TIDMMVCT
Molten Ventures VCT plc
LEI: 2138003I9Q1QPDSQ9Z97
31 July 2023
Final Results for the year ended 31 March 2023 (Correction)
The Final Results announcement released by the Company at 16:20
today incorrectly showed in the Chairman's Statement the dividend
payment date as 19 September 2023. The correct payment date is 29
September 2023.The full text of the corrected announcement as
follows:
FINANCIAL SUMMARY
31 Mar 2023 31 Mar 2022
Pence Pence
Net asset value per share ("NAV") 53.3 60.6
Cumulative dividends paid since launch 113.6 110.5
Total Return (NAV plus cumulative dividends paid per
share) 166.9 171.1
=========== ===========
Dividends in respect of financial year ended 31 March
2023
Interim dividend paid per share 1.0 1.5
Final dividend per share (payable on 29 September
2023) 0.5 3.1
1.5 4.6
=========== ===========
OVERVIEW
Molten Ventures VCT is a steadily growing, GBP110m investment
company that gives the opportunity to invest with the experienced,
technology focused, venture capital team at Molten Ventures plc in
a tax efficient manner.
This allows the Company to benefit from that team's distinctive
abilities in technology investment with a sector focus on
enterprise and consumer technology, differentiated operating
systems, machine learning and digital healthcare, all of which add
to the portfolio's increasing emphasis on
UK leading-edge expertise.
Through Molten Ventures' co-investment connections in
future-focused sectors, its process, analysis, structuring, and
engagement with investee companies, this VCT provides an enhanced
opportunity for investors to participate in and contribute to
future value in the UK and to make a serious contribution to the
future of that economy and its vital,
early-stage investment.
CHAIRMAN'S STATEMENT
Introduction
I present the Company's Annual Report for the year ended 31
March 2023. There has been a significant shift in investor
sentiment over the year, particularly in respect of the technology
sector which is now your Company's main focus.
Although there has been a fall in net asset value over the year,
the overall performance has been relatively good when compared
generally to quoted technology businesses, with many of the
portfolio companies weathering the more challenging conditions
reasonably well.
Net asset value and results
As at 31 March 2023, the Company's Net Asset Value per share
("NAV") stood at 53.3p, representing a decrease of 4.2p (6.9%) over
the year after adding back dividends paid.
The loss on ordinary activities after taxation for the year was
GBP7.6 million (2022: GBP18.4 million profit), comprising a revenue
loss of GBP1.0 million (2022: GBP537,000) and a capital loss of
GBP6.6 million (2021: GBP18.9 million profit).
Venture capital investments
Portfolio allocation
In line with the strategy that has been pursued in recent years,
the Company's growth technology investments now form a substantial
proportion of the investment portfolio. The split with the older
legacy investments at the year-end is summarised as follows:
Portfolio split as at 31 March 2023
Growth
Technology Legacy Cash Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost 50,323 10,903 28,845 90,071
Gains 17,394 2,937 - 20,331
Valuation 67,717 13,840 28,845 110,402
=========== ======= ======= =======
Percentage of
portfolio 61.4% 12.5% 26.1% 100.0%
Portfolio activity
There was a steady flow of new investment opportunities from the
Manager during the year. The Company made five new investments and
five follow-on investments totalling GBP17.4 million.
There were four investment disposals during the year, including
that of Lyalvale Express Limited, producing proceeds of GBP6.0
million, and Roomex UK Limited, producing proceeds of GBP1.4
million.
Further details on the investment activity can be found in the
Investment Manager's report.
Investment valuations
At the year end, the Company held a portfolio of 34 active
investments valued at GBP81.6 million.
The Board has reviewed the unquoted investment valuations at the
year end, resulting in a number of movements.
There were some significant uplifts over the year in respect of
Endomagnetics Limited, Form3 UK Limited and Focal Point Positioning
Limited, which contributed GBP4.8 million between them. There were
also some significant fallers, most notably IESO Digital Health
Limited, PrimaryBid Limited and Freetrade Limited. Additionally,
AIM-quoted Access Intelligence plc also saw a significant fall in
its share price.
Overall, the unrealised valuation movements on the portfolio
were a net loss of GBP3.9 million for the year.
Further commentary on the portfolio, together with a schedule of
additions, disposals and details of the ten largest investments can
be found within the Investment Manager's Report and Review of
Investments.
Dividends
As Shareholders may be aware, the VCT regulations restrict the
payment of dividends out of reserves related to funds raised in the
last three to four years (depending on the date shares were
allotted). As the Company has raised substantial levels of new
funds in recent years, the Board now needs to manage reserves
carefully in the short term to ensure that this test is not
breached, but once current reserves are available for distribution,
the Company intends to continue a strong dividend policy for
current and future subscribing Shareholders.
