Mercia Asset Management PLC (MERC.L) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Mercia Asset Management plc preliminary results investor presentation. [Operator Instructions]. The company may not be in a position to answer every question received in the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand over to Dr. Mark Payton, CEO. Good afternoon to you, sir.

Good afternoon, and welcome, everybody. And we do encourage those questions and comments. We do like to answer where practical and possible. So joining me today is Martin Glanfield and Julian Viggars. Perhaps, Martin, you can give us an introduction.

Yes. Good afternoon, everyone. And I joined Mercia just under 8 years ago now to help Mark IPO of the company, and my background is as the CFO of multiple publicly traded and private equity-backed technology-based businesses.

And Julian, Julian Viggars.

Yes. Thanks, Mark. Good afternoon, everyone. So I oversee the group's equity investment activities, have done since 2018. I also sit on the Board of nDreams and Invincibles Studios. And I have been a fund manager across the venture part of Mercia's activities, including the funds that had Blue Prism within them and also Faradion over time.

Thank you, Julian. Now it's Mark, Mark Payton. And I founded Mercia back in 2010. Martin and I actually floated the business back in 2014. Like Julian, I sit across a number of portfolio companies. My background is within life sciences. So I have 3 life science portfolio company responsibilities. I was in OXGENE's Board, a head of its sale a little over a year ago as well. So this slide, Slide 4, just shows -- I guess the theme to today's presentation and discussion, this time last year, we talked about the Mercia 2020, and I'll talk to that 2020 vision in a moment. At this time, within the sort of turbulent markets that many leadership teams find themselves in, having something like GBP 300 million of unrestricted cash on hand across the group in our funds and on our balance sheet is a very strong and comfortable place to be. And those funds that we have are what we call long-dated management. So it's typically 10- to 12-year funds or evergreen funds, such as the VCT funds that we manage. And the beauty of those funds is there are no redemptions as long-term capital locked in. And in regard to our portfolio across our funds as well as across our balance sheet, these businesses are well funded. And something that we've spoken to really over the years is that we deliberately choose businesses with quite modest capital needs. Typically, they need less than sort of GBP 20 million, maybe GBP 10 million, but they're very modest in their needs. And that's because venture in particular and across the sectors in venture is a cyclical nature and syndication risk really does raise its ugly head in times of turmoil. And although there are opportunities to be had, one also needs to be able to support the existing portfolio, and we can across our funds and across our balance sheet. And those businesses have strong commercial progress, particularly the businesses on our balance sheet, our direct investment portfolio, we often refer to those as diversified in terms of their stage of development as well as their sectors that they sit within. And finally, on these bullet points here, we have limited our public market exposure. And what we mean here is those direct investments that we have, and Julian will talk to those in a little while, those business, only one of those are on the public markets. So we do not have those same challenges that others who are managing listed tech businesses, for instance. To the right, we have always and we will continue to be focused on the domestic economy of the United Kingdom. We now have 8 offices across the country. We recently opened an office in Bristol. We see great opportunities across the Southwest and we continue to drive and grow in that direction. This slide really could be just used as the only sole slide today. It shows the great strength and breadth across the group in terms of the operational activity or investment activity, if you like, and you'll hear that from Julian. And that builds on a strong base from the previous year. So these are good figures, building on very good figures from the previous year as well. And the same is true of our financials in terms of turnover, in terms of unrestricted cash and profitability as we drive NAV per share. And I think, importantly, with the confidence in the Board as they look to propose a final dividend of 0.5p per share, taking the full year dividend to 0.8p per share. And importantly, as we've stated before, this is a progressive dividend policy, and that makes it double the dividend than it was the previous year. Now this, Slide 6 really demonstrates the scalable platform that we have developed over a decade and is now delivering. And I think it's important to note in the title, Mercia is debt-free. So this is a highly profitable, cash-generative debt-free group, where our proprietary capital has 3 specific purposes. We selectively invest in a number of the funds that we manage, we invest alongside the funds selectively in portfolio companies that emerge from those funds, and of course, we look to make acquisitions, and I'll talk to that in a moment. That activity is driving both NAV per share or capital growth and yield in terms of dividend. As those funds age and start to return capital, that capital flows back into our proprietary capital, our balance sheet position. And with those direct investments as they realize cash through exit that comes back into our balance sheet as well, which can then be recycled across the group. This is a business with strong cash position, cash generation and it does not envisage going back to the market to raise further money, a fully aligned model that is delivering. Just in terms of delivering and scale. As I mentioned in my introduction, actually, we IPO-ed the business back in 2014. And just ahead of that IPO, we had approximately GBP 13 million in direct investments in a young portfolio and GBP 23 million in what