MOLTEN VENTURES PLC Final Results
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Molten Ventures Plc (GROW; GRW)
Molten Ventures Plc ("Molten Ventures", “Molten”, “the Group” or the "Company") FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2024 Molten Ventures (LSE: GROW, Euronext Dublin: GRW), a leading venture capital firm investing in and developing disruptive, high-growth technology companies, today announces its final results for the year ended 31 March 2024. Financial highlights
*The above figures contain alternative performance measures (“APMs”) - see Note 35 for reconciliation of APMs to IFRS measures in the Annual Report. **EIS and VCT funds are managed by Molten Ventures plc group but are not consolidated. See Accounting Policies on page 116 and Glossary on page 162 for defined terms in the Annual Report.
Performance highlights • Investments of £65m during the year from the Molten Ventures balance sheet, with a further £37m from the managed EIS/VCT funds, alongside cash proceeds from realisations during the year of £39m • Completed share-for-share acquisition of Forward Partners plc (‘Forward Partners’) in March 2024 • Stake acquired in Seedcamp Fund III in February 2024, continuing the strategy of acquiring portfolios with high potential for near-term realisation • Committed to 6 new seed funds via our Fund of Funds programme, bringing the overall Fund of Funds portfolio to 80 funds. • Weighted average revenue growth of Core portfolio forecast to be over 50% for calendar year 2024 • Over 85% of companies in the Core portfolio with at least 18 months of cash runway as at 31 March 2024 (based on existing budgets and growth plans) ESG highlights • Launched inaugural stand-alone Sustainability Report on our website • Delivered tailored climate workshops to portfolio companies with the aim of improving their climate literacy and alignment to the Net Zero transition, in line with the commitments set out in our Climate Strategy • Joined the Steering Group of ESG_VC, became a member of Ventures ESG and continued to report against external standards and frameworks including PRI, CDP, TCFD, Investing in Women Code and SECR • Formally launched the Esprit Foundation (part of the Molten Ventures Group) and awarded its first grants to the Social Mobility Foundation, Included VC and Foundervine Post period-end • On 30 April 2024, Hologic, Inc, a NASDAQ listed entity, signed definitive agreement to acquire Endomagnetics Ltd. (‘Endomag’). The acquisition, which is subject to completion conditions and regulatory approval as well as working capital and other customary closing adjustments, values Endomag at approximately $310 million, which is modestly above NAV Capital Allocation Policy As reported in our announcement on 30 April, we provide an update to our capital allocation policy which outlines how the Company intends to deploy its capital resources across NAV per share accretive opportunities in order to deliver long-term value for its shareholders whilst ensuring the Company has appropriate liquidity headroom. 1. The Company will continue to focus its efforts on deploying capital into exceptional primary and secondary investments 2. The Company manages liquidity risk by maintaining adequate reserves with ongoing monitoring of forecast and actual cash flows. Capital resources are managed to ensure there is sufficient headroom for 18 months’ rolling operating expenses 3. Given the strong realisation pipeline, the Directors likewise believe that the current share price provides an opportunity to deliver accretive benefits to shareholders by purchasing its own shares at the prevailing discount levels. The Company therefore intends to allocate a minimum of 10% of realisation proceeds to buy back its own shares, utilising the existing authority granted to the Board at the AGM The Company will continue to balance the pipeline of new investment opportunities against the ability to drive returns to shareholders through share buy backs whilst maintaining sufficient reserves.
Martin Davis, Chief Executive Officer, Molten Ventures, commented:
“This has been a productive year for Molten. We’ve continued to enhance our innovative platform to capture the exceptional investment opportunities available in backing high growth, disruptive, UK and European technology firms. The underlying performance of our portfolio companies remain strong, with valuations continuing to stabilise as the macroeconomic environment shows signs of improvement.
“Looking ahead, we expect to see a step up in realisations, in the region of £100 million of capital back to the balance sheet this financial year, the proceeds of which we expect to deploy towards NAV per share accretive opportunities as outlined in our capital allocation policy today, and in doing so, continuing to maximise value for our shareholders”.
As previously announced, a live webcast presentation including Q&A will be held today at 9.00am for analysts and will be available on https://brrmedia.news/GROW_FY_24. Conference call details for the Q&A are available upon request via Powerscourt. In addition, Molten will provide a further presentation for retail investors via the Investor Meet Company platform on at 10.00 on Friday 14 June. Existing and potential investors can sign up to Investor Meet Company for free via the link below.
https://www.investormeetcompany.com/molten-ventures-plc/register-investor
Enquiries:
About Molten Ventures Molten Ventures is a leading venture capital firm in Europe, developing and investing in disruptive, high growth technology companies. We inject visionary companies with energy to help them to transform and grow. This energy comes in many forms - capital, of course, but also knowledge, experience, and relationships. We believe it is our role to support the entrepreneurs who will invent the future, and that future is being built, today, in Europe. As at 31 March 2024, Molten Ventures had a diverse portfolio with shareholdings in 118 companies, 20 of which represent our Core holdings and account for 62% of the Gross Portfolio Value. Our Core companies include Thought Machine, Coachhub, Aiven, Ledger and Aircall. We invest across four sectors: Enterprise Technology, Hardware and Deeptech, Consumer Technology, and Digital Health and Wellness, with highly experienced partners constantly looking for new opportunities in each. We look for high-growth companies operating in new markets, with high potential for global expansion, strong IP, powerful technology, and strong management teams to deliver success. We also look for businesses with the potential to generate strong margins to ensure rapid, sustainable growth in substantial addressable markets. A member of the London Stock Exchange’s FTSE 250, Molten Ventures provides a unique opportunity for public market investors to access these fast-growing tech businesses, without having to commit to long term investments with limited liquidity. Since our IPO in June 2016, we have deployed over £1bn capital into fast growing tech companies and have realised over £520m to 31 March 2024. For more information, go to https://www.moltenventures.com/ Chairman’s introduction In the years preceding my appointment, Molten developed and built an innovative platform, cementing itself as one of Europe’s leading venture capital firms. We support high-growth, disruptive technology companies, and through our listing on the London Stock Exchange and secondary listing on Euronext Dublin, we provide access to the returns attainable from venture capital to both institutional and retail investors. I am looking forward to helping Molten Ventures build an even more successful business in the coming years. After two years of a very challenging economic and market backdrop, we are beginning to see some signs of increased market stability, helped by improved visibility on global interest rates. Our portfolio remains in good health and the overall underlying performance of our assets has been strong. While reduced M&A activity since the end of the pandemic has resulted in fewer transactions and correspondingly fewer realisations, the coming year shows more promise, highlighted most recently by the announced sales of Perkbox in the period, and Endomag post-period end, both subject to completion conditions and regulatory approval. We anticipate further exits in the course of the current financial year. In the past year, the management team has continued to enhance the platform through the equity capital raise, the all-share acquisition of Forward Partners and the subsequent purchase of a stake in Seedcamp Fund III. These were important initiatives in ensuring that Molten is favourably positioned going forward. We have the firepower to pursue attractive opportunities in a buyer’s market for venture capital investment in our preferred areas of expertise. I was pleased to welcome some of the portfolio companies and colleagues coming across with Forward Partners at Molten’s annual Investor Day in February, which was also my first. I have also begun a programme of meeting many of our major Shareholders, as well as industry bodies and other key stakeholders for the Group. Our AGM in 2025 will be a policy approval year for executive remuneration, and we will be proactively engaging with Shareholders on this matter in the months ahead. In January, the Financial Reporting Council announced the revisions it is making to the UK Corporate Governance Code that enhance the transparency and accountability of UK public companies, as well as help support the growth and competitiveness of the UK, and preparation is well under way to ensure that Molten continues to be fully compliant. In my role as Chairman, ensuring Molten has best-practice governance is an important priority. We commenced our first externally facilitated Board evaluation in February, and more can be found on this in the Governance section of this report. We will continue to address such issues as Board diversity, mindful of the Parker Review’s recommendations. Ensuring that Molten’s culture, ethos and mission is carried across future key employees is critical, and succession planning both for the Board and executive management is underway. We refer to this in more detail in the Nomination Committee report. We appointed Lara Naqushbandi as a Non-Executive Director in September. Lara brings with her a wealth of global commercial, strategic, and investment experience. Gervaise Slowey has succeeded Richard Pelly as the designated Non-Executive Director for employee engagement. ESG issues are important to us, and as we have stated in the past, Molten’s contribution to sustainability is two-fold, both through our consideration of ESG in investment decision-making and our excitement about investment opportunities in the climate tech space in particular. We also continue to develop our reporting and remuneration structure in alignment to ESG and wider sustainability best practice. More information can be found in the ESG pages of our Annual Report, and in our inaugural stand alone Sustainability Report which has also been released today. I am conscious that Karen Slatford and Grahame Cook (who adeptly covered her role as Interim Chair) will be hard acts to follow. They have served Molten with distinction over several years – Grahame continues to do so as Senior Independent Director and Chairman of the Audit, Risk and Valuations Committee – and have helped to develop the firm into the innovative venture capital investor it is today. I would like to thank them both for their leadership of the Board, and in particular Grahame for an informed and seamless handover. I look forward to supporting management and the wider team in continuing to develop a platform that provides inspirational founders with long-term capital, access to international networks and decades of experience building businesses. Finally, I would like to thank our Shareholders for their support during the past year as well as our Executive Directors, and, importantly, each of our employees who are so vital in ensuring the continued growth of Molten Ventures plc. Laurence Hollingworth Chairman
CEO’s statement Overview It has been a busy and productive year for Molten Ventures, marked with significant achievements amid an economic backdrop that has been challenging for most technology companies and those who invest in them. We continued to develop our platform, operating model, and acquisition strategy while simultaneously navigating ‘higher-for-longer’ interest rates, inflationary pressures and the ongoing geopolitical tensions which have cast a cautionary shadow over some notable signs of stabilisation in the second half of the year. Our focus within this context has been on what we can control. We have maintained discipline around our own investment process and worked closely with our portfolio companies to extend cash runways, control costs, and retain talent. Our business performance and the revenue growth of our portfolio companies has remained strong, and the disruptive entrepreneurs we have backed across UK and Europe continue to transform the industries in which they operate. Our adaptable model allowed us to act quickly to identify opportunities at attractive valuations in the year, with a focus on providing value for our Shareholders. Data from previous downturns suggests that investments made in periods of economic decline have yielded some of the greatest returns of all vintages for technology investors. We continued to support innovation through our fundraising activity, and by offering exposure to investors of privately owned technology assets in the year. Forward Partners acquisition In November 2023, we announced a share-for-share acquisition of Forward Partners, adding a portfolio of over 40 companies. The acquisition, completed in March 2024, blends the maturity of our assets with a more diverse pipeline of earlier-stage companies for follow-on investment. Forward Partners was founded in 2013 by Nic Brisbourne, a former Molten Partner. Forward Partners investment strategy has been focused on earlier-stage businesses than Molten has traditionally invested in previously. We see significant opportunity for continued growth in these portfolio companies and to accelerate value creation. The Molten platform can provide the winners with the additional support and resource to reach their potential and generate returns. We extended an official welcome to Nic Brisbourne and the rest of the Forward Partners team in March, with the history between Molten and Forward allowing for a smooth integration which can be attributed in part to a similar set of experiences, investment ethos and cultural affinity. Several of our Forward Partners colleagues have now joined our investment and finance teams, leading to cost synergies and alignment across operational functions. Alongside the Forward Partners transaction we successfully completed an oversubscribed fundraise of £55 million (net of fees) by way of issuance of new shares on the London Stock Exchange, and the Euronext Dublin, to capitalise on attractive primary and secondary investment opportunities during a period of market dislocation. Seedcamp III acquisition Our acquisition of a stake in Seedcamp III in February 2024, builds on Molten’s strategy to access exceptional Secondary investments at attractive valuations. Our Secondaries acquisition strategy acts to leverage our network in the venture capital market to provide liquidity to Limited Partners in later life funds, with a focus on acquiring portfolios of high-quality assets with nearer-term visibility on realisation opportunities. To date, the Secondaries strategy has delivered 2.5x returns (as a multiple on invested capital). The Seedcamp acquisition is an illustration of our strategy in action and comes on the back of a strong track record of Secondary investments; including Seedcamp Funds I & II, Earlybird DWES Funds IV and Earlybird Digital East Fund I. Third-party asset activity Elsewhere, we continued to make progress with our third-party assets strategy through the launch of our Irish-focused fund in July 2023, which continues our long-standing relationship with the Ireland Strategic Investment Fund as a strategic partner – as we continue to back promising Irish technology companies and founders, in a key European centre for the global tech industry. We are pleased to welcome Isabel (‘Izzy’) Fox as the Head of Third-Party Funds, a new strategic role aimed at expanding the firm’s impact through various targeted investment funds complementing its publicly listed core model, EIS and VCT investment vehicles. With Izzy’s appointment, Molten intends to make further progress in building its third-party assets under management and associated income, including via its syndicated Fund of Funds programme and other third party private funds strategies. Venture capital as an asset class has typically generated equal or better returns compared with listed equities or other alternative asset classes, and the UK Government is keen that Defined Contribution (‘DC’) pension schemes are able to invest in these types of assets. This has the full support of the British Private Equity & Venture Capital Associations (‘BVCA’), and is something we at Molten are supporting wholeheartedly. Facilitating access to venture capital for high-growth companies remains a priority for UK and European governments, and forms part of the UK’s proposed pension system reforms. Molten Ventures is among the 20 signatories to the BVCA’s Venture Capital Compact, supporting the UK government’s Mansion House initiative to improve DC pension schemes’ access to venture capital investments. Molten Board Our most valuable asset is our people, and we continue to bolster our strength and expertise year-on-year. We appointed Lara Naqushbandi as a Non-Executive Director in September 2023, followed by the appointment of Laurence Hollingworth in January 2024 as Chair of the Board. Lara brings a wealth of experience from previously held roles in both finance and sustainability, and Laurence brings significant capital markets, investment banking and leadership experience to Molten. Integrating ESG We continue to develop our ESG agenda as part of our commitment to being a responsible investor. The integration of ESG across our portfolio is a business priority throughout the full investment cycle, and through our portfolio management we continue to fulfil our broader corporate purpose of advancing society through technological innovation. We aim to invest in businesses and entrepreneurs who recognise and embrace the need for more sustainable practices, and strive to improve their ESG performance to contribute towards a more sustainable and prosperous future for all. You can read more about these efforts in our Sustainability Report, also published today. During the year, we have made significant progress against the commitments set out in our Climate Strategy, particularly with regards to our portfolio engagement programme. We have also continued to disclose against PRI, CDP, TCFD and the Investing in Women Code. Finally, The Esprit Foundation awarded its first four grants to charities and organisations, whose objectives focus on the advancement of education for the public benefit (especially those aged under 30), with particular emphasis on the fields of technology, business and entrepreneurship. Market environment and the Molten model The cost of capital remains a significant factor for investors, and we have adapted to an environment of higher-for-longer interest rates. More recently, we have seen forecasts for interest rates stabilising, which is set to allow greater visibility of the cost of capital over the next 12 to 24 months. We have seen early shifts towards fresh capital raising, with a much higher proportion of ‘flat rounds’, and in some cases small up-rounds, compared to last year. General Partners are typically raising less and taking longer to close funds due to a more restricted liquidity environment. We believe the visibility over the interest rates provides further confidence across the private market valuations. Although public and private markets are interconnected, any anticipated rise in confidence among public investors will take time to reflect in private market valuations. We remain confident that our unique and flexible model will lead to significant returns for our investors. Financial position and our portfolio We have retained the discipline of preserving our balance sheet, and raised funds, which has provided us with a sufficient cash position of £57 million, along with the £60 million additional headroom that our undrawn revolving credit facility provides. I am pleased to say that these measures have provided us with the ability to support our existing portfolio and to invest in high-quality opportunities where identified. Our portfolio has remained resilient and well-funded, and we have continued to realise investments which provides capital back for reinvestment in a period of muted liquidity. The Gross Portfolio Value at 31 March 2024 was £1,379 million, which is marginally up from £1,371 million at 30 September 2023, predominantly resulting from investments in Seedcamp III and Forward Partners. We have generated realisations of £39 million and a fair value uplift (excluding the impact of FX) of £6 million. We are rightly proud of our strong track record, having deployed more than £1 billion of capital and realised over £520 million since our IPO in 2016, achieving a 16% average return per year for our Shareholders. Realisations and exits During the period, realisations remained fairly low relative to previous years as a consequence of uncertain global macroeconomic conditions and the resulting downturn in corporate transactions across almost all industries and markets. While we do not anticipate the IPO market for high-growth technology companies to return to pre-downturn levels immediately, there is evidence that some high-tech companies are publicly considering an IPO. Historically, most of our exits have been through trade sales, and we have seen an uptick in M&A enquiries, alongside the exits of Perkbox and Endomag, subject to completion conditions and regulatory approvals (both due to take place above our holding NAV). Capital allocation With a number of realisation processes either underway or planned across the portfolio, we expect to be able to deliver in the region of £100 million in realisations this upcoming financial year alongside our existing meaningful cash resources. As reported in our announcement on 30 April, we provide an update to our capital allocation policy which outlines how the Company intends to deploy its capital resources across NAV per share accretive opportunities in order to deliver long-term value for its shareholders whilst ensuring the Company has appropriate liquidity headroom. 1. The Company will continue to focus its efforts on deploying capital into exceptional primary and secondary investments. 2. The Company manages liquidity risk by maintaining adequate reserves with ongoing monitoring of forecast and actual cash flows. Capital resources are managed to ensure there is sufficient headroom for 18 months’ rolling operating expenses. 3. Given the strong realisation pipeline, the Directors likewise believe that the current share price provides an opportunity to deliver accretive benefits to shareholders by purchasing its own shares at the prevailing discount levels. The Company therefore intends to allocate a minimum of 10% of realisation proceeds to buy back its own shares, utilising the existing authority granted to the Board at the AGM. The Company will continue to balance the pipeline of new investment opportunities against the ability to drive returns to shareholders through share buy backs whilst maintaining sufficient reserves. Outlook Our flexible investment model has consistently demonstrated its resilience and ability to generate significant returns. We have implemented a capital allocation policy that aligns with our current share price discount to NAV and the anticipated timeline for realisations. This policy ensures that we are well-positioned to maximise value for our Shareholders while maintaining a prudent approach to capital management. We remain cautiously optimistic on the stabilisation of interest rates, and the early signs of renewed capital raising activity indicating a potential shift towards a more favourable investment climate. The strength of our business model stands us in good stead. I extend my thanks to the Molten team and look forward to delivering on our strategy in the year to come. Martin Davis Chief Executive Officer