For the above reason, the proposed final dividend will be at a
lower level than in the previous years this year. The Board is
proposing to pay a final dividend of 0.5p per share. This dividend
will be paid, subject to Shareholder approval, on 29 September 2023
to Shareholders on the register at 25 August 2023. This will bring
the total dividends paid in respect of the year to 1.5p per
share.
Shareholders are reminded that the Company operates a Dividend
Reinvestment Scheme ("DRIS"), which allows Shareholders to reinvest
their dividends in new shares and obtain income tax relief on that
new investment. Further details can be found on the Shareholder
Information page within the Annual Report.
Fundraising
The Company launched another successful offer for subscription
in October 2022 which reached capacity and closed in February 2023
having raised GBP29.6 million. A significant proportion of the
shares were allotted after the year end, in April 2023.
Earlier in the year the Company completed another offer for
subscription which launched in November 2021. GBP29.7 million was
raised, with all the shares being allotted in April 2022.
The Company expects to launch another offer for subscription
later this year.
Uninvested cash
Since the year end, the Company has placed the majority of its
uninvested cash in a money market fund which produces investment
income while the funds await new growth technology investment
opportunities.
Share Buybacks
The Company has a policy of purchasing its own shares that
become available in the market at a discount of approximately 5% to
the latest published NAV, subject to regulatory and liquidity
constraints.
For the reasons described in the Dividend section above, the
Board is temporarily controlling the level of funds allocated for
share buybacks to ensure that compliance with the VCT regulations
is maintained. Buybacks are still expected to be undertaken from
time to time, and the Board is working with the Company's broker to
ensure that funds are allocated on a fair basis at any time where
demand might exceed the funds available. The Board expects the
constraints from this VCT regulation to ease significantly over the
next one to two years.
Any Shareholders who are considering selling their shares will
need to use a stockbroker. Such Shareholders should ask their
stockbroker to register their interest in selling their shares with
Panmure Gordon & Co.
During the year, the Company purchased a total of 2,620,650
shares at an average price of 54.6p per share. Resolution 13 will
be proposed at the AGM, to renew the authority for the Company to
purchase its own shares.
Directorate
Several of the Board members have now been on the Board for more
than the nine years which is the guideline set by the Corporate
Governance Code. With the significant changes in respect of the
management of the Company that have occurred in recent years, it
has not been an appropriate time to make major board changes. Now
that these changes are behind us, an exercise has commenced to
identify suitable candidates to oversee the Company in this new
phase of its life. I expect that the Company will have news of some
changes over the coming months.
Annual General Meeting ("AGM")
The AGM will take place at 20 Garrick Street, London WC2E 9BT on
20 September 2023 at 11:15 a.m.
Three items of special business are proposed at the AGM:
one in respect of the authority to buy back shares as noted
above; and
two in respect of the authority to allot shares.
The authority to allot shares provides the Board with the
opportunity to issue shares for the next fundraising that is being
planned without having to necessarily incur the expense of seeking
separate approval via a shareholder circular. Any further
fundraising decisions will take account of the level of uninvested
funds and the rate of investment.
Outlook
Whilst the combination of high inflation and increasing interest
rates is presenting significant challenges for many businesses, one
factor to note is that the Company's investments are funded by
equity and have nil or limited debt in the majority of cases.
The fund manager has followed a consistent strategy since its
inception, and it continues to follow this approach to identify and
invest in high growth and high potential technology-led businesses.
This strategy has been successfully followed through the ups and
downs of prior economic and market cycles and has proven resilient
in its ability to deliver exits and returns.
Following another successful fundraising, we expect the Company
to continue to be a highly active investor this year by
supporting the growth of existing portfolio companies and adding
new businesses.
I look forward to updating Shareholders in the Half Yearly
Report which will be published towards the end of the year.
David Brock
Chairman
INVESTMENT MANAGER'S REPORT
The past year has delivered a significant shift in the
investment environment, particularly in the high-growth technology
markets, as interest rates were increased to combat global
inflationary pressures. This challenging market backdrop has led to
a reduction in the value of our portfolio, and our focus for this
year has been centred on the active management of our investments
and to continue to invest in new and exciting companies.
The valuation movements in the first half of the year showed a
NAV decrease of 12.8% versus the second half results which
demonstrate greater stability with a NAV increase of 0.9%.
Overall NAV decreased 12.0% year on year but a more modest 6.9%
after adding back dividends paid in the period.
During the year, the team completed ten investments totalling
GBP17.4 million. This comprised five new investments totalling
GBP9.9 million alongside five follow-on investments totalling
GBP7.5 million. There were four exits.
At the year end, Molten technology companies represented 83% of
the portfolio and legacy companies 17%. The net asset valuation
split was 74% in investments, and 26% in cash. Cash was boosted
post the April 2023 allotments by a further GBP17.6 million less
dividends paid in April of GBP2.1 million.
