money-2696219 (1)

Mercia Technologies

LN: MERC

£115m market cap

37.9p last close

Mercia Technologies is a leading player in the funding and scaling of high growth businesses. Through its subsidiary managed funds (MFM) and its own balance sheet, Mercia provides a ‘complete capital solution’ to UK SMEs, with a focus on the Midlands and North UK.

Investment summary

Mercia Technologies is a leading player in the funding and scaling of high growth companies from the UK regions, with a business model that is significantly de-risked vs peers. £400m of managed funds are used to predominately support early-stage activity, while providing meaningful revenue to offset group operating costs. At its interim results in December, key portfolio companies had continued to deliver against commercial milestones, with Mercia well positioned for further progress in FY19. Despite February’s share price jump, the shares continue to trade at a discount to NAV.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 6.7 (2.4) 2.8 1.26 30.1 N/A
2018A 10.2 (0.4) 3.5 1.17 32.4 N/A
2019E N/A N/A N/A N/A N/A N/A
2020E N/A N/A N/A N/A N/A N/A
Last updated on 15/03/2019
Industry outlook

After the initial IP commercialisation (IPC) IPO in 2006, the sector generally traded at a premium to NAV prior to 2016. Subsequently, investor sentiment has turned more negative with sector stocks typically trading at a meaningful discount to NAV. In 2019, investor frustration at a lack of material exits/value realisation across the sector are only likely to intensify leading to greater differentiation between stocks.

Last updated on 15/03/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 1.6 24.3 (9.8)
Relative* 1.3 16.9 (10.2)
52-week high/low 40.0p/27.5p
*% relative to local index
Key management
Dr Mark Payton CEO
Martin Glanfield CFO
Julian Viggars CIO