Market overview Venture capital: an overview We believe that venture capital works best when VCs give their energy to help companies succeed. At Molten, this ‘energy’ can come in the form of capital, experience or knowledge, as well as building relationships with our portfolio companies that demonstrate our commitment for the long term. In its most basic form, venture capital (VC) is a form of financing where capital is invested into a company—a privately held start-up or small business—in exchange for equity or convertible debt in the company. While investing in early-stage technology companies comes with a degree of risk, VCs are driven by a conviction that tomorrow’s problems won’t be solved by today’s conventions, and that the process of rapid technological innovation and transformation is set to continue. As well as generating returns for investors, VC is about empowering start-up businesses with capital, mentorship, and advice to help them succeed in their endeavours, and in doing so, helping them create products and services that improve the human experience. Sometime these endeavours are connected to some of the world’s largest and most complex challenges, and at other times they could involve entirely new problem sets which are yet to be clearly defined. Starting a new business is always a daunting experience, and entrepreneurs often find themselves having to educate investors, customers, and the broader market as to why they exist at all. Companies raise money from VC investors to: 1. help build their business and products 2. recruit and retain a good pipeline of talent 3. make acquisitions and invest further into intellectual property 4. acquire access to relevant networks and relationships, and 5. gain advice and guidance from seasoned operators VC investors take the opportunity to assess companies, and invest in those they believe to have highly credible management teams, a unique product offering, and a framework to execute a business plan to become a prominent competitor in their respective market niche. There are three major VC markets globally which are the US, Europe, and Asia, and in 2023, over $300bn was invested between those regions in start-up businesses. While the US and Asia are larger than the European VC market, Europe is growing at a faster rate, and the capital sought to support that market growth is failing to keep pace. For this reason, Molten continues to see great opportunities to invest in the category-defining businesses of tomorrow, with a focus on investing in the best venture-stage opportunities throughout Europe. Who are Molten and how do they fit in the VC sphere? Molten disrupted the conventional venture capital model, recognising the limitations of traditional approaches in driving sustainable, transformative growth by pursuing an IPO in 2016. Our focus is to collaborate with entrepreneurs who share in our conviction that disruptive innovation is imperative for building enduring, category-defining businesses. Molten’s legacy traces back to 2006 when Esprit Capital Partners was established as a spin-off from a larger asset manager. Since then, we have scaled into a well-established VC platform, supported by a team of over 60 professionals dedicated to investing in promising start up and growth-stage businesses. While headquartered in London and Dublin, Molten’s investment platform has a pan-European mandate, spanning the entire lifecycle from seed stage (typically as a limited partner) to later stages (typically as a direct investor) through to IPO or acquisition. Our adaptable platform is designed to facilitate long-term investments and support companies throughout economic cycles, with a focus on businesses capable of fundamentally disrupting the status quo and becoming category leaders. As a minority equity investor, Molten fosters early relationships with portfolio companies, and adds value through active Board participation. Beyond capital, we provide entrepreneurs and management teams with strategic advice, mentorship, and access to a global network, which creates outcomes for all stakeholders, including our Shareholders. Molten operates a unified strategy across three vehicles: the plc, and the managed EIS and VCT funds. Where investments qualify, this structure enables us to combine three capital pools to invest in the UK and Europe’s most promising technology companies in a risk-adjusted and tax-efficient manner for our respective investors. Additionally, our Fund of Funds programme, established in 2017, enables us to gain exposure and invest in the most promising seed and early-stage venture capital funds across the UK and Europe. Seed and early-stage investing is a highly localised endeavour, requiring deep networks within local ecosystems of angel investors, incubators, and technology entrepreneurs. We believe that nascent businesses are best funded by investors who can engage founders locally or within specific verticals, and our Fund of Funds programme (complemented by the acquisition of Forward Partners) allows us to effectively leverage this expertise. Our decision in 2016 to IPO on the AlM growth market of the London Stock Exchange, and Euronext Dublin, thereby adapting beyond the traditional GP/LP model to become one of the largest public venture capital firms in Europe, was partly driven by our commitment to ‘democratise’ the returns available from venture capital as an asset class, and make the rewards of our investments accessible to public market investors, not just a small group of Limited Partners. Our innovative structure as a public company allows us to direct capital from institutional and retail investors towards our portfolio companies. We benefit from an evergreen balance sheet strategy that offers flexible investment terms, and allows Molten to focus on helping portfolio companies grow, while evaluating the market for optimal exit conditions, which we aim to achieve above NAV to maximise value for our Shareholders. This structure also provides us with the flexibility to raise capital from public market investors, including retail investors via the PrimaryBid platform, giving us the ‘firepower’ to pursue investment opportunities. Our direct investment strategy primarily focuses on early and growth-stage opportunities. We maintain a balanced portfolio that is diversified across four key sectors of consumer tech, enterprise tech, digital health and wellness, hardware and deeptech. Our market at a glance 17% European VC market CAGR (2015-2023) $66bn European VC market valuation (2023) 189 No. of active unicorns in Europe combined value over $500bn (2023)
Market events that have occurred in VC in the past year Over the past 12 months the global economy has experienced stabilised high interest rates across most major currencies, including the USD, EUR and GBP. Towards the end of 2022 (and into the beginning of 2023) asset prices were volatile which seeped into the private markets. Across 2023 and early 2024, both valuations and volatility began to stabilise, with recent new heights on the S&P 500, STOXX 600, and the FTSE 100. Going forward, the consensus for global monetary policy appears to favour dovish sentiment which historically has supported upside potential for equity prices. As these market dynamics filter into the VC market there is a sense of cautious optimism for new compelling investment opportunities. In September 2023 we saw the highly anticipated Tech IPO for ARM Holdings which was widely regarded as a barometer for the IPO market. ARM successfully raised nearly $5 billion and has shown promising after-market performance. This is evidencing that ‘good deals can get done’ and that the public market is ready to support outstanding high growth technology businesses. The market is showing signs of improvement, and technology businesses are coming back into focus to drive performance through innovation. Much of the tailwind experienced in the technology market over the past 12 months has been driven by the potential productivity gains through rapid adoption of artificial intelligence. Microsoft’s most recent investment in Open AI valued the business at $80 billion, NVIDIA’s market cap had crossed $2 trillion, surpassing Google and closing in on Apple and Microsoft. At the earlier stages of the business lifecycle, Molten is seeing companies take the next step in this market and focusing more closely on real-world applications to drive productivity gains. Private markets typically lag public markets and 2023 displayed the largest contraction in European VC within the last ten years. 2023 saw $66 billion invested in European VC deals which was down 42% from the previous year. Much of that contraction was due to liquidity restrictions in a challenging fundraising environment coupled with repricing dynamics as a result of a higher interest-rate environment. Given the public sphere showed more promising returns than anticipated over the last 12 months to March 2024, we anticipate seeing improvements in the private market over the next 12 months due to that lag effect. Currently in 2024, we are witnessing more capital invested in European VC than in 2023. Since 2015 that continues to follow a growth trajectory for the market which is scaling more rapidly than the US or Asia. Looking closely at the quarterly investment data for European VC (see charts on bottom of this page), it was the larger rounds in excess of $100 million that saw the biggest contractions throughout 2023, while investment in smaller/earlier rounds continued to persist at more modest valuations. Q1 2024 saw some larger deals (in excess of $250 million) come to market, raising over $7 billion in aggregate in the first quarter. Comparatively, the total investment in rounds at or above $250 million over all four quarters in 2023 was only $11 billion. Heading into the remainder of 2024, Molten sees value opportunities in the market. With the recent acquisition of Forward Partners, and having acquired a stake in Seedcamp III, we have an expanded portfolio of assets, combined with those in our Fund of Funds programme, which continue to present us with unique investment opportunities. With this in mind, Molten is well positioned to invest in the most interesting and competitive deals in the market throughout the next 12 months.
Our strategy Our strategy consists of six clear objectives, underpinned by our corporate purpose ‘to advance society through technology and innovation’.
KPIs We are focused on delivering a strong financial performance and achieving the targets we have set. These core KPIs demonstrate our strategy’s effectiveness, and validate the value delivered to Shareholders.
Financial review The current market cycle has been characterised by higher interest rates leading to lower valuations, as a function of the cost of capital increasing, and reduced liquidity in an environment with less M&A and IPO activity. This backdrop has been in place since March 2022, and we responded quickly to reflect the reduced public market valuation multiples for technology businesses into our portfolio holding values in September 2022 (the first valuation period following the market adjustment). Alongside ensuring our portfolio holding values are consistent with the prevailing market, in line with IPEV guidelines, we focused on preserving the balance sheet capital by reducing the amount invested and ensuring there was sufficient liquidity to support our existing portfolio. The resilience of the portfolio has been demonstrated by: (1) the capital raisings that have been undertaken during this past two years, with over £1.2bn raised in FY23 and FY24, in spite of a less active fundraising environment, (2) the continued commercial traction and revenue growth of the portfolio businesses, and (3), the limited capital support that was required from Molten. As we appear to be entering an improving environment for realisations, the robustness of our valuation processes and the quality of our underlying portfolio is being validated as demonstrated by our recent announcements, relating to portfolio companies Perkbox and Endomag, modestly above their holding values. The flexibility of our evergreen balance sheet model has been further illustrated through the equity fundraise in the year to take advantage of opportunities presented by a disconnected market, where asset prices have been depressed alongside limited liquidity. This provided an opportunity for the Group to acquire high-quality assets via a share acquisition of Forward Partners ,and also through a stake in Seedcamp Fund III. The financial year 2024 reflects a continuation of this more challenged market environment, but also demonstrates stability in the portfolio values in the second half of the year. The first half of the year saw further reduction in valuation multiples across the broader technology sector before stabilising in the latter half of the year. In addition to the decline in public market technology valuations, private company fundraising has continued to stutter across the broader market, outside of specific pockets of interest. We have seen the impact of these factors in our own portfolio valuations. Despite this macroeconomic picture, it has been pleasing to see continued value creation stemming from our secondary strategy. Our acquisition of a stake in Seedcamp’s Fund III, along with an all-share acquisition of Forward Partners (both which took place in the second half of the year) contributed fair value uplifts to the portfolio. As ever, cash runway and preservation of liquidity remain key for our portfolio, and we are encouraged by the resilience demonstrated by our portfolio companies, as they continue to balance capital preservation and growth priorities. The first half of the financial year saw a reduction in portfolio value which was offset in the second half by a slight increase in the valuation of the existing portfolio, and increases in fair value following the acquisitions of Forward Partners and Seedcamp III. As at 31 March 2024, net assets stood at £1,251 million, an increase of £57 million on the prior year. We have generated fee income during the year of £20 million, which serves to offset our cost base such that our costs (net of income) remain substantially less than 1% of NAV. As we continue to build a broader platform to incorporate third-party assets alongside our own balance sheet, we have seen the benefit of fee income covering 93% of our general administrative expenses, including salaries. Minimising the cost drag on investment returns remains an area of focus for our management team. The Forward Partners acquisition is recognised at fair value through profit or loss (“FVTPL”) in the Consolidated Statement of Financial Position and as a gain on bargain purchase in the Consolidated Statement of Comprehensive Income. The terms of the acquisition for Forward Partners were one new Molten share for nine Forward Partners shares, resulting in a portfolio cost of £25 million (net of cash acquired). On acquisition, the Forward Partners portfolio was valued at £65 million, representing a gain on bargain purchase of £39 million. For more information of this transaction see Note 14. Statement of financial position
Portfolio The Gross Portfolio Value at 31 March 2024 is £1,379 million (£1,371 million at 31 March 2023). The Gross Portfolio Value is an APM (see Note 35) and there is a reconciliation from the gross to net portfolio value (see Note 30). Molten has maintained a disciplined approach to its capital allocation through FY24, with cash investments below historical investment rates, and aligned to realisations during the period. Investments of £65 million, including £25 million representing the Forward Partners share-for-share exchange (net of cash acquired), were made during the year; and cash proceeds from exits, escrows and sales of shares were received of £39 million. The gross fair value reduction on the portfolio was £18 million, of which £24 million results from a decline in foreign exchange and offset by an increase of £6 million from fair value movements. Further details on the Group’s valuation policy and valuations basis as at 31 March 2024 can be found in Notes 4 and 30 to the consolidated financial statements. The gross portfolio fair value has stabilised from and is broadly flat for the year at constant currency, reflecting a modest increase in the like-for-like portfolio in the second half of the year. The Gross Portfolio Value, presented on page 26 of the Annual Report, is subject to adjustments for the fair value of accrued carry liabilities and deferred tax to generate the net portfolio value of £1,292 million. Both carried interest liabilities and deferred tax arise at the level of our investment vehicles and are taken into account when arriving at the fair value of these vehicles to be recognised in the consolidated statement of financial position. The Net Portfolio Value has increased by £15 million to £1,292 million (31 March 2023: £1,277 million) with the summary of the movements in financial assets held at fair value through the profit and loss (FVTPL) which is recognised on the Consolidated Statement of Financial Position, is shown on page 112 of the Annual Report. The fair value reduction of £29 million, in accordance with the relevant IFRS in Note 4, comprised of fair value movement on investments of £68 million is reflected in the consolidated statement of comprehensive income, offset by a £39 million gain on bargain on purchase. Carry balances of £87 million are accrued to previous and current employees of the Group based on the current fair value at the year-end and deducted from the Gross Portfolio Value. Carry payments totalling £2 million were made in the year following the realisation of assets in the underlying fund holdings that exceeded threshold returns. The non-investment movements to entities held at FVTPL were made of £16 million, including for settlement of priority profit share (“PPS”). The Gross Portfolio Value table below reconciles the gross to net portfolio values, and the movements between 31 March 2023 to 31 March 2024. The percentage of net portfolio value to Gross Portfolio Value is 94% (31 March 2023: 93%), which reflects the decrease to carry balances in line with the movements of the portfolio. Total liquidity The consolidated cash balance at 31 March 2024 was £57 million (31 March 2023: £23 million). Total available cash for Molten Ventures at 31 March 2024 was £117 million, including £60 million undrawn on the Company’s revolving credit facility (31 March 2023: £83 million, including £60 million undrawn on the Company’s revolving credit facility). In November 2023, we completed an equity fund raise of £55 million (net of fees) from new and existing investors (including a PrimaryBid retail element), to enable our position for new follow-on direct and secondary investments. Molten issued 21,261,548 shares comprising a placing, subscription, retail offer and offer for subscription. The proceeds of the placing are recognised in the cash balance at the year end and within the share capital movements (please see Note 26 for further detail). Debt facility The existing debt facility with J.P. Morgan Chase Bank N.A. London Branch (‘JPM’) and HSBC Innovation Bank Limited (‘HSBC’) (the ‘Debt Facility’) comprises a £90 million term loan and a revolving credit facility (‘RCF’) of up to £60 million on three and two-year availability periods respectively, and is secured against various assets and LP interests in the Group. The Debt Facility interest rate is SONIA plus a margin of 5.5% per annum and is underpinned by the value of the investment portfolio. The value of the portfolio companies is subject to periodic independent third-party valuation. The Debt Facility is utilised for investment and working capital purposes. We have been compliant with all relevant financial covenants throughout the duration of the debt facilities and at period-end. During the year, we amended the terms of the covenants relating to loan to value and market adjusted GAV to provide additional flexibility, see Note 24(i) for more information. As at 31 March 2024, the £90 million term loan is fully drawn and the £60 million RCF is undrawn and fully available, subject to utilisation conditions. The drawn amount is recognised in the Consolidated Statement of Financial Position at 31 March 2024, offset by capitalised fees from the set-up of the Debt Facility, which are being amortised over its life. Drawdowns and paydowns on the Debt Facility will be driven by portfolio investments and realisations. For further information, please see Note 24(i). Net assets Net assets in the Consolidated Statement of Financial Position at 31 March 2024 have increased by £57 million from 31 March 2023, to £1,251 million, an increase of 4.7%. This is mainly the result of the increase in the investments balance and cash due to the fund raise and Forward Partners’ acquisition, along with a decrease in deferred tax liability recognised in the statement of financial position. The Net Asset Value per share for the year ended 31 March 2024 was 662p (31 March 2023: 780p) after the issuance of new shares for the equity fund raise and share-for-share acquisition of Forward Partners. Statement of comprehensive income We recognised a loss after tax in the year of £41 million, compared to a £243 million loss in FY23. Income recognised during the year ending 31 March 2024 comprises investment fair value decreases of £29 million (year ending 31 March 2023: £240 million decreases), including the gain on bargain purchase attributed to the Forward Partners portfolio of £39 million. Fee income of £20 million was generated in the year (year ended 31 March 2023: £23 million), which is principally comprised of priority profit share (“PPS”), management fees from the managed EIS/VCT funds, performance fees and promoter fees. PPS is generated from management fees charged on the underlying plc funds, as invested capital, net of realisations, increases so too does the PPS income. The decrease in fee income in the year is a result of a decrease in PPS percentage held in older vintages with the decreased level of investments in 2024. This has resulted in management fees decreasing by 12.7% in the period. Our operating costs (net of fee income) continue to be less than our target of 1% of NAV. It is anticipated that further income from fees generated from management of third-party funds will provide a further positive contribution to our cost base and profitability in the future. Finance expenses have increased to £11 million from £7 million in 2023 due to the debt facility being utilised for the full 12 months and an increase in the rate of SONIA. General and administration costs (“G&A”) of £21 million, compared to the £19 million recognised in the year to 31 March 2023, have increased in comparison to the prior year following the growth of the Investment Team and supporting infrastructure. Post-period end On 30 April 2024, Hologic, Inc, a NASDAQ listed entity, signed a definitive agreement to acquire Endomagnetics Ltd. (‘Endomag’). The acquisition, which is subject to regulatory approval as well as working capital and other customary closing adjustments, values Endomag at approximately $310 million, which is at a slight uplift to NAV. Ben Wilkinson Chief Financial Officer 11 June 2024
Gross portfolio value table
* Fully diluted interest categorised as follows: Cat A: 0–5%, Cat B: 6–10%, Cat C: 11–15%, Cat D: 16–25%, Cat E: >25%.
