FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2022
13 June 2022
Molten Ventures Plc
("Molten Ventures", "Molten", "the Group" or the "Company")
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2022
Molten Ventures (LSE: GROW, Euronext Dublin: GRW), a leading venture capital firm investing in and developing high growth digital technology businesses, today announces its final results for the year ended 31 March 2022.
Financial highlights
· £1,532m Gross Portfolio Value (31 March 2021: £984m)
· 37% Gross Portfolio fair value growth (31 March 2021: 51%)
· £311m Cash invested in the year, and a further £45m from EIS/VCT funds (year to 31 March 2021: £128m from plc and £34m from EIS/VCT funds)
· 937p NAV per share (31 March 2021: 743p)
· £78m plc cash (including restricted cash) (31 March 2021: £161m plc cash)
· £301m Profit after tax (year to 31 March 2021: £267m)
· £126m Cash proceeds from realisations (year to 31 March 2021: £206m)
· £108m Net funds raised during the year (31 March 2021: £107m)
· <1% Operating costs (net of fee income) continue to be substantially less than the targeted 1% of year-end NAV
· £1,434m Net Assets (31 March 2021: £1,033m)
The above figures contain alternative performance measures ("APMs") - see Note 33 for reconciliation of APMs to IFRS measures.
Operational highlights
• Cash investments of £311m during the year from the Molten Ventures balance sheet (year to 31 March 2021: £128m), with a further £45m from EIS/VCT funds (year to 31 March 2021: £34m). This increased cadence is attributable to a higher level of follow-on opportunities in the existing portfolio, consistently leading rounds in new primary investment opportunities and the continued expansion of our scalable platform
• Committed to 22 new seed funds via our Fund of Funds programme bringing the overall seed portfolio to 57 funds
• Cash proceeds of £126m received during the year (year to 31 March 2021 £206m). These were predominantly generated by the sale of shares held in publicly-listed Trustpilot and UiPath, exits from SportPursuit, Premfina, Conversocial and Bright Computing, as well as amounts being released from escrow relating to previously announced disposals
• Completed successful move to the Premium Segment of the Official List and to trading on the London Stock Exchange's Main Market as well as to the secondary listing segment of the Official List of Euronext Dublin and to trading on the regulated market of Euronext Dublin
• Unveiled a new name, Molten Ventures, and a new motto "Make More Possible". The new brand reflects our ongoing transformation: our increased investment cadence and expanding team
• Continued to progress our ESG roadmap, including being awarded the Diversity VC Standard Level 1 certification, becoming a signatory of the Investing in Women Code, establishing an ESG Committee of the Board (in addition to the ESG Working Group), completing our first year of TCFD reporting, approval of our Board Diversity and Inclusion Policy, Investment Team ESG training, and engaging with the portfolio on their own ESG activities
Post period-end highlights
· Deployed £73.7 million into new and existing portfolio companies, including our announced deal in HiveMQ
· Announced the funding rounds of Thought Machine and Aiven (Aiven is held via our partnership in Earlybird)
· At 31 March 2022, we held interests in three listed companies - Trustpilot, UiPath, and Cazoo. Their valuations are based on their quoted share price on 31 March 2022. Their value using the closing quoted share price on 8 June 2022 was £43.9 million
Martin Davis, Chief Executive Officer of Molten Ventures, commented:
"This year, we made huge progress across the business from both an operational and financial perspective. In addition to producing strong full year results, we successfully moved to the main market of the London Stock Exchange and the official list of Euronext Dublin, subsequently entered the FTSE 250 and underwent a complete rebrand to Molten Ventures.
"Our job is not only to identify the best opportunities but to do everything we can to support the growth of the companies in our portfolio, and ensure they have all the tools they need to realise their full potential. Molten is better positioned than ever to take advantage of investing in these sought-after assets right the way through their lifecycle from seed to exit.
"Despite recent volatility in world markets caused in part by the tragic events in Ukraine, VC remains resilient, and the European technology market continues to be an area of growth. We have successfully navigated several market cycles and our adaptable and scalable business model, combined with the significant progress made this year, puts us in an advantaged position within the current market context.
-ENDS-
Enquiries:
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Molten Ventures plc Martin Davis (Chief Executive Officer) Ben Wilkinson (Chief Financial Officer) |
+44 (0)20 7931 8800 |
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Numis Securities Joint Financial Adviser and Corporate Broker Simon Willis Jamie Loughborough Havish Patel |
+44 (0)20 7260 1000 |
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Goodbody Stockbrokers Joint Financial Adviser and Corporate Broker, Euronext Dublin Sponsor Don Harrington Charlotte Craigie Linda Clarke |
+44 (0) 20 3841 6202 |
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Powerscourt Public relations Robin O'Kelly Jane Glover |
+44 (0)20 7250 1446
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About Molten Ventures
Molten Ventures is one of the most active venture capital firms in Europe, developing and investing in disruptive, high growth technology companies. We believe it is our role to support the visionary entrepreneurs who will invent the future. We fuel their growth with our "energy" in the form of long-term capital, access to international networks and decades of experience building businesses.
As at 31 March 2022, Molten Ventures had a diverse portfolio with shareholdings in 69 companies, 21 of which represent our core holdings and account for 68% of the total portfolio value. Our core companies include Graphcore, Ledger, Revolut, Aiven, and CoachHub. We invest across four sectors: Consumer Technology, Enterprise Technology, Hardware and Deeptech, 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.
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 £865m capital into fast growing tech companies and have realised over £439m to 31 March 2022.
For more information, go to https://www.moltenventures.com/
Chair's introduction
FY22 has been a busy year for us - we began it as Draper Esprit, listed on AIM and Euronext Growth, and ended it as Molten Ventures, a FTSE 250 and Euronext Dublin company. The successful rebranding and step up to a Main Market listing reflect the considerable progress we have made since our AIM listing in 2016 in maturing and growing the business in pursuit of our commitment to investing in Europe's best entrepreneurs and seed funds.
This transformation continued in FY22 amidst a volatile external environment. It saw the end of many national lockdowns and the beginning of a post-pandemic 'new normal', followed by the invasion of Ukraine and a resulting fall in stock markets across the world. Despite these factors, overall FY22 was a period of strong performance and significant investment opportunity for the Molten team.
I would like to offer my thanks to Grahame Cook, our Senior Independent Director, who stepped up to assume the responsibility of temporary Chair during a short period earlier in the year when I was indisposed due to illness.
I am very impressed by the team at Molten, who have managed these challenging times with professionalism and consistency. They have invested in some of the best companies in the market, while maintaining a high level of investment discipline and rigour. Our people remain the most important part of our business. The considerable work which we have undertaken in recent years to create an agile, scalable and resilient platform provides a sound base for our continued delivery of value to our Shareholders.
Once again, we exceeded our stated gross fair value growth target in FY22 and are actively invested in a diverse portfolio of high-growth technology businesses, all of which have their own ambitions to harness the power of technology to invent a better future.
FY22 has also been a positive year for realising investments, where Molten's role has come to a natural conclusion, including the sale of Bright Computing and SportPursuit, which were sold to new owners. Cazoo and UiPath were listed on leading Stock Exchanges during the year, following TrustPilot's listing in the previous financial year. These are, in some cases, decade-long partnerships and we are happy to have been able to support these entrepreneurs and companies in a key stage of their development.
At Molten, we are also proud to be playing a significant part in society's mission to achieve a sustainable future for coming generations. As well as our own internal ESG initiatives, we are committed to working with our entrepreneurs to support them with their own ESG programmes. We are active board members, and we know that as investors we have a responsibility to help build companies which are successful in growing value but also sustainable in the long term. ESG is increasingly embedded into every part of our business, including within our investment criteria, our initiative into climate tech investing, our subscription to the UK Corporate Governance Code, as well as through our remuneration structure.
Finally, I am pleased to welcome Gervaise Slowey, Non-Executive Director and Chair of our newly formed ESG Committee, and Sarah Gentleman, Non-Executive Director and Chair of Molten's Remuneration Committee, who joined the Board in July and September 2021 respectively. They bring with them decades of experience in strategy, general management and governance.
Karen Slatford
CEO's statement
Overview
This year, we made strong progress across the business from both an operational and financial perspective. I am pleased to report that, through the efforts we have taken to grow and mature our model, we have advanced our strategic ambition of making Molten the leader of a new generation of technology VCs.
FY22 saw continued strong momentum in deal activity, with increased capital deployment across our four investment pillars, above the previous annual investment cadence, reflecting a period of strong opportunities. We were also able to achieve gross fair value growth significantly above our targeted 20% through the cycle, reflecting the strong performance of our portfolio and the disciplined approach of our Investment Team. In June 2021 we raised £107.7 million by way of a placing (net proceeds) and since then we have set about deploying that capital to take advantage of the growing European venture capital market and the continued shift towards technology and digitalisation.
Our business model is adaptable across investment cycles and continues to scale, including through the expansion of the Fund of Funds programme, and the identification of new deployment strategies and sources of capital and fee income. Our team, which has been augmented through the year, brings together a diverse group of leading investment decision-makers, supporting the effective delivery of our strategy. Plans for our growth fund are on track, which will target Series B+ deal flow, syndicating third-party funds alongside our own, to provide a greater ability to consistently lead growth-stage deals, and secure greater influence and allocation. The additional fees generated from the growth fund are anticipated to provide a positive contribution to our cost base and profitability.
In July 2021, we completed the successful move to a Premium listing on the London Stock Exchange's Main Market and a secondary listing on Euronext Dublin. The move was motivated by the growth and maturity of the business and what we believe to be the most appropriate platform for the Company's future development.
In November 2021, we announced our name change from Draper Esprit plc to Molten Ventures plc. This rebrand reflects the Company's transformation in recent years, accelerated growth, as well as a recognition of Molten's unique role in the democratisation of venture capital. We also announced our new motto, "Make More Possible", which reflects Molten's contribution as a listed venture capital firm to identify and fully support the vision of some of Europe's most successful companies and, in doing so, deliver value for our Shareholders.
Financial performance
We are pleased with our strong financial performance across all our key measures: fair value growth, cash realisations, investments made and available capital resources.
The gross fair value growth achieved during the year of 37% (FY21: 51%) was principally achieved by our Core Companies, reflecting growth in the investments made in previous financial years, both through financing rounds at higher valuations and revenue growth, offsetting the fall in valuation of our publicly listed companies at 31 March 2022.
Due to the steps taken to transform the Company, including our move to the Main Market, our investment in strengthening the team and creating a more scalable platform, our costs during the year increased. These costs were offset by increased fee income and remain well within our target of less than one percent of net asset value.
Increased capital deployment
Capital deployed during the year was £311.2 million (compared to £128.0 million in FY21), as a result of an acceleration of rounds for some of our existing companies, high-quality new investments, taking lead positions in rounds and larger stake sizes. This has been underpinned by our thesis-driven approach, the deep networks of our Partnership Team and our increased scale, which we have been able to leverage to consistently lead funding rounds and support our portfolio companies. Quality remained a consistent focus and we continued to invest capital wisely and remain disciplined around the quality and number of deals in which we chose to participate.
We have participated in new deals and follow-on rounds in sub-sectors we feel are poised for strong growth, including climate tech, marketplaces, artificial intelligence and machine learning, low code/no code and cloud-native technologies, including Thought Machine, Gardin, Mostly AI, CausaLens, Form3, CoachHub, Aircall, Ledger, Lyst, Cervest and FintechOS.
Realisations & IPOs
Realisations are an important part of our business and cash proceeds from realisations during the year remained strong at £126.3 million (FY21: £206.3 million). The recycling of capital allows us to reinvest further in the portfolio as part of our evergreen model. Our portfolio is a blend of mature core portfolio companies and the emerging portfolio, which includes some of the future's best businesses.
Cash proceeds during the year delivered a return on opening Gross Portfolio Value ("GPV") of 13%, within our stated 10-15% return on GPV target across the cycle. Exits were mainly from mature companies, including Bright Computing and SportPursuit, as well as share sales in TrustPilot and UiPath. Historically the majority of our realisations have been through trade sales, while in the past year the balance shifted as a result of the strong IPO market of 2021.
In addition to Trustpilot in FY21, two of our companies, UiPath and Cazoo, have gone public during FY22. We have received cash proceeds in the year from UiPath of £49.8 million and £23.2 million from TrustPilot following proceeds received of £5.3million and £75.5 million in FY21 respectively.
Broader market environment
Despite the recent volatility in global equities reflected through high inflation and interest rates, venture capital as an asset class shows signs of resilience.
Public and private markets are closely linked, but they nevertheless operate differently. This lack of correlation can be explained by the contrasting funding cycles and valuation periods. Global events will have an impact on both public and private markets, and while often with a lagged effect, we are seeing some impact of this in private markets, particularly at the later growth/pre-IPO stages.
What is fundamental is the commercial traction of the portfolio companies and their ability to navigate shifting market environments. With technology underpinning growth and efficiency in so many industries, we see this demand continuing. We are an active manager, providing support and oversight, allowing us to work with our portfolio companies to plan and reorganise to attune to changes in the market as they emerge.
The markets of the last couple of years have seen capital from new entrants; the effect of any downward shift in the market is that this capital will be displaced. A feature of venture capital is understanding how to operate through cycles in what is a long-term asset class. We will continue to access quality deals in tighter macro conditions and position our portfolio to grow in environments where capital is more selective in subsequent investment rounds. We know that in any market, quality deals will still be highly competitive, and reputation and experience matter greatly. We have successfully navigated several market cycles and our robust but stable platform allows us the flexibility to continue to do so. For these reasons, we believe that Molten is well positioned to navigate the current uncertainty and capitalise on any opportunities presented.
Sustainability
"Make More Possible" is not just about capital investment, it is also about the positive transformation that Molten can drive through its actions. I am pleased to report a continued focus on ESG during the year, something which is not only important to Molten in our own operations, but is embedded into our investment activities, both through our ESG-focused investment criteria and our push into investing in climate tech companies (see more on our climate tech thesis and investments on pages 22-23).
We are gaining recognition for our efforts, tying first place as a Top Performer in the ITPEnergised and Orbis Advisory ESG Transparency Index in February 2022 for embracing ESG integration into our operations, positioning the company at the forefront of ESG for the VC industry.
Our ESG activities during the year involved engagement with both Molten staff and our portfolio, including hosting our first ESG portfolio engagement session (with more to come) and sharing our ESG Framework with the portfolio companies, delivering externally led training to the investment team on the topic of ESG within the investment process, as well as continuing to progress with our climate-related work, including kicking off our Task Force on Climate-Related Financial Disclosures ("TCFD") project, which we are undertaking voluntarily.
We have spent considerable time focusing on Diversity, Equity, and Inclusion ("DEI"), achieving the launch of our Board D&I Policy (inclusive of targets for adjusted board composition in line with the Hampton-Alexander Review and Parker Review recommendations), our Group-wide DEI & Equal Opportunities Policy, and the roll out of our DEI recruitment policy.
We will continue to progress our ESG roadmap into FY23 by reporting to the CDP Climate Change questionnaire for the first time, and through the development of a Climate Change Policy which will capture our carbon reduction strategy and path to net zero.
Our ESG-related KPIs, indexed to 10% of annual bonus entitlement for all Molten employees (including Executive Directors), can be found on page 51 of the Annual Report for the year ending 31 March 2022.
We recognise ESG is a journey, and we are pleased to be making good progress, but there is still work to be done and we look forward to providing further updates in the year ahead.
People
As a group, for more than a decade we have been bringing together experienced investors with companies that will invent the future. This year we have continued to grow with 14 new hires into the Company, including 6 additions to the Investment Team, bolstering both our partnership and platform offerings. We also welcomed two new members to our Board, Gervaise Slowey and Sarah Gentleman.
We believe that bringing together different experiences, opinions and perspectives is the key to building long-term success in venture capital.
Outlook
Looking forward to the next 12 months, there is clearly a great deal of uncertainty with the current geopolitical and macroeconomic factors unlikely to change significantly over the next 6-9 months. The other main driver restricting growth, the pandemic, appears to continue to retreat within developed markets and is likely to have a lesser impact on our business moving forward. However, continued COVID-19 restrictions in China and future variants are likely to impact supply chains and drag consumer sentiment and investor confidence for at least the remainder of the current financial year.
We remain confident that the technological advances we have seen over the past 3-5 years will continue to transform the way we live, work, build and deliver products and services. In addition, many of our portfolio companies are delivering solutions that provide greater efficiencies and customer engagement/ROI that will be crucial for businesses as they respond to the new economic reality. We also believe that technology can provide the foundations for how we use data, manage our environment and provide our food and energy requirements for future generations. Our disciplined thesis-driven investment approach does not change, despite our constant evolving view of the likely winners in these markets.
We have built a platform that has flexibility and adaptability at its core. Accordingly, we anticipate little change to our fundamental investment approach: indeed history tells us that tomorrow's winners will typically be created and funded during periods of uncertainty.
The environment in which we will have to operate during the current year dictates that in order to maximise the flexibility within our model, we must make some small shifts in emphasis to ensure we continue to preserve capital, deliver shareholder value and position ourselves for the future. We anticipate a slowing of investment, especially as the core portfolio remains well funded, thus the opportunities for follow-ons are less, and therefore I expect a level of annual deployment in the region of £150.0 million.
