Final Results

Molten Ventures VCT plc
LEI: 2138003I9Q1QPDSQ9Z97
31 July 2023
Final Results for the year ended 31 March 2023

FINANCIAL SUMMARY

	31 Mar 2023 Pence		31 Mar 2022 Pence
Net asset value per share ("NAV”)	53.3		60.6
Cumulative dividends paid since launch	113.6		110.5
Total Return (NAV plus cumulative dividends paid per share)	166.9		171.1
Dividends in respect of financial year ended 31 March 2023
Interim dividend paid per share	1.0		1.5
Final dividend per share (payable on 29 September 2023)	0.5		3.1
	1.5		4.6

OVERVIEW

Molten Ventures VCT is a steadily growing, £110m investment company that gives the opportunity to invest with the experienced, technology focused, venture capital team at Molten Ventures plc in a tax efficient manner.

This allows the Company to benefit from that team’s distinctive abilities in technology investment with a sector focus on enterprise and consumer technology, differentiated operating systems, machine learning and digital healthcare, all of which add to the portfolio’s increasing emphasis on
UK leading-edge expertise.

Through Molten Ventures’ co-investment connections in future-focused sectors, its process, analysis, structuring, and engagement with investee companies, this VCT provides an enhanced opportunity for investors to participate in and contribute to future value in the UK and to make a serious contribution to the future of that economy and its vital,
early-stage investment.

CHAIRMAN’S STATEMENT

Introduction
I present the Company’s Annual Report for the year ended 31 March 2023. There has been a significant shift in investor sentiment over the year, particularly in respect of the technology sector which is now your Company’s main focus.

Although there has been a fall in net asset value over the year, the overall performance has been relatively good when compared generally to quoted technology businesses, with many of the portfolio companies weathering the more challenging conditions reasonably well.

Net asset value and results
As at 31 March 2023, the Company’s Net Asset Value per share ("NAV”) stood at 53.3p, representing a decrease of 4.2p (6.9%) over the year after adding back dividends paid.

The loss on ordinary activities after taxation for the year was £7.6 million (2022: £18.4 million profit), comprising a revenue loss of £1.0 million (2022: £537,000) and a capital loss of £6.6 million (2021: £18.9 million profit).

Venture capital investments
Portfolio allocation
In line with the strategy that has been pursued in recent years, the Company’s growth technology investments now form a substantial proportion of the investment portfolio. The split with the older legacy investments at the year-end is summarised as follows:

Portfolio split as at 31 March 2023

	Growth Technology	Legacy	Cash	Total
	£’000	£’000	£’000	£’000
Cost	50,323	10,903	28,845	90,071
Gains	17,394	2,937	-	20,331
Valuation	67,717	13,840	28,845	110,402
Percentage of portfolio	61.4%	12.5%	26.1%	100.0%

Portfolio activity
There was a steady flow of new investment opportunities from the Manager during the year. The Company made five new investments and five follow-on investments totalling £17.4 million.

There were four investment disposals during the year, including that of Lyalvale Express Limited, producing proceeds of £6.0 million, and Roomex UK Limited, producing proceeds of £1.4 million.

Further details on the investment activity can be found in the Investment Manager’s report.

Investment valuations
At the year end, the Company held a portfolio of 34 active investments valued at £81.6 million.

The Board has reviewed the unquoted investment valuations at the year end, resulting in a number of movements.

There were some significant uplifts over the year in respect of Endomagnetics Limited, Form3 UK Limited and Focal Point Positioning Limited, which contributed £4.8 million between them. There were also some significant fallers, most notably IESO Digital Health Limited, PrimaryBid Limited and Freetrade Limited. Additionally, AIM-quoted Access Intelligence plc also saw a significant fall in its share price.

Overall, the unrealised valuation movements on the portfolio were a net loss of £3.9 million for the year.

Further commentary on the portfolio, together with a schedule of additions, disposals and details of the ten largest investments can be found within the Investment Manager’s Report and Review of Investments.

Dividends
As Shareholders may be aware, the VCT regulations restrict the payment of dividends out of reserves related to funds raised in the last three to four years (depending on the date shares were allotted). As the Company has raised substantial levels of new funds in recent years, the Board now needs to manage reserves carefully in the short term to ensure that this test is not breached, but once current reserves are available for distribution, the Company intends to continue a strong dividend policy for current and future subscribing Shareholders.