Portfolio review Molten remained well-diversified across our four key sectors of investments which capture technology subsector themes such as fintech, climate-tech, cloud-native and security with early use cases of AI evident in our portfolio. Consumer technology Consumer-facing services and products, innovative business models, and proven execution capabilities that bring exceptional opportunities enabled by technology.
Enterprise technology The software infrastructure, applications and services that make enterprises more productive, cost-efficient, and smoother to run.
Hardware & Deeptech R&D-heavy technologies which emerge to become commercially dominant, upending industries and enabling entirely new ways of living and doing business.
Digital health & wellness Using data, software and hardware to create new products and services for the health and wellness market.
Companies included in our company numbers and associated analysis are direct investments, co-investment, Earlybird and assets under third party management companies above a £2.0 million fair value threshold to Molten Ventures. Key * AI First ** AI-Powered *** AI-Enhanced Cash runway within the portfolio remains a key focus within the current environment. We have continued with discipline around our investment process, deploying £40 million into the portfolio, including the acquisition of a stake in Seedcamp fund III, and investments into Fund of Funds and Earlybird strategies. Portfolio valuations The Gross Portfolio Value as at 31 March 2024 is £1,379 million, an increase of £8 million, net of investments, realisations and total fair value movement, from the 31 March 2023 value of £1,371 million. This represents a 1% increase in gross fair value, due to the increase in investments made in the year. £18 million is a net decrease, resulting from a £6 million increase in the gross fair value, offset by negative currency movements of £24 million. Valuations remain robust due to 97% of the portfolio value holding downside protection thanks to preference rights. Our portfolio valuations process continues to follow the IPEV Guidelines and aligns to the market movements in the period; we have seen movements in some of our key assets to reflect public market comparatives. We continue to see overall revenue growth in our portfolio companies with forecast weighted average revenue growth in the core of over 63% in the year, reflecting the ongoing innovation and digital transition continuing across sectors. The Core Portfolio is made up of 20 companies representing 62% of the Gross Portfolio Value. The core portfolio constituents has been updated to reflect the increase in valuation attributed to Freetrade, Perkbox, Riverlane and Smava, with PrimaryBid moving to the emerging portfolio category. During the period, we invested £12 million directly into new and existing companies, including:
Molten Ventures Core Portfolio is made up of 20 companies representing 62% of the Gross Portfolio Value. New entrants to the core consist of Freetrade, Perkbox, Riverlane and Smava, with PrimaryBid moving to the emerging portfolio. Note – narrative updates based on publicly available information from the Core Portfolio companies.
Risk management In order to achieve our strategic objectives and manage our business responsibly and sustainably, we operate an effective risk-management framework that aims to balance risk and reward, while protecting the business, our Shareholders, employees, and other stakeholders. The Board has ultimate responsibility for setting and managing the risk framework, as well as defining appetite for risk. Ongoing oversight of the Company’s risk profile and risk framework is delegated to the Audit, Risk and Valuations Committee supported by the Compliance Team. Risk appetite The nature of our business fundamentally involves an assumption of a level of risk if we are to achieve our strategic aim of creating and maintaining a pipeline of investment opportunities and supporting our diversified portfolio of high growth early stage businesses over the long-term to attain meaningful returns. However, we will accept risk only where we have assessed that it can be appropriately managed and offers sufficient reward. The Board has determined its risk appetite for each of the principal risks described on pages 58 to 65 of the Annual Report and considered appropriate ways to monitor performance and mitigate against each risk to ensure that the level of exposure remains acceptable. Risk governance We adopt a top-down approach to risk governance, with a culture of compliance that flows from the Board and its Committees through to the Executive Team and Compliance Team who have delegated authority to oversee the application of the risk framework across the business, and thereafter to all staff, encouraging a thoughtful and transparent attitude towards risk that is grounded in principles of responsible stewardship for our stakeholders. For the Group, the first line of defence comprises management controls and internal control measures administered by all managers and staff. The second line of risk management is administered and overseen by the Compliance Team. The Compliance Team reports directly into the Executive Team and Audit, Risk and Valuations Committee on all compliance matters and have direct access as needed to the Chair of the Board and the Chair of the Audit, Risk and Valuations Committee. Both the Audit, Risk and Valuations Committee and the Executive Team regularly consider and review the existing and emerging risks faced by the business to ensure that any exposure and associated mitigations align with the business’s strategic objectives. Risks associated with the Group and its activities that are considered material are entered into the Company’s Corporate Risk Register which applies a scoring system to assist the Audit, Risk and Valuations Committee in its decision-making by capturing inherent risks; mitigations; and the resultant residual risks, as well as any proposed or ongoing actions. Risks are translated to a heat map for ongoing monitoring purposes, while controls are in place and regularly reviewed in order to mitigate the Group’s exposure. The Audit, Risk and Valuations Committee meets formally at least four times a year, with other informal meetings convened as necessary. The Group operates clear reporting lines throughout the business and engages external compliance specialists, IQ-EQ, to assist the Compliance Team in monitoring and advising on all regulatory compliance matters at a fund manager level within the Group structure. We identify and monitor risks closely throughout the business, which ultimately involves all employees in overseeing and mitigating risk on a day-to-day level in accordance with the Group Compliance Manual and Group Code of Conduct. Periodic internal checks are administered by the Compliance Team; enhanced IT security measures are employed by the IT Manager supported by external IT specialists, Rock IT and Softwerx; weekly meetings are conducted at an Executive level where risk is a standing item; and dedicated risk-review sessions are undertaken periodically by the Executive Team structured around the Corporate Risk Register. A summary of the Company’s full suite of Policies, Procedures, Systems and Controls can be found on our website at https://investors.moltenventures.com/investor-relations/plc/documents. Third-party review There is a formal compliance report issued to the Board annually in addition to the output of monitoring reports issued quarterly by IQ-EQ, which during the year ended 31 March 2024 included a consistent focus on the newly introduced Consumer Duty, which the Company (working alongside IQ-EQ) has taken relevant steps to be compliant with. Depositary services in the financial year were provided to the Company and the Fund of Funds programme by Langham Hall UK Depositary LLP including safekeeping of Company assets, oversight, and reporting any breaches, anomalies and discrepancies. Representatives of the Depositary attended a meeting of the Audit, Risk and Valuations Committee prior to the year-end in order to report on activity completed during the year and any associated recommendations, with no items identified as being high risk or in need of remedial action. Training Externally-led mandatory compliance-focused training is provided to all staff at least annually to ensure a suitable level of awareness and understanding of both the theory and the practical application of the Group’s culture towards risk awareness, risk mitigation and applicable professional and ethical standards to which all employees are required to perform in the fulfilment of their roles (including where relevant under the Senior Managers and Certification Regime (“SM&CR”)). During the year, IQ-EQ delivered targeted training on the subjects of SM&CR; market abuse; bribery and corruption; whistleblowing; and fraud. A separate refresher session was also delivered by IQ-EQ, in conjunction with the Compliance Team, on the the Group’s Client Assets Sourcebook (CASS) obligations to relevant members of the compliance, legal, finance and administrative teams involved in the safekeeping and reconciliation of client assets. Mandatory online training is conducted not less than annually (including associated testing) on a variety of core topics including anti-money laundering, anti-bribery and corruption, SM&CR, anti-bullying and harassment, anti-modern slavery, cyber security and data protection. Targeted internal-led compliance training sessions are delivered during the onboarding process for new joiners and to different teams within the business as required. The Investment Team also explore market themes, opportunities and risks as part of the wider approach towards investments in the weekly Investment Committee meetings and the bi-annual Strategy Days to review the Group’s existing portfolio and assess risks and opportunities on both an asset-by-asset level and at a wider aggregated portfolio performance. Whistleblowing The Group operates established procedures whereby employees may, in confidence, raise concerns relating to possible improprieties in matters of financial reporting, financial control, adequate management of risks or any other matter. The Whistleblowing Policy applies to all employees of the Group and is the subject of annual training. Principal and emerging risks A principal risk is a risk, or a combination of risks, from our corporate risk register that can seriously affect the performance or reputation of the Group. We regularly consider and assess the principal and emerging risks and opportunities, both internal and external, which may affect the Group in the near, medium, and long term. The Executive Team and Audit, Risk and Valuations Committee consider risk at meetings periodically as required and during the year. The Audit, Risk and Valuations Committee additionally perform a dedicated annual review of the Group’s principal risks, assessing the severity and mitigation strategies in place for previously identified risks, and identifying whether any new risks had materialised in the period. The heat map (below) highlights what we consider to be our principal risks and uncertainties by potential impact and likelihood of occurrence. Detailed descriptions of those principal risks are set out on pages 58 to 65 of the Annual Report. Emerging risks are those risks not yet considered to be “principal” by the Audit, Risk and Valuations Committee on recommendation by the Executive Directors, but which have been identified through horizon scanning, scenario analysis and third party professional advice. These are risks that are either new and therefore may, in time, pose a threat to the Company and/or its business model; or they can be a pre-existing risk that has emerged in a new or unfamiliar context. The following are some of the emerging risks that have been identified and are currently being monitored: • Global elections, including in the UK and US, the outcome of which could lead to as-yet-unknown shifts in policy, regulation or international relations, as well as polarising sentiment that could have a material impact on the Company or the wider venture capital industry • Increased regional and international tension in Israel and the Middle-East • Potential escalation of China/Taiwan tensions and conflict with the US • Global supply chain pressure due to concentration risk of various key component materials that are embedded into many applications relevant to the portfolio, or the underlying technologies on which they are built • Increased adoption and regulation of artificial intelligence, the application of which remain unclear • Cost of borrowing to finance investment /deployment with lack of certainty about interest rates from central banks • Continued cost of living pressures effect on B2C/B2B sales Risk framework updates Updates to our risk framework for the year include: • Appointment of a new IT Manager supported by new external IT and cyber security support function - Rock IT to ensure that the business remains cyber resilient and secure. • Embedded Consumer Duty across the Group.
Our principal risks
Principal risks Board approval The Strategic Report as set out on pages 6 to 66 of the Annual Report was approved by the Board of Directors on 11 June 2024 and signed on its behalf by: Ben Wilkinson Chief Financial Officer
Going concern The Directors confirm that they have a reasonable expectation that the Group will have adequate resources to continue in operational existence for at least the next 12 months from the date of the approval of the financial statements and accordingly they continue to adopt the going concern basis in preparing the financial statements. A statement in compliance with provision 31 of the Code can be found on page 66 of the Annual Report.
Statement of directors’ responsibilities in respect of the financial statements The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group financial statements in accordance with UK-adopted international accounting standards and the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law). The group has also prepared financial statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. Under company law, 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 group and company and of the profit or loss of the group and company for that period. In preparing the financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • state whether applicable UK-adopted international accounting standards and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed for the group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements; • make judgements and accounting estimates that are reasonable and prudent; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business. The directors are responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Directors’ confirmations The directors consider that the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group’s and company’s position and performance, business model and strategy. Each of the directors, whose names and functions are listed in Board of Directors section on pages 70 and 71 of the Annual Report confirm that, to the best of their knowledge: • the group financial statements, which have been prepared in accordance with UK-adopted international accounting standards and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the group; • the company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of the assets, liabilities, financial position and loss of the company; and • the Directors’ Report includes a fair review of the development and performance of the business and the position of the group and company, together with a description of the principal risks and uncertainties that it faces. By order of the Board Ben Wilkinson Chief Financial Officer 11 June 2024
Consolidated statement of comprehensive income For the year ended 31 March 2024
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of financial position As at 31 March 2024
The consolidated financial statements should be read in conjunction with the accompanying notes. The consolidated financial statements were authorised for issue by the Board of Directors on 11 June 2024 and were signed on its behalf by: Ben Wilkinson Chief Financial Officer Molten Ventures plc registered number 09799594
Consolidated statement of cash flows For the year ended 31 March 2024
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of changes in equity For the year ended 31 March 2024 Year ended 31 March 2024
Year ended 31 March 2023
The consolidated financial statements should be read in conjunction with the accompanying notes.
