Half-year report

Molten Ventures VCT plc
LEI: 2138003I9Q1QPDSQ9Z97
Half-Year Report
14 December 2023

Recent performance summary

	30 Sept 2023	31 Mar 2023	30 Sept 2022
	Pence	Pence	Pence
Net Asset Value (“NAV”) per Share	49.9	53.3	52.8
Cumulative distributions paid per Share	115.1	113.6	113.6
Total Return per Share	165.0	166.9	166.4

CHAIRMAN’S STATEMENT
I am pleased to present the Half-Yearly Report for the Company for the six months ended 30 September 2023.

Market conditions have remained difficult throughout the period, however we have seen a steady level of new investment activity, utilising some of the funds raised from the successful offer for subscription earlier this year.

Net Asset Value and results
At 30 September 2023, the Company’s Net Asset Value per share (“NAV”) stood at 49.9p, a decrease of 1.9p or 3.6% since 31 March 2023 (after adding back the dividend paid during the period).

The loss on ordinary activities after taxation for the period was £3.8 million, comprising a revenue loss of £209,000 and a capital loss of £3.6 million.

Dividend
In 2023, the Company paid dividends in April and September 2023, totalling 1.5p. As explained in the 2023 Annual Report, VCT regulations restrict the payment of dividends out of reserves related to funds raised in the last three to four years. Following a series of successful fundraising offers in recent years, the Company has raised substantial levels of funds and as a result the Board currently has to carefully monitor reserves to ensure that the VCT regulations remain adhered to. The Board targets a total annual dividend of equal to 5% of net asset value, although ensuring continuing compliance with the VCT regulations will always take precedent.

As a result of the above, the Board is not proposing to pay a dividend prior to the end of the accounting period but intends to review this and continue a strong dividend policy once a greater level of reserves is “unlocked” from the VCT regulation restrictions in future.
With this in mind, the Company will pay an interim dividend on 5 April 2024 of 1.0p per share, to Shareholders on the register at 23 February 2024.

Shareholders are reminded that the Company operates a Dividend Reinvestment Scheme, which allows Shareholders to automatically reinvest their dividends into new shares in the Company and obtain further income tax relief on that investment. Further details about how to opt-in can be found in the “Shareholder Information” section on the inside cover of this report. The last date for elections under the Dividend Reinvestment Scheme for the above dividend will be 8 March 2024.

Venture capital investments
During the period, the Company made four new and three follow-on investments, at a total cost of £13.2 million.

New investments were made in Morressier GmbH, Melio Healthcare Limited, Binalyze OU, and Oliva Health Holdings Inc. Follow-on investments were made in Global Satellite Vu Limited, Allplants Limited, and Apperio Limited.

At the period end, the Company held a portfolio of 52 venture capital investments, valued at £92.2 million.

As usual, the Board has reviewed the valuations of the unquoted investments as at 30 September 2023 and a number of adjustments to their carrying values have been made. This has resulted in a net valuation downturn of £2.6 million for the period across the whole portfolio.

The Company holds two AIM-quoted investments; Access Intelligence plc and Fulcrum Utility Services Limited, which are both valued at their share prices as at 30 September 2023. The valuation of the investment in Access Intelligence saw a decrease of £1.7 million over the period and that in Fulcrum of £383,000.

Fundraising
As noted in the last Annual Report, the Company closed a successful offer for subscription in February 2023, having raised £29.6 million.

In view of the strong demand from investors and the expectation of a continuing stream of good quality deal flow, the Company launched a new offer for subscription in October, seeking to raise up to £20 million (with an overallotment facility of £20 million to be used at the Directors’ discretion). Approximately £3.5 million has been raised to date.

Shareholders can find full details of the offer, including the prospectus, and online application at:
investors.moltenventures.com/investor-relations/vct

Investors are recommended to consult their financial adviser before making any investment decisions.

Share buybacks
The Company continues to operate a policy of buying in its shares that become available in the market at approximately a 5% discount to the latest published NAV, subject to regulatory and liquidity constraints.

In line with this policy, during the period, the Company purchased 1,233,000 shares for cancellation at an average price of 48.91p per share.

As noted above in respect of the dividend, the Board is currently monitoring the Company’s reserves to ensure continued compliance with the VCT regulations. In view of this, it is not expected that any further share buybacks will be made prior to the end of March 2024. However, the Board confidently expects to resume buybacks, subject to the above, in the Company’s next financial year.