Five new investments, alongside the Molten EIS and Molten
Ventures plc funds, were made into the following companies:
Expanding Circle
Limited No-Code Causal AI platform 2,931,197
Juliand Digital
Limited Connected worker software platform 2,439,063
Worldr Technologies Privacy, security and compliance
Limited layers for communication tools 1,696,777
BeZero Carbon Voluntary Carbon Market market
Limited information infrastructure 1,567,037
Fluidic Analysis
Limited Protein analysis technology 1,249,995
9,884,070
---------
Within the year, two portfolio companies attracted sizeable
follow-on investments at attractive valuations.
FocalPoint Limited is a next generation high performance
positioning technology used to increase the accuracy of the Global
Navigation Satellite System (GNSS). FocalPoint's solution is
powered by a concept called Supercorrelation using advanced physics
and machine learning to improve the accuracy, reliability and
energy consumption of standard GNSS receivers without the need for
additional hardware or infrastructure. The company raised a further
GBP23 million led by Gresham House and Molten Ventures.
Riverlane Limited, who are building the operating system to
unleash the power of quantum computing by transforming experimental
technology into commercially viable software for the quantum age,
raised a further GBP15 million from new and existing investors,
including the VCT, to accelerate growth. New investors included the
National Security Strategic Investment Fund.
During the year the company exited four companies generating
proceeds of GBP7.7 million and a combined multiple of 1.7x cost.
Three of these exits were profitable with the most successful of
these being the sale of Lyalvale Express which generated proceeds
of GBP6.0 million. One exit was a total write off with a cost of
GBP1.3 million.
In the recent successful fundraising offer which closed in 2023,
the VCT allotted GBP29.6 million of Ordinary Shares and the process
of investing these funds is underway.
At the time of writing, post the year end, the VCT has completed
one new investment GBP1.6m and four follow on investments totalling
GBP3.8m. A further GBP10.5m has been committed to four new
companies pending HMRC approval.
With Environmental, Social and Governance ("ESG") becoming an
ever-increasing focus, we remind our Shareholders that the parent
company of the Investment Manager, Molten Ventures plc, has
continued to progress its ESG roadmap.
When Molten Ventures VCT invests in new companies as part of the
Molten Ventures co-investment syndicate, the Molten Ventures Group
asks for a commitment from founders and management teams to meet or
surpass Molten Ventures' ESG targets during the lifetime of the
investment. We believe that in doing so, this creates value for our
Shareholders and makes our portfolio companies more attractive for
investment, against ever-growing expectations of investors,
regulators, prospective talent and consumers.
The Molten Ventures' ESG policy is available to view on the
Molten Ventures plc website via the link below:
https://www.globenewswire.com/Tracker?data=89iB7hAIuTAKIkTegRbKjAS6m5IKvI2ESF4KR5yMqShv3LcW2u-6YUUcFS6-ZKzgQAwSjn5cjAdm3fOseZb605r5AUJ5j8_EHm9mS021QgIz5dHQVrvIFO7UzBMaOGXfqwoU5UbsvdvO9mK8PnKmzkNMrZ-GN6WS3plmfUYfLhri7idHyfNGZd1ZA3o_s3y5
https://investors.moltenventures.com/sustainability
The Investment Manager is an active member of the VCT
Association (VCTA) which represents 13 of the largest VCT fund
managers and makes up over 90% of the GBP6.6 billion VCT industry.
The VCTA continues to lobby government for the continuation of the
tax reliefs for VCTs to support exciting and innovative businesses.
We are pleased to see that in March 2023, Jeremy Hunt, the
Chancellor of the Exchequer, made a statement "It is the
government's firm intention to extend them (The VCT and EIS
Schemes) beyond the current sunset on 6 April 2025". With this in
mind we do expect to return to raise further funds later this
year.
In summary, the year under review has been the most volatile
period for the technology industry since the Global Financial
Crisis, if not the dot com crash more than two decades ago.
Nonetheless, it is a matter of consensus that technological
innovation is continuing to transform our lives. The underlying
performance of technology businesses continues to be very strong,
and the response to the fall of Silicon Valley Bank (SVB) in the US
and UK is an encouraging sign that tech is a genuine government
policy priority globally.
As your fund manager we are cautiously optimistic for the year
ahead as the technology markets continue to stabilise and recover
in places. Even as economic headwinds persist, we will continue to
deliver through our scalable and adaptable model, active approaches
to portfolio management and thesis led investment approach.
Elderstreet Investments Limited
Part of the Molten Ventures Group
REVIEW OF INVESTMENTS
Portfolio of investments
The following investments were held at 31 March 2023. All
companies are registered in England and Wales, with the exception
of Fulcrum Utility Services Limited, which is registered in the
Cayman Islands.