Our privileged market positioning enables us to provide access to high growth private assets for a range of co-investors. We already manage c.£400m for investors via our EIS and VCT strategies which we expect to grow significantly in the next FY. Our Growth Fund and Fund of Funds are areas where we expect to welcome new co-investors over the next FY. Two sectors where we see great potential over the next 3-5 years are climate technology and in the emerging technology ecosystems in Eastern Europe. We have specialists with expertise in these areas and expect to build third party funds to help grow these important sectors over the next 24 months.
We believe that Molten, with our stable team with deep levels of experience and expertise, scalable and adaptable model, cash resources, active approach to portfolio management and thesis-led investment approach, can continue to deliver in the current market. The current level of volatility makes it challenging to give a meaningful forecast of portfolio fair value growth for the current financial year, but we remain confident in the strength of our portfolio and of our model which has proven its ability to meet or exceed our targets of 10% of NAV in cash realisations and an annual fair value growth of 20% across the cycle.
Martin Davis
Chief Executive Officer
Portfolio review
Our increased investment cadence has allowed us to continue to take advantage of high-quality opportunities and back our existing portfolio through their cycle. Whilst we have increased deployment this year, we have also maintained focus on the quality of our investment process and balanced this uplift through realisations.
Investments made during the year of £311.2 million include £111.7 million of investments into new companies and £130.3 million of follow-ons into our existing portfolio. Our higher levels of deployment have enabled us to invest in new companies, lead more rounds and take larger stakes.
Cash proceeds were £126.3 million, including proceeds from partially selling down shares held in publicly-listed Trustpilot and UiPath, as well as from the full realisations of SportPursuit, Premfina, Conversocial, and Bright Computing, and escrow receipts relating to previously announced disposals and distributions from Fund of Funds interests.
Our portfolio continues to comprise of a balance of mature core companies and emerging businesses.
Portfolio valuations
The Gross Portfolio Value as at 31 March 2022 is £1,531.5 million, an uplift of £547.7 million to the 31 March 2021 value of £983.8 million. The fair value increase for the year ending 31 March 2022 is £362.8 million, of which £15.9 million results from the impact of foreign currency movements on the portfolio. The largest contributors to the unrealised fair value gains are Revolut (£75.9 million), Thought Machine (£65.1 million), Aiven (£59.8 million) and CoachHub (£58.6 million).
At 31 March 2022, we held interests in three listed companies - Trustpilot, UiPath, and Cazoo. We also held an interest in one listed fund as part of our Fund of Funds programme. Their valuations are based on their quoted share price on 31 March 2022.
68% of the Gross Portfolio Value is made up of our 21 core companies. New entrants to the core are: CoachHub, Form3, ICEYE, N26, Isar Aerospace and PrimaryBid, whilst Perkbox is not included in the core in this period, and we exited SportPursuit. We partially disposed of Trustpilot and UiPath during the period, however these companies remain in the core. For more details on the movements of the core during the year, please see the Gross Portfolio Value table on below.
The Gross Portfolio Value reflects fair value growth driven by financing rounds at higher valuations and increased revenues. The fall in value of our public company shareholdings has been offset by gains in the value of our private investments at 31 March 2022. The performance of our portfolio companies continues to be strong with average revenue growth rates in the core portfolio above 65% during 2021.
Investments
New companies
During the year, we invested £111.7 million into new entrants to the portfolio, taking advantage of opportunities to lead rounds in areas such as climate tech, fintech and drone delivery technology, whilst maintaining the quality and volume of investments made.
• FintechOS - we led a US$60.0 million Series B funding round in FintechOS, supported by existing investors. FintechOS is a global technology provider for banks, insurers and other financial services companies with a low code approach to digital transformation.
• Schüttflix - we led a US$50.0 million Series A round into Schüttflix, a platform that connects material producers and freight forwarders with customers from different construction sectors, such as building, civil engineering, and landscaping.
• Material Exchange - we led a €25.0 million Series A round into Material Exchange, a SaaS enabled marketplace for sourcing materials within apparel industries.
• Mostly AI - we led a US$25.0 million Series B round into Mostly AI, which uses AI to create synthetic data sets to look just as real as a company's original customer data and reflect behaviours and patterns enabling companies to comply with data protection regulations and use sensitive data in cloud environments.
• SimScale - we co-led a €25.0 million Series C extension round in SimScale, a cloud-based SaaS platform making high-fidelity simulation technically and economically accessible to engineers worldwide.
• Allplants - we led a £38.0 million Series B funding round in Allplants, the D2C plant-based food business. Its plant-based meals are hand-made 24 hours a day by 140 chefs in the company's own kitchen and delivered across the UK.
• Aktiia - we led a US$17.5 million Series A round in Aktiia, which has built a system for continuous blood pressure monitoring for remote patient monitoring in hypertension. Aktiia's core product is a CE-marked, non-invasive optical blood pressure monitoring device worn on the wrist.
• Cervest - we led a US$30.0 million Series A round in Cervest, whose AI Climate Intelligence platform combines public and private data sources, machine learning and cutting-edge statistical science to present a unified view of climate risk.
• Manna - we led a US$25.0 million Series A round in Manna. Manna designs, builds and operates unmanned aerial vehicles which perform high-speed deliveries of takeaway food, groceries and pharmacy goods/supplies up to 3kg in suburban last-mile settings.
• BeZero Carbon - we led a £15.0 million seed round into carbon offset intelligence platform BeZero Carbon. BeZero is building a data and analytics platform for catalysing and scaling the Voluntary Carbon Market.
• IndyKite - we led a US$8.0 million seed round into IndyKite, a software company building the identity layer for Web 3.0. It has products that securely manage human, IoT and machine identity.
• CausaLens - we co-led a US$45.0 million Series A round into CausaLens, a no-code Causal AI platform. The platform is designed to quantify cause-and-effect relationships to reason alongside humans in a manner that is designed to be trustworthy, explainable, and fair.
• Gardin- we led a US$11.0 million seed round into Gardin, an agtech company aiming to make nutritious food sustainable and affordable. Gardin has developed optical sensors to obtain data at the individual plant level, allowing growers to monitor biochemical processes such as photosynthesis in real time.
• Satellite Vu - we invested as part of a £15.0 million Series A round into Satellite Vu, which is bringing satellite technology to address global challenges and plans to monitor the temperature of any building on the planet in near real time using a new satellite technology to determine insights into economic activity, energy efficiency and carbon footprint.
The final close of PrimaryBid's Series B, which we reported in our Annual Report for the year ended 31 March 2021, also forms part of the deployment figure into primaries in the year.
New companies - co-investment strategy
As an extension of our existing strategy of deploying capital via other vehicles through our Fund of Funds programme, co-investments with some of our seed fund managers have enabled us to invest £28.9 million into four new additions to the portfolio during the period.
• Genesis Global - a low-code platform for capital markets.
• Sorare - a French-based fantasy sports game, where players can buy, trade, play and collect with official NFT player cards.
• Choco - a German digital platform connecting restaurants and their suppliers to optimise the food supply chain.
• Pigment - a French collaborative financial planning software for mid and large enterprises.
Follow-on
We deployed £130.3 million into follow-ons in 17 existing portfolio companies during the year, supporting our portfolio in their larger, later stage rounds. These companies included the following (over £2.0 million invested):
• Form3 - we deployed £25.0 million in a US$160.0 million Series C round. Founded in 2016, Form3 is a platform payment technology provider and offering an alternative to the traditional payment infrastructure model, through its always-on, cloud-native, Payments-as-a-Service platform.
• Thought Machine - we invested £20.0 million into the Series C round. Thought Machine is a cloud native core banking technology company founded in 2014 with a mission to enable banks to deploy modern systems and move away from the legacy IT platforms of the banking industry.
• ICEYE - we participated in a US$136.0 million Series D round with an investment of £15.0 million. ICEYE has now raised over US$304.0 million since 2015, and owns and operates a constellation of Synthetic-aperture radar (SAR) satellites.
• CoachHub - we participated with a £14.7 million investment in their US$80.0 million Series B extension round. CoachHub is a global talent development platform that enables organisations to create a personalised, measurable and scalable coaching programme for their entire workforce, regardless of department and seniority level.
• Ledger - we invested £10.0 million in a US$380.0 million Series C round. We first invested in Ledger in 2018, as part of its US$75.0 million Series B. Ledger's hardware wallets allow investors to access the world of digital assets securely.
• PrimaryBid - we participated in a £125.0 million Series C round with an investment of £8.8 million. PrimaryBid is an online funding platform that enables investors to gain access to placings and fundraisings of listed companies.
• Pollen - we participated in a US$150.0 million Series C round with an investment of £7.5 million. Pollen is a destination travel marketplace, which offers both third-party events and Pollen's own curated events.
• Lyst - we participated in a US$85.0 million funding round in Lyst with an investment of £7.2 million, joined by new investors. Lyst is a global fashion search platform that lets users search thousands of online fashion stores at once.
• Paragraf - we participated in a US$60.0 million Series B round with an investment of £6.0 million. Paragraf's patented contamination-free deposition technology delivers a scalable approach to graphene device manufacturing.
• Freetrade - we invested £5.0 million into Freetrade, a challenger stock trading and investing app providing simple and commission-free access for users to online trading.
• Aircall - we participated in a US$120.0 million Series D round with an investment of £3.6 million, having first invested in their US$25.0 million Series B round in 2018. Aircall is an entirely cloud-based voice platform which integrates seamlessly with popular productivity and helpdesk tools.
• Crowdcube - we participated in a £15.0 million Series C round with an investment of £3.0 million. Crowdcube is a leading, British equity crowdfunding platform.
Fund of Funds
Our Fund of Funds programme continues to expand, providing access to earlier-stage companies, as well as dealflow opportunities for the highest quality companies from within these portfolios. During the year, we committed to another 22 funds, bringing our total to 57 funds. Total commitments to new and existing Fund of Funds at 31 March 2022 were £109.9 million (converted at year-end exchange rates), of which £52.5 million has been drawn (FY21: £67.2 million committed with £25.5 million drawn). During the year, we deployed capital of £27.0 million into drawdowns.
Our funds are experts in specific areas. Among the new funds within our portfolio are:
• Paua Ventures - a Berlin-based B2B software and deep tech fund.
• Boost VC - focusing on pre-seed "Sci-Fi" technology companies.
• Nomad Capital - a pre-seed and seed stage fund focused on US/EU based SaaS and Marketplace start-ups.
We have also continued our support of some of our existing managers by committing to their new funds, such as Join Capital II, ByFounders II, Hardware Club II, and IQ Capital IV A.
Earlybird
During this period, we deployed £13.3 million via our partnership with Earlybird into their Digital East Fund I, Earlybird Growth Opportunities Fund, and Earlybird West's Fund VI and VII, continuing to access earlier-stage companies in Germany and Europe with the benefit of Earlybird's expertise.
Realisations
Cash proceeds of £126.3 million were received during the year, relating to the full exits from SportPursuit, Premfina, Conversocial, and Bright Computing, as well as partial exits relating to Trustpilot and UiPath (now both publicly listed), a secondary partial realisation in Revolut, distributions from our Fund of Funds programme, and distributions of escrows relating to exits in prior periods.
• SportPursuit - we exited our investment in the online private outdoor active clothing and accessories sales club in the UK and Germany following the acquisition by private equity firm of SportPursuit, bd-capital. We realised a total cash return of £22.8 million (including estimated escrow not yet received), above the £18.5 million fair value held at 31 March 2021. We first invested in SportPursuit in 2012 as part of a Series A round, providing the first institutional investment and supported them in each subsequent fund raise through to exit.
• Bright Computing - we exited our investment in the software developer as a result of NVIDIA's acquisition of Bright Computing, generating proceeds of £11.7 million with a 1.6x return on invested capital.
• Premfina - we generated proceeds of £1.5 million from the sale of Premfina to HPS Partners.
• Conversocial - Conversocial was sold via acquisition and generated proceeds of £5.2 million.
• Trustpilot - during the prior financial year, as part of Trustpilot's IPO in March 2021, Molten sold down part of its holding in the leading global review platform, generating proceeds during FY21 of £75.5 million. At 31 March 2022, we held 25 million shares in Trustpilot plc, having generated further proceeds of £23.2 million during the period. Post period-end, we sold no further Trustpilot shares. Since IPO, we have so far generated cash proceeds of £98.7 million.
• UiPath - UiPath listed on the New York Stock Exchange in April 2021. We have generated proceeds of £49.8 million during the period from related distributions from Earlybird Digital East and sale of shares and are recognising the remaining holding at 31 March 2022 at the period-end share price.
Post period-end
· We have deployed £73.7 million into new and existing portfolio companies, including our announced deal in HiveMQ.
· We announced the funding rounds of Thought Machine and Aiven (Aiven is held via our partnership with Earlybird).
· At 31 March 2022, we held interests in three listed companies - Trustpilot, UiPath, and Cazoo. Their valuations are based on their quoted share price on 31 March 2022. Their value using the closing quoted share price on 8 June 2022 was £43.9 million.