Any Shareholders considering selling their shares will need to use a stockbroker, whom you should ask to contact Panmure Gordon (UK) Limited, who acts as the Company’s corporate broker, and maintains a list of potential sellers to be contacted when the next buyback is undertaken by the Company.

Outlook
Although we have seen a slight fall in NAV over the period, the Board is satisfied with the approach taken by the manager in supporting existing portfolio companies and continuing to identify suitable new opportunities.

We are hopeful that conditions will begin to improve in 2024 and that we may now be approaching a point in the cycle when excellent investment opportunities in the sectors in which your Company operates are available at attractive prices which can drive strong performance in future.

I look forward to updating Shareholders on progress in my statement in the Annual Report to 31 March 2024, which will be published in the summer.

David Brock
Chairman

INVESTMENT MANAGER’S REPORT

The challenging market backdrop has continued for the period however we continue to actively support our portfolio companies as well as making new investments.

The valuation movements in the first half of the year showed a NAV Total Return (NAVTR - adding back dividends paid in the period) decrease of 3.6%. While we are disappointed to report this small decline in NAVTR in the period, our long-held and consistent approach to valuations has enabled the manager to demonstrate relative resilience. Having acted quickly at the onset of the downturn in early 2022, we are now seeing evidence of greater stability in our valuations, and we anticipate further stabilisation, and in parts, recovery.

Following a successful fundraising season, deployment has been strong for the first seven months of the year. Including one new investment made post the period end, the team completed eight investments totalling £15.9 million. This compares with a total invested in the previous twelve months of £17.3 million. This comprised five new investments totalling £12.1 million alongside three follow-on investments totalling £3.8 million.

At the period end, Molten technology companies represented 87% of the portfolio and legacy companies 13%. The net asset valuation split was 76% in investments, and 24% in cash and other net current assets, which was reduced by the new investment made post the period end.

Five new investments (including one made post the period end), alongside the Molten EIS and Molten Ventures plc funds, were made into the following companies:

	£’000
Oliva Health Holdings Inc Non-clinical mental health solutions	1,628
Morressier GmbH Publishes workflow and integrity software	3,162
Binalyze OU Cybersecurity Forensics and incident response	2,161
Melio Healthcare Limited t/a IMU Bioscience Immune system bio diagnostics	2,520
Anima Group Inc (made after the period end) Care enablement platform	2,653
	12,124

In the period, one portfolio company, Global Satellite Vu Limited, attracted a £12.7 million follow-on investment bringing their total investment to £30.5m in venture capital funding. The round was led by Molten Ventures, with participation from Seraphim Space Investment Trust PLC, A/O Proptech, Lockheed Martin, Ridgeline Ventures, Earth Sciences Foundation, and Stellar Ventures - all existing investors.

Global Satellite Vu Limited, is a UK-based company that is launching a constellation of infrared satellites capable of monitoring the thermal footprint of any building on earth multiple times a day. The technology, built by Airbus, is proven, and there's commercial exclusivity over the intellectual property in perpetuity. The first satellite launched in June 2023 with SpaceX. By 2024/5 a constellation of just 7 satellites will provide global coverage with the ability to capture data over specific areas of interest 10-20 times a day.

Global Satellite Vu is not just focusing on delivering geospatial intelligence for defence and government customers; its long-term vision is to create proprietary data, analytics, and solutions focusing on energy efficiency, retrofit, and net-zero markets. Global Satellite Vu has already secured customer commitments through its Early Access Option Programme (EAP) valued at over £128 million.

Two further smaller follow-on investments were made into Apperio Limited and AllPlants Limited.

There were no successful exits in the period, however, post the period end Fluidic Analytics entered administration. While disappointing from a returns perspective, we are hopeful that the technology will be sold to continue the ground-breaking work achieved by the company.

Following the successful fundraise of £29.6 million in the last tax season, the Company recently launched its new fundraising offer with a target first close of £20 million. The prospectus is available to download from the VCT’s website at investors.moltenventures.com/investor-relations/vct
Access to the application portal and other documentation is also available on that page.

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 £6.6 billion VCT industry. We were delighted to see that the Chancellor has officially confirmed the extension of the sunset clause on the VCT scheme to 2035. This fantastic result is a testament to the hard work of the VCTA and its members over the last few years. The data, resources and site visit opportunities provided by VCT managers were vital in helping to make the case to HM Treasury that the VCT scheme deserves to be extended and help the next generation of British businesses scale and grow.

As your fund manager, we are cautiously optimistic for the year ahead as the technology markets continue to stabilise and recover in places. Our focus remains on positioning ourselves to capture exceptional opportunities at attractive valuations in what is increasingly a buyers’ market for venture capital.