Valuation
Movement % of portfolio
Cost Valuation in year by value
Largest venture capital investments
(by value) GBP'000 GBP'000 GBP'000
Thought Machine Group Limited* 2,400 10,300 571 9.3%
Endomagnetics Limited(*) 2,147 8,635 2,313 7.8%
Form3 UK Limited (formerly Back
Office Technology Ltd) (*) 1,420 6,606 1,142 6.0%
Access Intelligence plc** 2,586 6,229 (2,155) 5.7%
Fords Packaging Topco Limited 2,433 5,867 - 5.3%
Focal Point Positioning Limited(*) 3,300 5,561 1,366 5.0%
Riverlane Limited(*) 2,661 4,114 589 3.7%
IESO Digital Health Limited(*) 3,567 3,878 (2,264) 3.5%
Evonetix Limited(*) 2,999 3,383 (14) 3.1%
Expanding Circle Limited(*) 2,931 2,931 - 2.7%
Juliand Digital(*) 2,439 2,439 - 2.2%
Impulse Innovations Limited(*) 2,079 1,953 (126) 1.8%
Hadean Supercomputing Limited(*) 1,775 1,938 (21) 1.8%
Apperio Limited(*) 1,357 1,812 705 1.6%
Worldr Technologies Limited 1,697 1,697 - 1.5%
35,791 67,343 2,106 61.0%
Other venture capital investments 61,226 14,214 (5,996) 73.9%
Cash and cash equivalents 28,845 28,845 26.1%
Total investments 90,071 110,402 (3,890) 100.0%
======= ========== ========= ==============
** Quoted on AIM
All venture capital investments are unquoted unless otherwise
stated.
(*) These companies have also received investment from other
funds managed by the Molten Ventures Group (Molten Ventures Plc and
Molten Ventures EIS) as at 31 March 2023.
Investment movements for the year ended 31 March 2023
ADDITIONS
Venture capital investments GBP'000
Expanding Circle Limited 2,932
Focal Point Positioning Limited 2,700
Juliand Digital Limited 2,439
Riverlane Limited 1,760
Worldr Technologies Limited 1,697
BeZero Carbon Limited 1,567
Evonetix Limited 1,514
Fluidic Analytics Limited 1,250
Apperio Limited 857
Allplants Limited 654
17,370
=======
DISPOSALS
Value at Gain/(loss) Realised
Cost 1 April 2022* Proceeds vs cost losses
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Venture Capital
Investments
Lyalvale Express
Limited 1,915 5,979 5,979 4,064 -
Cervest Limited 1,312 1,312 - (1,312) (1,312)
Roomex UK Limited 1,081 1,080 1,357 276 277
Servoca plc 333 360 359 26 (1)
4,641 8,731 7,695 3,054 (1,036)
======= ============== ======== =========== ========
* Adjusted for purchases in the year where applicable
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Report of the
Directors, the Strategic Report, the Directors' Remuneration Report
and the financial statements in accordance with applicable law and
regulations. They are also responsible for ensuring that the Annual
Report includes information required by the Listing Rules of the
Financial Conduct Authority.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), including
Financial Reporting Standard 102, the financial reporting standard
applicable in the UK and Republic of Ireland (FRS 102).
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period.
In preparing these financial statements, the Directors are
required to:
select suitable accounting policies and then apply them
consistently;
make judgements and accounting estimates that are reasonable and
prudent;
state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
prepare a director's report, a strategic report and director's
remuneration report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Each of the Directors considers that the Annual Report, taken as
a whole, is fair, balanced and understandable and provides the
information necessary for Shareholders to assess the Company's
position, performance, business model and strategy.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements and other
information included in annual reports may differ from legislation
in other jurisdictions.
INCOME STATEMENT for the year ended 31 March 2023
Year ended 31 March 2023 Year ended 31 March 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 1 - 1 300 - 300
(Loss)/Gains on investments - (4,926) (4,926) - 20,233 20,233
1 (4,926) (4,925) 300 20,233 20,533
Investment management fees (542) (1,625) (2,167) (430) (1,291) (1,721)
Other expenses (468) - (468) (407) - (407)
Return/(loss) on ordinary activities before tax (1,009) (6,551) (7,560) (537) 18,942 18,405
Tax on return/(loss) - - - - - -
Return/(loss) attributable to equity shareholders,
being total comprehensive income for the period (1,009) (6,551) (7,560) (537) 18,942 18,405
======= ======= ======= ======= ======= =======
Basic and diluted return/(loss) per share (0.5) (3.5) (4.0) (0.4) 12.4 12.0
All Revenue and Capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the year. The total column within the Income Statement
represents the Statement of Total Comprehensive Income of the
Company prepared in accordance with Financial Reporting Standards
("FRS 102"). The supplementary revenue and capital return columns
are prepared in accordance with the Statement of Recommended
Practice issued in July 2022 by the Association of Investment
Companies ("SORP").