Portfolio review: core company updates
**Please refer to Note 28 for details.
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Graphcore |
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Graphcore is a machine intelligence semiconductor company, which develops Intelligent Processing Units ("IPUs") that enable unprecedented levels of AI compute. The IPUs' unique architecture enables AI researchers to undertake entirely new types of work, which drives advances in machine intelligence. • In December 2020, Graphcore raised US$222.0 million in a Series E funding round led by the Ontario Teachers' Pensions Plan. Also participating in the round were Molten Ventures, funds managed by Fidelity International Schroders, and Baillie Gifford • Industry performance metrics published by MLPerf demonstrated Graphcore have a significant Price to Performance advantage over the market leader, Nvidia1. These are the first public benchmarks published that show Graphcore against Nvidia • Graphcore increased spend on research and development by 125% in 2020, and ended the year with a cash balance of US$121.0 million, up 119% from 2019 • The company continues to roll out partnerships and product integrations, such as Pytorch lightning, ATOS Pacific Northwest National Laboratory (PNNL), NEC, and Spell • In December 2021, the company launched Poplar SDK 2.4 • In March 2022, Graphcore launched the world's first 3D wafer-on-wafer processor - the Bow IPU - which delivers up to 40% higher performance and 16% better power efficiency for real world AI applications than its predecessors • Jeff Richardson joined the Graphcore Board as an Independent Director. Jeff is current Chairman of Lattice Semiconductor (NASDAQ: LSCC) and was COO of LSI Logic 1 https://mlcommons.org/en/training-normal-10/ |
£24.0m Invested £113.5m Investment valuation** |
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Aiven |
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Aiven democratises access to the latest opensource technologies by offering fully-managed services for popular open-source projects like Apache Kafka and Cassandra, Elasticsearch, M3 and PostgreSQL in the public cloud. • In October 2021, the company announced it had extended the previous mentioned Series C funding round from US$100.0 million to US$160.0 million. As well as Earlybird, investors include Atomico, IVP (Institutional Venture Partners), World Innovation Lab, and Salesforce Ventures • Aiven has been growing its revenue over 100% year on year • Released Aiven for OpenSearch and now Kubernetes Operator support for PostgreSQL and Apache Kafka • The company has increased its headcount by more than 65% since October 2021 • Launched Cluster startup programme to help startups build their data infrastructure using Aiven services • Post year-end, Aiven announced their Series D funding round This investment is held via Earlybird. |
£5.0m Invested £105.3m Investment valuation** |
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Thought Machine |
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Cloud native core banking technology company, Thought Machine provides core banking infrastructure to both incumbent and challenger banks. The company's technology provides an alternative, more flexible cloud-based solution that can be configured to provide any product, user experience, operating model, or data analysis capability. • US$200.0 million Series C funding raised new institutional investors including ING Ventures, J.P. Morgan Chase Strategic Investments and Standard Chartered Ventures. Existing investors Molten, Lloyds Banking Group, British Patient Capital, Eurazeo, SEB, Backed, and IQ Capital have all participated in the round • Cauldron, a Thought Machine spin-out launched as a standalone financial video game studio • J.P. Morgan selected Thought Machine to overhaul its core banking systems across the bank's entire US retail network, Chase Bank • Italian bank Intesa Sanpaolo invested £40.0 million into Thought Machine and uses "Vault" to power a new digital banking platform • Post year-end, Thought Machine announced their Series D round raising US$160.0 million |
£36.5m Invested £103.5m Investment valuation** |
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Ledger |
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Ledger has created a next generation hardware digital asset wallet providing customers the highest level of physical security solution to store their digital assets. Ledger's products are USB-like devices which store access keys for a customer's crypto assets; the device uses advanced security authentication to allow customers to access their crypto assets. Ledger currently has sold over 4 million devices and over 15% of the world's crypto assets are already secured through Ledger products. In addition to its Nano products, Ledger has launched a dedicated app allowing customers to buy, sell, exchange, lend and manage crypto assets to other customers on the platform. Ledger combines a hardware wallet to the Ledger Live app to offer consumers the easiest way to start their crypto journey while maintaining full control over their digital assets. However, consumer products are just one aspect of Ledger's business. The company is also developing solutions for businesses including Ledger Vault, to secure digital assets, and Ledger Enterprise Solutions, a digital asset custody and security solution for institutional investors and financial players, as well as a staking solution. • In March 2022, the company launched a new update of its Nano S, the Nano S+, with a bigger screen that offers easy navigation and a smooth experience. A larger memory allows the installation of over 100 apps simultaneously and manages over 5,500 digital assets • A key partnership was also achieved with Coinbase in 2022: Coinbase users can now secure their coins and NFTs with Ledger as the Coinbase Wallet browser extension adds support for Ledger Hardware Wallets • Ledger has launched a debit card that connects directly with a crypto wallet (the Crypto Life card). Cardholders will also be able to receive their paychecks into their card account directly. They will be able to convert a percentage of their paycheck into Bitcoin and Ethereum every time they get paid |
£27.7m Invested £91.9m Investment valuation** |
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Revolut |
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Revolut is a global financial services company that specialises in mobile banking, card payments, money remittance, and foreign exchange. Revolut is developing into a fintech super-app. • In July 2021, Revolut raised US$800.0 million Series E funding from SoftBank's Vision Fund 2 and Tiger Global, valuing the business at US$33.0 billion. The funding will be used to continue to build the first global financial super-app • Secured Australian Credit licence and launched stock trading in Australia • Launched Payday, to help employees access wages early to improve their financial wellbeing • Acquired Forex Licence holder Arvog Forex Private Limited; the acquisition supports Revolut's continued expansion strategy which has included launches in Singapore, Australia, the US and Japan in the past two years • Continue to update and innovate, launching savings vault product and pet insurance as they enter the insuratech space • Revolut Junior now enables the use of Google Pay and Apple Pay • Acquired Nobly ePOS business to expand services into the hospitality sector • Revolut appointed a number of new hires including: Paroma Chatterjee as CEO India to build and lead Revolut's subsidiary in India, Mikko Salovaara as Group CFO, Sid Jajodia as Chief Banking Officer, and Joe Heneghan steps up to a new role as Chief Executive Officer, Europe. The company also appointed Ibrahim Dusi as Chief Risk Officer for Americas and Juan Miguel Guerra as CEO Mexico. Revolut acquired a team from New York talent-sourcing marketplace, Wanted, to support their product development resource |
£7.1m Invested £91.3m Investment valuation** |
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CoachHub |
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CoachHub is a leading global talent development platform that enables organisations to create a personalised, measurable, and scalable coaching programme for the entire workforce, regardless of department and seniority level. By doing so, organisations are able to reap a multitude of benefits, including increased employee engagement, higher levels of productivity, improved job performance, and increased retention. • CoachHub raised US$80.0 million Series B2 funding, increasing total funding to US$110.0 million. Molten, RTP Global, HV Capital, Signals Venture Capital, Partech, and Speedinvest all participated in the round • Continued expansion in Australia following the Series B fundraise including a series of new hires, expanding the team and bolstering leadership • In the first half of 2021, CoachHub exceeded their full year of new business generation for 2020 • Acquired French market leader and a pioneer in digital coaching, MoovOne • The company launched CoachHub Wellbeing, its new mental health coaching programme designed to improve employee wellbeing across the global workforce • Acquired coaching division of leading Austrian consulting company Klaiton including its pool of 500 highly qualified business coaches • Continued global expansion with the opening of an Asia Pacific Headquarters in Singapore and a new office in Amsterdam • Professor Jonathan Passmore appointed as Senior Vice President of Coaching |
£27.1m Invested £85.7m Investment valuation** |
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Aircall |
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The company's cloud-based platform integrates seamlessly with popular productivity and helpdesk tools and is accessible, transparent, and collaborative. It replaces outdated systems with a collaborative platform that helps to communicate with customers, prospects, candidates, and colleagues. This enables businesses to be better on customer support or sales engagement with a phone system. • The company raised a US$120.0 million Series D funding round. Goldman Sachs joined the round as the newest investor. Molten also participated alongside eFounders, NextWorld Capital, Adams Street Partners, DTCP, Swisscom Ventures, and Gaia Capital Partners • The expansion of Aircall's North American operations led to a growth of 26% in North American revenue from June to December 2021. • The company opened its Sydney office at the beginning of 2021 and has grown its team from one to 30, and reached the milestone of 1,000 customers. It also opened a new office in London as part of its expansion across Europe • Aircall continues to have a number of partnerships and integrations with platforms like HubSpot, CRM and Paytia |
£14.3m Invested £62.9m Investment valuation** |
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Form3 |
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Form3 provides a cloud-native, real-time payment technology platform to enable banks and regulated fintechs to create amazing products and experiences. • The company announced US$160.0 million Series C funding round led by Goldman Sachs Asset Management. Molten, alongside other existing investors, also participated • In 2021, annual recurring revenue grew by 233% from 2020 levels • Several new hires were made to its Executive Leadership team, including Giles Hawkins as Chief Legal Officer and Simeon Lando as Chief Marketing Officer • Employs over 260 people in 22 countries |
£30.1m Invested £46.6m Investment valuation** |
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Lyst |
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A search engine just for fashion. Lyst offers a social shopping site that includes an inventory of fashion products and provides access to changing fashion data points every hour, enabling users to find and buy the latest fashion trends by browsing through a series of clothing and accessories. • The company raised a US$85.0 million funding round. Molten participated alongside several existing investors and were joined by new investors, Fidelity International, Novator Capital, Giano Capital and C4 Ventures • In 2021, GMV exceeded US$500.0 million, following 1100% growth in new users on the Lyst app. Lifetime GMV is now over US$2.0 billion • Revenue of £35.5 million was generated in 2021, which was an increase of 54% on 2020 • Lyst released its own Conscious Fashion Report, a deep-dive into fashion lovers' changing sustainable habits and the creators driving that change from the company's insights and data analysis • The company announced a few appointments in senior management positions: Mateo Rando, previously at Spotify, as Chief Product Officer and Emma McFerran, formerly General Counsel and Chief People Officer, has been appointed COO and a new board member |
£13.2m Invested £39.7m Investment valuation** |
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M-Files |
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M-Files provides an intelligent information management platform that is repository neutral and utilises AI to break down information silos and unify systems, data and content. M-Files, organises customers' content with the ability to connect to existing network folders and systems and to enhance them with the help of AI to categorise and protect information. • Annual recurring revenue grew by more than 30% in 2021, with net revenue retention increasing to over 120% in 2021 • The company received the highest score in two use cases in updated Gartner® Critical Capabilities for Content Services Platforms report • Launched smart content migration with new intelligence service offering • Named winner in the 2022 Business Intelligence Group's Artificial Intelligence Excellence awards, recognised for its innovations to the M-Files metadata-driven document management platform • Recognised as one of five 2022 Gartner Peer Insights™ Customers' Choice for Content Services Platforms • 3 key recent appointments to further support M-Files' commitment to rapidly expand the company's global presence and deliver continuous innovation across its document management platform; appointment of Bob Pritchard (former SVP Sales of Alfresco) as Chief Revenue Officer, appointment of Nancy Harris (former EVP & MD of Sage North America) and Christophe Duthoit (former BCG Sr. Partner Emeritus) to the Board of Directors |
£6.5m Invested £37.3m Investment valuation** |
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Trustpilot |
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Online global review platform, Trustpilot, provides a trust layer for the open commerce ecosystem by giving consumers the confidence to purchase goods and services from a wide range of online and offline businesses across the world. • Trustpilot is listed on the London Stock Exchange with the ticker TRST • Revenue increased 24% in 2021 from 2020, with revenue of US$131.4 million, and the Company's ARR increased 26% from 2020 to 2021 • Launched integrations with Shopify, WooCommerce marketplace and PrestaShop • The company became a member of the European Tech Alliance (EUTA) joining 37 other major European digital champions, scaleups, and leading start-ups to provide insight on the tech industry and the experience of scaling in the EU • Joe Hurd was appointed to the board as a Non-Executive Director. Former Marketing Director of QuickBooks, Alicia Skubick was appointed Chief Marketing Officer (effective 4 October 2021) |
£12.1m Remaining cost £36.5m Investment valuation** £98.7 Proceeds received |
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RavenPack |
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RavenPack is a leading big data analytics provider for financial services. The Company offers a comprehensive data solution for global risk analysis to isolate and manage fast-moving issues. The data analytics platform uses natural language processing (NLP) algorithms to scan the news in real time and calculate sentiment and volume risk metrics allowing clients to enhance returns, reduce risk and increase efficiency by systematically incorporating the effects of public information on their models or workflows. RavenPack's clients include some of the most successful systematic hedge funds, as well as asset managers and banks. • Launched RavenPack Edge, the most advanced multilingual NLP platform on the planet. Edge is new AI platform that collects, reads, and analyses billions of documents to help businesses better monitor and mitigate emerging risks. RavenPack Edge is capable of understanding content in 13 different languages and can extract insights from all types of documents - from short news articles to complex legal filings and more recently, job news • Launched the Credit Suisse RavenPack Artificial Intelligence Index, a rules-based multi-asset index applying an S&P 500® sector rotation process driven by news sentiment. This powers systematic investment strategies designed to provide exposure to sectors of the US economy with stronger sentiment based on a news analytics algorithm powered by RavenPack. As of March 2022, Credit Suisse trades more than USD$1.0 billion in derivatives linked to the Index • RavenPack has been recently named Alternative Data Vendor of the Year 2022 by Risk.Net magazine, an important endorsement in the company's ecosystem recognising that the company leads the way with the most sophisticated text analytics platform that turns news, transcripts, filings and any text in different languages into actionable indicators |
£7.5m Invested £35.1m Investment valuation** |
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ICEYE |
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ICEYE's radar satellite imaging service, with coverage of selected areas every few hours, both day and night, helps clients resolve challenges in sectors such as maritime, disaster management, insurance, finance, security, and intelligence. ICEYE is the first organisation in the world to successfully launch synthetic-aperture radar (SAR) satellites with a launch mass under 100 kg. • In March 2021, ICEYE had US$50.0 million in signed contracts, which was nearly 10x growth from the previous year • In April 2021, the company opened new spacecraft production facility in Irvine California expanding manufacturing, research, and customer operations in the US • Four new radar imaging satellites launched in July 2021 to increase persistent monitoring capabilities • Contract with National Oceanic and Atmospheric Administration (NOAA) to support the monitoring and response to environmental hazards in the maritime sector also announced • Makoto Higashi joins as General Manager for local business operations as ICEYE expands its offering in Japan. Appointed Lisa Wardlaw as Global Head of Insurance Solutions as ICEYE accelerates growth in the insurance segment; Andy Read hired as Global Head of Government Solutions |
£22.5m Invested £32.1m Investment valuation** |
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Isar Aerospace Technologies |
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Isar Aerospace develops and builds launch vehicles for transporting small and medium-sized satellites, as well as satellite constellations into Earth's orbit. • The company extended its Series B funding round to over US$165.0 million led by HV Capital, Porsche SE, and Lombard Odier. Other participants include existing investors Earlybird, Lakestar, Vsquared Ventures, and Apeiron • The company won €10.0 million in funding from the EU in January 2022 along with €11.0 million from the Federal German Government and the German Aerospace Center in April 2021 • The company has signed an agreement with Norwegian Andøya Space to secure exclusive access for a period of up to 20 years to one of its launch pads on the island Andøya. As a launch site operator, Andøya Space provides launch pads, payload integration facilities, as well as the technical infrastructure on site • Airbus Defence and Space has committed to use Isar Aerospace for satellite launch services • Partnership with OroraTech to launch satellites for tackling global wildfire crises • Astrocast to use Isar Aerospace's launch vehicle to launch a satellite as part of its global nanosatellite IoT network This investment is held via Earlybird. |
£4.5m Invested £27.9m Investment valuation** |
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Endomag |
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Endomag utilises technology to improve cancer care by preventing unnecessary surgery and improving outcomes and patient experience where surgery is needed. • The company has received a 2021 Queen's Award for Enterprise in International Trade for the second time, originally having been selected as a recipient back in 2018 • The company was named one of Europe's fastest growing companies by the Financial Times, featured on the list as the 7th highest rated Healthcare company • An endorsement from the UK health technology assessment body NICE was received, opening the way to broader adoption of its technology in the National Health Service |
£9.3m Invested £24.7m Investment valuation** |
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PrimaryBid |
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Technology platform that allows everyday investors fair access to public companies raising capital. The company ensures retail investors are able to transact at the same time and at the same price as institutional investors. • The company raised US$190.0 million in their Series C round, which was led by SoftBank Vision Fund 2, with participation from Molten Ventures, as well as a number of existing investors • First cross-border IPO of Soho House on the New York Stock Exchange • Launched partnership with Euronext in France • Made ten offers available to individual investors in one week, PrimaryBid's highest ever • Crossed US$1.0 billion in demand on the platform users • Reached milestone of over 5 billion shares transferred • Revenue increased over 3,500% in FY21, to over £4.9 million |
£14.2m Invested £24.6m Investment valuation** |
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N26 |
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N26 provides mobile banking services for customers. Its mobile banking services offer online banking that includes making and handling of current accounts, fixed accounts, and other banking services, letting customers manage and control their banking details via a smartphone application easily. • Raised US$900.0+ million Series E Round led by Third Point Ventures and Coatue Management, and joined by Dragoneer Investment Group as well as existing N26 investors • Launched on-demand insurance product N26 insurance, which will offer the digital bank's customers the option from the N26 app to purchase coverage, manage plans and initiate claims for a range of insurance plans from different providers. The offering is currently available in Europe • The company announced a partnership with SumUp, lowering barriers for cashless payment acceptance for freelancers and self-employed individuals • US operations were discontinued as the company sharpens its focus on its European business • Expanded its management team with the appointment of Thomas Grosse taking on the role of Chief Risk Officer (CRO), Dr. Stephan Niermann as Group Money Laundering Reporting Officer (MLRO), and Dr. Volker Vonhoff as Director of Group Risk. Chief Financial Officer Dr. Jan Kemper, has taken over the roles of COO and CFO as COO Adrienne Gormley steps down. Alongside the appointment of Dr. Jan Kemper as Chief Financial Officer (CFO) of the Group, Christian Strobl was also appointed as Austrian Market lead This investment is held via Earlybird. |
£10.6m Invested £22.1m Investment valuation** |
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Freetrade |
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Freetrade is a challenger stockbroker with mobile-first, commission-free investing. Freetrade is on a mission to enable people to invest and grow their savings by benefitting from the global economic growth driven by public companies. Freetrade is FCA-regulated, FSCS-secured and one of the newest members of the London Stock Exchange (LSE). • A record-breaking fundraising via Crowdcube was achieved; the company hit £8.0 million in fewer than six hours • April 2021 saw the launch of Freetrade self-invested personal pension (SIPP) • The company received its licence from Sweden's financial regulator making its next step in European expansion • German, Finnish and Dutch stock have launched on Freetrade • The company reached a number of milestones in the past year including one million registered users in October and £1.0 billion assets under administration in November • Paul Brooker joined Freetrade as CFO in September 2021, formerly serving as CFO and Head of Financial Control at Revolut |
£13.0m Invested £20.1m Investment valuation** |
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smava |
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Online loan comparison platform, which brings private applicants together with a variety of banks and private investors, offering highly attractive interest rates for loans, providing customers a tailored online loan with the best conditions free of charge within seconds. • Announced partnership with Deutsche Bank and Younited Credit • In February 2021, smava acquired Finanzcheck • Since market launch in 2007, smava has enabled more than 500,000 consumers to take out cheap loans This investment is held via Earlybird. |
£14.5m Invested £17.3m Investment valuation** |
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UiPath |
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UiPath provides a comprehensive robotic software solution for IT-based process automation. Built on a comprehensive, fully integrated platform with centralised instrumentality, UiPath is designed for the highest standards of enterprise management, security, scalability and auditability. • UiPath listed on 21 April 2021 onto the New York Stock Exchange with the ticker PATH • As of January 31 2022,, UiPath's annualised renewal run-rate had grown 59% year on year, with ARR of US$925.0 million • Announced features that enable customers to further their automation journeys with powerful capabilities and simpler, more gratifying experiences in discovering, building, managing, and running automations with its latest platform release • Five UiPath executives were named in CRN's 2021 Women of the Channel List for their leadership, dedication and channel advocacy • The company strengthened their leadership team with two new hires; former ServiceMax executive, Bettina Koblick, was appointed new Chief People Officer and Andreea Baciu was appointed the company's first Chief Culture Officer • We have received distributions in kind from the Earlybird funds and now hold a portion of UiPath directly This investment is partially held via Earlybird. |
£4.4m Remaining cost £14.0m Investment valuation** £59.8 Proceeds received |
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Cazoo |
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Founded in 2018 by entrepreneur, Alex Chesterman, Cazoo is changing the way to buy and sell a car online. Cazoo is a UK digital business and leading online car retailer, allowing purchase, financing or subscription to cars online, with the option of home delivery or collection. In August 2021 Cazoo launched on NYSE trading under the symbol "CZOO". • US$630.0 million fund raise led by Viking Global Investors to support continued growth and expansion in the UK and EU • Secured €50.0 million asset backed securitisation with BNP Paribas • Launched in Spain, France and Germany and opened customer centres in Carlisle, Liverpool, Lakeside, Essex and Newcastle (marking its 21st customer centre) • The company has made a number of acquisitions in the past year including; automotive data insights platform, Cazanna, SMH Fleet Solutions, Swipcar, and Italian online car retailer, brumbrum • Agreed partnership with Oglive fleet securing 18,000+ vehicles • Expanded its offering to commercial vehicles • Duncan Tatton-Brown, Anne Wojcicki, Moni Mannings and Luciana Berger joined the Cazoo board. Appointed a number of new hires including Veronica Sharma (Group Chief People Officer), Abhishek Roy (European Managing Director), Andreas Schuierer (Country Manager for Germany), Romain Weill (Country Manager for France), Tommaso Debenedetti (Country Manager for Italy) and Julio Ribes (Country Manager for Spain) |
£9.9m Invested £12.0m Investment valuation** |
Financial review
FY22 delivered strong uplifts in the portfolio, increased investment capital deployed and further portfolio company IPOs set against a backdrop of a variable environment. With an equity raise, move to the Main Market and corporate rebrand, it was another active year. It is pleasing to be able to report further strengthening of the portfolio with fair value growth and a number of new exciting companies added. The resilience and flexibility of our model is beneficial as we link public markets into the private venture capital ecosystem, and we will look to broaden this by building the capital pool alongside the balance sheet with additional private fund strategies. This will complement our existing c.£400 million of AUM from our EIS and VCT funds.