Elderstreet Investments Limited
Part of the Molten Ventures Group

SUMMARY OF INVESTMENT PORTFOLIO

Investment Portfolio as at 30 September 2023	Cost	Valuation	Valuation movement in period	% of portfolio by value
	£’000	£’000	£’000
Top ten venture capital investments
Thought Machine Group Limited	2,400	9,688	(613)	8.0%
Endomagnetics Limited	2,147	8,698	63	7.2%
Form3 Limited	1,420	8,251	1,646	6.8%
Fords Packaging Topco Limited	2,433	5,867	-	4.8%
Focal Point Positioning Limited	3,300	5,561	-	4.6%
Global Satellite Vu Limited	4,089	4,688	583	3.9%
Access Intelligence plc*	2,586	4,488	(1,741)	3.7%
River Lane Research Limited	2,661	4,113	-	3.4%
IESO Digital Health Limited	3,567	3,758	(119)	3.1%
Evonetix Limited	2,999	3,383	-	2.8%
	27,602	58,495	(181)	48.2%
Other venture capital investments	46,847	33,673	(2,430)	27.8%
	74,449	92,168	(2,611)	76.0%
Cash at bank and in hand/Money market funds		29,104		24.0%
Total investments		121,272		100.0%

*Quoted on AIM
All venture capital investments are unquoted unless otherwise stated.

SUMMARY OF INVESTMENT MOVEMENTS

Investment additions
Venture capital investments	£’000
Morressier GmbH	3,162
Global Satellite Vu Limited	3,111
Melio Healthcare Limited	2,520
Binalyze OU	2,161
Oliva Health Holdings Inc	1,628
Allplants Limited	400
Apperio Limited	240
	13,222

All venture capital investments are unquoted unless otherwise stated.

UNAUDITED BALANCE SHEET
as at 30 September 2023

	30 Sept 2023		30 Sept 2022		31 Mar 2023
	£’000		£’000		£’000
Fixed assets
Investments	92,168		71,756		81,557
Current assets
Debtors	143		8		27
Cash at bank and in hand	2,885		28,665		28,845
Money market fund investments	26,219		-		-
	29,247		28,673		28,872
Creditors: amounts falling due within one year	(101)		(1,083)		(117)
Net current assets	29,146		27,590		28,755
Net assets	121,314		99,346		110,312
Capital and reserves
Called up Share capital	12,146		9,406		10,347
Capital redemption reserve	62		925		-
Share premium account	25,510		63,628		8,689
Special reserve	63,602		2,285		65,178
Capital reserve - unrealised	24,735		23,744		27,346
Capital reserve - realised	(2,431)		936		853
Revenue reserve	(2,310)		(1,578)		(2,101)
Equity Shareholders’ funds	121,314		99,346		110,312
Basic and diluted Net Asset Value per Share	49.9p		52.8p		53.3p

UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2023

	Six months ended 30 Sept 2023			Six months ended 30 Sept 2022			Year ended 31 Mar 2023
	Revenue	Capital	Total	Revenue	Capital	Total	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Income	348	-	348	-	-	-	1
Gains on investments
Realised	-	-	-	-	-	-	(1,036)
Unrealised	-	(2,611)	(2,611)	-	(6,922)	(6,922)	(3,890)
	348	(2,611)	(2,263)	-	(6,922)	(6,922)	(4,925)
Investment management fees	(324)	(973)	(1,297)	(289)	(867)	(1,156)	(2,167)
Performance incentive fees	-	-	-	-	(621)	(621)	-
Other expenses	(233)	-	(233)	(197)	-	(197)	(468)
(Loss) on ordinary activities before taxation	(209)	(3,584)	(3,793)	(486)	(8,410)	(8,896)	(7,560)
Tax on total comprehensive income and ordinary activities	-	-	-	-	-	-	-
(Loss) attributable to equity Shareholders	(209)	(3,584)	(3,793)	(486)	(8,410)	(8,896)	(7,560)
Basic and diluted return per Share	(0.1p)	(1.6p)	(1.7p)	(0.3p)	(4.4p)	(4.7p)	(4.0p)

All Revenue and Capital items in the above statement are derived from continuing operations. The total column within the Income Statement represents the profit and loss account of the Company.