BALANCE SHEET at 31 March 2023
31 Mar 31 Mar
2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Investments 81,557 76,808
Current assets
Debtors 27 20
Cash and cash equivalents 28,845 31,095
28,872 31,115
Creditors: amounts falling due
within one year (117) (356)
Net current assets 28,755 30,759
Net assets 110,312 107,567
Capital and reserves
Called up share capital 10,347 8,880
Capital redemption reserve - 794
Share premium account 8,689 56,273
Merger reserve - 673
Special reserve 65,178 5,303
Capital reserve -- unrealised 27,346 35,220
Capital reserve -- realised 853 1,516
Revenue reserve (2,101) (1,092)
Total equity shareholders' funds 110,312 107,567
Basic and diluted net asset value 53.3p 60.6p
per share
STATEMENT OF CHANGES IN EQUITY for the year ended 31 March
2023
Capital Share
Share Redemption Premium Merger Special Capital Capital Revenue
capital reserve account reserve reserve reserve -unrealised reserve - realised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year
ended 31 March
2022
At 1 April
2021 5,537 659 18,321 1,828 15,463 14,159 - (555) 55,412
Total
comprehensive
income - - - - - 20,221 (1,279) (537) 18,405
Transfer
between
reserves* - - - (1,155) (6,838) 840 7,153 - -
Transactions
with owners
Issue of new
shares 3,478 - 37,952 - - - - - 41,430
Share issue
costs - - - - (1,900) - - - (1,900)
Purchase of
own shares (135) 135 - - (1,422) - - - (1,422)
Dividends paid - - - - - - (4,358) - (4,358)
At 31 March
2022 8,880 794 56,273 673 5,303 35,220 1,516 (1,092) 107,567
======== =========== ======== ======== ======== ==================== =================== ======== =======
For the year
ended 31 March
2023
At 1 April
2022
Total
comprehensive
income - - - - - (3,890) (2,661) (1,009) (7,560)
Transfer
between
reserves* - - - (673) (3,239) (3,984) 7,896 - -
Cancellation
of Share
Premium - - (63,628) - 63,628 - - - -
Cancellation
of Capital
Redemption - (925) - - 925 - - - -
Transactions
with owners
Issue of new
shares 1,598 - 16,915 - - - - - 18,513
Share issue
costs - - (871) - - - - (871)
Purchase of
own shares (131) 131 - - (1,439) - - - (1,439)
Dividends paid - - - - - - (5,898) - (5,898)
At 31 March
2023 10,347 - 8,689 - 65,178 27,346 853 (2,101) 110,312
======== =========== ======== ======== ======== ==================== =================== ======== =======
* A transfer of GBP4.0 million (2022: GBP840,000), representing
impairment losses during the year, as well as cumulative unrealised
gains on investments which were disposed of during the year has
been made from the Capital reserve - unrealised to the Capital
Reserve -- realised. A transfer of GBP3.2 million (2022: GBP2.5
million), representing realised losses on investment disposals plus
capital expenses in the year, has been made from Capital Reserve --
realised to the Special reserve. A transfer of GBPnil (2022:
GBP4,358,000) from Special Reserve to Capital reserve-realised has
been made to replenish the reserve.
A transfer of GBP673,000 (2022: 1,155,000) from Merger Reserve
to Capital reserve-realised has been made following the disposal of
an investment which was held pre-merger.
A transfer of GBP63.6 million (2022: GBPnil), from the
cancellation of Share premium, has been made from the Share Premium
account to the Special Reserve. A transfer of GBP925,000 (2022:
nil), from the cancellation of Capital Redemption, has been made
from the Capital Redemption Reserve to the Special Reserve.
STATEMENT OF CASH FLOWS for the year ended 31 March 2023
31 Mar 31 Mar
2023 2022
GBP'000 GBP'000
Cash flow from operating activities
(Loss)/profit on ordinary activities before taxation (7,560) 18,405
Loss/(gains) on investments 4,926 (20,233)
(Increase)/decrease in debtors (5) 11
(Decrease)/increase in creditors (179) 216
Net cash outflow from operating activities (2,818) (1,601)
-------- --------
Cash flow from investing activities
Purchase of investments (17,370) (12,491)
Proceeds from disposal of investments 7,695 672
Net cash outflow from investing activities (9,675) (11,819)
-------- --------
Cash flow from financing activities
Equity dividends paid (5,898) (4,358)
Proceeds from share issue 18,513 41,429
Share issue costs (873) (1,853)
Purchase of own shares (1,499) (1,362)
Net cash inflow from financing activities 10,243 33,856
-------- --------
Net (decrease)/increase in cash (2,250) 20,436
Cash and cash equivalents at start of year 31,095 10,659
Cash and cash equivalents at end of year 28,845 31,095
======== ========
Total cash and cash equivalents 28,845 31,095
NOTES
1. Accounting policies
General information
Molten Ventures VCT plc ("the Company") is a venture capital
trust established under the legislation introduced in the Finance
Act 1995 and is domiciled in the United Kingdom and incorporated in
England and Wales. The Company is a premium listed entity on the
London Stock Exchange.