For the above reason, the proposed final dividend will be at a lower level than in the previous years this year. The Board is proposing to pay a final dividend of 0.5p per share. This dividend will be paid, subject to Shareholder approval, on 19 September 2023 to Shareholders on the register at 25 August 2023. This will bring the total dividends paid in respect of the year to 1.5p per share.

Shareholders are reminded that the Company operates a Dividend Reinvestment Scheme ("DRIS”), which allows Shareholders to reinvest their dividends in new shares and obtain income tax relief on that new investment. Further details can be found on the Shareholder Information page within the Annual Report.

Fundraising
The Company launched another successful offer for subscription in October 2022 which reached capacity and closed in February 2023 having raised £29.6 million. A significant proportion of the shares were allotted after the year end, in April 2023.

Earlier in the year the Company completed another offer for subscription which launched in November 2021. £29.7 million was raised, with all the shares being allotted in April 2022.

The Company expects to launch another offer for subscription later this year.

Uninvested cash
Since the year end, the Company has placed the majority of its uninvested cash in a money market fund which produces investment income while the funds await new growth technology investment opportunities.

Share Buybacks
The Company has a policy of purchasing its own shares that become available in the market at a discount of approximately 5% to the latest published NAV, subject to regulatory and liquidity constraints.

For the reasons described in the Dividend section above, the Board is temporarily controlling the level of funds allocated for share buybacks to ensure that compliance with the VCT regulations is maintained. Buybacks are still expected to be undertaken from time to time, and the Board is working with the Company’s broker to ensure that funds are allocated on a fair basis at any time where demand might exceed the funds available. The Board expects the constraints from this VCT regulation to ease significantly over the next one to two years.

Any Shareholders who are considering selling their shares will need to use a stockbroker. Such Shareholders should ask their stockbroker to register their interest in selling their shares with Panmure Gordon & Co.

During the year, the Company purchased a total of 2,620,650 shares at an average price of 54.6p per share. Resolution 13 will be proposed at the AGM, to renew the authority for the Company to purchase its own shares.

Directorate
Several of the Board members have now been on the Board for more than the nine years which is the guideline set by the Corporate Governance Code. With the significant changes in respect of the management of the Company that have occurred in recent years, it has not been an appropriate time to make major board changes. Now that these changes are behind us, an exercise has commenced to identify suitable candidates to oversee the Company in this new phase of its life. I expect that the Company will have news of some changes over the coming months.

Annual General Meeting ("AGM”)
The AGM will take place at 20 Garrick Street, London WC2E 9BT on 20 September 2023 at 11:15 a.m.

Three items of special business are proposed at the AGM:
?   one in respect of the authority to buy back shares as noted above; and
?   two in respect of the authority to allot shares.

The authority to allot shares provides the Board with the opportunity to issue shares for the next fundraising that is being planned without having to necessarily incur the expense of seeking separate approval via a shareholder circular. Any further fundraising decisions will take account of the level of uninvested funds and the rate of investment.

Outlook
Whilst the combination of high Inflation and increasing interest rates is presenting significant challenges for many businesses, one factor to note is that the Company’s investments are funded by equity and have nil or limited debt in the majority of cases.

The fund manager has followed a consistent strategy since its inception, and it continues to follow this approach to identify and invest in high growth and high potential technology-led businesses. This strategy has been successfully followed through the ups and downs of prior economic and market cycles and has proven resilient in its ability to deliver exits and returns.

Following another successful fundraising, we expect the Company to continue to be a highly active investor this year by
supporting the growth of existing portfolio companies and adding new businesses.

I look forward to updating Shareholders in the Half Yearly Report which will be published towards the end of the year.

David Brock
Chairman

INVESTMENT MANAGER’S REPORT

The past year has delivered a significant shift in the investment environment, particularly in the high-growth technology markets, as interest rates were increased to combat global inflationary pressures. This challenging market backdrop has led to a reduction in the value of our portfolio, and our focus for this year has been centred on the active management of our investments and to continue to invest in new and exciting companies.

The valuation movements in the first half of the year showed a NAV decrease of 12.8% versus the second half results which demonstrate greater stability with a NAV increase of 0.9%.

Overall NAV decreased 12.0% year on year but a more modest 6.9% after adding back dividends paid in the period.

During the year, the team completed ten investments totalling £17.4 million. This comprised five new investments totalling £9.9 million alongside five follow-on investments totalling £7.5 million. There were four exits.