is -- what was CDIS and EIS funds again at the early stage of venture. And over the years until to date, we have scaled the group, we've scaled assets under management from GBP 36 million to GBP 959 million through scaling venture from just early stage through to regional capital and VCT, adding private equity and debt and greatly scaling our proprietary position. And that's been through looking at adjacent assets that we can really scale against our existing capabilities. And in all metrics, we see that growth coming through, and you'll hear that from Julian and Martin, as we scale the group, there are 120 of us, growing from 7 back in 2014 and 8 offices, as I've alluded to, from the 1 initially in Henley-in-Arden, it is in Henley-in-Arden today that the 3 of us are talking to you. So in terms of assets under management and how does Mercia scale AUM, we obviously break that down into 2 parts, and that's organic and acquisition. We have mentioned in the past that we have historically grown 50% of our AUM has come through acquisitions, and we would expect that dynamic to continue going forward. But just looking at organic fundraising, you can break that down into 3 discrete pools of capital. Retail investors, so that's our EIS and VCT investors, now we're in the top 4 manager now across the U.K. in terms of EIS and VCT management. Within EIS, if you look at the market back in 2021, the latest published figures, GBP 1.6 billion in the EIS was raised. And in the last 12 months, we've raised circa GBP 15 million. So clearly, considering our track record, a lot to go after in terms of EIS raise and deployment. And then within VCT, the latest figures there, GBP 1.1 billion raised. And in the last 12 months, we've raised approximately GBP 40 million. So again, a lot of opportunity to grow that part in terms of distribution and scale and, of course, deployment. And then the next area is what I'd call sort of pseudo public sector, public sector pool. A good example there is British Business Bank. We currently manage approximately 40% of the venture and debt regional funds that are looked after by British Business Bank in the spending review just recently in 2021. There was a commitment by government for the next generation of these regional funds of GBP 1.6 billion. And put that into context, that's over twice the size of the previous regional funds. And based on our capabilities and track record, we would be confident and optimistic that we should be able to secure continued capital within that second generation. And the final pool of capital that we look to grow organically is the institutional capital side of things. And here, this is specifically within private equity and also within debt. Based on our strong track record in those 2 places, we would expect to be able to raise further funds going forward, specifically in private equity. And this, of course, is through regional pension funds. As a regional asset manager, we're well placed with those regional pension funds. But as I mentioned, approximately half of the AUM growth will come through M&A, has come from M&A, and we would expect that trend to continue over the foreseeable future. We operate a very deeply disciplined approach here where we have it driven through a value driver analysis. And that's where we're looking for at least 20 defensible discrete reasons that why you would be buying a particular business. And at the top of that list is strong cultural fit. I mean culture is clearly critical in terms of extracting value from an acquisition, but importantly, by further scaling it. They have to be earnings-enhancing. We are a domestic investor. So they have to be capital-focused on the divested market and, in particular, within the third-party funds under management, the profitable operation that we have. The fee structures that you'll hear from Martin in a moment, we look to maintain those. So again, that plays to the value driver analysis. And of course, a strong fit with our investment model, our internal capabilities investment team and the proprietary systems that we have built ourselves in terms of asset management and scaleup. The 2 acquisitions that we have made historically, the first was Enterprise Ventures back in 2016, one of the most active venture investors in the north of England. Indeed, Julian, Julian Viggars, Mercia's CIO, joined us from the EV acquisition. That was an GBP 11 million structured investment through shares and cash, bringing GBP 200 million of funds under management on to Mercia. And the metric there in terms of multiple is a 7.9x profit before tax multiple. 3 years later 2019, NVM, we acquired 3 VCT by management contracts as well as the team there. GBP 25 million was the price for that, again, structured over a period of years in shares and in cash. GBP 270 million of FUM came across the Mercia in that regard, and that was acquired at a 6.3x profit before tax. That really does set the scene for the sorts of businesses that we look to evaluate that against those value drivers and against the sort of profit multiples when we're looking at those acquisitions. And just finally, in this opening summary and just reminding you of that 2020 Mercia vision that we set out basically this time last year. And that's where we see GBP 20 million of profit before tax per annum averaged, and that's important, averaged over 3 years. And in addition to that, 20% growth in AUM per annum, again, averaged over 3 years, driving 2 important value metrics within Mercia, growing NAV per share and growing the dividend. That table to the right, I think, sort of nicely summarizes that position where actually look at it as a 3-year cumulative target where we have profit before tax, the target being GBP 60 million in that 3-year period, 2 years left now to deliver against that GBP 27.4 million through these numbers that we're presenting today. And then in 3 -- in 2 years' time now, our 3-year target to get to circa GBP 1.5 billion AUM, our starting points from today is GBP 959 million, and we remain confident that those 2 targets will be met over the remaining 2 years. Martin?