UNAUDITED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2023

	Called up Share capital	Capital redemption reserve	Share premium	Merger reserve	Special reserve	Capital reserve- unrealised	Capital reserve- realised	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April 2022	8,880	794	56,273	673	5,303	35,220	1,516	(1,092)	107,567
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
Total comprehensive income	-	-	-	-	-	(2,611)	(973)	(209)	(3,793)
Transfer between reserves	-	-	-	-	(973)	-	973	-	-
Transactions with owners
Issue of new Shares	1,861	-	17,838	-	-	-	-	-	19,699
Share issue costs	-	-	(1,017)	-	-	-	-	-	(1,017)
Purchase of own Shares	(62)	62	-	-	(603)	-	-	-	(603)
Dividends paid	-	-	-	-	-	-	(3,284)	-	(3,284)
At 30 September 2023	12,146	62	25,510	-	63,602	24,735	(2,431)	(2,310)	121,314

A transfer of £973,000 was made from the Special Reserve to the Capital Reserve – realised in respect of capital expenses for the period.

UNAUDITED STATEMENT OF CASH FLOWS

for the six months ended 30 September 2023

	Six months ended 30 Sept 2023	Six months ended 30 Sept 2022	Year ended 31 Mar 2023
	£’000	£’000	£’000
Cash flow from operating activities
Return on ordinary activities before taxation	(3,793)	(8,896)	(7,560)
Losses on investments	2,611	6,922	4,926
(Increase)/decrease in debtors	(113)	14	(5)
(Decrease)/increase in creditors	(16)	400	(179)
Net cash (outflow) generated from operating activities	(1,311)	(1,560)	(2,818)
Cash flow from investing activities*
Purchase of investments
Venture capital investments	(13,223)	(8,209)	(17,370)
Money market funds	(45,219)	-	-
Sale of investments
Venture capital investments	-	6,339	7,695
Money market funds	19,000	-	-
Net cash outflow from investing activities	(39,442)	(1,870)	(9,675)
Cash flows from financing activities
Proceeds from Share issue	19,699	8,424	(5,898)
Share issue costs	(1,019)	(414)	18,513
Purchase of own Shares	(603)	(1,112)	(873)
Equity dividends paid	(3,284)	(5,898)	(1,499)
Net cash inflow from financing activities	14,793	1,000	10,243
Net (decrease) in cash	(25,960)	(2,430)	(2,520)
Net movement in cash
Beginning of period	28,845	31,095	31,095
Net cash (outflow)	(25,960)	(2,430)	(2,520)
End of period	2,885	28,665	28,845

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
for the six months ended 30 September 2023
1.  The unaudited Half-Yearly Report covers the six months to 30 September 2023 and has been prepared in accordance with the accounting policies set out in the statutory accounts for the period ended 31 March 2023, which were prepared in accordance with the Financial Reporting Standard 102 (“FRS 102”) and the Statement of Recommended Practice “Financial Statements of Investment Trust Companies” issued in July 2022 (“SORP”).

2.  The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.

3.  The comparative figures are in respect of the six months ended 30 September 2022 and the year ended 31 March 2023, respectively.

4.  Basic and diluted return per Share

	Six months ended 30 Sept 2023		Six months ended 30 Sept 2022		Year ended 31 Mar 2023
Return per Share based on:
Net revenue (loss) (£’000)	(209)		(486)		(1,009)
Capital return per Share based on:
Net capital (loss) (£’000)	(3,584)		(8,410)		(6,551)
Weighted average number of Shares	224,828,251		189,766,121		190,419,643

5.  Dividends

		30 September 2023				31 March 2023
	Per Share	Revenue	Capital	Total		Total
	Pence	£’000	£’000	£’000		£’000
Forthcoming dividends
2024 Interim (5 April 2024)	1.0p	-	2,429	2,429		-
		-	2,429	2,429		-
Paid in the period
2023 Final	0.5p	-	1,214	1,214		-
2023 Interim	1.0p	-	2,070	2,070		-
2022 Final	3.1p	-	-	-		5,898
		-	3,284	3,284		5,898

6.  Basic and diluted Net Asset Value per Share

	30 Sept 2023		30 Sept 2022		31 Mar 2023
Net asset value per Share based on:
Net assets (£’000)	121,314		99,346		110,312
Number of Shares in issue at period end	242,913,196		188,123,911		206,931,912
Net Asset Value per Share	49.9p		52.8p		53.3p

7.  Called up Share capital

	30 Sept 2023		30 Sept 2022		31 Mar 2023
Ordinary Shares of 5p each
Number of Shares in issue at period end	242,913,196		188,123,911		206,931,912
Nominal value (£’000)	12,146		9,406		10,347

During the period, the Company allotted 36,846,664 Ordinary Shares of 5p each (“Shares”) under an Offer for Subscription that launched in October 2022, at an average price of 52.96p per Share. Gross proceeds received thereon were £19.5 million, with issue costs in respect of the Offer amounting to £1.0 million.