At the year end, Molten technology companies represented 83% of the portfolio and legacy companies 17%. The net asset valuation split was 74% in investments, and 26% in cash. Cash was boosted post the April 2023 allotments by a further £17.6 million less dividends paid in April of £2.1 million.

Five new investments, alongside the Molten EIS and Molten Ventures plc funds, were made into the following companies:

Expanding Circle Limited	No-Code Causal AI platform	2,931,197
Juliand Digital Limited	Connected worker software platform	2,439,063
Worldr Technologies Limited	Privacy, security and compliance layers for communication tools	1,696,777
BeZero Carbon Limited	Voluntary Carbon Market market information infrastructure	1,567,037
Fluidic Analysis Limited	Protein analysis technology	1,249,995
		9,884,070

Within the year, two portfolio companies attracted sizeable follow-on investments at attractive valuations.

FocalPoint Limited is a next generation high performance positioning technology used to increase the accuracy of the Global Navigation Satellite System (GNSS). FocalPoint’s solution is powered by a concept called Supercorrelation using advanced physics and machine learning to improve the accuracy, reliability and energy consumption of standard GNSS receivers without the need for additional hardware or infrastructure. The company raised a further £23 million led by Gresham House and Molten Ventures.

Riverlane Limited, who are building the operating system to unleash the power of quantum computing by transforming experimental technology into commercially viable software for the quantum age, raised a further £15 million from new and existing investors, including the VCT, to accelerate growth. New investors included the National Security Strategic Investment Fund.

During the year the company exited four companies generating proceeds of £7.7 million and a combined multiple of 1.7x cost. Three of these exits were profitable with the most successful of these being the sale of Lyalvale Express which generated proceeds of £6.0 million. One exit was a total write off with a cost of £1.3 million.

In the recent successful fundraising offer which closed in 2023, the VCT allotted £29.6 million of Ordinary Shares and the process of investing these funds is underway.

At the time of writing, post the year end, the VCT has completed one new investment £1.6m and four follow on investments totalling £3.8m. A further £10.5m has been committed to four new companies pending HMRC approval.

With Environmental, Social and Governance ("ESG”) becoming an ever-increasing focus, we remind our Shareholders that the parent company of the Investment Manager, Molten Ventures plc, has continued to progress its ESG roadmap.

When Molten Ventures VCT invests in new companies as part of the Molten Ventures co-investment syndicate, the Molten Ventures Group asks for a commitment from founders and management teams to meet or surpass Molten Ventures' ESG targets during the lifetime of the investment. We believe that in doing so, this creates value for our Shareholders and makes our portfolio companies more attractive for investment, against ever-growing expectations of investors, regulators, prospective talent and consumers.

The Molten Ventures’ ESG policy is available to view on the Molten Ventures plc website via the link below: https://investors.moltenventures.com/sustainability

The Investment Manager is an active member of the VCT Association (VCTA) which represents 13 of the largest VCT fund managers and makes up over 90% of the £6.6 billion VCT industry. The VCTA continues to lobby government for the continuation of the tax reliefs for VCTs to support exciting and innovative businesses. We are pleased to see that in March 2023, Jeremy Hunt, the Chancellor of the Exchequer, made a statement "It is the government’s firm intention to extend them (The VCT and EIS Schemes) beyond the current sunset on 6 April 2025”. With this in mind we do expect to return to raise further funds later this year. 

In summary, the year under review has been the most volatile period for the technology industry since the Global Financial Crisis, if not the dot com crash more than two decades ago. Nonetheless, it is a matter of consensus that technological innovation is continuing to transform our lives. The underlying performance of technology businesses continues to be very strong, and the response to the fall of Silicon Valley Bank (SVB) in the US and UK is an encouraging sign that tech is a genuine government policy priority globally.

As your fund manager we are cautiously optimistic for the year ahead as the technology markets continue to stabilise and recover in places. Even as economic headwinds persist, we will continue to deliver through our scalable and adaptable model, active approaches to portfolio management and thesis led investment approach.

Elderstreet Investments Limited
Part of the Molten Ventures Group

REVIEW OF INVESTMENTS

Portfolio of investments
The following investments were held at 31 March 2023. All companies are registered in England and Wales, with the exception of Fulcrum Utility Services Limited, which is registered in the Cayman Islands.