Thank you, Mark. I'm pleased to confirm that Mercia has had a second consecutive year of strong financial performance. And as a result, in the last 2 years, has generated over GBP 60 million of pretax profits on GBP 40 million of headline revenues. As you can see here on this slide, the 2 years together, and it's worth noting the big jump in adjusted operating profit, which has come both from growth in profits from our fund management activities but also, we've had a very strong increase in our finance income, which has come from some of the very adept structuring that Julian and the investment team put into our direct investments. Our profit before tax of GBP 27.4 million was up 133% of revenue. And at the end of the year, as Mark said, we had GBP 61.3 million of unrestricted cash. And this together led to a 14% growth in net asset value per share. And this next slide speaks to the quality of our fee income as a percentage of our assets under management. And what you can see here is that we are still at around about 2% as a revenue margin, which in our industry is a very, very good fee margin. And that dip in 2020 is simply because we had only managed the VCT contracts for 3 months at the end of that financial year. But at the end of that financial year, we have included all of the VCT FUM of GBP 270 million in our closing assets under management. It's also worth noting, I think, that -- and this is a point to the reason why our RNS was headed robust results because 95% of our total revenues are now coming from our funds under management and 87% of our total revenues are contracted and recurring. And that is a great place to be in a period of uncertainty when you know the vast majority of your revenues year-on-year will be the same. This next slide is our income statement reported under International Financial Reporting Standards. And here, you can see the revenue is up at GBP 23 million because it includes a performance fee that we received earlier in the year from 1 of the 3 venture capital trusts that we manage. Julian in a moment will speak to the realized gain of almost GBP 10 million on the sale of Faradion and also to the GBP 11.4 million of fair value movements. And further down, you can see the finance income, the very strong performance of redemption premiums and convertible loan interest that we've received from a number of our direct investments during the year. And one final note on this page is that we have become tax paying. And this is, I guess, is a sign of success and maturity of our business model in that we have utilized our remaining tax losses faster than we had expected simply because of the profits that we've made in the last 2 years. Now we don't pay tax -- the good news is we don't pay tax on our profit before tax of GBP 27.4 million because the vast majority of that is derived from our asset management activities on the balance sheet and where those investments qualify for what's called substantial shareholder exemption on disposal, then there is no corporation tax risk to pay. So we are really only going forward paying corporation tax on our adjusted operating profit. In our balance sheet, not that long ago, I was saying that we were pleased to have reached a benchmark of GBP 200 million of gross assets. And now I'm pleased to say that we've reached that same hurdle of GBP 200 million of net assets. And you can see there the 2 key numbers on the balance sheet is the investment portfolio and also our strong cash position. And as I've also said before, in the cash flow statement, we are very focused not just on making profits, but turning those profits into cash. And you can see here on the very first line that we generated just over GBP 9 million of cash from our operating -- day-to-day operating activities. And you can also see there the amount that we invested into the balance sheet portfolio. And finally for me for the moment, it's very reassuring for a company of our relative use and relative size that we have such a fantastic share register made up of, obviously, individual investors such as yourselves, but also a number of really blue-chip long-holder institutions. And quite recently, we're pleased to say that Fidelity as a long-holder has joined our share register.

