Mercia Asset Management reports higher earnings, improved profitability

(Sharecast News) - Mercia Asset Management reported higher earnings and improved profitability in the first half, supported by growth in assets under management and increased operating efficiency. The regionally-focused private capital investor said EBITDA rose 14% to £4.2m in the six months ended 30 September, with the EBITDA margin expanding to 24.6% from 20.8% a year earlier.

Its board increased the interim dividend by 5% to 0.39p per share.

Revenue dipped to £17.2m from £17.9m, although operating profit rose to £1.8m and profit before tax edged up to £2.5m.

Net assets were broadly unchanged at £187.1m, and basic earnings per share stood at 0.39p.

Chief executive Mark Payton said the performance reflected the benefits of scale, noting, "Mercia has delivered a robust first half performance with our increased economies of scale driving both EBITDA and EBITDA margin growth."

Assets under management grew to £2.0bn from £1.84bn a year earlier, driven by new commitments across Mercia's venture, development capital and property finance strategies.

Venture fund assets rose to approximately £959m, supported by £34.8m raised by the three Northern Venture Capital Trusts in April and £10.6m secured across two Enterprise Investment Scheme funds.

Development capital funds increased to around £454m as the FDC Debt fund returned £18m to investors, while property finance assets reached £400m.

Mercia invested a net £5.5m into five companies during the period, lifting the fair value of its direct investment portfolio to £131.1m.

Post period-end, the company completed the first £38m allotment of the Northern VCTs' latest £50m fundraising and launched the £35m North East Accelerate Fund, targeting investments across Tyne & Wear, Northumberland and County Durham.

The board said the group continued to trade in line with expectations and maintained a strong cash position, with £34.5m held at the period end.

Payton said the business remained well positioned to build on its momentum, underpinned by growing capital pools and the continued scaling of its regional investment platform.

At 1206 GMT, shares in Mercia Asset Management were up 3.03% at 30.39p.

Reporting by Josh White for Sharecast.com.