Basis of accounting
The Company has prepared its financial statements in accordance
with the Financial Reporting Standard 102 ("FRS 102") and in
accordance with the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" issued in July 2022 ("SORP") and with the Companies Act
2006.
Going concern
After reviewing the Company's forecasts and projections, the
Directors have a reasonable expectation that the major cash
outflows of the Company (most notably investments, share buybacks
and dividends) are within the Company's control and therefore the
Company has sufficient cash to meet its expenses and liabilities
when they fall due. The impact of the Ukraine conflict and the cost
of living have been considered, more detail on these considerations
can be found within the Corporate Governance report. As such, the
Board confirms that the Company has adequate resources to continues
in operational existence for at least 12 months from the date of
approval of the financial statements. The Company therefore
continues to adopt the going concern basis in preparing its
financial statements as noted further within the Corporate
Governance report within the Annual Report.
Presentation of Income Statement
In order to better reflect the activities of a venture capital
trust, and in accordance with the SORP, supplementary information
which analyses the Income Statement between items of a revenue and
capital nature has been presented alongside the Income Statement.
The net revenue is the measure the Directors believe appropriate in
assessing the Company's compliance with certain requirements set
out in Part 6 of the Income Tax Act 2007.
Investments
Investments are designated as "fair value through profit or
loss" assets, upon acquisition, due to investments being managed
and performance evaluated on a fair value basis. A financial asset
is designated within this category if it is both acquired and
managed, with a view to selling after a period of time, in
accordance with the Company's documented Investment Policy.
Listed fixed income investments and investments quoted on AIM
and the Main Market are measured using bid prices in accordance
with the International Private Equity and Venture Capital Valuation
Guidelines ("IPEV").
For unquoted instruments, fair value is established using the
IPEV. The valuation methodologies for unquoted entities used by the
IPEV to ascertain the fair value of an investment are as
follows:
Multiples;
Industry valuation benchmarks;
Discounted cash flows or earnings (of underlying business);
Discounted cash flows (from the investment);
Net assets; and
Calibrating to the price of a recent investment.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable
data, market inputs, assumptions and estimates in order to
ascertain fair value as explained in the investment accounting
policy above and addressed further in note 9 of the Annual
Report.
Where an investee company has gone into receivership,
liquidation, or administration (where there is little likelihood of
recovery), the loss on the investment, although not physically
disposed of, is treated as being realised. Permanent impairments in
the value of investments are deemed to be realised losses and held
within the Capital Reserve -- Realised.
Gains and losses arising from changes in fair value are included
in the Income Statement for the period as a capital item and
transaction costs on acquisition or disposal of the investment
expensed.
It is not the Company's policy to exercise significant influence
over investee companies. Therefore, the results of these companies
are not incorporated in the Income Statement, except to the extent
of any income accrued. This is in accordance with the SORP and FRS
102 sections 14 and 15 that do not require portfolio investments to
be accounted for using the equity method of accounting.
Calibration to price of recent investment requires a level of
judgment to be applied in assessing and reviewing any additional
information available since the last investment date. The Board and
Investment Manager consider a range of factors in order to
determine if there is any indication of decline in value or
evidence of increase in value since the recent investment date. If
no such indications are noted the price of the recent investment
will be used as the fair value for the investment.
Examples of signals which could indicate a movement in value
are: -
Changes in results against budget or in expectations of
achievement of technical milestones patents/testing/ regulatory
approvals)
Significant changes in the market of the products or in the
economic environment in which it operates
Significant changes in the performance of comparable
companies
Internal matters such as fraud, litigation or management
structure.
In respect of disclosures required by the SORP for the 10
largest investments held by the Company, the most recent publicly
available accounts information, either as filed at Companies House,
or announced to the London Stock Exchange, is disclosed. In the
case of unlisted investments, this may be abbreviated information
only.
Judgement in applying accounting policies and key sources of
estimation uncertainty
The key estimates in the financial statements is the
determination of the fair value of the unquoted investments by the
Directors as it impacts the valuation of the unquoted investments
at the year end date.
Of the Company's assets measured at fair value, it is possible
to determine their fair values within a reasonable range of
estimates. The fair value of an investment upon acquisition is
deemed to be cost. Thereafter, investments are measured at fair
value in accordance with FRS 102 sections 11 and 12, together with
the IPEV.
A price sensitivity analysis of the unquoted investments is
provided in note 15 of the Annual Report, under Investment price
risk.
Income
Dividend income from investments is recognised when the
Shareholders' rights to receive payment have been established,
normally the ex-dividend date.