As at 31 March 2022, net assets of £1,433.8 million were recognised, which is an increase of £400.7 million on prior year. This growth is mainly driven by the movement in value of our net portfolio, which is recognised at fair value through profit or loss ("FVTPL") in the consolidated statement of financial position.
We have a strong and diversified portfolio, across sectors and stages of their lifecycle, which is evidenced by the gross fair value growth for the year of £362.8 million (37%), a £329.4 million net fair value increase. We have generated fee income during the year of £21.8 million, both internally and externally, which allows us to continue to meet and improve on our target of costs (net of income) being less than 1% of NAV.
In June 2021, we completed an equity raise of £107.7 million (net of costs) from new and existing investors (including a PrimaryBid retail element), followed by the Company moving to the Main Market in July 2021, further broadening the investor base.
Statement of financial position
Portfolio
The Gross Portfolio Value at 31 March 2022 is £1,531.5 million (£983.8 million at 31 March 2021). The Gross Portfolio Value is an APM (see Note 33) and a reconciliation from gross to net portfolio value, which is recognised on the consolidated statement of financial position, is shown below. Investments of £311.2 million were made during the year, cash proceeds from exits, escrows and sales of shares were received of £126.3 million (£112.8 million net of carry payments) and non-investment movements of £15.9 million related mostly to internal management fee payments. The gross fair value movement on the portfolio was £362.8 million, of which £15.9 million results from foreign exchange movements and £346.9 million from fair value movements. The overall fair value increase results from the net £564.2 million increase in fair value offset by £217.3 million decrease in fair value. Further details on the Group's valuation policy and valuations basis as at 31 March 2022 can be found in Notes 5, 28 and 29 to the consolidated financial statements.
The fair value growth in the year reflects strong performance in the private portfolio on the basis of their continued commercial traction and rounds at higher valuations, offset by the fall in value of our public company shareholdings at 31 March 2022. Private market valuations have been underpinned with several financing rounds at higher valuations, including recently announced rounds for Thought Machine and Aiven. This demonstrates the breadth and robustness of the portfolio. Key fair value increases during the year relate to some of our core companies, including Revolut (£75.9 million), Thought Machine (£65.1 million), Aiven (£59.8 million) and CoachHub (£58.6 million).
The Gross Portfolio Value is subject mainly to adjustments for the fair value of carry liabilities and Irish deferred tax to generate the Net Portfolio Value of £1,410.8 million. Both carried interest liabilities and Irish deferred tax arise at the level of our investment vehicles, and must be taken into account when arriving at the fair value of our these vehicles to be recognised in the consolidated statement of financial position.
The increase of £543.7 million in the year from £867.1 million at 31 March 2021 results from investments made of £311.2 million and a net fair value increase of £329.4million (including £15.9 million of FX impact), offset by realisations of £126.3 million (£112.8 million net of carry paid).
The net fair value gain on investments of £329.4 million is reflected in the consolidated statement of comprehensive income. The deferred tax recognised on the Gross Portfolio Value has decreased in the year as a UK deferred tax liability in respect of the investment portfolio has been recognised in the consolidated statement of financial position. This is to more closely align the recognition of deferred tax to the location in which it will likely become payable on realisation of the assets. Carry balances of £121.5 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 £13.5 million were made in the year following the further realisations of assets in the underlying fund holdings that exceeded threshold returns. In addition, non investment cash movements to entities held at FVTPL were made of £15.9 million, including for payments of Priority Profit Share ("PPS"). The Gross Portfolio Value table below has been generated to reconcile the Gross to Net Portfolio Values and the movements between 31 March 2021 to 31 March 2022. The percentage of Net Portfolio Value to Gross Portfolio Value is 92% (31 March 2021: 88%), which is a reflection of the deferred tax alignment and increase in carry balances as the portfolio grows.
Total liquidity
Total available liquidity for the Group at 31 March 2022 was £113.1 million, including £35.0 million undrawn on the Company's revolving credit facility (31 March 2021: £220.7 million, including £60.0 million undrawn on the Company's revolving credit facility). Our EIS and VCT funds also have £60.5 million of cash available for investment at 31 March 2022. The consolidated cash balance at 31 March 2022 was £78.1 million (31 March 2021: £160.7 million). This includes £2.3 million of restricted cash relating to our revolving credit facility - see Note 22(ii) for further details. During the year, our fundraise generated net proceeds of £107.7 million and we received cash proceeds from portfolio realisations of £126.3 million. This was offset by investments made during the period of £311.2 million, as well as carry, management fees, and operating costs.
Following the fundraise in June 2021, a total of 13,902,778 new ordinary shares were issued at a placing price of 800p per share; retail investors in the UK subscribed via an offer via PrimaryBid for 603,500 of these. These are recognised in share capital (1p ordinary shares) and share premium in the consolidated statement of financial position, net of directly attributable costs.
The Company has a revolving credit facility of £65.0 million, of which £35.0 million remains undrawn at 31 March 2022. The facility was extended and increased by one year to £65.0 million (from £60.0 million) in May 2021. We have been in compliance with all covenants throughout the duration of the facility and at the year-end. The drawn amount of £30.0 million is recognised in the consolidated statement of financial position at 31 March 2022, offset by capitalised fees from the setup and extension of the facility, which are being amortised over its life. Drawdowns and paydowns will continue to be driven by portfolio investments and realisations.
Net assets
Net assets in the consolidated statement of financial position at 31 March 2022 have increased by £400.7 million from 31 March 2021 to £1,433.8 million, an increase of 39%. This is mainly the result of the increase in the investments balance discussed above, offset by the resulting decrease in cash, deferred tax recognised in the statement of financial position, drawdown on the revolving credit facility, and an increase in deferred income relating to fees.
Statement of comprehensive income
We recognised profit in the year of £300.7 million, up from £267.4 million in FY21.
Income recognised during the year ending 31 March 2022 comprises investment gains of £329.4 million (year ending 31 March 2021: £276.3 million), as well as fee income of £21.8 million (year ended 31 March 2021: £12.5 million). Fee income is principally comprised of Priority Profit Share ("PPS"), management fees from the 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. Performance fees are generated from realisations of EIS assets ahead of return hurdles. These are passed through to the management teams with £0.5m retained within the Group. Promoter fees are income that is recognised alongside fundraising activity in the VCT. The increase in fee income is a result of an increase in the funds under management and particularly from the increase in the third-party funds. This in part reflects the consolidation of the manager of our VCT funds following acquisition of the full holding.
General and administration costs ("G&A") of £19.5 million, compared to the £13.8 million recognised in the year to 31 March 2021, have increased due to growth in the team and infrastructure as the Group builds the investment platform. Within G&A is £2.0 million of performance fees (highlighted above) that were paid out. Exceptional costs of £2.4 million were recognised in the period relating to the Company's move to the Main Market. This includes all non-recurring costs relating to the Main Market move, such as legal, reporting accountant, exchange, and broker fees.
Our operating costs (net of fee income) continue to be substantially less than our target of 1% of NAV and have narrowed as income builds. It is anticipated that further income in fees generated from management of third-party funds, such as our planned growth fund, will provide a further positive contribution to our cost base and profitability in the future.
Post period-end:
We have deployed £73.7 million into new and existing portfolio companies, including our announced deal in HiveMQ.
We announced the funding rounds of Thought Machine and Aiven.
At 31 March 2022, we held interests in three listed companies - Trustpilot, UiPath, and Cazoo. Their valuations are based on their quoted share price on 31 March 2022. Their value using the closing quoted share price on 8 June 2022 was £43.9 million.
Ben Wilkinson
Chief Financial Officer
12 June 2022
Gross Portfolio Value Table
|
Investments |
Fair Value of Investments 31-Mar-21 £m |
Investments £m |
Realisations £m |
Non-investment cash movement £m |
Movement in Foreign Exchange £m |
Movement in Fair Value £m |
Fair Value of Movement 31-Mar-22 £m |
Fair Value of Investments 31-Mar-22 £m |
Interest FD Category* at reporting date |
|
Graphcore |
108.8 |
0.0 |
0.0 |
0.0 |
5.2 |
(0.5) |
4.7 |
113.5 |
A |
|
Aiven |
45.5 |
0.0 |
0.0 |
0.0 |
(1.0) |
60.8 |
59.8 |
105.3 |
B |
|
Thought Machine |
18.4 |
20.0 |
0.0 |
0.0 |
0.0 |
65.1 |
65.1 |
103.5 |
A |
|
Ledger |
41.8 |
10.0 |
0.0 |
0.0 |
(1.3) |
41.4 |
40.1 |
91.9 |
B |
|
Revolut |
20.4 |
0.0 |
(5.0) |
0.0 |
2.7 |
73.2 |
75.9 |
91.3 |
A |
|
CoachHub |
12.4 |
14.7 |
0.0 |
0.0 |
(1.2) |
59.8 |
58.6 |
85.7 |
D |
|
Aircall |
32.8 |
3.6 |
0.0 |
0.0 |
2.4 |
24.1 |
26.5 |
62.9 |
B |
|
Form3 |
10.2 |
25.0 |
0.0 |
0.0 |
0.0 |
11.4 |
11.4 |
46.6 |
C |
|
Lyst |
35.1 |
7.2 |
0.0 |
0.0 |
1.9 |
(4.5) |
(2.6) |
39.7 |
C |
|
M-Files |
29.7 |
0.0 |
0.0 |
0.0 |
(0.3) |
7.9 |
7.6 |
37.3 |
B |
|
Trustpilot |
85.5 |
0.0 |
(23.2) |
0.0 |
0.0 |
(25.8) |
(25.8) |
36.5 |
B |
|
Ravenpack |
29.9 |
0.0 |
0.0 |
0.0 |
1.5 |
3.7 |
5.2 |
35.1 |
D |
|
ICEYE |
13.1 |
15.0 |
0.0 |
0.0 |
1.0 |
3.0 |
4.0 |
32.1 |
A |
|
Isar Aerospace |
14.8 |
0.0 |
0.0 |
0.0 |
(0.5) |
13.6 |
13.1 |
27.9 |
A |
|
Endomag |
15.7 |
0.0 |
0.0 |
0.0 |
0.0 |
9.0 |
9.0 |
24.7 |
C |
|
PrimaryBid |
2.3 |
11.9 |
0.0 |
0.0 |
0.0 |
10.4 |
10.4 |
24.6 |
A |
|
N26 |
10.0 |
0.0 |
0.0 |
0.0 |
(0.3) |
12.4 |
12.1 |
22.1 |
A |
|
Freetrade |
20.0 |
5.0 |
0.0 |
0.0 |
0.0 |
(4.9) |
(4.9) |
20.1 |
B |
|
Smava |
23.8 |
0.0 |
0.0 |
0.0 |
0.0 |
(6.5) |
(6.5) |
17.3 |
A |
|
UiPath |
100.3 |
0.0 |
(49.8) |
0.0 |
1.9 |
(38.4) |
(36.5) |
14.0 |
A |
|
Cazoo |
25.7 |
0.0 |
0.0 |
0.0 |
0.3 |
(14.0) |
(13.7) |
12.0 |
A |
|
Remaining portfolio |
285.0 |
198.8 |
(48.3) |
0.0 |
3.6 |
46.5 |
50.1 |
485.6 |
|
|
Total Portfolio |
981.2 |
311.2 |
(126.3) |
0.0 |
15.9 |
347.7 |
363.6 |
1,529.7 |
|
|
Co-Invest |
2.6 |
0.0 |
0.0 |
0.0 |
0.0 |
(0.8) |
(0.8) |
1.8 |
|
|
Gross Portfolio Value |
983.8 |
311.2 |
(126.3) |
0.0 |
15.9 |
346.9 |
362.8 |
1,531.5 |
|
|
Carry External |
(97.0) |
0.0 |
13.5 |
0.0 |
0.0 |
(38.0) |
(38.0) |
(121.5) |
|
|
Portfolio Deferred tax |
(20.0) |
0.0 |
0.0 |
0.0 |
0.0 |
20.5 |
20.5 |
0.5 |
|
|
Trading carry & co-invest |
0.3 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.3 |
|
|
Non-investment cash movement |
0.0 |
0.0 |
0.0 |
15.9 |
0.0 |
(15.9) |
(15.9) |
0.0 |
|
|
Net Portfolio Value |
867.1 |
311.2 |
(112.8) |
15.9 |
15.9 |
313.5 |
329.4 |
1,410.8 |
|
* 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%
Consolidated statement of comprehensive income
for the year ended 31 March 2022
|
|
Notes |
Year ended £'m |
Year ended £'m |
|
Change in gains on investments held at fair value through profit and loss |
6 |
329.4 |
276.3 |
|
Fee income |
7 |
21.8 |
12.5 |
|
Total investment income |
|
351.2 |
288.8 |
|
|
|
|
|
|
Operating expenses |
|
|
|
|
General administrative expenses |
8 |
(19.5) |
(13.8) |
|
Depreciation and amortisation |
15, 18 |
(0.8) |
(0.7) |
|
Share-based payments - resulting from Company share option scheme |
14 |
(3.7) |
(1.5) |
|
Investment and acquisition costs |
|
(0.2) |
(0.3) |
|
Exceptional items |
34 |
(2.4) |
- |
|
Total operating costs |
|
(26.6) |
(16.3) |
|
|
|
|
|
|
Other income |
|
- |
0.1 |
|
Profit from operations |
|
324.6 |
272.6 |
|
|
|
|
|
|
Finance income |
11 |
1.8 |
0.2 |
|
Finance expense |
11 |
(1.4) |
(5.4) |
|
Profit before tax |
|
325.0 |
267.4 |
|
|
|
|
|
|
Income taxes |
12 |
(24.3) |
- |
|
Profit for the year |
|
300.7 |
267.4 |
|
|
|
|
|
|
Other comprehensive income |
|
- |
- |
|
Total comprehensive income for the year |
|
300.7 |
267.4 |
|
|
|
|
|
|
Earnings per share attributable to owners of the parent: |
|
|
|
|
Basic earnings per weighted average shares (pence) |
13 |
200 |
208 |
|
Diluted earnings per weighted average shares (pence) |
13 |
198 |
206 |
The consolidated financial statements should be read in conjunction with the accompanying notes.
Consolidated statement of financial position
As at 31 March 2022
|
|
Notes |
Year ended £'m |
Year ended £'m |
|
Non-current assets |
|
|
|
|
Intangible assets |
15 |
10.7 |
10.9 |
|
Financial assets held at fair value through profit or loss |
16 |
1,410.8 |
867.1 |
|
Deferred tax |
23 |
1.6 |
- |
|
Property, plant and equipment |
18 |
0.9 |
1.4 |
|
Total non-current assets |
|
1,424.0 |
879.4 |
|
Current assets |
|
|
|
|
Trade and other receivables |
20 |
2.8 |
3.7 |
|
Cash and cash equivalents |
|
75.8 |
158.4 |
|
Restricted cash |
22(ii) |
2.3 |
2.3 |
|
Total current assets |
|
80.9 |
164.4 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
21 |
(14.3) |
(9.7) |
|
Financial liabilities |
22 |
(0.4) |
(0.3) |
|
Total current liabilities |
|
(14.7) |
(10.0) |
|
Non-current liabilities |
|
|
|
|
Deferred tax |
23 |
(26.1) |
(0.4) |
|
Provisions |
|
(0.3) |
- |
|
Financial liabilities |
22 |
(30.0) |
(0.3) |
|
Total non-current liabilities |
|
(56.4) |
(0.7) |
|
Net assets |
|
1,433.8 |
1,033.1 |
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
24 |
1.5 |
1.4 |
|
Share premium account |
24 |
615.9 |
508.3 |
|
Own shares reserve |
25 |
(8.2) |
(0.3) |
|
Other reserves |
25 |
28.9 |
26.2 |
|
Retained earnings |
|
795.7 |
497.5 |
|
Total equity |
|
1,433.8 |
1,033.1 |
|
|
|
|
|
|
Net assets per share (pence) |
13 |
937 |
743 |
The consolidated financial statements should be read in conjunction with the accompanying notes. The consolidated financial statements on pages 134-169 of the Annual Report for the year ending 31 March 2022 were authorised for issue by the Board of Directors on 12 June 2022 and were signed on its behalf.
