Mercia Asset Management - Excellent results despite the tough market

FY22 was the first year of Mercia’s Vision 20:20 strategy, and a year of real progress for the group. Mercia reported FY22 PBT of £27.4m, with AUM rising marginally to £959m, passing the £1bn mark with £45m of VCT and EIS funds raised post-year-end. Mercia exited Faradion, its second largest holding (4.2x ROI, IRR of 72%) and also completed a major up-round for nDreams, helping to drive net assets up 14% to £200.6m and NAV per share to 45.6p. Mercia trades at 0.65x FY22 NAV/share and at 0.56x adjusted NAV/share (52.5p, including our estimate for the fund management business of 7p per share at 4% of FUM). Based on FY22 EPS of 5.9p (FY21: 7.8p), Mercia trades on a trailing P/E of 5x. With cash of £61.3m at year end, Mercia remains well placed for a downturn, with the potential for opportunistic M&A in FY23.