	Cost	Valuation	Valuation Movement in year	% of portfolio by value
Largest venture capital investments (by value)	£’000	£’000	£’000
Thought Machine Group Limited*	2,400	10,300	571	9.3%
Endomagnetics Limited*	2,147	8,635	2,313	7.8%
Form3 UK Limited (formerly Back Office Technology Ltd) *	1,420	6,606	1,142	6.0%
Access Intelligence plc**	2,586	6,229	(2,155)	5.7%
Fords Packaging Topco Limited	2,433	5,867	-	5.3%
Focal Point Positioning Limited*	3,300	5,561	1,366	5.0%
Riverlane Limited*	2,661	4,114	589	3.7%
IESO Digital Health Limited*	3,567	3,878	(2,264)	3.5%
Evonetix Limited*	2,999	3,383	(14)	3.1%
Expanding Circle Limited*	2,931	2,931	-	2.7%
Juliand Digital*	2,439	2,439	-	2.2%
Impulse Innovations Limited*	2,079	1,953	(126)	1.8%
Hadean Supercomputing Limited*	1,775	1,938	(21)	1.8%
Apperio Limited*	1,357	1,812	705	1.6%
Worldr Technologies Limited	1,697	1,697	-	1.5%
	35,791	67,343	2,106	61.0%
Other venture capital investments	61,226	14,214	(5,996)	73.9%
Cash and cash equivalents	28,845	28,845		26.1%
Total investments	90,071	110,402	(3,890)	100.0%

**         Quoted on AIM

All venture capital investments are unquoted unless otherwise stated.

^* These companies have also received investment from other funds managed by the Molten Ventures Group (Molten Ventures Plc and Molten Ventures EIS) as at 31 March 2023.

Investment movements for the year ended 31 March 2023
ADDITIONS

Venture capital investments	£'000
Expanding Circle Limited	2,932
Focal Point Positioning Limited	2,700
Juliand Digital Limited	2,439
Riverlane Limited	1,760
Worldr Technologies Limited	1,697
BeZero Carbon Limited	1,567
Evonetix Limited	1,514
Fluidic Analytics Limited	1,250
Apperio Limited	857
Allplants Limited	654
	17,370

DISPOSALS

	Cost	Value at 1 April 2022*	Proceeds	Gain/(loss) vs cost	Realised losses
	£’000	£’000	£’000	£’000	£’000
Venture Capital Investments
Lyalvale Express Limited	1,915	5,979	5,979	4,064	-
Cervest Limited	1,312	1,312	-	(1,312)	(1,312)
Roomex UK Limited	1,081	1,080	1,357	276	277
Servoca plc	333	360	359	26	(1)
	4,641	8,731	7,695	3,054	(1,036)

* Adjusted for purchases in the year where applicable

DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Report of the Directors, the Strategic Report, the Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102, the financial reporting standard applicable in the UK and Republic of Ireland (FRS 102).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

?  select suitable accounting policies and then apply them consistently;
?  make judgements and accounting estimates that are reasonable and prudent;
?  state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
?  prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
?  prepare a director’s report, a strategic report and director’s remuneration report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the Directors considers that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company’s position, performance, business model and strategy.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other information included in annual reports may differ from legislation in other jurisdictions.

INCOME STATEMENT for the year ended 31 March 2023

	Year ended 31 March 2023				Year ended 31 March 2022
	Revenue	Capital	Total		Revenue	Capital	Total
	£’000	£’000	£’000		£’000	£’000	£’000
Income	1	-	1		300	-	300
(Loss)/Gains on investments	-	(4,926)	(4,926)		-	20,233	20,233
	1	(4,926)	(4,925)		300	20,233	20,533
Investment management fees	(542)	(1,625)	(2,167)		(430)	(1,291)	(1,721)
Other expenses	(468)	-	(468)		(407)	-	(407)
Return/(loss) on ordinary activities before tax	(1,009)	(6,551)	(7,560)		(537)	18,942	18,405
Tax on return/(loss)	-	-	-		-	-	-
Return/(loss) attributable to equity shareholders, being total comprehensive income for the period	(1,009)	(6,551)	(7,560)		(537)	18,942	18,405
Basic and diluted return/(loss) per share	(0.5)	(3.5)	(4.0)		(0.4)	12.4	12.0

All Revenue and Capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. The total column within the Income Statement represents the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS 102”). The supplementary revenue and capital return columns are prepared in accordance with the Statement of Recommended Practice issued in July 2022 by the Association of Investment Companies ("SORP”).