Ben Wilkinson
Chief Financial Officer
Molten Ventures plc registered number 09799594
Consolidated statement of cash flows
for the year ended 31 March 2022
|
|
Notes |
Year ended £'m |
Year ended £'m |
|
Cash flows from operating activities |
|
|
|
|
Operating profit after tax |
|
300.7 |
267.4 |
|
Adjustments to reconcile operating profit to net cash (outflow)/inflow in operating activities |
26 |
(294.8) |
(264.4) |
|
Purchase of investments |
16 |
(311.2) |
(128.0) |
|
Proceeds from disposals in underlying investment vehicles |
16 |
126.3 |
206.3 |
|
Net loans made (to)/returned from underlying investment vehicles and Group companies |
16 |
(29.4) |
(8.1) |
|
Share options exercised and paid to employees |
|
(3.4) |
(2.6) |
|
Tax paid |
|
(0.4) |
(0.0) |
|
Net cash (outflow)/inflow from operating activities |
|
(212.2) |
70.6 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Payment for acquisition of subsidiary, net of cash acquired |
|
- |
(0.7) |
|
Payments for property, plant and equipment |
18 |
(0.1) |
(0.1) |
|
Net cash (outflow) from investing activities |
|
(0.1) |
(0.8) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Loan repayments |
22 |
- |
(80.0) |
|
Loan proceeds |
22 |
30.0 |
35.0 |
|
Fees paid on issuance of loan |
22 |
(0.3) |
(0.3) |
|
Interest paid |
|
(1.0) |
(2.2) |
|
Interest received |
|
0.2 |
0.3 |
|
Acquisition of own shares |
25 |
(8.0) |
(2.3) |
|
Sale of own shares |
25 |
- |
1.6 |
|
Repayments of leasing liabilities |
22 |
(0.4) |
(0.4) |
|
Gross proceeds from issue of share capital |
24 |
111.2 |
111.9 |
|
Equity issuance costs |
22 |
(3.6) |
(3.5) |
|
Net cash inflow from financing activities |
|
128.1 |
60.1 |
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(84.2) |
129.9 |
|
Cash and cash equivalents at beginning of year |
|
160.7 |
34.1 |
|
Exchange differences on cash and cash equivalents |
11 |
1.6 |
(3.3) |
|
Cash and cash equivalents at end of year |
|
75.8 |
158.4 |
|
Restricted cash at year end |
|
2.3 |
2.3 |
|
Total cash and cash equivalents and restricted cash at year end |
|
78.1 |
160.7 |
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 2022
Year ended 31 March 2022
|
£'m |
Note |
Share capital |
Share premium |
Own shares reserve |
Other reserves |
Retained earnings |
Total equity |
|
Brought forward as at 1 April 2021 |
|
1.4 |
508.3 |
(0.3) |
26.2 |
497.5 |
1,033.1 |
|
Comprehensive income/(expense) for the year |
|
|
|
|
|
|
|
|
Profit for the year |
|
- |
- |
- |
- |
300.7 |
300.7 |
|
Total comprehensive income/(expense) for the year |
|
- |
- |
- |
- |
300.7 |
300.7 |
|
Contributions by and distributions to the owners: |
|
|
|
|
|
|
|
|
Contributions of equity, net of transaction costs and tax |
24 |
0.1 |
107.6 |
- |
- |
- |
107.7 |
|
Options granted and awards exercised |
14, 25 |
- |
- |
0.1 |
2.7 |
(2.5) |
0.3 |
|
Acquisition of treasury shares |
14, 25 |
- |
- |
(8.0) |
- |
- |
(8.0) |
|
Total contributions by and distributions to the owners |
|
0.1 |
107.6 |
(7.9) |
2.7 |
(2.5) |
100.0 |
|
Balance as at 31 March 2022 |
|
1.5 |
615.9 |
(8.2) |
28.9 |
795.7 |
1,433.8 |
Year ended 31 March 2021
|
£'m |
Note |
Share capital |
Share premium |
Own shares reserve |
Other reserves |
Retained earnings |
Total equity |
|
Brought forward as at 1 April 2020 |
|
1.2 |
400.7 |
- |
26.2 |
231.4 |
659.5 |
|
Comprehensive income/(expense) for the year |
|
|
|
|
|
|
|
|
Profit for the year |
|
- |
- |
- |
- |
267.4 |
267.4 |
|
Total comprehensive income/(expense) for the year |
|
|
|
|
|
267.4 |
267.4 |
|
Contributions by and distributions to the owners: |
|
|
|
|
|
|
|
|
Contributions of equity, net of transaction costs |
24 |
0.2 |
106.3 |
- |
- |
- |
106.5 |
|
Options granted and awards exercised |
14, 25 |
0.0 |
1.3 |
2.0 |
(0.0) |
(1.3) |
1.9 |
|
Acquisition of treasury shares |
25 |
- |
- |
(2.3) |
- |
- |
(2.2) |
|
Total contributions by and distributions to the owners |
|
0.2 |
107.6 |
(0.3) |
(0.0) |
(1.3) |
106.2 |
|
Balance as at 31 March 2021 |
|
1.4 |
508.3 |
(0.3) |
26.2 |
497.5 |
1,033.1 |
The consolidated financial statements should be read in conjunction with the accompanying notes.
Notes to the consolidated financial statements
1. General information
|
Name of the Company |
Molten Ventures plc |
|
LEI code of the Company |
213800IPCR3SAYJWSW10 |
|
Domicile of Company |
United Kingdom |
|
Legal form of the Company |
Public limited company |
|
Country of incorporation |
United Kingdom |
|
Address of Company's registered office |
20 Garrick Street, London, WC2E 9BT |
|
Principal place of business |
20 Garrick Street, London, WC2E 9BT |
|
Description of nature of entity's operations and principal activities |
Venture capital firm |
|
Name of parent entity |
Molten Ventures plc |
|
Name of ultimate parent of Group |
Molten Ventures plc |
|
Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period |
Molten Ventures plc was formerly known as Draper Esprit plc |
|
Period covered by financial statements |
1 April 2021 - 31 March 2022 |
Molten Ventures plc (the "Company") is a public limited company incorporated and domiciled in England and Wales. During FY22, as part of a rebrand, Draper Esprit plc has changed its name to Molten Ventures plc. On 23 July 2021, the Company's ordinary shares were admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's Main Market for listed securities, as well as to the secondary listing of the Official List of the Irish Stock Exchange plc and to trading on the regulated market of Euronext Dublin. Prior to this, between 15 June 2016 and 22 July 2021, the Company was listed on the London Stock Exchange's AIM market and the Irish Stock Exchange's Euronext Growth market.
The Company is the ultimate parent company in which results of all subsidiaries are consolidated in line with IFRS 10 (see Note 4(b) below for further details). The consolidated financial statements for the year ending 31 March 2022 and for the comparative year ending 31 March 2021 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 rounded to the nearest million, 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 approval 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 scenarios to assess the potential impact on the Group's operations and portfolio companies. These downside scenarios include unpredictability of exit timing and portfolio company valuations subject to change. 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 31 March 2022, 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.
· The Group must comply with financial and non-financial covenants as part of the revolving credit facility with Silicon Valley Bank and Investec (see Note 22(ii) for further details). An assessment of forecast covenant compliance was undertaken using a number of severe but plausible scenarios on valuations. Under each adverse scenario the Group still had sufficient headroom in order to comply with the covenant obligations.
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 99 to 102 and the Directors' Report on pages 122 to 124.
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 2022, 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. Significant accounting policies
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. On 31 December 2020, EU-adopted IFRS at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Molten Ventures plc transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 April 2021. There was no impact or changes in accounting policies from the transition.
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 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 12 June 2022.
The financial reporting framework that has been applied in the preparation of the Company's financial statements (beginning on page 170) 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 99 to 102 of the Annual Report for the year ending 31 March 2022), in the Directors' Report (pages 122 to 124 of the Annual Report for the year ending 31 March 2022) 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 third 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 57).
· We have engaged ESG Consulting Partner, ITPEnergised.
· As stated in Note 28, 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 FY22 (FY21: 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:
|
Name of undertaking |
Nature of business |
Country of incorporation |
% ownership |
|
Esprit Capital Partners LLP^ |
AIFM to the Company and the Esprit Funds |
England and Wales |
100% |
|
Elderstreet Holdings Limited^ |
Intermediate holding company |
England and Wales |
100% |
|
Elderstreet Investments Limited^ |
AIFM to Molten Ventures VCT plc (formerly Draper Esprit plc) |
England and Wales |
100% |
|
Grow Trustees Limited^ |
Trustee of the Group's employment benefit trust |
England and Wales |
100% |
|
Molten Ventures Advisors Ltd^ |
Investment Advisor to the Growth Fund |
England and Wales |
100% |
|
Molten Ventures (Nominee) Limited^ (formerly Draper Esprit (Nominee) Limited) |
Nominee company |
England and Wales |
100% |
|
Encore Ventures LLP^ |
AIFM to the Encore Funds |
England and Wales |
100% |
|
Esprit Capital I (GP) Limited^ |
General Partner and co-invest vehicle |
England and Wales |
100% |
|
Esprit Capital I General Partner^ |
General Partner |
England and Wales |
100% |
|
Esprit Capital II GP Limited† |
General Partner |
Cayman Islands |
100% |
|
Esprit Capital III Founder GP Limited* |
General Partner |
Scotland |
100% |
|
Esprit Capital III GP LP* |
General Partner |
Scotland |
100% |
|
Encore I Founder GP Limited† |
General Partner |
Cayman Islands |
100% |
|
Encore I GP Limited† |
Intermediate holding company |
Cayman Islands |
100% |
|
Esprit Capital Holdings Limited^ |
Dormant |
England and Wales |
100% |
|
Esprit Nominees Limited^ |
Nominee company |
England and Wales |
100% |
|
Esprit Capital I (CIP) Limited^ |
Dormant |
England and Wales |
100% |
|
Esprit Capital III MLP LLP^ |
Intermediate holding company |
England and Wales |
100% |
|
Esprit Capital III GP Limited^ |
General Partner (dormant) |
England and Wales |
100% |
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
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.
Associates
Associates are all entities over which the Group has significant influence, but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses of the investee in profit or loss, and the Group's share of movements in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment. When the Group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. The carrying amount of equity-accounted investments is tested for impairment where there are indications that the carrying value may no longer be recoverable. Following the acquisition of the remaining interest in Elderstreet Holdings Limited on 9 February 2021, no associates are recognised in the consolidated financial statements. For related undertakings held at fair value through profit or loss, refer to Note 17.
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 15 of the Annual Report for the year ending 31 March 2022. Exit strategies for the portfolio vary depending for 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 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 subsidiary, Molten Ventures (Ireland) Limited, 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 discussed above. 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.
|
Name of undertaking |
Principal activity |
Country of incorporation |
% ownership |
|
Molten Ventures (Ireland) Limited^ |
Investment entity |
Republic of Ireland |
100% |
|
· Esprit Capital III LP* |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
· Esprit Capital III (B) LP* |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
· Esprit Capital IV LP* |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
- DFJ Europe X LP† |
Limited partnership pursuant to which the Group makes certain investments |
Cayman Islands |
100% |
|
· Esprit Investments (1) LP* |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
· Esprit Investments (2) LP* |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
Esprit Investments (1) (B) LP* |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
· Seedcamp Holdings LLP* |
Limited liability partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
- Seedcamp Investments LLP‡ |
Limited liability partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
- Seedcamp Investments II LLP‡ |
Limited liability partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
Esprit Investments (2) (B) LP* |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
|
· SC_4_OF1 LP" |
Limited partnership pursuant to which the Group makes certain investments |
England and Wales |
100% |
^ 32 Molesworth Street, Dublin 2, Ireland, D02 Y512
* 20 Garrick Street, London, England, WC2E 9BT
† c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands
‡ 16 Great Queen Street, London, England, WC2B 5AH
" 35 New Bridge Street, London, England, EC4V 6BW
Limited partnerships (co-invest and carried interest)
Carried interest vehicles / 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(x) 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:
|
Name of undertaking |
Principal activity |
Country of incorporation |
|
Encore I GP LP^ |
General partner |
Cayman Islands |
|
Esprit Capital II Founder LP^ |
Co-investment limited partnership |
Cayman Islands |
|
Esprit Capital II Founder 2 LP^ |
Co-investment limited partnership |
Cayman Islands |
|
Encore I Founder LP^ |
Co-investment limited partnership |
Cayman Islands |
|
Encore I Founder 2014 LP^ |
Co-investment limited partnership |
Cayman Islands |
|
Encore I Founder 2014-A LP^ |
Co-investment limited partnership |
Cayman Islands |
|
Esprit Capital III Founder LP* |
Co-investment limited partnership / carry partner |
Scotland |
|
Esprit Investments (2) (Carried Interest) LP* |
Carry vehicle |
Scotland |
|
Esprit Capital III Carried Interest LP* |
Carry vehicle |
Scotland |
|
Esprit Investments (1) (Carried Interest) LP* |
Carry vehicle |
Scotland |
|
Molten Ventures Growth I Special Partner LP* |
Carry vehicle |
Scotland |
|
Molten Ventures Growth SP GP LLP † |
Carry vehicle |
England and Wales |
^ 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
† 20 Garrick Street, London, WC2E 9BT
Each carry vehicle indirectly hold interests in a vintage of investments within our portfolio with the purpose of producing profits for distribution amongst 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, Esprit Fund 3(i), and their general partners are consolidated within the Group. These funds are in run-off. The Group does not have any direct beneficial interests in the assets owned by these funds and the Group is not exposed to variable returns from these funds. Management considers 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 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 - c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
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 funds) 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, Draper Esprit EIS 5, and Draper Esprit EIS (renamed Molten Ventures EIS post-period end).
VCT funds : Molten Ventures VCT plc - 6th Floor St Magnus House, 3 Lower Thames Street, London, England, EC3R 6HD.
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
Esprit Foundation
The Esprit Foundation was set up during the year. Molten Ventures plc is sole member. 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. No activity took place in the year ending 31 March 2022. 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 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 resource.
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 is 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 £15.0 million). Although the managers of our EIS funds, VCT funds and plc funds have a 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 II LP, Esprit Capital IIIi Fund LP and Esprit Capital IIIiA fund 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 which 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.
As such and as the Group's investment portfolio represents a coherent and diversified portfolio with similar economic characteristics, the individual investments and funds have been aggregated into a single operating segment.
The majority of the Group's revenues are not from interest, and the chief operating decision maker 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, as well as performance fees and promoter fees. Priority Profit Share/management fees are also generated from management fees charged on the funds underlying the plc fund. 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 measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. All revenue from services is generated within the UK and is stated exclusive of value added tax. Revenue from services comprises:
i. Fund management services
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. Portfolio 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.
iii. Performance fees
Performance fees are earned on a percentage basis on returns over a hurdle rate in the statement of comprehensive income. 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.
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 profit or loss 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 are applied:
i. Encore Ventures LLP: 8 years
ii. Elderstreet Investments Limited: 3 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 profit and loss.
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 and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned and are 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 that its investment interests referred to in Note 4(b) are appropriately designated as at FVTPL as they meet criteria (b) above.
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 intangible assets, deferred tax, property, plant and equipment, trade and most other receivables, and cash and cash equivalents in the consolidated statement of financial position.
k) Financial liabilities
The Group's financial liabilities may include borrowings, and trade and other payables. All of the Group's financial liabilities are measured at amortised cost.
Trade and other payables
Trade and other payables are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned and are initially measured at fair value, plus transaction costs.
Financial liabilities are measured subsequently at amortised cost using the effective interest method. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost using the effective interest rate method. All interest-related charges are reported in profit or loss and are included within finance costs or finance income.
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
Where 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.
p) Leased assets
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in the profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in "property, plant and equipment" and lease liabilities in "financial liabilities" in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group would recognise the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
q) Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity Shareholders, this is when the dividend is paid. In the case of final dividends, this is when the dividend is approved by the Shareholders at the AGM.
r) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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.
s) 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.
t) 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% p.a. straight line
• Computer equipment - 33% p.a. 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. See (p) above for PPE relating to right-of-use assets resulting from leases.
u) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits at bank and highly liquid investments with a term of no more than 90 days that are readily convertible into known amounts of cash and that are subject to an insignificant risk of changes in value. Where they are not readily convertible into known amounts of cash, they will be reflected as restricted cash on the consolidated statement of financial position.
v) Financial instruments
Financial assets and financial liabilities are recognised in the consolidated balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
w) 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.
x) Carried interest
The Company has established carried interest plans for the Executive Directors (see associated note below), 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 operates in respect of investments made during a 24-month period and related follow-on investments made for a further 36-month period. From 1 April 2020 the carried interest plan 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.
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. Where the Group has a holding in the carried interest, this is recognised at FVTPL.
y) 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 actual prices that would be achieved in an arm's length transaction at the reporting date (See Note 5(a)).
z) 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 2022.
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 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 German or 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. 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 outlined below and these valuations will be adjusted by the Group where necessary based on the Group valuation policy for valuing 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 International Private Equity and Venture Capital Valuation Guidelines as well as the IPEV Board, Special Valuation Guidance issued on 31 March 2020 in response to the COVID-19 crisis ("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. Recent transactions may include post-year-end as well as pre-year-end transactions depending on the nature and timing of these transactions.
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) 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 2022 and 31 March 2021 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.
Where a fair value cannot be estimated reliably, the investment is reported at the carrying value at the previous reporting date unless there is evidence that the investment has since been impaired.
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 28 for information on unobservable inputs used and sensitivity analysis on investments held at fair value through profit or loss.