Thank you, Martin.

Yes. Thanks, Martin. So my first slide shows the progression of our assets under management. So we started the period with GBP 940 million, added GBP 50 million through EIS raises and new LP commitments through our regional funds. And our performance has also been strong, particularly across our legacy venture and older EIS funds and our balance sheet itself. More on that in a minute. So that and strong realizations has led to returns to our LPs and increased dividends to our VCT and balance sheet shareholders. So -- and that has resulted in GBP 90 million of distributions back to give us a closing position of GBP 960 million at the year-end. So it's important also to recognize, as Mark has said, that our funds are either LP closed structures or evergreen. So we don't suffer redemptions from those structures. And it's also equally important to note that we added a further GBP 45 million early in April, just ahead of the tax year-end in VCT and EIS raises to take our AUM to over GBP 1 billion. So I want to see some stats from across the group. So as always, deal origination remains a priority for us. And again, I've just noticed the question there. So we get our deals from a variety of sources from our networks of nonexecs and other investors. So we have circa 1,000 nonexecs now that are within our networks. We also get them through advisers. But also we search out investments ourselves in proactive fashion. So 220 or so new opportunities coming through the door or that we find per month on average enabled us to deploy a record, GBP 124 million last year across 148 businesses. 95 of those were, in fact, new to us. And of that 95, around half of those are new debt deals. So particularly strong deployment last year across the VCTs, GBP 45 million, and our regional funds at about GBP 26 million. And again, in terms of performance, I'm really pleased. Last year was another excellent year after the GBP 103 million or so of realizations in 2021. We realized a further GBP 155 million last year, and that came across 30 exits from our equity funds and generated a very good 3x, 3.1x on average cash performance. So this slide shows the majority of that GBP 155 million came through the venture activity within the funds, but also with GBP 20 million going back to the balance sheet through the sale of Faradion. The second pie chart there shows the 4.4x cash we received from Faradion onto the balance sheet. But equally importantly, that, on average, we are making 3x our money on the 29 or so other venture fund exits. So I'd just like to spend a couple of minutes on Faradion because it's a real super example of our ability to create value. So back in 2011, Ashwin Kumaraswamy, a colleague and investment director, myself and a couple of other colleagues set out to create something disruptive in the battery tech space because we could see this was a really important area going forward, having seen a lot of more incremental technologies coming at us. So we searched and found 2 individuals, highly respected in the field, Jerry and Chris and their brief was to find or indeed create a more sustainable, lower-cost solution, but critically the one that would fit into current manufacturing techniques. And in Sheffield with initially as little as GBP 100,000, they focused down on sodium-ion chemistry, did the first POC in terms of the solution and filed the first patents. After a couple of years in 2013, '14, we managed to demonstrate the world's first sodium-ion powered electric bike. And that was in conjunction with Williams, the Formula One team. In 2017, we added the balance sheet in order to help scale further the business. And really commercial traction accelerated with the arrival of Jim Quinn as the CEO across 2019 and '20 when the company's battery packs could be placed in the hands of potential customers. So one of those was Reliance Industries, which happens to be India's largest company spanning retail, telecommunications, distribution, energy sectors. And they were particularly keen on the sustainability of energy supply, and they also disclosed to us that they spent over $1 billion a year on their batteries for their vehicles and also for stationary power. So during mid-2021, we started license discussions, and those discussions led over the course of the year 2 acquisition. And Reliance paid GBP 100 million in December for Faradion. Now we're really pleased that Reliance continues to invest in Faradion in the U.K. It has doubled the headcount of the company, and that's really important to us. Okay. So this slide shows this is the balance sheet, so our proprietary capital. So we started the period with GBP 96 