Interest income is accrued on a timely basis, by reference to
the principal outstanding and at the effective interest rate
applicable and only where there is reasonable certainty of
collection. Where previously accrued income is considered
irrecoverable a corresponding bad debt expense is recognised.
Expenses
All expenses are accounted for on an accruals basis. In respect
of the analysis between revenue and capital items presented within
the Income Statement, all expenses have been presented as revenue
items except as follows:
Expenses which are incidental to the acquisition of an
investment are deducted as a capital item.
Expenses which are incidental to the disposal of an investment
are deducted from the disposal proceeds of the investment.
Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. The Company has adopted the
policy of allocating investment manager's fees, 75% to capital and
25% to revenue as permitted by the SORP. The allocation is in line
with the Board's expectation of long term returns from the
Company's investments in the form of capital gains and income
respectively.
Performance incentive fees arising, if any, are treated as a
capital item.
Taxation
The tax effects on different items in the Income Statement are
allocated between capital and revenue on the same basis as the
particular item to which they relate using the Company's effective
rate of tax for the accounting period.
Due to the Company's status as a Venture Capital Trust and the
continued intention to meet the conditions required to comply with
Part 6 of the Income Tax Act 2007, no provision for taxation is
required in respect of any realised or unrealised appreciation of
the Company's investments which arise.
Deferred taxation is not discounted and is provided in full on
timing differences that result in an obligation at the balance
sheet date to pay more tax, or a right to pay less tax, at a future
date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the
inclusion of items of income and expenditure in taxation
computations in periods different from those in which they are
included in the accounts.
A deferred tax asset is only recognised to the extent that it is
probable there will be taxable profits in the future against which
the asset can be offset.
Other debtors and other creditors
Other debtors (including accrued income) and other creditors are
included within the accounts at amortised cost.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
at call with an original maturity of three months or less.
Dividends
Dividends payable are recognised as distributions in the
financial statements when the company's liability to make payment
has been established, typically when approved by Shareholders at
the AGM or, for interim dividends, the payment date.
Issue costs
Issue costs in relation to the shares issued are deducted from
the special reserve.
Reportable segments
The Company has one reportable segment as the sole activity of
the Company is to operate as a VCT and all of the Company's
resources are allocated to this activity.
2. Basic and diluted return per share
Year to Year to
31 Mar 31 Mar
2023 2022
Basic and diluted (loss)/return per share (4.0p) 12.4p
Return per share based on:
Net revenue loss for the financial year
(GBP'000) (1,009) (537)
Net capital (loss)/gains for the financial
year (GBP'000) (6,551) 18,942
Total (losses)/return for the financial
year (GBP'000) (7,560) 18,405
=========== ===========
Weighted average number of shares in issue 190,419,643 152,969,728
As the Company has not issued any convertible securities or
share options, there is no dilutive effect on return per share. The
return per share disclosed, therefore, represents both basic and
diluted return per share.
3. Basic and diluted net asset value per share
31 March 2023 31 March 2022
Number in issue as at 31 March Net asset value Net asset value
Pence Pence
2023 2022 per share GBP'000 per share GBP'000
Ordinary
Shares 206,931,912 177,597,183 53.3 110,312 60.6 107,567
As the Company has not issued any convertible securities or
share options, there is no dilutive effect on net asset value per
share. The net asset value per share disclosed therefore represents
both basic and diluted net asset value per share.
4. Principal Risks
The Company's investment activities expose the Company to a
number of risks associated with financial instruments and the
sectors in which the Company invests. The principal financial risks
arising from the Company's operations are:
Market risks;
Credit risk; and
Liquidity risk.
The Board regularly reviews these risks and the policies in
place for managing them. There have been no significant changes to
the nature of the risks that the Company is exposed to over the
year and there have also been no significant changes to the
policies for managing those risks during the year.
The risk management policies used by the Company in respect of
the principal financial risks and a review of the financial
instruments held at the year-end are provided below.
Market risks
As a VCT, the Company is exposed to investment risks in the form
of potential losses that may arise on the investments it holds in
accordance with its Investment Policy. The management of these
investment risks is a fundamental part of investment activities
undertaken by the Investment Manager and overseen by the Board. The
Manager monitors investments through regular contact with
management of investee companies, regular review of management
accounts and other financial information and attendance at investee
company board meetings. This enables the Manager to manage the
investment risk in respect of individual investments. Investment
risk is also mitigated by holding a diversified portfolio spread
across various business sectors and asset classes.
The key investment risks to which the Company is exposed
are:
Investment price risk; and
Interest rate risk.
The Company has undertaken sensitivity analysis on its financial
instruments, split into the relevant component parts, taking into
consideration the economic climate at the time of review in order
to ascertain the appropriate risk allocation.
Investment price risk
Investment price risk arises from uncertainty about the future
prices and valuations of financial instruments held in accordance
with the Company's investment objectives. It represents the
potential loss that the Company might suffer through investment
price movements in respect of quoted investments, and changes in
the fair value of unquoted investments that it holds.