Notes to the consolidated financial statements 1. General information
Molten Ventures plc (the “Company”) is a public limited company incorporated and domiciled in England and Wales. The Company is the ultimate parent company in which the results of all subsidiaries are consolidated in line with IFRS 10 (see Note 4(b) for further details). The consolidated financial statements for the year ended 31 March 2024 and for the comparative year ended 31 March 2023 comprise the consolidated financial statements of the Company and its subsidiaries (together, the “Group”). The consolidated financial statements are presented in Pounds Sterling (GBP/£), which is the currency of the primary economic environment in which the Group operates. All amounts are presented in millions, unless otherwise stated. 2. Going concern assessment and principal risks Going concern The Group’s primary sources of liquidity are the cash flows it generates from its operations, realisations of its investments and borrowings. The primary use of this liquidity is to fund the Group’s operations (including the purchase of investments). Responsibility for liquidity risk management rests with the Board, which has established a framework for the management of the Group’s funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and with ongoing monitoring of forecast and actual cash flows. The Group has undertaken a going concern assessment and the latest assessment showed sufficient headroom for liquidity for at least the next 12 months from the date of signing of these financial statements. The assessment of going concern considered both the Group’s current performance and future outlook, including: • An assessment of the Group’s liquidity and solvency position using a number of severe but plausible downside case to assess the potential impact on the Group’s operations and portfolio companies. This downside scenario include (i) unpredictability of exit timing, being only contractually committed realisations throughout the Going Concern period; (ii) portfolio company valuations subject to change, being a 25% decrease in GPV to assess the impact on covenant compliance; and (iii) the impact of an additional 2% increase in interest rates to take SONIA to 7.2%. The Group manages and monitors liquidity regularly and continually assesses investments, commitments, realisations, operating expenses, and receipt of portfolio cash income including under stress scenarios ensuring liquidity is adequate and sufficient. As at the date of signing, the Directors believe the Group has sufficient cash resources and liquidity, and is well placed to manage the business risks in the current economic environment with the ability to utilise the Debt Facility as required. • The Group must comply with financial and non-financial covenants as part of its Debt Facility agreement (see Note 24(i) for further details). In order to assess forecast covenant compliance, management have performed an assessment to identify the level at which covenants would be breached. This is based on the current portfolio and assuming no intervention to manage a breach. For a breach to occur under these circumstances, a 31% decrease in gross asset value would need to occur which would trigger debt repayment. The Directors do not consider this to be plausible based on the performance in the year and the current outlook. Management action would be taken in advance of such a significant decrease to the gross asset value such as the sale of investments in the secondaries market to repay the Debt Facility. After making enquiries and following challenge and review, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for 12 months from the date of approval of these financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements. For further information, please refer to the Audit, Risk and Valuations Committee Report on pages 83 to 85 and the Directors’ Report on pages 99 to 101 of the Annual Report. Principal risks The Group has reviewed its exposure to its principal risks and concluded that these did not have a significant impact on the financial performance and/or position of the Group for the year and as at 31 March 2024, respectively. For further details on the Group’s principal risks, as well as its risk management processes, please see the Risk Management and Principal Risks section in the Strategic Report to these financial statements. 3. Adoption of new and revised standards i. Adoption of new and revised standards No changes to IFRS have impacted this year’s financial statements. ii. Impact of standards issued not yet applied No upcoming changes under IFRS are likely to have a material effect on the reported results or financial position. Management will continue to monitor upcoming changes. 4. Material accounting policy information a) Basis of preparation The financial statements have been prepared in accordance with UK-adopted International Accounting Standards (“IAS”) and the requirements of the Companies Act 2006 as applicable to companies reporting under those standards and International Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (“EU”). UK-adopted International Accounting Standards differ in certain respects from International Financial Reporting Standards as adopted by the EU. The differences have no material impact on the financial statements for the periods presented, which, therefore, also comply with International Financial Reporting Standards as adopted by the EU. The consolidated financial statements have been prepared under the historical cost convention as modified for the revaluation of certain financial assets and financial liabilities held at fair value. A summary of the Group’s principal accounting policies, which have been applied consistently across the Group, is set out below. The consolidated financial statements have been approved for issue by the Board of Directors on 11 June 2024. The financial reporting framework that has been applied in the preparation of the Company’s financial statements (beginning on page 153) is Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (FRS 101). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities measured at fair value through profit or loss, and in accordance with the Companies Act 2006. The Company has taken advantage of disclosure exemptions available under FRS 101 as explained further in Note 1 of the Company’s financial statements. The financial statements are prepared on a going concern basis as disclosed in the Audit, Risk and Valuations Committee Report (pages 83 to 85 of the Annual Report), in the Directors’ Report (pages 99 to 101 of the Annual Report) and in Note 2. In preparing the financial statements we have considered the impact of climate change, particularly in the context of the disclosures included in the Strategic Report this year. There has not been a material impact on the financial reporting judgements and estimates arising from our considerations. Specifically, we note the following: • For the fifth year running, we have offset 100% of our Scope 1 and Scope 2 and select Scope 3 emissions for the financial year (see more details on page 53 of the Annual Report). • We continue to engage ESG Consulting Partners to support us with respect to our ESG roadmap. During the year, we worked Altruistiq and Accenture to support us with our Climate Strategy, GHG Verification and TCFD Report. • As stated in Note 30, based on work performed so far, management have considered climate-related risks and consider these to be currently immaterial to the value of our portfolio for FY24 (FY23: immaterial). A summary of the Group’s principal accounting policies, which have been applied consistently across the Group, is set out below. b) Basis of consolidation The consolidated financial statements comprise the Company (Molten Ventures plc, 20 Garrick Street, London, England WC2E 9BT) and the results, cash flows and changes in equity of the following subsidiary undertakings as well as the Molten Ventures Employee Benefit Trust:
Registered addresses ^ 20 Garrick Street, London, England, WC2E 9BT * 50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ † c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands ‡ 412F, Route d’Esch, Grand Duchy of Luxembourg, 1471, Luxembourg Subsidiaries Subsidiaries are entities controlled by the Group. Control, as defined by IFRS 10, is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which the Group effectively obtains control. They are deconsolidated from the date that control ceases. Control is reassessed whenever circumstances indicate that there may be a change in any of these elements of control. All transactions and balances between Group subsidiaries are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with consolidated accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. Employee Benefit Trust On 27 November 2020, Molten Ventures Employee Benefit Trust (the “Trust”) was set up to operate as part of the Molten Ventures employee share option schemes. The substance of the relationship is considered to be one of control by the Group and, therefore, the Trust is consolidated, and all assets and liabilities are consolidated into the Group. Grow Trustees Limited was appointed trustee of the Trust and the substance of this relationship is also considered to be one of control by the Group and, as such, Grow Trustees Limited is consolidated. Investment entity In accordance with the provisions of IFRS 10, Molten Ventures plc considers itself to be an investment entity. As a result of its listed status, it obtains funds from its Shareholders to acquire equity interests in multiple high-growth technology businesses (indirectly) with the purpose of capital appreciation over the life of the investments. These investments are made on behalf of investors in Molten Ventures plc across a number of deployment strategies – see page 16. Exit strategies for the portfolio vary depending on each investment, with realisations occurring typically five to ten years after the investment is made. Exit strategies for each of the portfolio companies are documented and discussed as part of regular portfolio reviews. The Group reviews exit opportunities regularly and each member of the Deal Team is responsible for an exit thesis for the investee companies they are responsible for prior to any investment being made. An exit thesis is set out in the original investment papers and it is reiterated or amended thereafter, as appropriate, in the Group’s regular quarterly reports. Exit strategies for successful investments include the sale of the investment via private placement or in a public market, IPO, trade sale of a company, and distributions to investors from funds invested into. All exits are approved by a sub-committee of the Investment Committee, following a similar approval process to any approval of a new investment, requiring a majority vote. Although Molten Ventures plc holds these investments indirectly, it has been deemed appropriate to directly consider the investment strategies for the portfolio as the intermediary investment vehicles discussed below were formed to hold investments on behalf of Molten Ventures plc. Molten Ventures plc evaluates its investments on a fair value basis and reports this financial information to its Shareholders. The Directors have also satisfied themselves that Molten Ventures plc’s wholly owned subsidiaries, as well as certain partnerships listed below, meet the characteristics of an investment entity. Although they have one or two investors, in substance these partnerships and companies are investing funds on behalf of the Shareholders of Molten Ventures plc. They have obtained funds for the purpose of acquiring equity interests in high-growth technology businesses with the purpose of capital appreciation over the life of the investments for the benefit of Shareholders of Molten Ventures plc and this has been communicated directly to the Shareholders. Exit strategies for investments (directly or indirectly) are previously discussed. The Group evaluates its portfolio on a fair value basis and this financial information is communicated directly to the Molten Ventures plc Shareholders. In line with the IFRS 10 consolidation exemption, entities meeting the definition of investment entity do not consolidate certain subsidiaries and instead measure those investments that are controlling interests in another entity (i.e., their subsidiaries) as investments held at fair value through profit or loss on the consolidated balance sheet. Loans to investment vehicles are treated as net investments at fair value through profit or loss. The below is a list of entities that are controlled and not consolidated but held as investments at fair value through profit or loss on the consolidated balance sheet.
1 32 Molesworth Street, Dublin 2, Ireland D02 Y512. 2 20 Garrick Street, London, England WC2E 9BT. 3 c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1–1104, Cayman Islands. 4 16 Great Queen Street, London, England WC2B 5AH. 5 35 New Bridge Street, London, England EC4V 6BW. 6 412F, Route d’Esch, Grand Duchy of Luxembourg, 1471, Luxembourg. 7 circa 22% is held by Molten Ventures FoF I LP of which Molten and a third party are both 50% LPs Limited partnerships (carried interest and co-invest) Carried interest vehicles and co-investment limited partnerships (“CIPs”) – the Group’s general partners are members of these limited partnerships. These vehicles are set up with two purposes: 1) to facilitate payments of carried interest from the fund to carried interest participants; and 2) in certain circumstances to facilitate co-investment into the funds. Carried interest and co-investment partnerships are investment entities and are measured at FVTPL with reference to the performance conditions described in Note 4(u) and held at FVTPL, which equates to the net asset value attributable to the Group, in the statement of financial position in line with our application of IFRS 10 for investment entities. The vehicles in question are as follows:
^ c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1–1104, Cayman Islands. * 50 Lothian Road, Festival Square, Edinburgh, Scotland EH3 9WJ. † 20 Garrick Street, London WC2E 9BT. Each carry vehicle indirectly holds interests in a vintage of investments within our portfolio with the purpose of producing profits for distribution among the carried interest partners. The Group evaluates its interest in carried interest at fair value as part of the valuations cycle. Indirectly, the carry partnerships have exit strategies for each investment within which they have an interest as the manager of both the carry partner and the investment vehicles regularly considers exit strategies as discussed above. Limited partnerships (managed by Group entities) A number of limited partnerships are managed by entities within the Group but are not considered to be controlled and, therefore, they are not consolidated in these financial statements. Legacy funds The Group continues to manage three legacy funds, Esprit Fund 1, Esprit Fund 2 and Esprit Fund 3(i), and their general partners are consolidated within the Group. These funds are in run-off. Historically, the Group has not had any direct beneficial interests in the assets owned by these funds and the Group was not exposed to variable returns from these funds. Other than Esprit Capital II LP, which is held at fair value through profit and loss, as an investment, management considers the legacy funds are held under an agency relationship with the funds where the Group acts as an agent which is primarily engaged to act on behalf, and for the benefit, of the fund investors rather than for its own benefit. Although the manager (Esprit Capital Partners LLP, subsidiary to Molten Ventures plc) has the power to influence the returns generated by the fund, the Group does not have an interest in their returns. As a result, the Group is not deemed to control these managed funds and they are not consolidated. The legacy funds have the following details: Esprit Fund 1: Esprit Capital I Fund No.1 Limited Partnership and Esprit Capital I Fund No.2 Limited Partnership – c/o Molten Ventures plc, 20 Garrick Street, London WC2E 9BT. Esprit Fund 2 : Esprit Capital II L.P. – c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1–1104, Cayman Islands Esprit Capital 3(i): Esprit Capital Fund III(i) LP and Esprit Capital Fund III(i) A LP – EIS/VCT funds Enterprise Investment Scheme funds and Molten Ventures VCT plc are managed by the Group. The Group has no direct beneficial interest in the assets being managed and its sole exposure to variable returns are to performance fees payable on exits above a specified hurdle and management fees based on subscriptions (and Promoter’s fees in certain cases), which is a small proportion of the total capital within each fund. The Board believes that this results in an agency relationship with the funds where the Group acts as an agent, which is primarily engaged to act on behalf, and for the benefit, of the fund investors rather than for its own benefit. Although the managers (Encore Ventures LLP – EIS funds, Elderstreet Investments Limited – VCT fund and Molten SP I LLP) have the power to influence the returns generated by the fund, the Group only has an insignificant interest in their returns. As a result, the Group is not deemed to control these managed funds and they are not consolidated. The EIS/VCT funds have the following details: EIS funds: DFJ Esprit Angels’ EIS Co-Investment Fund, DFJ Esprit Angels’ EIS Co-Investment II, DFJ Esprit EIS III, DFJ Esprit EIS IV, VCT funds: Molten Ventures VCT plc – The Office Suite, Den House, Den Promenade, Teignmouth, United Kingdom, TQ14 8SY. Audit exemption for members of the Group The following entities are included in the parent’s consolidated accounts. As a result of section 479A of the Companies Act 2006, these subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of accounts under section 475 of the Companies Act 2006. Esprit Capital Holdings Limited, Esprit Capital I (CIP) Limited, Molten Ventures (Nominee) Limited, Esprit Nominees Limited, Grow Trustees Limited, Esprit Capital III MLP LLP, Esprit Capital III GP Limited, Esprit Capital I (GP) Limited, Esprit Capital III Founder GP Limited, Elderstreet Holdings Limited, Encore I GP Limited, Encore I Founder GP Limited, Esprit Capital I General Partner, Esprit Capital III GP LP, Molten Ventures Growth Fund I GP S.a.r.l, Molten Ventures Growth SP GP LLP, Molten Ventures FoF I GP LLP and Molten Ventures Investments GP LLP. Esprit Foundation Molten Ventures plc is the sole member of the Foundation. However, this is not controlled by Molten Ventures plc or the Group, as the Esprit Foundation has a separate board of trustees with a separate governance and decision-making process. A donation was received during the year ended 31 March 2023. A total of £0.1m in grants were made for the year ended 31 March 2024 (31 March 2023: £Nil). Charitable Incorporated Organisation status was entered onto the Register of Charities with the Registered Charity Number 1198436 on 30 March 2022. Stuart Chapman is one of, and a donor to, the three Trustees of the Esprit Foundation and is also an Executive Director on the Board of Molten Ventures plc. c) Operating segment IFRS 8, ‘Operating Segments’, defines operating segments as those activities of an entity about which separate financial information is available and which are evaluated by the Chief Operating Decision Maker to assess performance and determine the allocation of resources. The Board of Directors have identified Molten’s Chief Operating Decision Maker to be the Chief Executive Officer (“CEO”). The Group’s investment portfolio engages in business activities from which it earns revenues and incurs expenses, has operating results, which are regularly reviewed by the CEO to make decisions about resources and assess performance, and the portfolio has discrete financial information available. The Group’s investment portfolio has similar economic characteristics, and investments are similar in nature. Dealflow for the investment portfolio is now consistent across all funds (except for the Legacy funds – see below) and the Group’s Investment Committee reviews and approves (where appropriate) investments for all of the investment portfolio in line with the strategy set by the Molten Ventures plc Board of Directors (approvals from the Molten Ventures plc Board of Directors is required for higher value investments where the proposed value of the investment to be made by plc is above £3.0 million). Although the managers of our EIS funds, VCT funds and plc funds have a separate management committee, the majority of those sitting on the committees are consistent across all. Taking into account the above points, and in line with IFRS 8, the investment portfolio (across all funds) has been aggregated into one single operating segment. Legacy funds – the legacy funds (Esprit Capital I Fund No 1 LP, Esprit Capital Fund No 2 LP, Esprit Capital Fund III (i) LP, Esprit Capital Fund III (i) A LP and Esprit Capital II LP) continue to be managed by the Group (Esprit Capital Partners LLP). These funds are in run-off. Although the investments held within these funds are not consistent with the rest of the investment portfolio (although there has been some cross-over in the past), they are similar in nature and the Group does not earn material revenue (neither is material expenditure incurred) from the management of these funds that would meet the quantitative thresholds set out in IFRS 8. Management does not believe that separate disclosure of information relating to the legacy funds would be useful to users of the financial statements. The majority of the Group’s revenues are not from interest, and Management does not primarily rely on net interest revenue to assess the performance of the Group and make decisions about resource allocation. Therefore, the Group reports interest revenue separately from interest expense. The Group’s management considers the Group’s investment portfolio represents a coherent and diversified portfolio with similar economic characteristics and as a result these individual investments have been aggregated into a single operating segment. In the view of the Directors, there is accordingly one reportable segment under the provisions of IFRS 8. d) Revenue recognition Revenue is comprised of management fees from EIS/VCT funds and Molten SP I LLP, as well as performance fees and promoter fees. Priority Profit Share is incorporated within management fees, presented as management fees charged on the underlying investment vehicles. Revenue is also generated from Directors’ fees from a small number of portfolio companies where members of the Investment Team act as Directors for portfolio companies. Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring services to a customer. For each contract with a customer, the Group: identifies the contract with a customer, identifies the performance obligations in the contract; determines the transaction price which takes into account the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative standalone selling price of each distinct service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the services promised. All revenue from services is generated within the UK and is stated exclusive of value added tax. Revenue presented as fee income are services comprised of: i. Management fees (Priority Profit Share) Management fees are earned by General Partners of Limited Partnerships, through a Priority Profit Share arrangement. The basis of calculation of fund management fees differs depending on the fund and its stage. Fund management fees are either earned at a fixed annual rate or are set at a fixed percentage of funds under management, measured by commitments or invested cost, depending on the stage of the fund being managed. Revenues are recognised as the related services are provided. ii. Management fees earned by Encore Ventures LLP. Fund Close April 2019 and prior. Management fees are charged on the Net Subscription per annum for the first four years of the life of the portfolio. Management fees are charged annually in advance. Cash received from the investor’s Net Subscription is received and will be recognised as revenue in the period they become due, across the first four years in line with the investment and follow-on period for investing activities. In this case, the transaction price is fixed for the life of the contract and, if management fees are recognised in the period for which they are receivable. Fund Close July 2019 onwards. Management fees are charged on Net Subscription per annum for the first five years of the life of the portfolio, payable annually in advance. Cash received from the investor’s Net Subscription is received and will be recognised as revenue in the period they become due, across the first five years in line with the investment and follow-on period for investing activities. Management fees are charged annually in advance. Cash received from the investor’s Net Subscription to cover the payment of management fees relating to the first 2.75 years of the life of the portfolio. Thereafter, fees will be accrued and deducted from cash proceeds from exits at the time of becoming highly probable. If no proceeds are received, these fees will not be charged to investors. iii. Performance fees Performance fees are earned on a percentage of returns over a hurdle rate. These are recognised in the statement of comprehensive income on realisation of underlying investment. Amounts are recognised as revenue when it can be reliably measured and is highly probable funds will flow to the Group, which is generally at the point of invoicing or shortly before due to the unpredictability associated with realisations but is assessed on a case-by-case basis. iv. Promoter’s fees Promoter’s fees are earned by Elderstreet Investments Limited, as manager of the VCT funds, based on amounts subscribed during each offer. Fees are agreed on an offer-by-offer basis and are receivable when the shares are allotted. Elderstreet Investments Limited may also be entitled to promoter’s fees when it promotes offers for new subscriptions into the funds it manages. Promoter’s fees are earned at a percentage of subscriptions received. Revenue is recognised in full at the time valid subscriptions are received. v. Directors’ fees Portfolio Directors’ fees are annual fees charged to an investee company. Directors’ fees are only charged on a limited number of the investee companies. Revenues are recognised as services are provided. e) Deferred income The Group’s management fees are typically billed quarterly or half-yearly in advance. Where fees have been billed for an advance period, the amounts are credited to deferred income, and then subsequently released through the statement of comprehensive income during the period to which the fees relate. Certain performance fees and portfolio Directors’ fees are also billed in advance and these amounts are credited to deferred income, and then subsequently released through the statement of comprehensive income accounting during the period to which the fees relate. f) Business combinations The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred, and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. The Group recognises identifiable assets acquired and liabilities assumed in a business combination, regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of: a) fair value of consideration transferred; b) the recognised amount of any non-controlling interest in the acquiree; and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in the statement of comprehensive income immediately. g) Goodwill and other intangible assets Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceed the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. When the consideration transferred by the Group in a business combination includes an asset or liability resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the “measurement period” (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. Other intangible assets Certain previously unrecognised assets acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair values, e.g. brand names, customer contracts and lists. All finite-lived intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described below. Customer contracts are amortised on a straight-line basis over their useful economic lives, typically the duration of the underlying contracts. The following useful economic lives for customer contracts were applied on the date of acquisition: i. Encore Ventures LLP: eight years; and ii. Elderstreet Investments Limited: three years. h) Impairment For the purposes of assessing impairment, assets are grouped at the lowest level for which there are largely independent cash inflows (“cash generating units” or “CGU”). As a result, some assets are tested individually for impairment, and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the consolidated statement of total comprehensive income for the amount by which the assets or cash-generating units carrying amount exceeds its recoverable amount that is the higher of fair value less costs to sell and value-in-use. To determine value-in-use, management estimates expected future cash flows over five years from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profile as assessed by management. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro-rata to the other assets in the cash-generating unit with the exception of goodwill, and all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount where there has been a change in estimates used for the calculation of the recoverable amount. i) Foreign currency Transactions entered into by Group entities in a currency other than the functional currency in which they operate are recorded at the rates prevailing when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates prevailing at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the statement of comprehensive income. The individual financial statements of the Group’s subsidiary undertakings are presented in their functional currency. For the purpose of these consolidated financial statements, the results and financial position of each subsidiary undertaking are expressed in Pounds Sterling, which is the presentation currency for these consolidated financial statements. The assets and liabilities of the Group’s undertakings, whose functional currency is not Pounds Sterling, are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period. j) Financial assets All financial assets are recognised when economic benefit is expected to be transferred to the Group. On recognition, a financial asset is initially measured at fair value, plus transaction costs, except for those financial assets classified at “fair value through profit or loss” (“FVTPL”), which are initially measured at fair value. Financial assets are classified by the Group into the following specified categories: • Financial assets “FVTPL”; and • Amortised cost. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets through profit or loss A financial asset may be designated as at FVTPL upon initial recognition if: a. such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or b. the financial asset forms part of a group of financial assets or financial liabilities, or both, which is managed, and its performance is evaluated on a fair value basis, in accordance with the Molten Venture Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or c. it forms part of a contract containing one or more embedded derivatives, and IFRS 9 ‘Financial Instruments’ permits the entire combined contract (asset or liability) to be designated as at FVTPL. The Group considers its investment interests referred to in Note 4(b) are appropriately designated as at FVTPL as they meet criteria (b) above. Further details of the accounting policy can be found in Note 30, Fair value measurements. Financial assets through profit or loss are accounted for at settlement date. Amortised cost A financial asset is held at amortised cost under IFRS 9 where it is held for the collection of cash flows representing solely payments of principal and interest. These assets are measured at amortised cost using the effective interest method, less any expected losses. The Group’s financial assets held at amortised cost comprise trade and other receivables, and cash and cash equivalents in the consolidated statement of financial position. Financial assets held at amortised cost are accounted for at trade date. k) Financial liabilities The Group’s financial liabilities include trade and other payables, and borrowings. Trade and other payables Trade and other payables are recognised when the Group enters into contractual arrangements with an expectation that economic benefits will flow from the Group. The carrying amounts of trade and other payables are considered to be the same as their amortised cost, due to their short-term nature. Loans and borrowings Borrowings are initially recognised at fair value that is deemed to be the carrying value at inception. Fees related to the debt facility are amortised over the term of the loan, see Note 24(i) for further detail regarding the debt facility. The carrying amount of borrowings is deemed to be presented at amortised cost as the fair value of future cash flows have not been incorporated. All interest-related charges are reported in profit or loss and are included within finance costs. l) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the outflow of resources embodying the economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. m) Share capital Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group’s shares are classified as equity instruments. Equity instruments are recorded at the proceeds received, net of direct issue costs. Shares held by Molten Ventures Employee Benefit Trust are held at cost and disclosed as own shares and deducted from other equity. n) Defined contribution scheme Contributions to the defined contribution pension scheme are charged to the consolidated statement of comprehensive income in the years to which they relate. o) Share-based payments When equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period on a straight-line basis. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period. Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received. The employee share option plans are administered by the Molten Ventures Employee Benefit Trust, which is consolidated in accordance with the principles in Note 4(b). p) Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. q) Deferred tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available, against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits, against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities, and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. r) Property, plant and equipment Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is recognised to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following basis: • Leasehold improvements – over the term of the lease • Fixtures and equipment – 33% per annum straight line • Computer equipment – 33% per annum straight line The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. s) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, and short-term highly liquid money market funds and deposits with a maturity of three months or less, that are held for the purpose of meeting short-term cash commitments and are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. t) Interest income Interest income earned on cash and deposits and short-term liquidity investments is recognised when it is probable that the economic benefits will flow to the Group and the amount of income recognised can be measured reliably. Interest income is accrued on a time basis, with reference to the principal outstanding and at the effective interest rate applicable. u) Carried interest The Company has established carried interest plans for the Executive Directors (see the following associated note), other members of the Investment Team and certain other employees (together the “Plan Participants”) in respect of any investments and follow-on investments made from IPO. To 31 March 2020 each carried interest plan operated in respect of investments made during the 24-month period from inception of the fund, being the investment period, and related follow-on investments made for a further 36-month period. From 1 April 2020, a new carried interest plan was implemented, which operates for a five-year period in respect of any investment. From April 2020 onwards, the Executive Directors were not eligible to participate in new carried interest plans, and instead now participate in the Long-Term Incentive Plan. Continued participation in existing carried interest schemes that pre-dated the start of the 2021 financial year were not affected. Subject to certain exceptions, Plan Participants will receive, in aggregate, 15% of the net realised cash profits from the investments and follow-on investments made over the relevant period once the Company has received an aggregate annualised 10% realised return on investments and follow-on investments made during the relevant period. The carried interest plan from 1 April 2020 has an aggregate annualised 8% realised return on investments and follow-on investments made during the relevant period, to bring the plans more in line with market. The Plan Participants’ return is subject to a “catch-up” in their favour. Plan Participants’ carried interests vest over five years for each carried interest plan and are subject to good and bad leaver provisions. Any unvested carried interest resulting from a Plan Participant becoming a leaver can be reallocated by an adjudication committee formed by Esprit Capital Partners LLP as manager of the carried interest plan at their discretion, including to the Group, and, therefore, an assumption is made in the financial statements that any unvested carried interest as at the reporting date would be reallocated to the Group. See Note 30 for further information on amounts that have been attributed to the Group. Carried interest is measured at FVTPL with reference to the performance conditions described above. This is deducted from the gross value of our portfolio as an input to determine the fair value of our investment vehicles, which are held at FVTPL in the statement of financial position in line with our application of IFRS 10 for investment entities. The external carry is deducted as it will be paid to members external to the Group from proceeds of investments on realisation. Where the Group has a holding in the carried interest, this is recognised at FVTPL. v) Fair value movement Management uses valuation techniques to determine the fair value of financial assets. This involves developing estimates and assumptions consistent with how market participants would price the assets. Management bases its assumptions on observable data as far as possible, but this is not always available, in that case, management uses the best information available. Estimated fair values may vary from the amount which may be received as consideration for investments in normal market conditions, between two willing parties, at the reporting date (See Note 5(a)). w) Exceptional Items The Group classifies items of income and expenditure as exceptional when the nature of the item or its size is likely to be material, to assist the reader of the financial statements to better understand the results of the operations of the Group. Such items by their nature are not expected to recur and are shown separately on the face of the consolidated statement of comprehensive income. 5. Critical accounting estimates and judgements The Directors have made the following judgements and estimates that have had the most significant effect on the carrying amounts of the assets and liabilities in the consolidated financial statements. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Actual results may differ from estimates. The key estimate, (5)(a), and judgement, (5)(b), are discussed below. There have been no new critical accounting estimates and judgements in the financial year ended 31 March 2024. Estimates: a. Valuation of unquoted equity investments at fair value through profit or loss The Group invests into Limited Companies and Limited Partnerships, which are considered to be investment companies that invest for the benefit of the Group. These investment companies are measured at fair value through profit or loss based on their net asset value (“NAV”) at the year-end. The Group controls these entities and is responsible for preparing their NAV, which is mostly based on the valuation of their unquoted investments. The Group’s valuation of investments measured at fair value through profit or loss is, therefore, dependent upon estimations of the valuation of the underlying portfolio companies. The Group, through its controlled investment companies also invests in investment funds, which primarily focus on seed investments. These investments are considered to be “Fund of Fund investments” for the Group and are recognised at their NAV at the year-end date. These Fund of Fund investments are not controlled by the Group and some do not have coterminous year-ends with the Group. To value these investments, management obtains the latest audited financial statements or partner reports of the investments and discusses further movements with the management of the funds following consideration of whether the funds follow the IPEV Guidelines. Where the Fund of Funds hold investments that are individually material to the Group, management perform further procedures to determine that the valuation of these investments has been prepared in accordance with the Group’s valuation policies for portfolio companies, as outlined below, and these valuations will be adjusted by the Group where necessary based on the Group valuation policy for portfolio companies. The estimates required to determine the appropriate valuation methodology of investments means there is a risk of material adjustment to the carrying amounts of assets and liabilities. These estimates include whether to increase or decrease investment valuations and require the use of assumptions about the carrying amounts of assets and liabilities that are not readily available or observable. The fair value of investments is established with reference to the IPEV Guidelines. An assessment will be made at each measurement date as to the most appropriate valuation methodology. The Group invests in early-stage and growth technology companies, through predominantly unlisted securities. Given the nature of these investments, there are often no current or short-term future earnings or positive cash flows. Consequently, although not considered to be the default valuation technique, the appropriate approach to determine fair value may be based on a methodology with reference to observable market data, being the price of the most recent transaction. Fair value estimates that are based on observable market data will be of greater reliability than those based on estimates and assumptions and, accordingly, where there have been recent investments by third parties, the price of that investment will generally provide a basis of the valuation. If this methodology is used, its initial use and the length of period for which it remains appropriate to use the calibration of last round price depends on the specific circumstances of the investment, and the Group will consider whether this basis remains appropriate each time valuations are reviewed. In addition, the inputs to the valuation model (e.g. revenue, comparable peer group, product roadmap, and other milestones) will be recalibrated to assess the appropriateness of the methodology used in relation to the market performance and technical/product milestones since the round and the company’s trading performance relative to the expectations of the round. The Group considers alternative methodologies in the IPEV Guidelines, being principally price-revenue or price-earnings multiples, depending upon the stage of the asset, requiring management to make assumptions over the timing and nature of future revenues and earnings when calculating fair value. When using multiples, we consider public traded multiples as at measurement date (31 March 2024 for this report) in similar lines of business, which are adjusted based on the relative growth potential and risk profile of the subject company versus the market and to reflect the degree of control and lack of marketability as well as considering company performance against milestones (e.g. financial/technical/product milestones). The equity values of our portfolio companies are generally assessed via the methodologies described above. For direct investments, the equity values are run through their relevant waterfalls to assess the fair value of the investment to Molten Ventures under the current value methodology. Other methodologies would be considered if appropriate. In all cases, valuations are based on the judgement of the Directors after consideration of the above and upon available information believed to be reliable, which may be affected by conditions in the financial markets. Due to the inherent uncertainty of the investment valuations, the estimated values may differ significantly from the values that would have been used, had a ready market for the investments existed, and the differences could be material. Due to this uncertainty, the Group may not be able to sell its investments at the carrying value in these financial statements when it desires to do so or to realise what it perceives to be fair value in the event of a sale. See Note 30(iv) for information on unobservable inputs used and sensitivity analysis on investments held at fair value through profit or loss. Judgement: b. The Company and certain subsidiaries as an investment entity The Group has a number of entities within its corporate structure and a judgement has been made regarding which should be consolidated in accordance with IFRS 10, and which should not. The Group consolidates all entities where it has control, as defined by IFRS 10, over the following: • power over the investee to significantly direct the activities; • exposure, or rights, to variable returns from its involvement with the investee; and • the ability to use its power over the investee to affect the amount of the investor’s returns. The Company does not consolidate qualifying investment entities it controls in accordance with IFRS 10 and instead recognises them as investments held at fair value through profit or loss. An investment entity, as defined by IFRS 10, is an entity that: • obtains funds from one or more investors for the purpose of providing those investor(s) with the investment management services; • commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and • measures and evaluates the performance of substantially all of its investments on a fair value basis. When judging whether an entity within the Group is an investment entity, the Group structure as a whole is considered. As a Group, the investment entities listed in Note 4(b) have the characteristics of an investment entity. This is because the Group has: • more than one investment; • more than one investor; • unrelated investors; and • equity ownership interests. See Note 4(b) for further details on the consolidation status of entities. 6. Movements on investments held at fair value through profit or loss.