BALANCE SHEET at 31 March 2023

		31 Mar 2023			31 Mar 2022
	£’000	£’000		£’000	£’000
Fixed assets
Investments		81,557			76,808
Current assets
Debtors	27			20
Cash and cash equivalents	28,845			31,095
	28,872			31,115
Creditors: amounts falling due within one year	(117)			(356)
Net current assets		28,755			30,759
Net assets		110,312			107,567
Capital and reserves
Called up share capital		10,347			8,880
Capital redemption reserve		-			794
Share premium account		8,689			56,273
Merger reserve		-			673
Special reserve		65,178			5,303
Capital reserve – unrealised		27,346			35,220
Capital reserve – realised		853			1,516
Revenue reserve		(2,101)			(1,092)
Total equity shareholders’ funds		110,312			107,567
Basic and diluted net asset value per share		53.3p			60.6p

STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2023

	Share capital	Capital Redemption reserve	Share Premium account	Merger reserve	Special reserve	Capital reserve -unrealised	Capital reserve - realised	Revenue reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
For the year ended 31 March 2022
At 1 April 2021	5,537	659	18,321	1,828	15,463	14,159	-	(555)	55,412
Total comprehensive income	-	-	-	-	-	20,221	(1,279)	(537)	18,405
Transfer between reserves*	-	-	-	(1,155)	(6,838)	840	7,153	-	-
Transactions with owners
Issue of new shares	3,478	-	37,952	-	-	-	-	-	41,430
Share issue costs	-	-	-	-	(1,900)	-	-	-	(1,900)
Purchase of own shares	(135)	135	-	-	(1,422)	-	-	-	(1,422)
Dividends paid	-	-	-	-	-	-	(4,358)	-	(4,358)
At 31 March 2022	8,880	794	56,273	673	5,303	35,220	1,516	(1,092)	107,567
For the year ended 31 March 2023
At 1 April 2022
Total comprehensive income	-	-	-	-	-	(3,890)	(2,661)	(1,009)	(7,560)
Transfer between reserves*	-	-	-	(673)	(3,239)	(3,984)	7,896	-	-
Cancellation of Share Premium	-	-	(63,628)	-	63,628	-	-	-	-
Cancellation of Capital Redemption	-	(925)	-	-	925	-	-	-	-
Transactions with owners
Issue of new shares	1,598	-	16,915	-	-	-	-	-	18,513
Share issue costs	-	-	(871)	-		-	-	-	(871)
Purchase of own shares	(131)	131	-	-	(1,439)	-	-	-	(1,439)
Dividends paid	-	-	-	-	-	-	(5,898)	-	(5,898)
At 31 March 2023	10,347	-	8,689	-	65,178	27,346	853	(2,101)	110,312

* A transfer of £4.0 million (2022: £840,000), representing impairment losses during the year, as well as cumulative unrealised gains on investments which were disposed of during the year has been made from the Capital reserve - unrealised to the Capital Reserve – realised. A transfer of £3.2 million (2022: £2.5 million), representing realised losses on investment disposals plus capital expenses in the year, has been made from Capital Reserve – realised to the Special reserve. A transfer of £nil (2022: £4,358,000) from Special Reserve to Capital reserve-realised has been made to replenish the reserve.

A transfer of £673,000 (2022: 1,155,000) from Merger Reserve to Capital reserve-realised has been made following the disposal of an investment which was held pre-merger.

A transfer of £63.6 million (2022: £nil), from the cancellation of Share premium, has been made from the Share Premium account to the Special Reserve. A transfer of £925,000 (2022: nil), from the cancellation of Capital Redemption, has been made from the Capital Redemption Reserve to the Special Reserve.

STATEMENT OF CASH FLOWS for the year ended 31 March 2023

	31 Mar 2023		31 Mar 2022
	£’000		£’000
Cash flow from operating activities
(Loss)/profit on ordinary activities before taxation	(7,560)		18,405
Loss/(gains) on investments	4,926		(20,233)
(Increase)/decrease in debtors	(5)		11
(Decrease)/increase in creditors	(179)		216
Net cash outflow from operating activities	(2,818)		(1,601)
Cash flow from investing activities
Purchase of investments	(17,370)		(12,491)
Proceeds from disposal of investments	7,695		672
Net cash outflow from investing activities	(9,675)		(11,819)
Cash flow from financing activities
Equity dividends paid	(5,898)		(4,358)
Proceeds from share issue	18,513		41,429
Share issue costs	(873)		(1,853)
Purchase of own shares	(1,499)		(1,362)
Net cash inflow from financing activities	10,243		33,856
Net (decrease)/increase in cash	(2,250)		20,436
Cash and cash equivalents at start of year	31,095		10,659
Cash and cash equivalents at end of year	28,845		31,095
Total cash and cash equivalents	28,845		31,095

NOTES

1.    Accounting policies
General information

Molten Ventures VCT plc ("the Company”) is a venture capital trust established under the legislation introduced in the Finance Act 1995 and is domiciled in the United Kingdom and incorporated in England and Wales. The Company is a premium listed entity on the London Stock Exchange.

