging
with our portfolio companies.
Our commitment to regional SMEs is long term, and we will deploy
all of our resources to support them through this period. This will
in turn ensure that we protect long-term value for our shareholders
and managed fund investors alike. Mercia's funds under management
are typically long-term and closed-end in nature, including some
with supportive investors such as British Business Bank and
regional pension funds.
Strong balance sheet to meet funding needs
The Company has a strong balance sheet with GBP30.4million of
unrestricted cash as at 20 March 2020 and no bank borrowings or
other debt obligations. In addition, Mercia has c.GBP190million of
available investment capital in its managed funds. Together, this
provides sufficient liquidity to selectively support our portfolios
and provide financial stability to the Group as a whole. Mercia's
focus has always been on sectors where investee companies have
relatively low investment needs to achieve cash flow breakeven and,
at this time of limited liquidity, Mercia's significant cash
resources across both its funds and balance sheet is a key
asset.
Likely short-term financial impact on the Group
With almost all asset classes worldwide falling in value it is
inevitable that valuations for Mercia's managed funds will be
impacted. Where contracted revenues are directly linked to those
asset values, they will be consequently affected. Today the three
Northern Venture Capital Trusts, whose portfolios are now managed
by Mercia, announced reduced net asset values of c.22% on average.
Similarly, it is inevitable that the fair value of Mercia's direct
investment portfolio will be impacted.
Outlook
The Group will continue to invest carefully to preserve the
significant potential future value in all portfolios and has the
necessary capital to do so. Whilst it is not possible to provide
more explicit guidance at this time we do now expect revenues over
the next financial year to be lower than originally anticipated.
The Group remains very well placed financially, however, and has a
degree of flexibility in its cost base, to partially mitigate lower
anticipated revenues.
As a result of these key strengths, Mercia's medium-term future
prospects remain unchanged.
Mark Payton, Chief Executive Officer of Mercia, commented:
"Mercia was established with the knowledge that capital supply
and market performance is cyclical in nature. Over more than a
decade we have built a proactive, supportive ecosystem where we
have invested in businesses with relatively modest capital needs
and sensible entry valuations. I have the privilege of working with
an exceptionally talented and experienced team who themselves have
successfully invested through such cycles. I am confident that we
will come out of this cycle in good health. We are well prepared
with strong liquidity (c.GBP220million of uninvested cash across
our asset classes) and long-term, supportive fund investors. Mercia
has only invested on a domestic and largely regional basis, and we
are here to support our portfolio companies as we chart our way
together through these difficult times."
For further information, please contact:
Mercia Asset Management PLC +44 (0)330 223 1430
Mark Payton, Chief Executive Officer
Martin Glanfield, Chief Financial
Officer
www.mercia.co.uk
Canaccord Genuity Limited (NOMAD
and Joint Broker) +44 (0)20 7523 8000
Simon Bridges, Richard Andrews
N+1 Singer ( Joint Broker )
Harry Gooden, James Moat +44 (0)20 7496 3000
Buchanan Communications +44 (0)20 7466 5000
Giles Stewart, Chris Lane, Vicky
Hayns
www.buchanan.uk.com
About Mercia Asset Management PLC:
Mercia is a proactive, specialist asset manager focused on
supporting regional SMEs to achieve their growth aspirations.
Mercia provides capital across its four asset classes of balance
sheet, venture, private equity and debt capital; the Group's
'Complete Capital Solution'. The Group initially nurtures
businesses via its third-party funds under management, then over
time Mercia can provide further funding to the most promising
companies, by deploying direct investment follow-on capital from
its own balance sheet.
The Group has a strong UK regional footprint through its eight
offices, 19 university partnerships and extensive personal
networks, providing it with access to high-quality deal flow.
Mercia has over GBP700million of assets under management and, since
its IPO in December 2014, has invested over GBP90million across its
direct investment portfolio.
Mercia Asset Management PLC is quoted on AIM with the epic
"MERC".
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END
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