Judgement:
b) 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 3(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. Changes in gains on investments held at fair value through profit or loss
|
|
Year ended £'m |
Year ended £'m |
|
Changes in unrealised gains on investments held at fair value through profit or loss |
217.6 |
183.6 |
|
Changes in realised gains on investments held at fair value through profit or loss |
95.9 |
143.9 |
|
Net foreign exchange gain/(loss) on investments held at fair value through profit or loss |
15.9 |
(51.2) |
|
Total movements on investments held at fair value through profit or loss |
329.4 |
276.3 |
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:
|
|
Year ended £'m |
Year ended £'m |
|
Management fees |
17.8 |
12.5 |
|
Performance fees |
2.5 |
- |
|
Promoter's fees |
1.4 |
- |
|
Directors' and other fees |
0.1 |
- |
|
Total fee income |
21.8 |
12.5 |
8. General administrative expenses
Administrative expenses comprise:
|
|
Year ended £'m |
Year ended £'m |
|
General employee and employee related expenses (Note 9) |
11.9 |
10.0 |
|
Legal and professional |
2.5 |
1.4 |
|
Performance fees payable |
2.0 |
0.1 |
|
Marketing expenses |
1.1 |
0.7 |
|
Building costs and rates |
0.4 |
0.4 |
|
Travel expenses |
0.3 |
0.1 |
|
IT expenses |
0.3 |
0.1 |
|
Listing fees |
0.2 |
0.1 |
|
Other administrative costs |
0.8 |
0.9 |
|
Total administrative expenses |
19.5 |
13.8 |
9. Employee and employee-related expenses
Employee benefit expenses (including Directors) comprise:
|
|
Year ended £'m |
Year ended £'m |
|
Wages and salaries |
9.0 |
7.6 |
|
Defined contribution pension costs |
0.8 |
0.7 |
|
Benefits (healthcare and life assurance) |
0.3 |
0.2 |
|
Recruitment costs |
0.2 |
- |
|
Social security contributions and similar taxes |
1.6 |
1.5 |
|
General employee and employee-related expenses |
11.9 |
10.0 |
|
Share-based payment expense arising from Company share option scheme |
3.7 |
1.5 |
|
Total employee benefit expenses |
15.6 |
11.5 |
Infrastructure comprises finance, marketing, human resources, legal, IT, and administration.
The monthly average number of persons (including Executive and Non-Executive Directors) employed by the Group during the year was:
|
|
Year ended Number |
Year ended Number |
|
Executive Directors |
3 |
3 |
|
Non-Executive Directors |
4 |
3 |
|
Investment |
16 |
12 |
|
Infrastructure |
25 |
19 |
|
Total |
48 |
37 |
At 31 March 2022, there were 5 Non-Executive Directors (31 March 2021: 3).
10. Auditors' remuneration
The profit for the year has been arrived at after charging:
|
|
Year ended £'m |
Year ended £'m |
|
Fees paid to the Company's auditor for the audit of the Company and Group consolidated financial statements |
0.3 |
0.2 |
|
Fees payable to the Company's auditors and associates for other services: |
|
|
|
Audit of the financial statements of the subsidiaries and related undertakings |
0.1 |
0.1 |
|
Audit-related assurance services |
0.1 |
- |
|
Non-audit services |
0.3 |
- |
|
Total fees payable to the Company's auditors |
0.8 |
0.3 |
Audit-related assurance services paid to the Company's auditors in the year were £18k related to CASS reporting to the FCA in respect of certain subsidiaries (for the year ended 31 March 2021: £17k), £46k in respect of the review of the Company's interim financial statements (for the year ended 31 March 2021: £27k).
Non-audit services paid to the Company's Auditors in the year were, £305k in respect of reporting accountant services (for the year ended 31 March 2021: £Nil) and £Nil in respect of ESG advisory work (for the year ended 31 March 2021: £31k).
11. Net finance income/(expense)
|
|
Year ended £'m |
Year ended £'m |
|
Interest on leases (Note 22(i)) |
(0.1) |
(0.1) |
|
Interest and expenses on loans and borrowings |
(1.3) |
(2.0) |
|
Net foreign exchange loss |
- |
(3.3) |
|
Finance expense |
(1.4) |
(5.4) |
|
Interest income on cash and cash equivalents |
0.2 |
0.2 |
|
Net foreign exchange gain |
1.6 |
- |
|
Finance income |
1.8 |
0.2 |
|
Net finance income/(expense) |
0.4 |
(5.2) |
12. Income taxes
The charge to tax, which arises in the Group and the corporate subsidiaries included within these financial statements, is:
|
|
Year ended £'m |
Year ended £'m |
|
Current tax expense |
|
|
|
Current tax on profits for the year |
- |
0.3 |
|
Adjustments for under/(over) provision in prior years |
(0.1) |
- |
|
Total current tax expense |
(0.1) |
0.3 |
|
Deferred tax expense |
|
|
|
Arising on business combinations |
- |
- |
|
Prior year correction on deferred tax |
(20.5) |
- |
|
Movement on deferred tax |
(3.7) |
(0.3) |
|
Total deferred tax (expense)/benefit |
(24.2) |
(0.3) |
|
Income tax expense |
(24.3) |
- |
The UK standard rate of corporation tax is 19% (for the year ended 31 March 2021: 19%). From 1 April 2023, the UK rate of corporation tax will rise to 25% for companies with profits greater than £250,000. The UK rate of corporation tax will remain 19% for companies with profits of not more than £50,000, with marginal relief for profits of up to £250,000. It is anticipated that Molten Ventures plc will have profits of greater than £250,000 in FY24, and therefore in FY24 a corporation tax rate of 25% is anticipated to apply.
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 profit/(loss) for the year before tax are as follows:
|
|
Year ended £'m |
Year ended £'m |
|
Profit for the year before tax |
325.0 |
267.4 |
|
|
|
|
|
Tax at the UK tax rate of 19% (2021: 19%) |
61.8 |
50.8 |
|
Taxable gains |
1.1 |
- |
|
Gains on investments |
(62.6) |
(50.7) |
|
Prior year correction on deferred tax |
20.5 |
- |
|
Movement on deferred tax |
3.7 |
0.3 |
|
Other |
(0.2) |
(0.4) |
|
Income tax expense |
24.3 |
- |
13. Earnings 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 earnings per ordinary share
|
|
Profit after tax £'m |
No. of shares m |
Pence |
|
For the year ended 31 March 2022 |
300.7 |
150.1 |
200 |
|
For the year ended 31 March 2021 |
267.4 |
128.9 |
208 |
Diluted earnings per ordinary share
|
|
Profit after tax £'m |
No. of shares1 m |
Pence |
|
For the year ended 31 March 2022 |
300.7 |
151.9 |
198 |
|
For the year ended 31 March 2021 |
267.4 |
129.7 |
206 |
1. The basic number of shares is 150.1m (FY21: 128.9m). This has been adjusted to calculate the diluted number of shares by accounting for options of 1.8m in the year (FY21: 0.8m) to get to the diluted number of shares of 151.9m (FY21: 129.7m).
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
|
|
Net assets £'m |
No. of shares m |
Pence |
|
As at 31 March 2022 |
1,433.8 |
153.0 |
937 |
|
As at 31 March 2021 |
1,033.1 |
139.1 |
743 |
Diluted net asset value per ordinary share
|
|
Net assets £'m |
No. of shares1 m |
Pence |
|
As at 31 March 2022 |
1,433.8 |
154.9 |
926 |
|
As at 31 March 2021 |
1,033.1 |
140.0 |
738 |
1. The basic weighted average number of shares is 153.0m (FY21: 139.1m). This has been adjusted to calculate the diluted weighted average number of shares by accounting for options of 1.9m in the year (FY21: 0.9m) to get to the diluted weighted average number of shares of 154.9m (FY21: 140.0m).
14. Share-based payments
|
|
Date of |
b/f (No.) |
Granted in the year (No.) |
Lapsed in the year (No.) |
Exercised in the year (No.) |
c/f (No.) |
Approved options |
Vesting |
Exercise Price (pence) |
Fair value per granted instrument (pence) |
|
Molten Ventures plc 2016 Company Share Option Scheme ("CSOP") |
28-Nov-16 |
612,959 |
- |
- |
(90,540) |
522,419 |
25,350 |
3 years |
355 |
64.1 |
|
28-Nov-16 |
101,685 |
- |
- |
(101,685) |
- |
- |
3 years |
355 |
89.3 |
|
|
11-Nov-17 |
120,000 |
- |
- |
- |
120,000 |
8,356 |
3 years |
359 |
89.8 |
|
|
28-Nov-17 |
407,007 |
- |
- |
(100,623) |
306,384 |
- |
3 years |
387 |
70.9 |
|
|
28-Nov-17 |
77,344 |
- |
- |
(77,344) |
- |
- |
3 years |
387 |
97.9 |
|
|
30-Jul-18 |
842,550 |
- |
- |
(178,100) |
664,450 |
- |
3 years |
492 |
152.9 |
|
|
30-Jul-18 |
102,750 |
- |
- |
(102,750) |
- |
- |
3 years |
492 |
186.4 |
|
|
12-Feb-19 |
735,302 |
- |
- |
(178,434) |
556,868 |
- |
3 years |
530 |
67.8 |
|
|
12-Feb-19 |
75,000 |
- |
- |
(75,000) |
- |
- |
3 years |
530 |
95.2 |
|
|
26-Nov-19 |
200,000 |
- |
- |
- |
200,000 |
- |
3 years |
467 |
71.5 |
|
|
29-Jun-20 |
200,000 |
- |
- |
- |
200,000 |
- |
3 years |
449 |
81.2 |
|
|
26-Jul-21 |
- |
56,314 |
(3,044) |
- |
53,270 |
- |
1 year |
1 |
986.0 |
|
|
Molten Ventures plc Long-Term Incentive Plan ("LTIP") |
29-Jun-20 |
581,696 |
- |
(20,119) |
- |
561,577 |
- |
3 years |
1 |
449.0 |
|
16-Jul-21 |
- |
581,212 |
(20,325) |
- |
560,887 |
- |
1 year |
1 |
940.0 |
|
|
Total |
|
4,056,293 |
637,526 |
(43,488) |
(904,476) |
3,745,855 |
33,706 |
|
|
|
Both the CSOP and LTIP are, as of 31 March 2022, 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 25(i)). Of the 0.9 million options exercised during the year, none were satisfied with new ordinary shares issued by Molten Ventures plc (FY21: 1.4 million options exercised with 0.4 million satisfied with new ordinary shares issued) (see Note 24).
For share options granted under the CSOP, the Black-Scholes Option Pricing Model has been used for valuation purposes. All options are settled in shares. Volatility is expected to be in the range of 20-30% based on an analysis of the Company's and peer group's share price. The risk-free rates used were taken from zero coupon United Kingdom government bonds on a term consistent with the vesting period. There are no non-market performance conditions attached to the share options granted under the CSOP.
Share options granted during the year under the LTIP vest if certain performance standards are met. The amount of options that will vest depends on performance conditions included within the agreement relating to realisations, assets under management, and Total Shareholder Return. These options are granted under the plan for no consideration and are granted at a nominal value of 1 pence. All options are settled in shares. The fair value of the LTIP shares will be 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 2022 we are currently on target for LTIPs.
The share-based payment charge for the year is £3.7 million (year ended 31 March 2021: £1.5 million).
15. Intangible assets
|
Year ended 31 March 2022 |
Goodwill £'m |
Customer contracts2 £'m |
Total £'m |
|
Cost |
|
|
|
|
Cost carried forward as at 1 April 2021 |
10.4 |
1.1 |
11.5 |
|
Additions during the period |
- |
- |
- |
|
Cost as at 31 March 2022 |
10.4 |
1.1 |
11.5 |
|
Accumulated amortisation |
|
|
|
|
Amortisation carried forward as at 1 April 2021 |
- |
(0.6) |
(0.6) |
|
Charge for the period |
- |
(0.2) |
(0.2) |
|
Accumulated amortisation as at 31 March 2022 |
- |
(0.8) |
(0.8) |
|
Net book value: |
|
|
|
|
As at 31 March 2022 |
10.4 |
0.3 |
10.7 |
|
Year ended 31 March 2021 |
Goodwill1 £'m |
Customer contracts2 £'m |
Total £'m |
|
Cost |
|
|
|
|
Cost carried forward as at 1 April 2020 |
9.7 |
0.8 |
10.5 |
|
Acquisition of business |
0.7 |
0.3 |
1.0 |
|
Cost as at 31 March 2021 |
10.4 |
1.1 |
11.5 |
|
Accumulated amortisation |
|
|
|
|
Amortisation carried forward as at 1 April 2020 |
- |
(0.4) |
(0.4) |
|
Charge for the year |
- |
(0.2) |
(0.2) |
|
Accumulated amortisation as at 31 March 2021 |
- |
(0.6) |
(0.6) |
|
Net book value: |
|
|
|
|
As at 31 March 2021 |
10.4 |
0.5 |
10.9 |
1 In FY21, goodwill of £0.7 million arose on the step acquisition of all issued share capital in Elderstreet Holdings Limited. Elderstreet Holdings Limited is the holding company of Elderstreet Investments Limited, a VCT manager incorporated in the UK, on 9 February 2021 and represents the value of the acquired expertise and knowledge of the Investment Team. The Directors have identified the fund managers as the cash-generating unit ("CGU") being the smallest group of assets that generates cash inflows independent of cash flows from other assets or groups of assets. The fund managers are responsible for generating dealflow and working closely with the investee companies to create value and maximise returns for the Group. The Group tests goodwill annually for impairment comparing the recoverable amount using value in use calculations and the carrying amount. Value in use calculations are based on future expected cash flows generated by the CGU fee income from management fees over the next three years with reference to the most recent financial budget and forecasts. A three-year cash flow period was deemed appropriate for value in use calculation given the terms of the Investment Management Agreement. The key assumptions for the value in use calculations are the discount rate using pre-tax rates that reflect the current market assessments of the time value of money and risks specific to the CGU. The internal rate of return ("IRR") will be based on past performance and experience.
2 In FY21, an intangible asset of £0.3 million was recognised in respect of the anticipated profit from the participation in Elderstreet Investments Limited following the acquisition of the remaining issued share capital the Group did not previously own on 9 February 2021.
The amortisation charge for the year is shown in the "depreciation and amortisation" line of the consolidated statement of comprehensive income.
16. 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 28. 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.
|
|
Year ended £'m |
Year ended £'m |
|
As at 1 April |
867.1 |
657.3 |
|
Investments made in the period1 |
311.2 |
128.0 |
|
Investments settled in shares |
- |
- |
|
Loans repaid from underlying investment vehicles |
(126.3) |
(206.3) |
|
Carry external |
13.5 |
- |
|
Non-investment cash movements2 |
15.9 |
11.8 |
|
Unrealised gains on the revaluation of investments |
329.4 |
276.3 |
|
As at 31 March |
1,410.8 |
867.1 |
1 Investments and loans made in the period/year are amounts the Group 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.
2 In FY21, there is a difference between the movement in the loans made to underlying investment vehicle in Note 16 and in the statement of cash flows. This difference is due to the fact that in FY21 the Company loaned £3.7 million to Esprit Capital Fund No 1 & No 2 LP. The loan was repaid during the year ending 31 March 2021. For further details, see Note 30.
17. Related 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 and loss in the statement of financial position.
|
Name |
Address |
Principal activity |
Type of shareholding |
Interest FD category* at reporting date/partnership interest |
|
Ravenpack Holding AG |
Churerstrasse 135, CH-8808 Pfäffikon, Switzerland |
Trading company |
Ordinary shares Preference shares |
D |
|
FinalCAD |
4, rue Jules Lefebvre 75009 Paris |
Trading company |
Ordinary shares Preference shares |
D |
|
Allplants Ltd |
Solar House, 282 Chase Road, London, United Kingdom, N14 6NZ |
Trading company |
Ordinary shares Preference shares |
D |
|
Earlybird GmbH & Co. Beteiligungs-KG IV |
c/o Earlybird Venture Capital, Maximilianstr. 14, 80539, München |
Limited partnership pursuant to which the Group holds certain investments |
Partnership interest |
27% |
|
Earlybird Special Opportunities LP |
c/o Earlybird Venture Capital, Maximilianstr. 14, 80539, München |
Limited partnership pursuant to which the Group holds certain investments |
Partnership interest |
35% |
|
Earlybird DWES Fund VI GmbH & Co. KG |
c/o Earlybird Venture Capital, Maximilianstr. 14, 80539, München |
Limited partnership pursuant to which the Group holds certain investments |
Partnership interest |
57% |
* 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 in the Financial Review.
Below sets out the latest publicly available accounts for the related undertakings above. These reflect the net asset and profit or loss position. These relate to historic periods. No other publicly available accounts for the related undertakings above are available.
• Allplants Ltd: Net assets at 31 August 2020 of £2.9 million and a loss for the 12 month period ending 31 August 2020 of £5.2 million. The numbers in these accounts are unaudited.
18. Property, plant and equipment
|
Year ended 31 March 2022 |
Right-of-use assets £'m |
Leasehold improvements £'m |
Computer equipment £'m |
Total £'m |
|
Cost |
|
|
|
|
|
Cost carried forward as at 1 April 2021 |
1.6 |
0.8 |
0.1 |
2.5 |
|
Additions during the period |
- |
- |
0.1 |
0.1 |
|
Disposals during the year |
- |
- |
- |
- |
|
Cost as at 31 March 2022 |
1.6 |
0.8 |
0.2 |
2.6 |
|
Accumulated depreciation |
|
|
|
|
|
Depreciation carried forward as at 1 April 2021 |
(0.7) |
(0.4) |
- |
(1.1) |
|
Charge for the period |
(0.3) |
(0.2) |
(0.1) |
(0.6) |
|
Disposals during the year |
- |
- |
- |
- |
|
Accumulated depreciation as at 31 March 2022 |
(1.0) |
(0.6) |
(0.1) |
(1.7) |
|
Net book value: |
|
|
|
|
|
As at 31 March 2022 |
0.6 |
0.2 |
0.1 |
0.9 |
|
Year ended 31 March 2021 |
Right-of-use assets £'m |
Leasehold improvements £'m |
Computer equipment £'m |
Total £'m |
|
Cost |
|
|
|
|
|
Cost carried forward as at 1 April 2020 |
1.6 |
0.7 |
0.1 |
2.4 |
|
Additions during the period |
- |
0.1 |
- |
0.1 |
|
Disposals during the year |
- |
- |
- |
- |
|
Cost as at 31 March 2021 |
1.6 |
0.8 |
0.1 |
2.5 |
|
Accumulated depreciation |
|
|
|
|
|
Depreciation carried forward as at 1 April 2020 |
(0.3) |
(0.3) |
- |
(0.6) |
|
Charge for the period |
(0.3) |
(0.2) |
- |
(0.5) |
|
Disposals during the year |
- |
- |
- |
- |
|
Accumulated depreciation as at 31 March 2021 |
(0.6) |
(0.5) |
- |
(1.1) |
|
Net book value: |
|
|
|
|
|
As at 31 March 2021 |
1.0 |
0.3 |
0.1 |
1.4 |
The depreciation charge for the year is shown in the "depreciation and amortisation" line of the consolidated statement of comprehensive income.