The changes in (losses) on investment held at fair value through profit or loss is exclusive of the gain on bargain purchase relating to the acquisition of Forward Partners. For more information, see Note 14 for the gain on bargain purchase. 7. Fee income Revenue is derived solely within the UK, from continuing operations for all years. An analysis of the Group’s revenue is as follows:
8. General administrative expenses Administrative expenses comprise:
9. Employee and employee-related expenses Employee benefit expenses (including Directors) comprise:
The monthly average number of persons (including Executive and Non-Executive Directors) employed by the Group during the year was:
At 31 March 2024, there were five Non-Executive Directors (31 March 2023: four). See Nomination Committee report for further details of changes in the year. Infrastructure comprises finance, marketing, human resources, legal, IT, Environmental, Social and Governance (“ESG”), investor relations and administration. 10. Auditor’s remuneration The loss for the year has been arrived at after charging:
Audit-related assurance services paid to the Company’s Auditors in the year were £39k related to CASS reporting to the FCA in respect of certain subsidiaries (for the year ended 31 March 2023: £25k), £65k in respect of the review of the Group’s interim financial statements (for the year ended 31 March 2023: £61k). Non-audit services paid to the Company’s Auditors in the year were £430k in respect of reporting accountant services (for the year ended 31 March 2023: £Nil). For the year ended 31 March 2024, the Group paid Grant Thornton £300k for the audit of Forward Partners Group Limited and its subsidiaries. 11. Net finance expense
12. Tax expenseThe charge to tax, which arises in the Group and the corporate subsidiaries included within these financial statements, is:
The UK standard rate of corporation tax is 25% as at year-end (for the year ended 31 March 2023: 19%). The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to loss for the year before tax are as follows:
The standard rate of corporation tax will remain at 25% for the 2024/2025 tax year. 13. Loss per share and net asset value The calculation of basic earnings per weighted average shares is based on the profit attributable to Shareholders and the weighted average number of shares. When calculating the diluted earnings per share, the weighted average number of shares in issue is adjusted for the effect of all dilutive share options and awards. Basic loss per ordinary share
Diluted loss per ordinary share
1 The basic number of shares is 189.0 million (FY23: 153.0 million). This has been adjusted to calculate the diluted number of shares by accounting for options of 0.4 million in the year (FY23: 0.7 million) to get to the diluted number of shares of 189.4 million (FY23: 153.7 million). Net asset value per share is based on the net asset attributable to Shareholders and the number of shares at the relevant reporting date. When calculating the diluted earnings per share, the number of shares in issue at balance sheet date is adjusted for the effect of all dilutive share options and awards. Net asset value per ordinary share
Diluted net asset value per ordinary share
1 The basic number of shares is 189.0 million (FY23: 153.0 million). This has been adjusted to calculate the diluted weighted average number of shares by accounting for options of 0.4 million in the year (FY23: 0.7 million) to get to the diluted weighted average number of shares of 189.4 million (FY23: 153.7 million). 14. Business Combinations On 14 March 2024, Molten Ventures plc acquired 100% of the issued shared capital of Forward Partners Group plc, an AIM listed venture capital investing in early-stage technology businesses, in an all share acquisition completed via scheme of arrangement, in a ratio of one new Molten Ventures plc ordinary share for every nine Forward Partners plc ordinary shares. The Group acquired Forward Partners Group plc to gain access to a range of promising startups in high-growth sectors across AI, alternative asset and digital marketplaces. The Group owned a 0.76% equity interest in Forward Partners Group plc through the Fund of Funds Programme before the business combination, held at a fair value of £0.5m. The Group therefore recognised a loss of £0.04m on completion of the acquisition as a result of remeasuring this equity interest at fair value on 14 March 2024. The resulting fair value loss of £0.04m is included in Movements on investments held at fair value through profit and loss for the year ended 31 March 2024. The Group opted to use a ‘convenience’ date of 31 March 2024 for acquisition accounts, as per IFRS 3. This standard allows an entity to designate an acquisition date at the end (or the beginning) of a month - the date in which it closes its book, rather than the actual acquisition date. The total consideration for the acquisition of Forward Partners Group Limited (formerly, Forward Partners Group plc) was therefore £37.5m. Acquisition-related costs for this transaction amounted to £2.8m which has been included in the Statement of Comprehensive Income under exceptional costs. Forward Partners Group Limited has generated revenues of £0.3m and net loss of £7.5m of which £29k and net profit of £0.2m, respectively, were generated from the date of acquisition to the year end date. Under the scheme of arrangement Molten Ventures plc issued 14.8m new shares in exchange for the issued share capital of Forward Partners Group Limited. This equates to consideration of £37.0m based on the closing Molten Ventures plc share price on 14 March 2024 of £2.504 pence per share. The total consideration for the acquisition of Forward Partners was therefore £37.5m. As Forward Partners Group Limited was trading at a discount to its Net Asset Value on acquisition, the acquisition resulted in a Gain on bargain purchase of £38.6m, which is recognised in the Consolidated statement of comprehensive income.
The consideration was satisfied by:
15. Share-based payments
* This is a vesting period of three years and a further two-year holding period. Set out below are summaries of options granted under the plan
Both the CSOP and LTIP are, as of 31 March 2024, partly administered by the Molten Ventures Employee Benefit Trust (“Trust”). The Trust is consolidated in these consolidated financial statements. The Trust may purchase shares from the market and, from time to time, when the options are exercised, the Trust transfers the appropriate number of shares to the employee or sells these as agent for the employee. The proceeds received, net of any directly attributable transaction costs, are credited directly to equity. Shares held by the Trust at the end of the reporting period are shown as own shares in the consolidated financial statements (see Note 27(i)). Of the 60,143 options exercised during the year, none were satisfied with new ordinary shares issued by Molten Ventures plc (FY23: 16,906 options exercised with no new ordinary shares issued). All outstanding options have been assessed to be reportable as equity-settled. Share options granted during the period under the LTIP vest over the prescribed performance period to the extent that performance conditions are met. The performance conditions relate to realisations, assets under management (calculated in line with the relevant deed of grant), and Total Shareholder Return. These options are granted under the plan for no consideration and are granted at a nominal value of one pence per share option. The fair value of the LTIP shares is valued using the Black–Scholes model, which includes a Monte Carlo simulation model. A six-monthly review takes place of non-market performance conditions and, as at 31 March 2024, the best estimate for expected vesting of unvested share options is 52%. In the year ended 31 March 2024, it was agreed that 0% (31 March 2023: 0%) of the Executive Team’s bonus for that financial year would be deferred in shares of Molten Ventures plc. FY24 bonus amounts were paid in cash for an amount up to 100% (FY23: 100%) of each Director’s salary, with the balance being paid in the form of a deferred share award over a number of shares calculated based on the Volume Weighted Average Price per share for the five trading days immediately prior to the date of grant. The deferral period under the bonus scheme is two years from the date of the award. Vesting is not subject to any further performance conditions (other than continued employment at the date of vesting). The Black–Scholes Option Pricing Model has been used for valuation purposes. The share-based payment charge for the year is £4.8 million (year ended 31 March 2023: £4.4 million). 16. Intangible assets
The amortisation charge for the year is shown in the “depreciation and amortisation” line of the consolidated statement of comprehensive income. 17. Financial assets held at fair value through profit or loss The Group holds investments through investment vehicles it manages. The investments are carried at fair value through profit or loss. The Group’s valuation policies are set out in Note 5(a) and Note 30. The table below sets out the movement in the balance sheet value of investments from the start to the end of the year, showing investments made, cash receipts and fair value movements.
1 Investments made in the period include the cost attributed for the share-for-share acquisition of Forward Partners amounting to £25.8m 2 Unrealised losses on the revaluation of investments are inclusive of the gain on bargain purchase attributable to the acquisition of Forward Partners. For more information, see Note 14 for the gain on bargain purchase. 18. Significant holdings in undertakings other than subsidary undertakings For further details of other related undertakings within the Group, see Note 4(b). Please see below details of investments held by the Group’s investment companies, where the ownership percentage or partnership interest exceeds 20%. These are held at fair value through the profit or loss in the statement of financial position.
* Fully diluted interest categorised as follows: Cat A: 0–5%, Cat B: 6–10%, Cat C: 11–15%, Cat D: 16–25%, Cat E: >25%. Details of the fair value of the Core companies are detailed as part of the Gross Portfolio Value table on page 26. 19. Property, plant and equipment
The depreciation charge for the year is shown in the “depreciation and amortisation” line of the consolidated statement of comprehensive income. 20. Operating segments The Group follows the accounting policy on operating segments laid out in Note 4(c). 21. Cash and cash equivalents
Cash on hand earns interest at floating rates based on daily bank deposit rates. Cash equivalents represent monies held in a Sterling Government Liquid Reserves Money Market Fund which can be redeemed daily. 22. Trade and other receivables
Expected credit losses for these receivables are expected to be immaterial. The ageing of trade receivables at reporting date is as follows:
Trade receivables are held at amortised cost. The maximum exposure to credit risk of the receivables at the reporting date is the fair value of each class of receivable mentioned above, which is as shown above due to the short-term nature of the trade receivables. The Group does not hold any collateral as security. 23. Trade and other payables
All trade and other payables are short term. 24. Financial liabilities
The below table shows the changes in liabilities from financing activities.
24(i). Loans and borrowings On 6 September 2022, the Company entered into a facility agreement relating to a new debt facility (the “Debt Facility”) with J.P. Morgan Chase Bank N.A., London Branch (“JPM”) and HSBC Bank Plc (“HSBC”), with a JPM affiliate acting as the appointed agent. The Debt Facility comprises a £90.0 million term loan (“Term Loan”) and a revolving credit facility (“RCF”) of up to £60.0 million on three and two-year availability periods respectively. Repayment dates for both may be extended by two 12-month periods subject to the lenders’ willingness to extend and satisfaction of various conditions. The headline interest rate applied on both the Term Loan and RCF includes a “margin” of 5.50% per annum plus SONIA. The Debt Facility is secured against various Group assets, including bank accounts and LP interests, with a number of entities within the Group acceding as guarantors. The Company’s ability to borrow under the Debt Facility and satisfy its financial and non-financial covenants is dependent on the value of the investment portfolio (excluding third-party funds under management), with draw downs being subject to a maximum loan to value ratio of 12.5% on each utilisation. The lenders may commission quarterly independent valuations of the investment portfolio. On execution of the Debt Facility Agreement, the Group drew down £90.0 million of the Term Loan, with the RCF (£60.0 million, currently undrawn) being available for two years to September 2024 subject to any extension. After expiry of the availability period, a cash sweep on realisations will apply. Both the RCF and Term Loan must be fully repaid by the third anniversary of the date of the Debt Facility Agreement, subject to any extension. The Debt Facility contains financial and non-financial covenants, which the Company and certain members of the Group must comply with throughout the term of the Debt Facility: • Maintain a value to cost ratio of investments of at least 10% (1.10:1.00). • Total financial indebtedness not to exceed 20% (12.5% on each utilisation) of the value of investments in the portfolio with adjustments for concentration limits (see below) together with the value of all amounts held in specified bank accounts subject to the security package. • Total aggregate financial indebtedness of the Company and certain members of the Group is not to exceed 35% (25% on each utilisation) of the value of secured investments in the portfolio with adjustments for concentration limits calculated by reference to specified assets and bank accounts subject to the security package. • The Company, and certain members of its Group, must maintain a minimum number of investments subject to concentration limits connected to sector, geography, joint or collective value, and/or listed status. Failure to satisfy financial covenants may limit the Company’s ability to borrow and/or also trigger events of default, which in some instances could trigger a cash sweep on realisations and/or require the Company to cure those breaches by repaying the Debt Facility (either partially or in full). The Company seeks to maintain a conservative level of gearing and will limit its borrowings to a maximum of 25 percent of Net Asset Value.
25. Deferred tax Deferred tax is calculated in full on temporary differences under the balance sheet liability method using the tax rate expected to apply when the temporary differences reverse. See breakdown below:
As at 31 March 2024, the Group had tax losses carried forward of £2.9m (2023: £12.6m).
26. Share capital and share premium Ordinary share capital
1 In December 2023, the Company raised equity by issuing 21,261,548 new ordinary shares at 1 pence. 2 In March 2024, the Company exchanged 14,785,049 new ordinary shares as part of the Forward Partners Group Limited acquisition.
Share premium
27. Own shares and other reserves i. Own shares reserve Own shares are shares held in Molten Ventures plc that are held by Molten Ventures Employee Benefit Trust (“Trust”) for the purpose of awarding shares under the Molten Ventures plc 2016 Company Share Options Plan, Long-Term Incentive Plan and Deferred Bonus Plan. Shares issued to employees are recognised on a weighted average cost basis. The Trust holds 0.58% of the issued share capital at 31 March 2024 (31 March 2023: 0.72%).
* Disposals or transfers of shares by the Trust also include shares transferred to employees net of exercise price with no resulting cash movements. Cash receipts in respect of sale of shares in the year ended 31 March 2024 were £Nil (year ended 31 March 2023: £Nil). ii. Other reserves The following table shows a breakdown of the “other reserves” line in the consolidated statement of financial position and the movements in those reserves during the period. A description of the nature and purpose of each reserve is provided below the table.
