Mercia Asset Regulatory News (MERC)

Mercia Asset Management PLC

("Mercia", the "Company" or the "Group")

Update on Impression Technologies Limited

Mercia Asset Management PLC (AIM: MERC), the proactive, regionally focused specialist asset manager with over £1.5 billion of assets under management, announces that it has made the decision to cease further funding for one of its direct investments, Impression Technologies Limited ("ITL").

Mercia first invested in ITL via its thirds-party funds in 2014 and it became a balance sheet direct investment in 2015. During the period of Mercia's investment, ITL developed its novel Hot Form Quench ("HFQ®") technology, established a low volume manufacturing facility, secured its first production customers, signed licences with several automotive sub-contractors and developed its technology to be transferable across industry sectors e.g. aerospace.

However, despite this considerable technological and commercial progress, ITL has been unable to reach breakeven. As announced on 28 November 2023, Mercia reduced its direct investment carrying value in its interim results, reflecting increased uncertainty following a sale process which did not ultimately succeed. Since that time, ITL has continued to explore options including further funding or a sale. Ultimately however, no successful new external funding or a sale of ITL has been achieved. Given that ITL's pathway to profitability remains highly uncertain, Mercia has also decided to cease further funding. It is now anticipated that ITL will enter into an insolvency process in the near future.

Mercia will now reduce the carrying value of its investment in ITL as at 31 March 2024 to zero, resulting in a small reduction in the Group's net asset value per share of c.2 pence, compared with the net asset value per share of 45.3 pence as at 30 September 2023.

Dr Mark Payton, CEO of Mercia Asset Management PLC, said: "Mercia's year to 31 March 2024 has demonstrated the variability of venture investing, from the very successful and profitable sale of the Group's direct investment in nDreams for £30.2million, to the difficult decision to cease further investment into Impression Technologies Limited, after a decade of supporting its management team and its proven HFQ® technology. Despite our full support and ITL's best efforts, it has failed to reach breakeven or identify a suitable next-stage investor.

"Investment discipline is at the heart of Mercia's investing philosophy and long-term performance. Therefore, having explored all available options, we have reached this decision to cease further funding into ITL."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon publication of this announcement, this inside information is now considered to be in the public domain.

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About Mercia Asset Management PLC

Mercia is a proactive, specialist asset manager focused on supporting regional SMEs to achieve their growth aspirations. Mercia provides capital across its four asset classes of venture, private equity, debt and proprietary capital: the Group's 'Complete Connected Capital'. The Group initially nurtures businesses via its third-party funds under management, then over time Mercia can provide further funding to the most promising companies, by deploying direct investment follow-on capital from its own balance sheet.

The Group has a strong UK footprint through its regional offices, university partnerships and extensive personal networks, providing it with access to high-quality deal flow.

Mercia Asset Management PLC is quoted on AIM with the EPIC "MERC".