Basis of accounting
The Company has prepared its financial statements in accordance with the Financial Reporting Standard 102 ("FRS 102”) and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued in July 2022 ("SORP”) and with the Companies Act 2006.

Going concern
After reviewing the Company’s forecasts and projections, the Directors have a reasonable expectation that the major cash outflows of the Company (most notably investments, share buybacks and dividends) are within the Company’s control and therefore the Company has sufficient cash to meet its expenses and liabilities when they fall due. The impact of the Ukraine conflict and the cost of living have been considered, more detail on these considerations can be found within the Corporate Governance report. As such, the Board confirms that the Company has adequate resources to continues in operational existence for at least 12 months from the date of approval of the financial statements. The Company therefore continues to adopt the going concern basis in preparing its financial statements as noted further within the Corporate Governance report within the Annual Report.

Presentation of Income Statement
In order to better reflect the activities of a venture capital trust, and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Part 6 of the Income Tax Act 2007.

Investments
Investments are designated as "fair value through profit or loss” assets, upon acquisition, due to investments being managed and performance evaluated on a fair value basis. A financial asset is designated within this category if it is both acquired and managed, with a view to selling after a period of time, in accordance with the Company’s documented Investment Policy.

Listed fixed income investments and investments quoted on AIM and the Main Market are measured using bid prices in accordance with the International Private Equity and Venture Capital Valuation Guidelines ("IPEV”).

For unquoted instruments, fair value is established using the IPEV. The valuation methodologies for unquoted entities used by the IPEV to ascertain the fair value of an investment are as follows:
?  Multiples;
?  Industry valuation benchmarks;
?  Discounted cash flows or earnings (of underlying business);
?  Discounted cash flows (from the investment);
?  Net assets; and
?  Calibrating to the price of a recent investment.

The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value as explained in the investment accounting policy above and addressed further in note 9 of the Annual Report.

Where an investee company has gone into receivership, liquidation, or administration (where there is little likelihood of recovery), the loss on the investment, although not physically disposed of, is treated as being realised. Permanent impairments in the value of investments are deemed to be realised losses and held within the Capital Reserve – Realised.

Gains and losses arising from changes in fair value are included in the Income Statement for the period as a capital item and transaction costs on acquisition or disposal of the investment expensed.

It is not the Company’s policy to exercise significant influence over investee companies. Therefore, the results of these companies are not incorporated in the Income Statement, except to the extent of any income accrued. This is in accordance with the SORP and FRS 102 sections 14 and 15 that do not require portfolio investments to be accounted for using the equity method of accounting.

Calibration to price of recent investment requires a level of judgment to be applied in assessing and reviewing any additional information available since the last investment date. The Board and Investment Manager consider a range of factors in order to determine if there is any indication of decline in value or evidence of increase in value since the recent investment date. If no such indications are noted the price of the recent investment will be used as the fair value for the investment.

Examples of signals which could indicate a movement in value are: -
Changes in results against budget or in expectations of achievement of technical milestones patents/testing/ regulatory approvals)
Significant changes in the market of the products or in the economic environment in which it operates
Significant changes in the performance of comparable companies
Internal matters such as fraud, litigation or management structure.

In respect of disclosures required by the SORP for the 10 largest investments held by the Company, the most recent publicly available accounts information, either as filed at Companies House, or announced to the London Stock Exchange, is disclosed. In the case of unlisted investments, this may be abbreviated information only.

Judgement in applying accounting policies and key sources of estimation uncertainty
The key estimates in the financial statements is the determination of the fair value of the unquoted investments by the Directors as it impacts the valuation of the unquoted investments at the year end date.

Of the Company’s assets measured at fair value, it is possible to determine their fair values within a reasonable range of estimates. The fair value of an investment upon acquisition is deemed to be cost. Thereafter, investments are measured at fair value in accordance with FRS 102 sections 11 and 12, together with the IPEV.