million of value in our portfolios, added as Martin's covered circa GBP 80 million of new cash. That's both to the portfolio, but also in 2 new deals. Forensic analytics and Pimberly, both software businesses. The next 2 columns really back out Faradion from the portfolio, and there's the GBP 10 million realized gain. And the following column is the GBP 11.4 million of fair value movements. As you can see, there are some really interesting uplift there. So the largest of which is GBP 6.7 million against nDreams following a large GBP 20 million investment coming into the business in March, but also Intechnica, Warwick, VirtTrade and Invincibles Studios also have shown some really sizable uplifts. And that's on the back of, again, third-party investors, but also progress made within the businesses. One downward movement, which is MyHealthChecked. As Mark has said, that's the only listed investment we have. In my view, that doesn't do justice to the strength of the management, the cash or, indeed, the progress that, that business is making. And that meant that we closed the year out with a portfolio value of GBP 120 million. So I just wanted to highlight a few areas where I believe we could see significant value inflection over the course of the next 18 months or so. So starting with Eyoto, which is the forefront of remote eye care. So they have 2 products, 1 of which is a remote slit lamp, which enables a centralized practitioner to inspect the eye from head office, perhaps covering 5 to 10 sites. Partnerships with the top 5 -- sorry, we have a partnership with a top 5 U.S. chain, who have preowned significant volumes of that machine post what we believe is pretty imminent FDA clearance. On to VirtTrade, which is mobile games. So we've been really focusing on improving the return on advertising spend. So that's acquiring new users. And that's showing significant benefits month-on-month. So revenues now are of the order of 4x the levels that we've seen in the later part of 2021. So good progress there. Netacea, which is now stand-alone following its demerger from Intechnica in April. So this is server-side bot management. Again, recently highly recommended from the latest Forrester Wave report, around GBP 6 million of ARR and significant U.S. traction seen in that business now. And again, lastly, on this slide, Warwick Acoustics. So this is our flexible electrostatic speakers that produce very high-quality sound but are very much lower weight. Very interesting to the automotive OEMs. So -- and the reasons are that lower weight and low power helped to enhance electric vehicle ranges. It also enables a much more free and flexible design within the cap and also helps those OEMs move to net zero because Warwick uses recycled and upcycled materials in its products. So we're aiming at the luxury and premium brands. Examples of those would be the likes of McClaren, Lexus, Polestar, JLR, Audi, Merck, et cetera. And we are working with a selection of those. We're particularly excited here because we believe we could see Warwick's products on first vehicles in the latter part of 2024. Now it's interesting that these Eyoto, VirtTrade and Warwick were businesses that we impaired during the pandemic in terms of value. But as hopefully I've outlined, we can see some really interesting progress being made within them now. Next slide. So as you'd expect with a funds portfolio of 250 or so equity investments, we've got a very healthy proprietary WIP for our balance sheet. So we're looking at in depth some 9 or 10 really interesting businesses. So just a flavor across the sectors here. So Axis Spine is another example of where we've effectively created the business from scratch at finding a really capable individual. So this business is involved in spinal implant cages. So these are now FDA cleared. They're much more versatile and lead to much less aggressive surgery. Surgeries going on as we speak in the U.S. Uniphy, which is touchscreen technology at the human machine interface. Dxcover, which is very early all cancer detection diagnostic. Round to Mindtech, which is an AI platform that creates data in order to train other AI systems much faster and accurately. And Tribosonics, so it's an ultrasonic measurement of wear and tear in real time in bearings and components in Sheffield. And lastly, Nova Pangaea, which is a process technology that converts plant biomass into bioethanol and activated carbon and other usable products. So a lot of traction from the aero industry because it is very relevant for the production of sustainable aviation fuel. So I think you'll see new additions to our balance sheet over the course of the next few months.