For further information on right-of-use assets, please see the leases note - Note 22(i).
19. Operating segments
The Group follows the accounting policy on operating segments laid out in Note 4(c).
20. Trade and other receivables
|
|
Year ended £'m |
Year ended 31 March 2021 £'m |
|
Trade receivables |
1.1 |
2.5 |
|
Other receivables and prepayments |
1.7 |
1.2 |
|
Total |
2.8 |
3.7 |
Expected credit losses for these receivables are expected to be immaterial. The ageing of trade receivables at reporting date is as follows:
|
|
Year ended £'m |
Year ended £'m |
|
Not past due |
1.0 |
0.7 |
|
Past due 1-30 days |
0.0 |
0.8 |
|
Past due 31-60 days |
0.0 |
0.7 |
|
More than 60 days |
0.1 |
0.3 |
|
Total |
1.1 |
2.5 |
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.
21. Trade and other payables
|
|
Year ended £'m |
Year ended £'m |
|
Trade payables |
(0.5) |
(0.6) |
|
Other taxation and social security |
(0.5) |
(0.4) |
|
Other payables |
(1.9) |
(0.2) |
|
Accruals and deferred income |
(11.1) |
(8.2) |
|
Accrued tax expense |
(0.3) |
(0.3) |
|
Total |
(14.3) |
(9.7) |
All trade and other payables are short term.
22. Financial liabilities
|
|
Year ended £'m |
Year ended £'m |
|
Current liabilities |
|
|
|
Leases |
(0.4) |
(0.3) |
|
Loans and borrowings |
- |
- |
|
Total current financial liabilities |
(0.4) |
(0.3) |
|
Non-current liabilities |
|
|
|
Leases |
(0.3) |
(0.7) |
|
Loans and borrowings |
(29.7) |
0.4 |
|
Total non-current financial liabilities |
(30.0) |
(0.3) |
|
Total |
(30.4) |
(0.6) |
The below table shows the changes in liabilities from financing activities.
|
|
Borrowings £'m |
Leases £'m |
|
At 1 April 2020 |
(44.6) |
(1.4) |
|
Capitalisation of costs |
0.3 |
- |
|
Amortisation of costs |
(0.3) |
- |
|
Drawdowns |
- |
- |
|
Repayment of debt |
45.0 |
- |
|
Other changes - Interest payments (presented as operating cash flows) |
- |
- |
|
Payment of lease liabilities |
- |
0.4 |
|
At 31 March 2021 |
0.4 |
(1.0) |
|
Capitalisation of costs |
0.3 |
- |
|
Amortisation of costs |
(0.4) |
- |
|
Drawdowns |
(30.0) |
- |
|
Repayment of debt |
- |
- |
|
Other changes - Interest payments (presented as operating cash flows) |
- |
(0.1) |
|
Payment of lease liabilities |
- |
0.4 |
|
At 31 March 2022 |
(29.7) |
(0.7) |
22 (i). Leases
The Group leases office buildings in London for use by its staff. Information about leases for which the Group is a lessee is presented below. The Group also has an office in Dublin, however this contract is classified as a service contract and not a lease. This is not deemed to be a lease as it has been assessed not to be controlled by the Group as these are managed offices with no alterations to the space allowed by the Group.
The Group leases IT equipment such as printers for use by staff. The Group has elected to apply the recognition exemption for leases of low value to these leases.
i. Amounts recognised on the consolidated statement of financial position
Right-of-use assets
|
|
Year ended £'m |
Year ended £'m |
|
Property |
0.6 |
1.0 |
|
Total |
0.6 |
1.0 |
Lease liabilities
|
|
Year ended £'m |
Year ended £'m |
|
Current |
(0.4) |
(0.3) |
|
Non-current |
(0.3) |
(0.7) |
|
Total |
(0.7) |
(1.0) |
Additions to the right-of-use assets during the year ending 31 March 2022 were £Nil (year ending 31 March 2021: £Nil).
ii. Amounts recognised in the consolidated statement of comprehensive income
|
|
Year ended £'m |
Year ended £'m |
|
Interest on lease liabilities |
(0.1) |
(0.1) |
|
Depreciation charge for the period on right-of-use assets |
(0.3) |
(0.3) |
The total cash outflow for leases in the year ending 31 March 2022 was £0.4 million (year ending 31 March 2021: £0.4 million).
22 (ii). Loans and borrowings
In May 2021, the Company's existing revolving credit facility with Silicon Valley Bank and Investec ("the Financiers") was extended by £5.0 million to £65.0 million with a maturity of June 2024. The Company incurred costs of £0.3 million in respect of the increase and extension of the facility during the period, which are presented within loans and borrowings on the statement of financial position and are amortised over the life of the facility. Interest-related charges are reported in the consolidated statement of comprehensive income as finance costs (see Note 11). The bank loans are secured on agreed assets of the Group within the asset class of investments, updated as agreed with the Financiers from time to time, and are subject to customary financial and non-financial covenant conditions with which the Group must comply.
The facility agreement contains financial and non-financial covenants.
a. There must be a minimum of ten core investments at all times (core investments are not defined in the same way as in this Annual Report (as it is more broadly defined));
b. The ratio of the NAV of all investments (as defined in the agreement) to original investment cost should not be less than 1.1:1.0 at any time; and
c. The ratio of the NAV (as defined in the agreement) plus amounts in the collateral account to financial indebtedness (as defined in the agreement) should not be less than 10:1 at any time.
In addition, the borrowing base (as defined in the agreement) must exceed the facility amount.
The debt facility is repayable on maturity (June 2024) but may become repayable earlier under certain conditions, including it becoming unlawful for Molten Ventures plc to perform any of its obligations per the legal agreement, voluntary cancellation of the loan, the principal outstanding on the loan exceeding the facility limit, or the principal outstanding exceeding the maximum permitted amount.
As collateral for interest payments, an amount equal to the aggregate amount of interest costs due for the coming six months, all being equal, must be held in an Interest Reserve Account at all times. The balance of this at 31 March 2022 was £2.3 million (31 March 2021: £2.3 million) and is reflected on the consolidated statement of financial position as restricted cash.
As at 31 March 2022, the Company has drawn down £30.0 million of the £65.0 million facility (31 March 2021: £Nil of the £60.0 million facility)
|
|
31 Mar 2022 £'m |
31 Mar 2021 £'m |
|
Bank loan senior facility amount |
65.0 |
60.0 |
|
Interest rate |
BOE base rate + 6.25% |
BOE base rate + 6.75% / 7.50% floor |
|
Drawn at balance sheet date |
(30.0) |
- |
|
Arrangement fees |
0.3 |
0.4 |
|
Loan liability balance |
(29.7) |
0.4 |
|
Undrawn facilities at balance sheet date |
35.0 |
60.0 |
23. 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:
|
|
Year ended 31 March 2022 £'m |
Year ended 31 March 2021 £'m |
|
Arising on share-based payments |
1.6 |
- |
|
Deferred tax asset |
1.6 |
- |
|
Arising on business combination |
(0.1) |
(0.1) |
|
Arising on co-invest and carried interest |
(0.3) |
(0.6) |
|
Arising on the investment portfolio |
(25.6) |
- |
|
Other timing differences |
(0.1) |
0.3 |
|
Deferred tax liability |
(26.1) |
(0.4) |
|
Net deferred tax liability |
24.5 |
(0.4) |
24. Share capital and share premium
Ordinary share capital
|
31 March 2022 - Allotted and fully paid |
Number |
Pence |
'm |
|
As at 1 April |
139,097,075 |
1 |
1.4 |
|
Issue of share capital during the year for cash1 |
13,902,778 |
1 |
0.1 |
|
As at 31 March |
152,999,853 |
1 |
1.5 |
1 In June 2021, the Company raised gross proceeds of £111.2 million at a placing price of 800 pence per share by way of a placing of 13,902,778 new ordinary shares.
|
31 March 2021 - Allotted and fully paid |
Number |
Pence |
'm |
|
As at 1 April |
118,918,124 |
1 |
1.2 |
|
Issue of share capital during the year for share options being exercised1 |
359,131 |
1 |
- |
|
Issue of share capital during the year for cash2 |
19,819,820 |
1 |
0.2 |
|
As at 31 March |
139,097,075 |
1 |
1.4 |
1 Between August 2020 and March 2021, 359,131 new 1 pence ordinary shares were issued in association with share options being exercised.
2 In October 2020, the Company secured commitments to raise gross proceeds of £110.0 million at a placing price of 555 pence per share by way of a conditional placing of 19,819,820 new ordinary shares.
Share premium
|
Allotted and fully paid |
Year ended 31 Mar 2022 £'m |
Year ended 31 Mar 20211 £'m |
|
As at 1 April |
508.3 |
400.7 |
|
Premium arising on the issue of ordinary shares2 |
111.2 |
111.1 |
|
Equity issuance costs |
(3.6) |
(3.5) |
|
As at 31 March |
615.9 |
508.3 |
1 There is a difference between the share premium balance sheet movement and cash flow movement. This difference results from the fact that, in respect of shares issued for share options exercised during FY21, the cash is the market value of shares, whereas the amount recognised in share premium is the exercise price less share capital.
2 The movement on share premium during the year ending 31 Match 2022 has arisen as a result the issue of 13,902,778 ordinary shares issued by way of a conditional placing in June 2022. The movement on share premium during the year ending 31 March 2021 has arisen as a result of 359,131 ordinary shares issued in association with share options being exercised during the year and the issue of 19,819,820 ordinary shares issued by way of a conditional placing in October 2020.
25. 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 issuing shares under the Molten Ventures plc 2016 Company Share Options Plan and Long-Term Incentive Plan. Shares issued to employees are recognised on a weighted average cost basis. The Trust holds 0.61% of the issued share capital at 31 March 2022.
|
|
Year ended 31 Mar 2022 |
Year ended 31 Mar 2021 |
||
|
|
No. of shares m |
'm |
No. of shares m |
'm |
|
As at 1 April |
(0.1) |
(0.3) |
- |
- |
|
Acquisition of shares by the Trust |
(0.8) |
(8.0) |
(0.3) |
(2.3) |
|
Disposal or transfer of shares by the Trust* |
- |
0.1 |
0.2 |
2.0 |
|
As at 31 March |
(0.9) |
(8.2) |
(0.1) |
(0.3) |
* 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 ending 31 March 2022 were £Nil (year ending 31 March 2021: £1.6 million).
ii. Other reserves
The following table shows a breakdown of the "other reserves" line in the consolidated interim 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.
|
Year ending 31 March 2022 |
Merger relief reserve £'m |
Share-based payments reserve resulting from Company share option scheme £'m |
Share-based payments reserve resulting from acquisition of subsidiary £'m |
Total other reserves £'m |
|
As at 1 April |
13.1 |
2.3 |
10.8 |
26.2 |
|
Share-based payments |
- |
3.7 |
- |
3.7 |
|
Share-based payments - exercised during the year |
- |
(1.0) |
- |
(1.0) |
|
As at 31 March |
13.1 |
5.0 |
10.8 |
28.9 |
|
Year ending 31 March 2021 |
Merger relief reserve £'m |
Share-based payments reserve resulting from Company share option scheme £'m |
Share-based payments reserve resulting from acquisition of subsidiary £'m |
Total other reserves £'m |
|
As at 1 April |
13.1 |
2.3 |
10.8 |
26.2 |
|
Share-based payments |
- |
0.8 |
- |
0.8 |
|
Share-based payments - exercised during the year |
- |
(0.8) |
- |
(0.8) |
|
As at 31 March |
13.1 |
2.3 |
10.8 |
26.2 |
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.
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 14 for further details on how the fair value at the date of grant is recognised.
26. Adjustments to reconcile operating profit to net cash (outflow)/inflow in operating activities
|
|
Notes |
Year ended 31 March 2022 £'m |
Year ended 31 March 2021 £'m |
|
Adjustments to reconcile operating profit to net cash (outflow)/inflow in operating activities: |
|
|
|
|
Revaluation of investments held at fair value through profit and loss |
6 |
(329.4) |
(276.3) |
|
Depreciation and amortisation |
15, 18 |
0.8 |
0.7 |
|
Share-based payments - resulting from Company share option scheme |
14 |
3.7 |
1.5 |
|
Finance income |
11 |
(1.8) |
(0.2) |
|
Finance expense |
11 |
1.4 |
5.4 |
|
Deferred tax on investment portfolio |
23 |
25.6 |
- |
|
(Increase)/decrease in trade and other receivables and other working capital movements |
|
(0.6) |
0.4 |
|
Increase/(decrease) in trade and other payables |
|
5.5 |
4.1 |
|
Adjustments to reconcile operating profit to net cash (outflow)/inflow in operating activities: |
|
(294.8) |
(264.4) |
Please see Note 22 for the changes in liabilities from financing activities.
27. 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.
28. 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 and Note 16. As noted Note 5, valuation of unquoted equity investments at fair value through profit or loss is a critical accounting estimate and actuals may differ from estimates. 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 FY22 (FY21: immaterial). For further discussion of our climate-related risks, please see our TCFD and Principal Risks sections 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 2022, and 31 March 2021 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 FY21 and FY22 are financial assets relating to holdings in high-growth technology companies. The Group invests in special purpose vehicles and limited partnerships which are considered to be investment companies that invest 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 FY21 and FY22. For details of the reconciliation of those amounts please refer to Note 16. 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:
|
Investments |
Fair Value of Investments 31-Mar-21 £m |
Investments £m |
Realisations £m |
Non-investment cash movement £m |
Movement in Foreign Exchange £m |
Movement in Fair Value £m |
Fair Value movement 31-Mar-22 £m |
Fair Value of Investments 31-Mar-22 £m |
|
Total Portfolio |
981.2 |
311.2 |
(126.3) |
- |
15.9 |
347.7 |
363.6 |
1,529.7 |
|
Co-Invest |
2.6 |
- |
- |
- |
- |
(0.8) |
(0.8) |
1.8 |
|
Gross Portfolio Value |
983.8 |
311.2 |
(126.3) |
- |
15.9 |
346.9 |
362.8 |
1,531.5 |
|
Carry External |
(97.0) |
- |
13.5 |
- |
- |
(38.0) |
(38.0) |
(121.5) |
|
Portfolio Deferred tax |
(20.0) |
- |
- |
- |
- |
20.5 |
20.5 |
0.5 |
|
Trading carry & co-invest |
0.3 |
- |
- |
- |
- |
- |
- |
0.3 |
|
Non-investment cash movement |
- |
- |
- |
15.9 |
- |
(15.9) |
(15.9) |
- |
|
Net Portfolio Value |
867.1 |
311.2 |
(112.8) |
15.9 |
15.9 |
313.5 |
329.4 |
1,410.8 |
|
Investments |
Fair Value of Investments 31-Mar-20 £m |
Investments £m |
Realisations £m |
Non-investment cash movement £m |
Movement in Foreign Exchange £m |
Movement in Fair Value £m |
Fair Value of movement 31-Mar-21 £m |
Fair Value of Investments 31-Mar-21 £m |
|
Portfolio |
701.1 |
128.0 |
(205.7) |
- |
(51.2) |
409.0 |
357.8 |
981.2 |
|
Total |
701.1 |
128.0 |
(205.7) |
- |
(51.2) |
409.0 |
357.8 |
981.2 |
|
Co-Invest |
1.8 |
- |
(0.6) |
- |
- |
1.4 |
1.4 |
2.6 |
|
Gross Portfolio Value |
702.9 |
128.0 |
(206.3) |
- |
(51.2) |
410.4 |
359.2 |
983.8 |
|
Carry External |
(40.6) |
- |
- |
- |
- |
(56.4) |
(56.4) |
(97.0) |
|
Portfolio Deferred tax |
(5.3) |
- |
- |
- |
- |
(14.7) |
(14.7) |
(20.0) |
|
Trading carry & co-invest |
0.3 |
- |
- |
- |
- |
- |
- |
0.3 |
|
Non-investment cash movement |
- |
- |
- |
11.8 |
- |
(11.8) |
(11.8) |
- |
|
Net Portfolio Value |
657.3 |
128.0 |
(206.3) |
11.8 |
(51.2) |
327.5 |
276.3 |
867.1 |
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 which would be due to 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. These values are calculated based on unrealised fair value of investments at reporting date at the applicable tax rate.