A price sensitivity analysis of the unquoted investments is provided in note 15 of the Annual Report, under Investment price risk.

Income
Dividend income from investments is recognised when the Shareholders’ rights to receive payment have been established, normally the ex-dividend date.

Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate applicable and only where there is reasonable certainty of collection. Where previously accrued income is considered irrecoverable a corresponding bad debt expense is recognised.

Expenses
All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except as follows:

?  Expenses which are incidental to the acquisition of an investment are deducted as a capital item.
?  Expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment.
?  Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. The Company has adopted the policy of allocating investment manager’s fees, 75% to capital and 25% to revenue as permitted by the SORP. The allocation is in line with the Board’s expectation of long term returns from the Company’s investments in the form of capital gains and income respectively.
?  Performance incentive fees arising, if any, are treated as a capital item.

Taxation
The tax effects on different items in the Income Statement are allocated between capital and revenue on the same basis as the particular item to which they relate using the Company’s effective rate of tax for the accounting period.

Due to the Company’s status as a Venture Capital Trust and the continued intention to meet the conditions required to comply with Part 6 of the Income Tax Act 2007, no provision for taxation is required in respect of any realised or unrealised appreciation of the Company’s investments which arise.

Deferred taxation is not discounted and is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the accounts.

A deferred tax asset is only recognised to the extent that it is probable there will be taxable profits in the future against which the asset can be offset.

Other debtors and other creditors

Other debtors (including accrued income) and other creditors are included within the accounts at amortised cost.

Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with an original maturity of three months or less.

Dividends
Dividends payable are recognised as distributions in the financial statements when the company’s liability to make payment has been established, typically when approved by Shareholders at the AGM or, for interim dividends, the payment date.

Issue costs
Issue costs in relation to the shares issued are deducted from the special reserve.

Reportable segments
The Company has one reportable segment as the sole activity of the Company is to operate as a VCT and all of the Company’s resources are allocated to this activity.

2.    Basic and diluted return per share

	Year to 31 Mar 2023		Year to 31 Mar 2022
Basic and diluted (loss)/return per share	(4.0p)		12.4p
Return per share based on:
Net revenue loss for the financial year (£’000)	(1,009)		(537)
Net capital (loss)/gains for the financial year (£’000)	(6,551)		18,942
Total (losses)/return for the financial year (£’000)	(7,560)		18,405
Weighted average number of shares in issue	190,419,643		152,969,728

As the Company has not issued any convertible securities or share options, there is no dilutive effect on return per share. The return per share disclosed, therefore, represents both basic and diluted return per share.

3.    Basic and diluted net asset value per share

			31 March 2023				31 March 2022
Number in issue as at 31 March			Net asset value				Net asset value
	2023	2022		Pence per share		£’000		Pence per share		£’000
Ordinary Shares	206,931,912	177,597,183		53.3		110,312		60.6		107,567

As the Company has not issued any convertible securities or share options, there is no dilutive effect on net asset value per share. The net asset value per share disclosed therefore represents both basic and diluted net asset value per share.

4.    Principal Risks
The Company’s investment activities expose the Company to a number of risks associated with financial instruments and the sectors in which the Company invests. The principal financial risks arising from the Company’s operations are:

?  Market risks;
?  Credit risk; and
?  Liquidity risk.

The Board regularly reviews these risks and the policies in place for managing them. There have been no significant changes to the nature of the risks that the Company is exposed to over the year and there have also been no significant changes to the policies for managing those risks during the year.

The risk management policies used by the Company in respect of the principal financial risks and a review of the financial instruments held at the year-end are provided below.

Market risks
As a VCT, the Company is exposed to investment risks in the form of potential losses that may arise on the investments it holds in accordance with its Investment Policy. The management of these investment risks is a fundamental part of investment activities undertaken by the Investment Manager and overseen by the Board. The Manager monitors investments through regular contact with management of investee companies, regular review of management accounts and other financial information and attendance at investee company board meetings. This enables the Manager to manage the investment risk in respect of individual investments. Investment risk is also mitigated by holding a diversified portfolio spread across various business sectors and asset classes.

The key investment risks to which the Company is exposed are:
?  Investment price risk; and
?  Interest rate risk.

The Company has undertaken sensitivity analysis on its financial instruments, split into the relevant component parts, taking into consideration the economic climate at the time of review in order to ascertain the appropriate risk allocation.