Thank you, Julian. So very much a theme of more to come, which is really reassuring. Often, we talk about being the first choice for investees, investors and employees. And at the heart of that is one of being a responsible investor, making an impact on what we do. As a regional investor that doesn't just deploy capital, but we support teams through our own searches, et cetera, to build teams -- build management teams and drive business growth. We are very much dedicated to helping regional businesses with responsible investment at the heart of our activity. And I think these results show that responsible investment works in terms of delivering on the ground and delivering returns to our stakeholders. We've had for some time now a dedicated team to responsible investment as led by Jill. Jill Williams and I'm part of that responsible investment team. Recently, one of the many outcomes from that was a knowledge-intensive impact EIS fund that was launched and raised very quickly, and that is currently being delivered again in regional as an impact purpose-driven vehicle. There are 120 employees across Mercia in 8 regional offices. I mentioned the Bristol office being our eighth office that we've recently opened. We have 19 university partnerships, but I think it's important to note that, actually, they sort of account about 5% of our portfolio of our university spinouts. But there are other things we use the universities for, expertise, et cetera, but also an internship program. We work with the University of Warwick, for instance, where the responsible investment team, Jill has been working there to bring through in terms -- from people who've just not been fortunate in terms of opportunities they've been presented with over time and they'll be working across Mercia. 39% of our staff, 20% of our investment team and 2 of the 5 NEDs are women. Evidently, that is work in progress and diversity is an important driver going forward. On the right is a word cloud where we brought a number of our -- where our full team came together and asked them to describe Mercia in one word. And it's really pleasing to see actually ambitious in the middle of that. And perhaps another way of First Choice is actually being ambitious for our investees, our investors and our employees and ambitious is something that actually really defines what Mercia is about. And in this final slide, I think, brings together what both Julian and Martin have spoken to. In times like the strong liquidity, strong unrestricted cash of GBP 300 million, of which GBP 60 million of that is on our -- cash out on our balance sheet puts us in a great place and a great place to pick opportunities for new investments to support our portfolio and selectively look towards potential M&A, et cetera. As we grow AUM, in particular, through our third-party funds and maintenance of that fee margin on that scaling profitable operation is important, and we continue to maintain that fee margin. And those funds, just to remind you of those long-dated 10-year-plus funds or evergreen funds, which are not subject to redemptions. Again, a very strong solid position to be in. Our portfolio is well funded. There are a number of questions that we will answer against that portfolio of direct investments. And as we said historically, we always look for businesses with modest capital needs. We have, as you've just heard from Julian, just one direct investment, a small direct investment in the public market. So our exposure to the public markets is highly limited. And in conclusion, just 1 year into the 3-year Mercia 2020, we believe we're on track to achieve that and to meet and beat that within the next and remaining 2 years. So I'd like to thank you for your time and attention today. And we'll endeavor between the 3 of us to answer some of the questions that have come up.

Mark, Martin, Julian. Thank you very much for your presentation. [Operator Instructions] But just while the company take a few moments to review those questions into today, I'd like to remind you a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via investor dashboard. As you can see, we received a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Mark, if I could just hand over to you on the Q&A session and give response to what's appropriate to do so, that would be great. And then I'll pick up from you at the end.