Merger relief reserve In accordance with the Companies Act 2006, a Merger Relief Reserve of £13.1 million (net of the cost of share capital issued of £80k) was created on the issue of 4,392,332 ordinary shares for 300 pence each in Molten Ventures plc as consideration for the acquisition of 100% of the capital interests in Esprit Capital Partners LLP on 15 June 2016. A Merger Relief Reserve of £36.9 million was created on the issue of 14,785,049 ordinary Shares of 250 pence each in Molten Venture plc as consideration for the acquisition of 100% of the capital interest in Forward Partners Group plc on 14 March 2024. Share-based payment reserve Where the Group engages in equity-settled share-based payment transactions, the fair value at the date of grant is recognised as an expense over the vesting period of the options. The corresponding credit is recognised in the share-based payment reserve. Please see Note 15 for further details on how the fair value at the date of grant is recognised. 28. Adjustments to reconcile operating (loss) to net cash outflow in operating activities
Please see Note 24 for the changes in liabilities from financing activities. 29. Retirement benefits The Molten Ventures Group makes contributions to personal pension schemes set up to benefit its employees. The Group has no interest in the assets of these schemes and there are no liabilities arising from them beyond the agreed monthly contribution for each employee or member that is included in employment costs in the profit and loss account as appropriate. 30. Fair value measurements i. Fair value hierarchy This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value in the financial statements. This section should be read with reference to Note 5(a) and Note 17. As explained in Note 5(a), valuation of unquoted equity investments at fair value through profit or loss is a critical accounting estimate and actuals may differ from estimates. The Group has considered the impact of ESG and climate-related risks on its portfolio, and consider these to be currently immaterial to the value of our portfolio for FY24, owing to the nature of the underlying investments (FY23: immaterial) and taking into consideration the climate risk impact channels and their financial impact across the portfolio companies, however this will be monitored each year to assess any changes. The Group recognised a number of climate-related opportunities within the portfolio via our Climate Tech thesis. The inputs to our valuations are described in the sensitivities analysis table below, and because these are more short-term in nature (e.g. forecast revenue for the current year applied to current market multiples, and recent transactions), we do not currently see any material impacts on these inputs from the longer term risks described in our TCFD report and, therefore, values as at 31 March 2024. We also recognise that, although the risks are not currently material, they could become material in the medium to long-term without mitigating actions, which are described within the TCFD section of the Strategic Report. For further discussion of our climate-related risks and opportunities, please see our TCFD and Principal Risks section of the Strategic Report. The Group classifies financial instruments measured at fair value through profit or loss (“FVTPL”) according to the following fair value hierarchy prescribed under the accounting standards: • Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date (31 March 2024; and 31 March 2023 for comparatives); • Level 2: inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and • Level 3: inputs are unobservable inputs for the asset or liability. All financial instruments measured at FVTPL in FY23 and FY24 are financial assets relating to holdings in investment entities that hold high-growth technology companies either directly or through Fund of Funds. The Group invests in special purpose vehicles and limited partnerships, which are considered to be investment companies that invest mostly in equities for the benefit of the Group. As set out in Note 4(b), these are held at their respective net asset values and, as such, are noted to be all Level 3 for FY23 and FY24. For details of the reconciliation of those amounts please refer to Note 17. The additional disclosures below are made on a look-through basis and are based on the Gross Portfolio Value (“GPV”). In order to arrive at the Net Portfolio Value (“NPV”), which is the value recognised as investments held at FVTPL in the statement of financial position, the GPV is subject to deductions for the fair value of carry liabilities and adjustments for Irish deferred tax. UK deferred tax is recognised in the consolidated statement of financial position as a liability to align the recognition of deferred tax to the location in which it will likely become payable on realisation of the assets. For details of the GPV and its reconciliation to the investment balance in the financial statements, please refer to the extract of the Gross Portfolio Value table below:
Carry external – this relates to accrued carry that is due to former and current employees or managers external to the Group. These values are calculated based on the reported fair value, applying the provisions of the limited partnership agreements to determine the value that would be payable by the Group’s investment entities to external managers and the carried interest partnerships. Portfolio deferred tax – this relates to tax accrued against gains in the portfolio to reflect those portfolio companies where tax is expected to be payable on exits. This relates to Irish deferred tax only. UK deferred tax is recognised in the consolidated statement of financial position as a liability to align the recognition of deferred tax to the location in which it will likely become payable on realisation of the assets. These values are calculated based on unrealised fair value of investments at reporting date at the applicable tax rate. Trading carry and co-invest – this relates to accrued carry that is due to the Group. Non-investment cash movements – this relates to cash movements relating to management fees and other non-investment cash movements to the subsidiaries held at FVTPL. During the year ending 31 March 2024, Level 1 investments were realised. In the year ending 31 March 2023, there were transfers out of Level 3 and into Level 1 following the listing of two investments, one was held directly and one of which is held via our partnership with Earlybird – see below for the breakdown of investments by fair value hierarchy and Note 30 (iii) on the following page for movements. The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period.
* ”other” includes Fund of Funds investments and Earlybird investments where we do not perform a look-through valuation. This differs from the analysis in the Strategic Report in order to align to valuation methodologies. Within the Strategic Report, additional Earlybird companies are included within the sector analysis. ii. Valuation techniques used to determine fair values The fair value of unlisted securities is established with reference to the IPEV Guidelines. In line with the IPEV Guidelines, the Group may base valuations on earnings or revenues where applicable, market comparables, calibrated price of recent investment in the investee companies, or on net asset values of underlying funds (“NAV of underlying funds”). An assessment will be made at each measurement date as to the most appropriate valuation methodology, including that for investee companies owned by third-party funds that Molten Ventures plc invests in and which are valued on a look-through basis. Financial instruments, measured at fair value, categorised as Level 3 can be split into three main valuation techniques: • Calibrated price of recent investment; • Revenue-multiple; and • NAV of underlying fund. Each portfolio company will be subject to individual assessment. For a valuation based on calibrated price of recent investment, the recent round enterprise value is calibrated against the equivalent value at year-end using a revenue-multiple valuation methodology as well as in relation to technical/product milestones since the round and the company’s trading performance relative to the expectations of the round. For a valuation based on a revenue-multiple, the main assumption is the multiple. The multiple is derived from comparable listed companies or relevant market transaction multiples. Companies in the same industry, geography, and, where possible, with a similar business model and profile are selected and then adjusted for factors including liquidity risk, growth potential and relative performance. Where the Group invests in Fund of Fund investments, the value of the portfolio will be reported by the fund to the Group. The Group will ensure that the valuations comply with the Group policy and that they are adjusted with any cash and known valuation movements where reporting periods do not align. See also Note 5(a) where valuation policies are discussed in more detail. iii. Fair value measurements using significant unobservable inputs (Level 3) The table below presents the changes in Level 3 items for the years ending 31 March 2023 and 31 March 2024.
iv. Valuation inputs and relationships for fair value The following table summarises the quantitative information about the significant unobservable inputs used in Level 3 fair value measurements:
* There were no significant inter-relationships between unobservable inputs that materially affect fair values. v. Valuations processes The Audit, Risk and Valuations Committee is responsible for ensuring that the financial performance of the Group is properly reported on and monitored. In addition to continuous portfolio monitoring through the Board positions held in portfolio companies and the Investment Committee, a bi-annual strategy day is held every six months to discuss the investment performance and valuations of the portfolio companies. The Investment Team leads discussions focused on business performances and key developments, exit strategy and time lines, revenue and EBITDA progression, funding rounds and latest capitalisation table, and valuation metrics of listed peers. Valuations are prepared every six months by the Finance Team during each reporting period, with direct involvement and oversight from the CFO. Challenge and approvals of valuations are led by the Audit, Risk and Valuations Committee every six months, in line with the Group’s half-yearly reporting periods. 31. Financial instruments risk Financial risk management Financial risks are usually grouped by risk type: market, liquidity and credit risk. These risks are discussed in turn below. Market risk – Foreign currency A significant portion of the Group’s investments and cash deposits are denominated in a currency other than Sterling. The principal currency exposure risk is to changes in the exchange rate between GBP and USD/EUR. Presented below is an analysis of the theoretical impact of 10% volatility in the exchange rate on Shareholder equity. Theoretical impact of a change in the exchange rate of +/-10% between GBP and USD/EUR would be as follows:
Certain cash deposits held by the Group are denominated in Euros and US Dollars. The theoretical impact of a change in the exchange rate of +/-10% between GBP and USD/EUR would be as follows:
The combined theoretical impact on Shareholders’ equity of the changes to revenues, investments and cash and cash equivalents of a change in the exchange rate of +/- 10% between GBP and USD/EUR would be as follows:
Market risk – Price risk Market price risk arises from the uncertainty about the future prices of financial instruments held in accordance with the Group’s investment objectives. It represents the potential loss that the Group might suffer through holding market positions in the face of market movements. As stated in Note 5(a) and Note 30, valuation of unquoted equity investments at fair value through profit or loss is a critical accounting estimate and actuals may differ from estimates. The Group is exposed to equity price risk in respect of equity rights and investments held by the Group and classified on the balance sheet as financial assets at fair value through profit or loss (Note 30). These equity rights are held mostly in unquoted high-growth technology companies and are valued by reference to revenue or earnings multiples of quoted comparable companies (taken as at the year-end date), last round price (calibrated against market comparables), or NAV of underlying fund, and also in certain quoted high-growth technology companies – as discussed more fully in Note 5(a). These valuations are subject to market movements. The Group seeks to manage this risk by routinely monitoring the performance of these investments, employing stringent investment appraisal processes. Theoretical impact of a fluctuation in equity prices of +/-10% would be as follows:
Given the impact on both private and public markets from current market volatility, which could impact the valuation of our unquoted and quoted equity investments, we further flexed by 20% in order to analyse the impact on our portfolio of larger market movements. Theoretical impact of a fluctuation of +/- 20% would have the following impact:
Liquidity risk Cash and cash equivalents comprise of cash and short-term bank deposits with an original maturity of three months or less held in readily accessible bank accounts. There is no restricted cash as at 31 March 2024 (restricted cash as at 31 March 2023 included £2.3 million of collateral for interest payments on the revolving credit facility (see Note 24 (i)). The carrying amount of these assets is approximately equal to their fair value. Responsibility for liquidity risk management rests with the Board of Molten Ventures plc, which has established a framework for the management of the Group’s funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows. The utilisation of the debt facility and requirement for utilisation requests is monitored as part of this process, the debt facility is not linked to the liquidity of the Group and further drawdowns on the debt facility have been considered within the Going Concern assessment. For the contractual maturities of the Group’s liabilities see tables below.
Lease liabilities fall due over the term of the lease. The debt facility has a term of three years – for further details, see Note 24(i). All other Group payable balances at balance sheet date and prior periods fall due for payment within one year. As part of our Fund of Funds, Earlybird, Irish Co-Invest and Molten SP I LP strategy, we make commitments to funds to be drawn down over the life of the fund. Projected drawdowns due by the Company are monitored as part of the monitoring process above. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss. The Group is exposed to this risk for various financial instruments, for example by granting receivables to customers and placing deposits. As part of the Group’s investments, the Group invests in debt instruments such as bridging loans and convertible loan notes (included within the investments held at FVTPL). This is not included below as the risk is considered as part of the fair value measurement. The Group’s trade receivables are amounts due from the investment funds under management, or underlying portfolio companies. The Group’s maximum exposure to credit risk is limited to the carrying amount of trade receivables, cash and cash equivalents, and restricted cash at each period-end is summarised below:
The Directors consider that expected credit losses relating to the above financial assets are immaterial for each of the reporting dates under review as they are of good credit quality. In respect of trade and other receivables, the Group is not exposed to significant risk as the principal customers are the investment funds managed by the Group, and in these the Group has control of the banking as part of its management responsibilities. Investments in unlisted securities are held within limited partnerships for which Esprit Capital Partners LLP acts as manager, and, consequently, the Group has responsibility itself for collecting and distributing cash associated with these investments. The credit risk of amounts held on deposit is limited by the use of reputable banks with high-quality external credit ratings and, as such, is considered negligible. The Group has an agreed list of authorised counterparties. Authorised counterparties and counterparty credit limits are established within the parameters of the Group Treasury Policy to ensure that the Group deals with creditworthy counterparties and that counterparty concentration risk is addressed. Any changes to the list of authorised counterparties are proposed by the CFO after carrying out appropriate credit worthiness checks and any other appropriate information, and the changes require approval from the Board. Cash at 31 March 2024 is held with the following institutions (and their respective Moody’s credit rating): (1) Barclays Bank plc (Baa2); (2) HSBC UK Limited (Aa3); and at 31 March 2023, also (3) Investec Bank plc (Baa1). Cash equivalents at 31 March 2024 comprise of a holding in Goldman Sachs Sterling Government Liquid Reserves Fund (Moody’s credit rating AAA-mf). Capital management The Group’s objectives when managing capital are to: • safeguard their ability to continue as a going concern, so that they can continue to provide returns for Shareholders and benefits for other stakeholders; and • maintain an optimal capital structure. The Group is funded through equity and debt at the balance sheet date. During the period, the Group had £90 million term loan which has been fully drawn and an undrawn £60m revolving credit facility, please refer to Note 24(i) for further details regarding the loan. In order to maintain or adjust the capital structure, the Group may make distributions to Shareholders, return capital to Shareholders, issue new shares or sell assets between related parties or otherwise to manage cash. Interest rate risk The Group’s interest rate risk arises from borrowings on the £150.0 million Debt Facility with JPM and HSBC, which was entered into in September 2022, at which point £90.0 million term loan was drawn down (31 March 2023: £90.0 million drawn). The Group’s borrowings are denominated in GBP and are carried at amortised cost. £38 million was drawn from the revolving credit facility 30 November 2023 and fully repaid on 21 December 2023. Interest was charged at a rate of SONIA plus 5.50% The term loan balance remains outstanding at the period-end. The interest charged on future drawdowns will fluctuate with the movements on SONIA. 32. Related party transactions The Group has various related parties stemming from relationships with Limited Partnerships managed by the Group, its investment portfolio, its advisory arrangements/Directors’ fees (Board seats) and its key management personnel. Key management personnel compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, and are considered to be the Directors of the Company listed on pages 70 and 71 of the Annual Report.
The details of individual Directors’ remuneration and pension benefits, as set out in the tables contained in the Directors’ Remuneration Report on page 90 of the Annual Report, form part of these consolidated financial statements. During the year, employees of Molten Ventures plc, including key management personnel were granted and exercised share options – see Note 15 for further details. Transactions with other related parties In addition to key management personnel, the Company has related parties in respect of its subsidiaries and other related entities. On 30 March 2022, Molten Ventures plc entered into an agreement with Softcat plc to provide Molten Ventures plc with fractional CIO services. Karen Slatford was both the Chair of Softcat plc’s Board and was Chair of Molten Ventures plc’s Board at the time of entering the agreement until 17 January 2023. During the year fees of £Nil have been recognised in relation to the services (31 March 2023: £0.1k), and £Nil remains outstanding at 31 March 2024 (31 March 2023: £Nil). Management fees Fees are received by the Group in respect of the EIS and VCT funds as well as unconsolidated structured entities managed by Esprit Capital Partners LLP, which is consolidated into the Group. The EIS funds are managed by Encore Ventures LLP under an Investment Management Agreement; Encore Ventures LLP is a consolidated subsidiary of the Group. Molten Ventures VCT plc is managed under an Investment Management Agreement by Elderstreet Investments Limited, which is a consolidated subsidiary of the Group. Management fees are received by the Group in respect of these contracts. See Note 4(b) for further information on consolidation.
Directors’ fees Administration fees for the provision of Director services are received where this has been agreed with the portfolio companies. These amounts are immaterial. At times, expenses incurred relating to Director services can be recharged to portfolio companies – these are also immaterial. Molten Ventures does not exercise control or management through any of these Non-Executive positions. Carry payments Carry was paid to 15 beneficiaries in the year, of which the below was to related parties. Carry payments have been made in respect of Esprit Capital III LP and Esprit Capital IV LP to key management personnel in FY23 and FY24. Please see the Directors’ Remuneration Report for further details.
Performance fees Performance fees have not been paid during the year by the EIS and VCT funds to Encore Ventures LLP. At 31 March 2024, £0.1 was unpaid (31 March 2023: £Nil).
Unconsolidated structured entities The Group has exposure to a number of unconsolidated structured entities as a result of its venture capital investment activities. The Group ultimately invests all funds via a number of limited partnerships and some via Molten Ventures plc’s wholly owned subsidiaries, Molten Ventures (Ireland) Limited and Molten Venture Holdings Limited. These are controlled by the Group and not consolidated, but they are held as investments at fair value through profit or loss on the consolidated statement of financial position in line with IFRS 10 (see Note 4(b) for further details and for the list of these investment companies and limited partnerships). The material assets and liabilities within these investment companies are the investments, which are held at FVTPL in the consolidated accounts. Please see further details in the table below. The Group has a beneficial interest to these assets since the acquisition and as such holds them as investments at fair value through profit and loss.
