Mercia Technologies' cautious about Brexit as revenues fall

Mercia Technologies reported a full year loss as it expanded its investment portfolio and was cautious about the uncertainty Brexit has bought to the technology investment industry.

The technology investment firm’s revenue rose to £1.8m for the financial year ending 21 March 2016 from £500,000 the previous year. However, the group reported a pre-tax loss of £1.7m, down from a profit of £2.0m in 2015, which was attributed to growth of its investment headcount to scale its expanded funding model.

The company’s direct investment portfolio value increased by 55% to £38.1m compared to last year.

Net assets fell slightly to £80m from £80.8m. The company’s cash and short-term liquidity investments decreased 94% to £30.9.

The investment fund increased its network to 18 university partnerships and six offices across the Midlands, the north of England and opened a new office in Scotland.

During the year Mercia Technologies invested £12m in 16 companies including six "emerging stars" including Impression Technologies, Edge Case Games, Intelligent Positioning and Oxford Genetics.

They continued their investments in existing "emerging star" companies to support growth, which include nDreams, Smart Antenna Technologies and Crowd Reactive.

The company also made an initial direct investment in Edge Case Games followed by a co-investment with, Kingsoft, a Chinese games publisher.

Mercier Technologies bought Enterprise Ventures in March 2016, and the company said that the acquisition increased its potential for direct investment opportunities, and strengthened the company’s presence in the north of England.

Since its initial public offering in December 2014 the company has invested over £24m.

Chief executive Mark Payton said: “The integration of Enterprise Ventures went extremely well and we have already identified a number of exciting direct investment opportunities from its third party investment portfolio. With our pipeline of new direct investments now more than doubled from this time last year, we are excited about the potential for our business to deliver on its growth ambitions and in so doing, create considerable value for shareholders over the medium term."

“We are cognisant of the current macroeconomic climate both nationally (specifically with the recent referendum for the UK to exit from the European Union) and globally, which casts some uncertainty over the pace of the global economic recovery. These trends may impact the general funding environment for young technology businesses in the near term.

“However, we believe that Mercia's hybrid investment model for such early stage businesses, typically already in revenue and with relatively modest capital needs, is the right approach to take in the current climate”.

Shares in Mercia Technologies were up 2.2% to 41.90 at 1226 BST.