Investment price risk
Investment price risk arises from uncertainty about the future prices and valuations of financial instruments held in accordance with the Company’s investment objectives. It represents the potential loss that the Company might suffer through investment price movements in respect of quoted investments, and changes in the fair value of unquoted investments that it holds.

Interest rate risk
The Company accepts exposure to interest rate risk on floating-rate financial assets through the effect of changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed with its bankers and on liquidity funds at rates based on the underlying investments. Investments in loan notes and fixed interest investments attract interest predominately at fixed rates. A summary of the interest rate profile of the Company’s investments is shown below.

Interest rate risk profile of financial assets and financial liabilities
There are three levels of interest which are attributable to the financial instruments as follows:

? "Fixed rate” assets represent investments with predetermined yield targets and comprise fixed interest and loan note investments.
? "Floating rate” assets predominantly bear interest at rates linked to Bank of England base rate and comprise cash at bank and Cash Trust investments.
? "No interest rate” assets do not attract interest and comprise equity investments, loans and receivables (excluding cash at bank) and other financial liabilities.

The Company monitors the level of income received from fixed, floating and non-interest rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular, should this be required to ensure compliance with the VCT regulations.

During the period the Bank of England base rate has increased from 0.75% per annum to 4.25% per annum at the year end. Following the year end, in June 2023, the rate increased further, to 5.0% per annum. Any potential change in the base rate, at the current level, would have an immaterial impact on the net assets and Total Return of the Company.

Credit risk
Credit risk is the risk that a counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company is exposed to credit risk through its holdings of loan notes in investee companies, investments in fixed income securities, cash deposits and debtors.

The Manager manages credit risk in respect of loan notes with a similar approach as described under interest rate risk above. In addition, the credit risk is partially mitigated by registering floating charges over the assets of certain investee companies. The strength of this security in each case is dependent on the nature of the investee company’s business and its identifiable assets. The level of security is a key means of managing credit risk. Similarly, the management of credit risk associated interest, dividends and other receivables is covered within the investment management procedures.

Cash is mainly held at Bank of Scotland plc, with a balance also maintained at Royal Bank of Scotland plc, both of which are A-rated financial institutions. Consequently, the Directors consider that the risk profile associated with cash deposits is low.

Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments when required at their fair values or from the inability to generate cash inflows as required. The Company normally has a relatively low level of creditors (31 March 2023: £117,000, 31 March 2022: £356,000) and has no borrowings. The Company always holds sufficient levels of funds as cash and readily realisable investments in order to meet expenses and other cash outflows as they arise. For these reasons, the Board believes that the Company’s exposure to liquidity risk is minimal.

The Company’s liquidity risk is managed by the Investment Manager, in line with guidance agreed with the Board and is reviewed by the Board at regular intervals.

5.    Related party transactions
Nicholas Lewis is a partner of Downing LLP, which provides administration services to the Company for the year to 31 March 2023. During the year, £100,000 (2022: £90,000) was due to Downing LLP in respect of these services. As at 31 March 2023, £nil (2022: £5,000) was outstanding and payable.

Richard Marsh is an employee of Molten Ventures plc, the parent company of Elderstreet Investments Limited. Elderstreet Investments Limited provided investment management services to the Company. During the year, £2.2 million (2022: £1.7 million) was due in respect of these services. No performance incentive fees were paid to Elderstreet Investments Limited in respect of the year under review (2022: £nil). As at 31 March 2023, £17,000 (2022: £198,000) was outstanding and payable.

ANNOUNCEMENT BASED ON AUDITED ACCOUNTS

The financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 31 March 2023 but has been extracted from the statutory financial statements for the year ended 31 March 2023 which were approved by the Board of Directors on 31 July 2023 and will be delivered to the Registrar of Companies. The Independent Auditor's Report on those financial statements was unqualified and did not contain any emphasis of matter nor statements under s498(2) and (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 March 2022 have been delivered to the Registrar of Companies and received an Independent Auditors report which was unqualified and did not contain any emphasis of matter nor statements under s498(2) and (3) of the Companies Act 2006.

A copy of the full annual report and financial statements for the year ended 31 March 2023 will be printed and posted/emailed to shareholders shortly. Copies will also be available to the public at the registered office of the Company at St. Magnus House, 3 Lower Thames Street, London EC3R 6HD and will be available for download from www.moltenventures.com.