Molten Ventures (Ireland) Limited invests via the following limited partnerships: Esprit Investments (1) LP, Esprit Investments (2) LP, Esprit Capital IV LP (which also holds investments via DFJ Europe X LP) and Esprit Capital III LP. Molten Ventures Holdings Limited invests in or via the following limited partnerships: Molten Ventures Investments LP, Molten Ventures FoF I LP, Esprit Investments (2)(B)(ii) LP, and Molten Ventures Investments (Ireland) I LP. The investments balance in the consolidated statement of financial position also includes investments held by consolidated entities. The Group also co-invests or historically co-invested with a number of limited partnerships (see Note 4(b) for further details). The exposure to these entities is immaterial. Vested but unrealised carried interest of £0.6 million is recognised by the Group via Encore I Founder LP (14.5% aggregate carry LP interest) and Esprit Capital III Carried Interest LP (2.2% aggregate carry LP interest). 33. Capital commitments The Group makes commitments to Fund of Funds (including funds invested in as part of our partnership with Earlybird) as part of its investment activity, which will be drawn down as required by the funds over their investment period. Contractual commitments for the following amounts have been made as at 31 March 2024 but are not recognised as a liability on the consolidated statement of financial position:
Total fair value to the Group of these seed funds (including Earlybird) is £312.3 million of total investments (31 March 2023: £349.8 million). 34. Ultimate controlling party The Directors of Molten Ventures plc do not consider there to be a single ultimate controlling party of the Group. 35. Alternative Performance Measures (“APM”) The Group has included the APMs listed below in this report as they highlight key value drivers for the Group and, as such, have been deemed by the Group’s management to provide useful additional information to readers of this report. These measures are not defined by IFRS and should be considered in addition to IFRS measures. Gross Portfolio Value (“GPV”) The GPV is the gross fair value of the Group’s investment holdings before deductions for the fair value of carry liabilities and any deferred tax. The GPV is subject to deductions for the fair value of carry liabilities and deferred tax to generate the net investment value, which is reflected on the consolidated statement of financial position as financial assets held at FVTPL. Please see Note 30(i) for a reconciliation to the net investment balance. This table also shows the Gross to Net movement, which is 94% in the current year calculated as the net investment value (£1,292.1 million) divided by the GPV (£1,378.9 million). The table reflects a Gross fair value movement of (£18.3 million), on an opening balance of £1,370.8 million, which is a (1)% percentage change on the 31 March 2022 GPV. This is described in the report as the Gross fair value decrease/increase. Net Portfolio Value (“NPV”) The NPV is the net fair value of the Group’s investment holdings after deductions for the fair value of carry liabilities and any deferred tax from the GPV. The NPV is the value of the Group’s financial assets classified at “fair value through profit or loss” on the statement of financial position. NAV per share The NAV per share is the Group’s net assets attributable to Shareholders divided by the number of shares at the relevant reporting date. See the calculation in Note 13. Please see further details relating to the calculation of the Net Portfolio Value in Note 30 (i). Net fair value movement This is the fair value movement as calculated by dividing the fair value movement, excluding foreign exchange movements, by the opening Gross Portfolio Value at the relevant period. Gross fair value movement This is the fair value movement as calculated by dividing the fair value movement, including foreign exchange movements, by the opening Gross Portfolio Value at the relevant period. Platform AuM The latest available fair value of investments held at FVTPL and cash managed by the Group, including funds managed by Elderstreet Investments Limited, Encore Ventures LLP, and Esprit Capital Partners LLP. This includes a deduction for Molten Ventures plc operating costs budget for the year. We also refer to the EIS and VCT fund AUM separately within the report. Operating costs as a % of year end NAV This is the operating costs, net of fee income and exceptional items divided by year-end NAV. 36. Exceptional items Exceptional costs primarily consists of costs relating to the acquisition of Forward Partners Group Limited and equity raise which amounted to £3.6m for the year ended 31 March 2024 (year ended 31 March 2023: £Nil). The majority of these costs include fees relating to brokers, legal advisory, listing and reporting accountant. 37. Subsequent events On 30 April 2024, Hologic, Inc, a NASDAQ listed entity, signed definitive agreement to acquire Endomag. The acquisition, which is subject to completion conditions and regulatory approval as well as working capital and other customary closing adjustments, values Endomag at approximately $310 million, which is at a slight uplift to NAV. There are no further post balance sheet events requiring comment.
Company statement of financial position As at 31 March 2024
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and have not presented a statement of comprehensive income for the Company. The Company’s loss for the year ended 31 March 2024 was £49.4m (31 March 2023: loss of £224.0 million). The Company financial statements should be read in conjunction with the accompanying notes. The Company financial statements on pages 153 to 160 of the Annual Report were authorised for issue by the Board of Directors on 11 June 2024 and were signed on its behalf. Ben Wilkinson Chief Financial Officer Molten Ventures plc registered number 09799594
Company statement of changes in equity For the year ended 31 March 2024
The consolidated financial statements should be read in conjunction with the accompanying notes.
Notes to the company financial statements 1. Basis of preparation The financial reporting framework that has been applied in the preparation of the Company’s financial statements is Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (FRS 101). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities measured at fair value through profit or loss, and in accordance with the Companies Act 2006. The Company has taken advantage of disclosure exemptions available under FRS 101 as explained below. The financial statements are prepared on a going concern basis. A summary of the more important Company accounting policies, which have been consistently applied except where noted, is set out in the relevant notes below. The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101: paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment (details of the number and weighted average exercise prices of share options, and how the fair value of goods or services received was determined); IAS 7 Statement of Cash Flows; the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into and between two or more members of a group; IAS 1 Presentation of Financial Statements and the following paragraphs of IAS 1: 10(d) (statement of cash flows), 16 (statement of compliance with all IFRS), 111 (cash flow statement information), and 134-136 (capital management disclosures).No new Standards have been adopted in the current financial year ending 31 March 2024 or in the prior financial year ending 31 March 2023. 2. Critical accounting estimates and judgements The Directors have made judgements and estimates with respect to those items that have made the most significant effect on the carrying amounts of the assets and liabilities in the financial statements. The Directors have concluded that the critical judgements and estimates in the Company financial statements are consistent with those applied in the consolidated financial statements, further details of which can be found in Note 5 of the consolidated financial statements. 3. Investments in subsidiary undertakings Investments in subsidiaries are held at cost less any provision for impairment with the exception of unconsolidated investment entity subsidiaries that are held at fair value. 4. Property, plant and equipment Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is recognised to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following basis: Leasehold improvements – over the term of the lease The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting year, with the effect of any changes in estimate accounted for on a prospective basis
No “fixtures and equipment” are held by the Company. 5. Results for the parent company The Auditors’ remuneration for audit services and other services is disclosed in Note 10 to the consolidated financial statements. 6. Financial assets held at fair value through profit or loss
1 Investments and loans made in the year are amounts the Company has invested in underlying investment vehicles. This is not the equivalent to the total amount invested in portfolio companies, as existing cash balances from the investment vehicles are reinvested. See Note 4(b) in the consolidated financial statements for the accounting policies in respect of investments held at fair value through profit or loss. 7. Investments in consolidated subsidiary undertakings, associates and Employee Benefit Trust On 15 June 2016, the Company acquired the entire capital interests of Esprit Capital Partners LLP for £13.2 million, which was satisfied in shares and is held at cost on the Company’s balance sheet within investments in subsidiary undertakings as at 31 March 2024 (2023: £13.2 million). On 26 November 2016, the Company acquired 30.77% of the capital interests in Elderstreet Holdings Limited, the holding company of Elderstreet Investments Limited (manager of Molten Ventures VCT plc) for £0.26 million which was held at cost on the Company’s balance sheet at 31 March 2020 within investments in associates. On 9 February 2021, Molten Ventures plc acquired the remaining 69.23% of the issued share capital in Elderstreet Holdings Limited. Elderstreet Holdings Limited was held as an Investment in Associate on the consolidated statement of financial position as at 31 March 2020. Total consideration for the remaining issued share capital not previously held was cash consideration of £0.79 million (with an amount withheld for tax on share options). This transaction is accounted for under IFRS 3 as a business combination achieved in stages (or “step acquisition”) as this transaction resulted in Molten Ventures plc obtaining control over Elderstreet Holdings Limited and Elderstreet Investments Limited (as its 100% owned subsidiary). At 31 March 2024, the total investment in subsidiary undertaking is £1.05 million made up of initial ownership and the cash consideration (31 March 2023: £1.05 million). On 27 November 2020, Molten Ventures Employee Benefit Trust (the “Trust”) was set up to operate as part of the employee share option schemes. The Trust is funded via a loan from Molten Ventures plc, which is included in trade and other receivables on the company statement of financial position. On 14 March 2024, Molten Ventures plc acquired 100% of the issued capital of Forward Partners plc in an all share acquisition scheme of arrangement, in a ratio of one new Molten Ventures plc ordinary share for every nine Forward Partners plc ordinary shares. In accordance with IFRS 3, step acquisition accounting was applied as the Company held a 0.76% equity interest in Forward Partners plc before acquisition, at a fair value of £0.5m. The Company therefore recognised a loss of £0.04m on completion of the acquisition as a result of remeasuring this equity interest at fair value on 14 March 2024. Molten Ventures plc issued 14.8m new shares in exchange for the issued share capital of Forward Partners plc. This equates to consideration of £37.0m based on the closing Molten Ventures plc share price on 14 March 2024 of £2.504 pence per share. 8. Cash and cash equivalents
Cash on hand earns interest at floating rates based on daily bank deposit rates. Cash equivalents represent monies held in a Sterling Government Liquid Reserves Money Market Fund which can be redeemed daily. 9. Trade and other receivables
10. Loans and borrowings Molten Ventures have an agree £150.0 million net asset value facility with J.P. Morgan Chase Bank N.A. (“JPM”) and HSBC (the “Debt Facility”). The Debt Facility comprises a £90.0 million term loan and a revolving credit facility (“RCF”) of up to £60.0 million on three- and two- year tenors respectively, both with one-year extensions up to five years and is secured against various assets and LP interests in the Group. The Debt Facility interest rate is SONIA plus a margin of 5.5% per annum. 11. Trade and other payables
All trade and other payables amounts are short term. The net carrying value of all financial liabilities is considered a reasonable approximation of fair value. 12. Share capital and share premium
1 In December 2023, the Company raised equity by issuing 21,261,548 new ordinary shares at 1 pence. 2 In February 2024, the Company exchanged 14,785,049 ordinary shares as part of the Forward Partners Group Limited acquisition.
Movements in share premium in the statement of changes in equity are shown net of directly attributable costs relating to the share issuance. Movements in share capital and share premium are explained in Note 26 of the consolidated financial statements. 13. Other reserves Movements in other reserves are explained in Note 27 of the consolidated financial statements. 14. Share-based payments The Company operates a share option scheme that is explained in Note 15 of the consolidated financial statements. The Company operates the share option scheme within the Group, therefore, the details provided in Note 15 are also applicable to the Company. 15. Employee information Employee benefit expenses (including Directors) comprise
The monthly average number of persons (including Executive and Non-Executive Directors) employed by the Company during the year was:
Infrastructure comprises finance, marketing, human resources, legal, IT, ESG, investor relations and administration. At 31 March 2024, there were five Non-Executive Directors (31 March 2023: five). See Nomination Committee report for further details of changes in the year.
16. Deferred tax Deferred tax is calculated in full on temporary differences under the balance sheet liability method using the tax rate expected to apply when the temporary differences reverse. See breakdown below:
17. Subsidiary undertakings The Company has a number of subsidiary undertakings. For a breakdown of the subsidiaries and related undertakings of the Group, of which Molten Ventures plc is the ultimate parent entity, see Note 4(b) and Note 18 of the consolidated financial statements. See below the list of direct subsidiaries of Molten Ventures plc.
1 Molten Ventures (Nominee) Limited is held at cost £Nil (2023: £Nil) on the Company’s balance sheet. 2 The remaining interest in Elderstreet Holdings Limited, holding company of Elderstreet Investments Limited, was purchased by Molten Ventures plc on 9 February 2021. 3 A minority holding in Esprit Investments (1) (B) LP & Esprit Investments (2) (B) LP was sold within the financial year ended 31 March 2023 to internal and external parties. The investments are held through the investment companies as set out in Note 30 in the consolidated financial statements at their respective net asset values, and as such, are all noted to be Level 3 for FY24 and FY23. The difference between investments disclosed in Note 30 of the consolidated financial statements and the Company investments relate to interests in unvested carried interest held by subsidiaries of Molten Ventures plc, which are included in the consolidated financial statements at FVTPL but are not included in the Company financial statements. Unvested carried interest is carried interest, which is yet to vest, but would be due on realisation of assets based on measurement date fair values of investments. See table below for a reconciliation to the investment figure in Note 30 of the consolidated financial statements and the investments figure on the Company statement of financial position.
1 *Refers to the fair value of investments not held by Molten Ventures plc but included within the Consolidated Statement of Financial Position. The Company holds investments at FVTPL. Refer to Note 30 for the Group’s policies with respect to fair value measurements and Note 2 of the Company financial statements. 18. Financial instruments risk In the normal course of business, the Company uses certain financial instruments including cash, trade and other receivables and investments. The Company is exposed to a number of risks through the performance of its normal operations. Refer to Note 31 of the consolidated financial statements. 19. Related party transactions Key management personnel compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, and are considered to be the Directors of the Company listed on pages 70 to 71 of the Annual Report.
The details of individual Directors’ remuneration and pension benefits, as set out in the tables contained in the Directors’ Remuneration Report on page 90 of the Annual Report, form part of these financial statements. Other related party transactions Please refer to Note 32 in the consolidated financial statements for further details on related party transactions. In addition to the transactions referenced in Note 32, the below transactions eliminate on consolidation but are relevant for the Company: As at 31 March 2024, Molten Ventures plc has a receivable relating to an intercompany loan with Grow Trustees Limited relating to the purchase of own shares for the benefit of the Molten Ventures Employee Benefit Trust of £9.5 million (31 March 2023: £9.5 million). During the year, £1.8 million (year ended 31 March 2023: £2.0 million) was invoiced from Molten Ventures plc to Encore Ventures LLP for overheads, including use of office space at 20 Garrick Street, staff, and fixed assets. At year-end a balance , Molten Ventures plc owed £0.1 million (31 March 2023: due £0.2 million). Encore Ventures LLP is a subsidiary of Molten Ventures plc and has a management contract with the EIS funds. During the year, the Company invoiced Elderstreet Investments Limited, previously an associate and now a subsidiary, £0.4 million (year to 31 March 2023: £0.4 million), with a balance outstanding at year-end of £Nil (31 March 2023: £Nil) for overheads, including use of office space at 20 Garrick Street, staff, and fixed assets. During the year, the Company transferred certain fund of fund investments totalling £nil (31 March 2023: £26.2m) from Esprit Investments 1(B) LP and Esprit Investments 2(B) LP to a newly formed entity, Molten Ventures FoF I LP as part of a strategy for the syndication of Fund of Funds. 20. Subsequent events Please refer to Note 37 of the consolidated financial statements.
Annual Report and Accounts The Company has also submitted its Annual Report and Accounts to the UK National Storage Mechanism (available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and Euronext Dublin (available for inspection at https://direct.euronext.com/#/oamfiling). This announcement constitutes the material required by DTR 6.3.5 to be communicated in unedited full text through a Regulatory Information Service. Status of announcement 2024 Financial Information: The figures and financial information for 2024 are extracted from the Annual Report and Accounts for the year ended 31 March 2024 and do not constitute the statutory accounts for the year. The 2024 Annual Report and Accounts include the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The 2024 Annual Report and Accounts will be delivered to the Registrar of Companies in due course. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement. Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. |
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| ISIN: | GB00BY7QYJ50 |
| Category Code: | FR |
| TIDM: | GROW; GRW |
| LEI Code: | 213800IPCR3SAYJWSW10 |
| OAM Categories: | 1.1. Annual financial and audit reports |
| Sequence No.: | 327305 |
| EQS News ID: | 1922961 |
| End of Announcement | EQS News Service |
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