2nd Jul 2024 11:31
(Alliance News) - Mercia Asset Management PLC reported a rise in assets under management, shaking off "another year of subdued inflows" in the sector.
The alternative asset manager reported assets under management at its March 31 year end climb to GBP1.82 billion from GBP1.44 billion. Revenue in the year improved 18% to GBP30.4 million from GBP25.9 million. However, it swung to a pretax loss of GBP8.2 million from profit of GBP2.4 million.
Hurting its bottom line, it reported a GBP17.3 million hit from the fair value movement in direct investments, compared to a boost of GBP1.2 million a year prior.
Mercia Asset Management reported "record fund inflows" of GBP562 million during the year, something it achieved during "another year of subdued inflows by the asset management sector".
Looking ahead, Mercia said it is its intention to "now focus on its profitable and fast-growing funds under management".
"The board will propose a resolution at the 2024 annual general meeting that Mercia reclassifies as a trading company and ceases to be an investing company under the AIM rules," it adds.
Equity Development, in a coverage initiation report, said Mercia Asset has a "fundamental value" that is around 60% above its share price. The stock traded 5.0% higher at 32.56 pence each in London on Tuesday morning. Equity Development "fundamental value" for the stock is 51p.
"We see potential for a significant rerating," it added.
Edison analyst Rob Murphy said Mercia Asset's reclassification plan could leave well-placed for the future.
"Mercia's strategy to reclassify as a trading company signals a focus on leveraging its profitable fund management business, which could drive future growth. With strong cash reserves and an increased interim and proposed final dividend, Mercia remains well-positioned for the coming year," it adds.
By Eric Cunha, Alliance News news editor
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