Investors often fantasise about discovering the next Apple or Facebook. Mercia Technologies (MERC), which floated on Aim in December, aims to do just that by investing in fledgling software, digital media and advanced materials businesses. The strategy fuelled a £3.9m rise in the fair value of its investments in the 14 weeks to the end of March, resulting in a pre-tax profit of £2m.
Midlands-based Mercia directly invests in businesses that are no more than three years from realising value for shareholders or generating revenue. It has a near £25m direct investment portfolio with stakes in 14 'emerging stars', such as Science Warehouse, a Leeds University spinout that makes cloud-based procurement software. This investment accounted for most of the valuation uplift. Newer holdings include Crowd Reactive - which creates live, interactive ad campaigns for Nike, Coca-Cola and other brands - and Soccer Manager, owner of an online football management game with 30,000 daily players.
The group primarily sources investments from its fund management arm, which offers third-party funds investing in around 44 nascent technology businesses. Mercia recently took a direct stake in one of its subsidiary's holdings: Impression Technologies, which makes lightweight aluminium components that are used in cars, trains and airplanes.
| MERCIA TECHNOLOGIES (MERC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 58p | MARKET VALUE: | £122m | |
| TOUCH: | 56-59p | 12-MONTH HIGH: | 80p | LOW: 50p |
| DIVIDEND YIELD: | nil | PE RATIO: | 62 | |
| NET ASSET VALUE: | 38p | NET CASH: | £23.6m* | |
| Year to 31 Mar | Turnover (£'000) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 411 | 0.00 | na | nil |
| 2013 | 501 | 0.02 | na | nil |
| 2014 | 723 | 0.04 | na | nil |
| 14 weeks to 31 Mar | ||||
| 2015 | 508 | 1.97 | 0.93 | nil |
| % change | - | - | - | - |
*Excludes £30m in short-term liquidity investments | ||||