During the period the Company allotted 367,620 Ordinary Shares of 5p each (“Shares”) under a Dividend Reinvestment Scheme, at an average price of 50.29p per Share. Gross proceeds received thereon were £185,000.        

During the period, the Company purchased Shares for cancellation for an aggregate consideration of £603,000, at an average price of 48.91p per Share (approximately equal to a 5.0% discount to the most recently published NAV at the time of purchase) and representing 0.6% of the share capital in issue as at 1 April 2023.

8.  Reserves
The special reserve is available to the Company to enable the purchase of its own shares in the market without affecting its ability to pay dividends and allows the Company to write back realised capital losses arising on disposals and impairments.

Distributable reserves are calculated as follows:

	30 Sept 2023		30 Sept 2022		31 Mar 2023
	£’000		£’000		£’000
Special reserve	63,602		2,285		65,178
Capital reserve - realised	(2,431)		936		853
Revenue reserve	(2,310)		(1,578)		(2,101)
Unrealised losses - net of unquoted gains	(6,149)		(1,057)		(1,579)
	52,712		586		62,351

During the year ended 31 March 2023, the balances on the Share Premium account and the capital redemption reserve were cancelled and added to the special reserve, contributing an additional £64.5 million to distributable reserves. The VCT regulations place some restrictions on the use of these reserves during the first three to four years after the funds on which they arose were raised. Currently, £54.9 million of the special reserve is restricted by these regulations.

9.  Investments
The fair value of investments is determined using the detailed accounting policy as set out in Note 1 of the Annual Report.

The Company has categorised its financial instruments using the fair value hierarchy as follows:

Level 1        Reflects financial instruments quoted in an active market (fixed interest investments, and investments in shares quoted on either the Main or AIM Markets);
Level 2        Reflects financial instruments that have prices that are observable either directly or indirectly; and
Level 3        Reflects financial instruments that use valuation techniques that are not based on observable market data (unquoted equity investments and loan note investments).

				30 Sept 2023
	Level 1	Level 2	Level 3	Total
	£’000	£’000	£’000	£’000
AIM quoted shares	4,135	356	-	4,491
Loan notes	-	-	508	508
Unquoted shares	-	-	87,169	87,169
	4,135	356	87,677	92,168

				31 Mar 2023
	Level 1	Level 2	Level 3	Total
	£’000	£’000	£’000	£’000
AIM quoted shares	5,661	600	-	6,261
Loan notes	-	-	508	508
Unquoted shares	-	-	74,788	74,788
	5,661	600	75,296	81,557

10.  Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is required in the Company’s half-yearly results to report on principal risks and uncertainties facing the Company over the remainder of the financial year.

The Board has concluded that the key risks facing the Company over the remainder of the financial period are as follows:

• investment risk associated with investing in small and immature businesses;
• liquidity risk arising from investing mainly in unquoted businesses; and
• failure to maintain approval as a VCT.
  
  

In all cases the Board is satisfied with the Company’s approach to these risks. As a VCT, the Company is forced to have significant exposure to relatively immature businesses. This risk is mitigated to some extent by holding a well-diversified portfolio.

With a reasonably illiquid venture capital investment portfolio, the Board ensures that it maintains an appropriate proportion of its assets in cash and liquid instruments.

The Company’s compliance with the VCT regulations is continually monitored by the Administration Manager, who regularly reports to the Board on the current position. The Company also retains Philip Hare and Associates LLP to provide regular reviews and advice in this area. The Board considers that this approach reduces the risk of a breach of the VCT regulations to a minimal level.

The Company has considerable financial resources at the period end and holds a diversified portfolio of investments. As a result, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.

The Directors have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

11.  The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have been prepared in accordance with the “Statement: Half-Yearly Financial Reports” issued by the UK Accounting Standards Board as well as in accordance with FRS 104 Interim Financial Reporting and the half-yearly financial report includes a fair review of the information required by:

(a)  DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b)  DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last Annual Report that could do so.

12.  The unaudited financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the period ended 31 March 2023 have been extracted from the financial statements for that period, which have been delivered to the Registrar of Companies; the Auditor’s report on those financial statements was unqualified.

13.  Copies of the unaudited Half-Yearly Report will be sent to Shareholders shortly. Further copies can be obtained from the Company’s registered office or downloaded from investors.moltenventures.com/investor-relations/vct .