Interest rate risk
The Company accepts exposure to interest rate risk on
floating-rate financial assets through the effect of changes in
prevailing interest rates. The Company receives interest on its
cash deposits at a rate agreed with its bankers and on liquidity
funds at rates based on the underlying investments. Investments in
loan notes and fixed interest investments attract interest
predominately at fixed rates. A summary of the interest rate
profile of the Company's investments is shown below.
Interest rate risk profile of financial assets and financial
liabilities
There are three levels of interest which are attributable to the
financial instruments as follows:
"Fixed rate" assets represent investments with predetermined
yield targets and comprise fixed interest and loan note
investments.
"Floating rate" assets predominantly bear interest at rates
linked to Bank of England base rate and comprise cash at bank and
Cash Trust investments.
"No interest rate" assets do not attract interest and comprise
equity investments, loans and receivables (excluding cash at bank)
and other financial liabilities.
The Company monitors the level of income received from fixed,
floating and non-interest rate assets and, if appropriate, may make
adjustments to the allocation between the categories, in
particular, should this be required to ensure compliance with the
VCT regulations.
During the period the Bank of England base rate has increased
from 0.75% per annum to 4.25% per annum at the year end. Following
the year end, in June 2023, the rate increased further, to 5.0% per
annum. Any potential change in the base rate, at the current level,
would have an immaterial impact on the net assets and Total Return
of the Company.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument is unable to discharge a commitment to the Company made
under that instrument. The Company is exposed to credit risk
through its holdings of loan notes in investee companies,
investments in fixed income securities, cash deposits and
debtors.
The Manager manages credit risk in respect of loan notes with a
similar approach as described under interest rate risk above. In
addition, the credit risk is partially mitigated by registering
floating charges over the assets of certain investee companies. The
strength of this security in each case is dependent on the nature
of the investee company's business and its identifiable assets. The
level of security is a key means of managing credit risk.
Similarly, the management of credit risk associated interest,
dividends and other receivables is covered within the investment
management procedures.
Cash is mainly held at Bank of Scotland plc, with a balance also
maintained at Royal Bank of Scotland plc, both of which are A-rated
financial institutions. Consequently, the Directors consider that
the risk profile associated with cash deposits is low.
Liquidity risk
Liquidity risk is the risk that the Company encounters
difficulties in meeting obligations associated with its financial
liabilities. Liquidity risk may also arise from either the
inability to sell financial instruments when required at their fair
values or from the inability to generate cash inflows as required.
The Company normally has a relatively low level of creditors (31
March 2023: GBP117,000, 31 March 2022: GBP356,000) and has no
borrowings. The Company always holds sufficient levels of funds as
cash and readily realisable investments in order to meet expenses
and other cash outflows as they arise. For these reasons, the Board
believes that the Company's exposure to liquidity risk is
minimal.
The Company's liquidity risk is managed by the Investment
Manager, in line with guidance agreed with the Board and is
reviewed by the Board at regular intervals.
5. Related party transactions
Nicholas Lewis is a partner of Downing LLP, which provides
administration services to the Company for the year to 31 March
2023. During the year, GBP100,000 (2022: GBP90,000) was due to
Downing LLP in respect of these services. As at 31 March 2023,
GBPnil (2022: GBP5,000) was outstanding and payable.
Richard Marsh is an employee of Molten Ventures plc, the parent
company of Elderstreet Investments Limited. Elderstreet Investments
Limited provided investment management services to the Company.
During the year, GBP2.2 million (2022: GBP1.7 million) was due in
respect of these services. No performance incentive fees were paid
to Elderstreet Investments Limited in respect of the year under
review (2022: GBPnil). As at 31 March 2023, GBP17,000 (2022:
GBP198,000) was outstanding and payable.
ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in
accordance with section 434 Companies Act 2006 for the year ended
31 March 2023 but has been extracted from the statutory financial
statements for the year ended 31 March 2023 which were approved by
the Board of Directors on 31 July 2023 and will be delivered to the
Registrar of Companies. The Independent Auditor's Report on those
financial statements was unqualified and did not contain any
emphasis of matter nor statements under s498(2) and (3) of the
Companies Act 2006.
The statutory accounts for the year ended 31 March 2022 have
been delivered to the Registrar of Companies and received an
Independent Auditors report which was unqualified and did not
contain any emphasis of matter nor statements under s498(2) and (3)
of the Companies Act 2006.
A copy of the full annual report and financial statements for
the year ended 31 March 2023 will be printed and posted/emailed to
shareholders shortly. Copies will also be available to the public
at the registered office of the Company at St. Magnus House, 3
Lower Thames Street, London EC3R 6HD and will be available for
download from www.moltenventures.com.
(END) Dow Jones Newswires
July 31, 2023 11:40 ET (15:40 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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