Excellent. I'll do that. So there are a number of questions around our direct investments, Julian. So I'll just pull those together in separate themes One question was to do with the maturity of the direct investments. So over time, we've talked about when we invest, we look typically to exit these businesses on 3 to 7 years. And the question there is what is the maturity of those businesses? Do we expect those exits to continue going forward? And is there a weighting against age? In other words, are the value of those businesses going up over time?

Yes. So clearly, the portfolio is certainly maturing. And we have, for example, Intechnica VirtTrade, Invincibles, our businesses are now profitable or very close to being profitable. I guess in terms of disposals in general, the outlook that was one of the questions, I think, we have made since the period end, a further GBP 18 million of realizations. Do we think that the levels that we've achieved over the past couple of years will continue? Probably not. But we will still certainly continue to churn the portfolios. But I think the fundamental point here is that we are very happy to continue to grow this portfolio. And if the exit environment is not quite as healthy as it was in the last 2 years, that's absolutely fine for us. And many of our investments are not going to be sold off the back of multiples as we've demonstrated with the likes of Faradion. The acquirers of many of our businesses are going to do that for strategic reasons, and I think that will continue. There's another question, which is kind of related, Mark, around the cash levels, I think.

Yes. So I was going to say there's basically a split of -- we talked about the use of the proprietary capital being investment in funds, the direct investments and, indeed, in M&A. And I was going to split that into 2. Actually, there was no question on the funds, but there was a question in terms of what is the cash needs of the proprietary capital in terms of direct investment. And Martin, if I could ask you to talk to the M&A after that.

Yes. So the cash needs, I mean, I guess, the first point to make is this portfolio is not one where we are requiring to really kind of put our hands in our pockets for the next GBP 100 million or GBP 200 million funding round for high-growth kind of fintech or other types of businesses. So that is not where this portfolio sits. So we've done a lot of work and looking at where and how the next 18 to 24 months looks across the portfolio, except that some of these businesses are now profitable or breakeven. So as an overarching observation, our portfolio, if you were to exclude the holdings that we have less than 2%, which is surplus and cents, which are already very aptly served by existing syndicate members. Our portfolio requires possibly between GBP 20 million and GBP 25 million in total over the next 18 to 24 months. That's before syndications. So we are syndicated on many of these deals with the likes of our own VCTs, BGF, some really high-profile angel investors as well. So our portfolio needs in terms of cash are relatively small.

Brilliant. Martin, in terms of M&A.

Yes, yes. We've had a question around sort of M&A and sector sentiment and multiples and so I just like to give a bit of color on that. So if we go back to Slide 9, you'll see that the 2 acquisitions that we've completed, 2016 and 2019, that the purchase price multiples from a profit perspective were between 6.3 and 7.9x. And around -- and during that period, those were similar multiples to which we saw in other transactions. So certainly, Gresham House's purchase of some VCTs were in that range for profit multiples. But then in 2021, there was a transaction where it changed -- completely changed the dynamic of M&A in the specialist asset management sector, our transaction. And this is not to criticize it at all, but a transaction where Mathew Oil bought Maven Capital and the headline purchase price is 14x profits. And of course, at that point, what happened was some of the conversations that we were having with potential partners was that all of a sudden they all fell understandably that their business was also worth 14x profit. So at that point, we backed away from some of those conversations, kept our powder dry and waited. And then what we're seeing -- I'm pleased to say what we've seen in more recently in a couple of transactions that happened in June 2022 is foresight of recently purchased Downing's venture division. And it looks like the profit multiple there is back down to about 6x and AssetCo recently purchased an SDM, a specialist asset manager, as well. And again, it looks like the profit multiple is more sensible. So we are very much hoping that we'll be able to make some progress ourselves in the next 12 months. At least to say, we are having some early conversations with a number of companies that we believe would be a great fit for Mercia, but we'll see how the year plays out.