Trading carry & 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 2022, there were transfers out of Level 3 and into Level 1 following the listing of two investments, one is 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 (iii) below 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.
|
Fair value measurements At 31 March 2022 |
Level 1 £'m |
Level 2 £'m |
Level 3 £'m |
Total £'m |
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
Quoted investments |
64.0 |
- |
- |
64.0 |
|
Unquoted investments |
- |
- |
1,465.7 |
1,465.7 |
|
Total financial assets |
64.0 |
0.0 |
1,465.7 |
1,529.7 |
|
Fair value measurements At 31 March 2021 |
Level 1 £'m |
Level 2 £'m |
Level 3 £'m |
Total £'m |
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
Quoted investments |
85.5 |
- |
- |
85.5 |
|
Unquoted investments |
- |
- |
895.7 |
895.7 |
|
Total financial assets |
85.5 |
- |
895.7 |
981.2 |
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
• NAV of underlying fund
• Revenue-multiple
Each portfolio company will be subject to individual assessment.
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 and 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. They are also adjusted to represent our longer-term view of performance through the cycle of our existing assumption.
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.
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 2022 and 30 March 2021.
|
Level 3 valuations |
£'m |
|
Opening balance at 1 April 2020 |
701.1 |
|
Investments |
128.0 |
|
Gains |
357.8 |
|
Realisations |
(205.7) |
|
Unadjusted closing balance at 31 March 2021 |
981.2 |
|
Transfer to Level 1 |
(85.5) |
|
Closing balance at 31 March 2021 |
895.7 |
|
Investments |
309.1 |
|
Gains |
435.7 |
|
Realisations |
(86.2) |
|
Unadjusted closing balance at 31 March 2022 |
1,554.3 |
|
Transfer to Level 1 |
(88.6) |
|
Closing balance at 31 March 2022 |
1,465.7 |
iv. Valuation inputs and relationships for fair value
The following table summarises the methodologies used by the Group to measure the fair value of Level 3 instruments:
|
FY22 |
|
|
|
|
|
|
|
|
|
|
Sensitivity - effect of % enterprise value movement on total fair value £'m |
|
|
Investments |
Fair value £'m |
Valuation technique |
Significant input |
+10% |
-10% |
|
Unquoted equity |
806.7 |
Calibrated price of |
Calibrated round enterprise value - Pre and post year-end round enterprise values have been calibrated with appropriate discounts taken to reflect movements in publicly listed peer multiples, future revenue projections and timing risk. Discounts were applied to 52% of the fair value of investments measured at calibrated price of recent investment. The range of discounts taken is between 15%-89%.The weighted average discount taken is 25%. |
881.0 |
739.6 |
|
418.1 |
Market comparables |
Revenue-multiples are applied to the revenue of our portfolio companies to determine their enterprise value.
Implied revenue-multiple - the portfolio we have is diversified across sectors and geographies and the companies which have valuations based on revenue-multiples have a range of multiples of between 0.9x-13.8x and a weighted average multiple of 7.8x.
Revenue - We select forward revenues from our portfolio companies mostly with reference to financial updates in their board packs, adjusted where required in the event we do not have forward-looking information. |
458.0 |
378.3 |
|
|
240.8 |
NAV of underlying fund |
NAV of funds, adjusted where required - net asset values of underlying funds reported by the manager. These are reviewed for compliance with our policies and are calibrated for any cash and known valuation movements where reporting periods do not align. |
264.9 |
216.8 |
|
|
Total |
1,465.7 |
|
|
1,603.9 |
1,334.7 |
|
FY21 |
|
|
|
|
|
|
|
|
|
|
Sensitivity - effect of % enterprise value movement on total fair value £'m |
|
|
Investments |
Fair value £'m |
Valuation technique |
Significant input |
+10% |
-10% |
|
Unquoted equity |
450.5 |
Calibrated price of recent investment |
Calibrated round enterprise value - recent round enterprise value is calibrated against the equivalent value using a revenue-multiple valuation methodology, amongst other factors.
Pre and post year-end round enterprise values have been calibrated with appropriate discounts taken to reflect movements in publicly listed peer multiples, future revenue projections and timing risk. |
495.6 |
405.4 |
|
326.6 |
Market comparables |
Revenue-multiples are applied to the revenue of our portfolio companies to determine their enterprise value.
Implied revenue-multiple - the portfolio we have is diversified across sectors and geographies and the companies which have valuations based on revenue-multiples have a range of multiples of between 0.6x-9.1x and a weighted average multiple of 4.8x.
Revenue - We select revenues from our portfolio companies mostly with reference to financial updates in their board packs, adjusted where required in the event we do not have forward-looking information. |
359.2 |
294.0 |
|
|
118.6 |
NAV of underlying fund |
NAV of funds, adjusted where required - net asset values of underlying funds reported by the manager. These are reviewed for compliance with our policies and are calibrated for any cash and known valuation movements where reporting periods do not align. |
130.4 |
106.8 |
|
|
Total |
895.7 |
|
|
985.2 |
806.2 |
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, 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 timelines, 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.
29. 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:
|
Foreign currency exposures - Investments |
31 Mar 2022 £'m |
31 Mar 2021 £'m |
|
Investments - exposures in EUR |
614.3 |
286.6 |
|
10% decrease in GBP |
682.6 |
318.4 |
|
10% increase in GBP |
558.5 |
260.5 |
|
Investments - exposures in USD |
484.5 |
477.8 |
|
10% decrease in GBP |
538.3 |
530.8 |
|
10% increase in GBP |
440.5 |
434.4 |
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:
|
Foreign currency exposures - Cash |
31 March 2022 £'m |
31 March 2021 £'m |
|
Cash denominated in EUR |
24.5 |
40.6 |
|
10% decrease in EUR: GBP |
22.0 |
36.5 |
|
10% increase in EUR: GBP |
26.9 |
44.6 |
|
Cash denominated in USD |
32.5 |
26.3 |
|
10% decrease in USD: GBP |
29.3 |
23.6 |
|
10% increase in USD: GBP |
35.8 |
28.9 |
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:
|
Foreign currency exposures - Equity |
31 March 2022 £'m |
31 March 2021 £'m |
|
Shareholders' Equity |
1,433.8 |
1,033.1 |
|
10% decrease in EUR: GBP/USD : GBP |
1,290.5 |
929.8 |
|
10% increase in EUR: GBP/USD : GBP |
1,577.3 |
1,136.5 |
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 and Note 28, 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 28). 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:
|
|
Valuation methodology |
|||||||
|
|
Quoted equity |
Revenue-multiple |
NAV of underlying fund |
Calibrated price of investment |
||||
|
|
-10% |
+10% |
-10% |
+10% |
-10% |
+10% |
-10% |
+10% |
|
As at 31 March 2022 |
(6.4) |
6.4 |
(39.8) |
39.9 |
(24.1) |
24.1 |
(67.2) |
74.3 |
|
As at 31 March 2021 |
(8.6) |
8.6 |
(32.6) |
32.6 |
(11.8) |
11.8 |
(45.1) |
45.1 |
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. For further details of movements in our quoted investments post year-end, please see the Note 35, Subsequent events. Theoretical impact of a fluctuation of +/- 20% would have the following impact:
|
|
Valuation methodology |
|||||||
|
|
Quoted equity |
Revenue-multiple |
NAV of underlying fund |
Calibrated price of investment |
||||
|
|
-20% |
+20% |
-20% |
+20% |
-20% |
+20% |
-20% |
+20% |
|
As at 31 March 2022 |
(12.8) |
12.8 |
(80.2) |
79.7 |
(48.2) |
48.2 |
(132.2) |
151.4 |
|
As at 31 March 2021 |
(17.1) |
17.1 |
(65.2) |
65.2 |
(23.7) |
23.7 |
(90.1) |
90.1 |
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. Restricted cash includes £2.3 million of collateral for interest payments on the revolving credit facility (see Note 22). 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 loan facility and requirement for utilisation requests is monitored as part of this process. For the contractual maturities of the Group's liabilities see tables below.
|
Contractual maturities of liabilities at 31 March 2022 |
Less than |
6-12 months |
Between |
Between |
Total contractual |
Carrying amount |
|
Trade and other payables |
(13.3) |
(1.0) |
- |
- |
(14.3) |
(14.3) |
|
Fees on facility |
- |
- |
- |
- |
0.3 |
0.3 |
|
Facility |
(1.2) |
(1.2) |
(2.3) |
(30.3) |
(35.0) |
(35.0) |
|
Provisions |
- |
- |
(0.2) |
- |
(0.2) |
(0.2) |
|
Current lease liabilities |
(0.2) |
(0.2) |
- |
- |
(0.4) |
(0.4) |
|
Non-current lease liabilities |
- |
- |
(0.3) |
- |
(0.3) |
(0.3) |
|
Total shown in the Statement of Financial Position |
(14.7) |
(2.4) |
(2.8) |
(30.3) |
(49.9) |
(49.9) |
|
Contractual maturities of liabilities at 31 March 2021 |
Less than |
6-12 months |
Between |
Between |
Total contractual |
Carrying amount |
|
Trade and other payables |
(8.1) |
(1.6) |
- |
- |
(9.7) |
(9.7) |
|
Fees on facility |
- |
- |
- |
- |
0.4 |
0.4 |
|
Facility |
- |
- |
- |
- |
- |
- |
|
Current lease liabilities |
(0.2) |
(0.1) |
- |
- |
(0.3) |
(0.3) |
|
Non-current lease liabilities |
- |
- |
(0.4) |
(0.3) |
(0.7) |
(0.7) |
|
Total shown in the Statement of Financial Position |
(8.3) |
(1.7) |
(0.4) |
(0.3) |
(10.3) |
(10.3) |
Lease liabilities fall due over the term of the lease - see Note 22(i) for further details. The debt facility has a term of three years - for further details, see Note 22. 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 strategy, we make commitments to funds to be drawn down over the life of the fund. Projected drawdowns are monitored as part of the monitoring process above. For further details, see Note 31.
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. 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 31 March is summarised below:
|
Classes of financial assets impacted by credit risk, carrying amounts |
31 March 2022 £'m |
31 March 2021 £'m |
|
Trade and other receivables |
2.8 |
3.7 |
|
Cash at bank and on hand |
75.8 |
158.4 |
|
Restricted cash |
2.3 |
2.3 |
|
Total |
80.9 |
163.2 |
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 2022 and 31 March 2021 is held with the following institutions: (1) Barclays Bank plc; (2) Silicon Valley Bank plc; (3) Investec Bank plc; and (4) EFG Private Bank Limited.
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 balance sheet date. The Group has a revolving credit facility in place. During the year drawdowns of £30.0 million took place, with £30.0 million drawn at 31 March 2022 (31 March 2021: no drawdowns). Please refer to Note 22(ii) for further details regarding the revolving credit facility.
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 to manage cash.
Interest rate risk
The Group's interest rate risk arises from borrowings on the £65.0 million loan facility with Silicon Valley Bank and Investec, which was entered into in June 2019. Prior to the period ending 30 September 2019, the Group did not have any borrowings. The Group's borrowings are denominated in GBP and are carried at amortised cost.
Drawdowns of £30.0 million were made during the year (maximum drawn during the year of £30.0 million) at an interest rate of 6.75%, rising to 7% from 17 March 2022 - an amount of £30.0 million was drawn at 31 March 2022. Future drawdowns may be subject to a different interest rate. The facility agreement has an interest rate calculated with reference to the Bank of England base rate (currently 1.0% at date of publication) with a margin of 6.25%. At 31 March 2022, the agreement does not have an interest rate floor (at 31 March 2021: interest rate floor of 7.50%). If the base rate increases, the interest charged on future drawdowns will increase.
If the Bank of England base rate had been 1.0% higher during the year to 31 March 2022 the difference to the consolidated statement of comprehensive income would have been an increase in finance costs of £0.1 million. If the Bank of England base rate had been 1.0% higher during the year to 31 March 2022 the difference to the consolidated statement of cash flows would have been an increase in expenditure of £0.1 million.
30. 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.
On 30th March 2022, Molten Ventures plc entered into an agreement with Softcat plc to provide Molten Ventures plc with fractional CIO services. Karen Slatford is both the Chair of Softcat plc's Board and the Chair of Molten Ventures plc's Board.
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 84 to 85 of the Annual Report for the year ending 31 March 2022.
|
|
Year ended 31 March 2022 £'m |
Year ended 31 March 2021 £'m |
|
Wages and salaries |
2.6 |
2.2 |
|
Short-term non-monetary benefits |
- |
- |
|
Defined contribution pension costs |
0.2 |
0.1 |
|
Share-based payment expense |
- |
1.0 |
|
Social security contributions and similar taxes |
0.4 |
0.4 |
|
Carried interest paid |
2.6 |
0.2 |
|
Total |
5.8 |
3.9 |
The details of individual Directors' remuneration and pension benefits, as set out in the tables contained in the Directors' Remuneration Report on page 112, 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 14 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.
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.
|
Management fees recognised in the statement of comprehensive income resulting from related party transactions |
Year ended 31 March 2022 £'m |
Year ended 31 March 2021 £'m |
|
Management fees from unconsolidated structured entities |
12.7 |
9.2 |
|
Management fees from EIS and VCT funds |
5.1 |
3.4 |
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 16 beneficiaries in the year, of which the below was to related parties. Carry payments have been made in respect of Esprit Capital III LP, Esprit Capital IV LP and Esprit Capital (1) (B) LP to key management personnel in FY21 and FY22. Please see the Directors' Remuneration Report for further details.
|
|
Year ended 31 March 2022 £'m |
Year ended 31 March 2021 £'m |
|
Carry payments |
2.6 |
0.2 |
Performance fees
Performance fees have been paid during the year by the EIS and VCT funds to Encore Ventures LLP. At 31 March 2022, £0.8 million was unpaid (31 March 2021: £Nil).
|
|
Year ended 31 March 2022 £'m |
Year ended 31 March 2021 £'m |
|
Performance fees |
2.5 |
- |
Loans to related parties
In addition to the above, during the year ended 31 March 2021, the Company loaned £3.7 million to Esprit Capital Fund No 1 & No 2 LP on an arm's length basis. The loan was repaid during the year ending 31 March 2021 along with accrued interest of £0.4 million.
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 subsidiary, Molten Ventures (Ireland) 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.
|
Name of undertaking |
Registered office |
Activity |
Holding |
Country |
31 March 2022 £'m |
31 March 2021 £'m |
|
Esprit Investments (1) (B) LP |
20 Garrick Street, London, WC2E 9BT |
Limited Partnership pursuant to which the Group makes certain investments |
100% |
England |
18.0 |
12.0 |
|
Esprit Investments (2) (B) LP |
20 Garrick Street, London, WC2E 9BT |
Limited Partnership pursuant to which the Group makes certain investments |
100% |
England |
240.0 |
157.6 |
|
Molten Ventures (Ireland) Limited |
32 Molesworth Street, Dublin 2, Ireland |
Investment entity |
100% |
Ireland |
1,121.7 |
670.6 |
|
Esprit Capital III LP |
20 Garrick Street, London, WC2E 9BT |
Limited Partnership pursuant to which the Group makes certain investments |
100% |
England |
50.8 |
71.4 |
|
Esprit Capital IV LP |
20 Garrick Street, London, WC2E 9BT |
Limited Partnership pursuant to which the Group makes certain investments |
100% |
England |
34.8 |
79.6 |
|
DFJ Europe X LP |
c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands |
Limited Partnership pursuant to which the Group makes certain investments |
100% |
Cayman Islands |
15.8 |
62.7 |
|
Esprit Investments (1) LP |
20 Garrick Street, London, WC2E 9BT |
Limited Partnership pursuant to which the Group makes certain investments |
100% |
England |
248.3 |
211.1 |
|
Esprit Investments (2) LP |
20 Garrick Street, London, WC2E 9BT |
Limited Partnership pursuant to which the Group makes certain investments |
100% |
England |
787.2 |
307.8 |
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), Esprit Capital III 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.
31. Capital commitments
The Group makes commitments to seed 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 2022 but are not recognised as a liability on the consolidated statement of financial position:
|
|
Year ended 31 March 2022 £'m |
Year ended 31 March 2021 £'m |
|
Undrawn capital commitments |
74.2 |
68.2 |
|
Total capital commitments |
263.5 |
218.9 |
Total exposure for the Group to these seed funds (including Earlybird) is £399.5 million of investments (31 March 2021: £328.8 million).
32. Ultimate controlling party
The Directors of Molten Ventures plc do not consider there to be a single ultimate controlling party of the Group.
33. 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 28 for a reconciliation to the net investment balance. This table also shows the Gross to Net movement, which is 92% in the current year calculated as the net investment value (£1,410.8 million) divided by the GPV (£1,531.5 million). The table reflects a Gross fair value movement of £362.8 million, on an opening balance of £983.8 million, which is a 37% percentage change on the 31 March 2021 GPV. This is described in the report as the Gross fair value 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.
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.
34. Exceptional items
Exceptional costs were recognised in the year ending 31 March 2022 relating to the Company's Main Market Move of £2.4 million (31 March 2021: £Nil). The majority of these costs include fees relating to brokers, legal advisory, listing, reporting accountant, NED recruitment, remuneration advisory, IT consultancy, and PR services.
35. Subsequent events
Post period-end, we have deployed £73.7 million in investments including our announced deal in HiveMQ.
We announced the funding rounds of Thought Machine and Aiven (Aiven is held via our partnership with Earlybird).
At 31 March 2022, we held interests in three listed companies - Trustpilot, UiPath, and Cazoo. Their valuations are based on their quoted share price on 31 March 2022. Their value using the closing quoted share price on 8 June 2022 was £43.9 million.
There are no further post balance sheet events requiring comment.
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