Molten Ventures VCT plc

LEI: 2138003I9Q1QPDSQ9Z97

Half-Year Results

For the six months ended 31 December 2024

RECENT PERFORMANCE SUMMARY

DIVIDENDS

A full dividend history for the Company can be found at investors.moltenventures.com/investor-relations/vct

CHAIRMAN'S STATEMENT

I am pleased to present the Half-Yearly Report for the Company for the six months ended 30 September 2024.

I would like to welcome Shareholders who joined us as a result of the recent offers for subscription and express our gratitude to both new and the existing Shareholders who continue to support the Company despite the difficult markets we continue to face.

Despite market conditions for deals remaining difficult, we have seen a steady level of new investment activity, utilising some of the funds raised from the successful offer for subscription earlier this year. It is our view that the market is improving but cyclical.

Net Asset Value and results

At 30 September 2024, the Company's Net Asset Value per share ("NAV") stood at 43.2p, a decrease of 2.5p since 31 March 2024 (after adding back the dividends paid during the period).

The loss on ordinary activities after taxation for the period was £6.9 million, comprising a revenue gain of £276,000 and a capital loss, arising almost entirely on 30 September 2024 valuations, of £7.2 million.

Dividends

In 2024, the Company paid dividends totalling 2.5p in April and September. As explained in the 2024 Annual Report, VCT regulations limit dividend payments from reserves associated with funds raised in the last three to four years. Following several successful fundraisings, the Board must manage reserves carefully to ensure compliance with these regulations.

While the Board targets annual dividends of 5% of net asset value, due to a lack of available reserves for the accounting period ending 31 March 2025 no further dividends are proposed for this period. Significant additional reserves will become available after 1 April 2025 and the Board remains committed to its dividend policy and intends to resume dividend payments once reserves are accessible under the VCT rules.

Shareholders are reminded that the Company operates a Dividend Reinvestment Scheme, which allows Shareholders to reinvest their dividends automatically into new shares in the Company and obtain further income tax relief on that investment. Further details about how to opt-in can be found in the "Shareholder Information" section on page 3 of the Half Yearly report.

Venture capital investments

During the period, the Company made 3 new and 1 follow-on investments, at a total cost of £3.3 million.

New investments were made in Dines App Limited, FintechOS Holding B.V. and XMOS Limited. A follow-on investment was made in Global Satellite Vu Limited.

At the period end, the Company held a portfolio of 48 venture capital investments, valued at £75.6 million, a loan note valued at £0.5 million, and held net cash for investment of £38.2 million.

As usual, the Board has reviewed the valuations of the unquoted investments as at 30 September 2024 and a number of adjustments to their carrying values have been made. This has resulted in a net valuation downturn of £6.2 million for the period across the whole portfolio.

The Company holds an AIM-quoted investment, Pulsar plc valued at its share price as at 30 September 2024 which saw a increase of £0.4 million over the period and was valued at £4.6 million.

Fundraising

As noted in the last Annual Report, the Company launched another successful offer for subscription in October 2023 which closed in August 2024 having raised £15.7 million net of costs.

In October 2024, the Company continued its practice of a new offer and launched a limited subscription for new shares.

Shareholders can find full details of the offer, including the prospectus, and online application at:

investors.moltenventures.com/investor-relations/vct

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

Share buybacks

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

In line with this policy, during the period, the Company purchased 1,047,051 shares for cancellation at an average price of 44.91p per share.

As noted above in respect of the dividend, the Board is currently monitoring the Company's distributable reserves to ensure continued compliance with the VCT regulations, and it is not expected that any further share buybacks will be made prior to the end of March 2025. However, the Board confidently expects to resume buybacks, subject to the above, from 1 April 2025 onwards.

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

Outlook

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

We are hopeful that conditions will begin to improve in 2025 and that we may now be approaching a point in the cycle when excellent investment opportunities in the sectors in which your Company operates are available at attractive prices which can drive strong performance in future.

I look forward to updating Shareholders on progress in my statement in the Annual Report to 31 March 2025, which will be published in the summer.

David Brock

Chairman

11 December 2024

INVESTMENT MANAGER'S REPORT

The backdrop for technology companies and those who invest in them remains mixed with a number of portfolio companies performing well and some challenges which have constrained the overall VCT portfolio performance.

Our focus within this context has been on what we can control. We have maintained discipline around our own investment process and worked closely with our portfolio companies to extend cash runways, control costs, and retain talent. The entrepreneurs we have backed continue to transform the industries in which they operate.

The valuation movements in the first half of the year showed a NAV Total Return decrease of 5.2% (NAVTR - adding back dividends paid in the period).

In the period 2.5p of dividends were paid equivalent to just over a 5% yield on the starting year NAV of 48.2p (31 March 2024). This is a welcome return to meeting the VCTs target 5% annual yield.

In the period three new investments were made totalling £2.7 million and one follow-on investment of £0.6 million. One portfolio exit was achieved as outlined below.

Exit Highlight

Endomagnetics Ltd ('Endomag') returned £8.3 million to the VCT a multiple of 3.9x cost.

In July we were delighted that portfolio company Endomag was acquired by NASDAQ listed Hologic Inc. The acquisition valued Endomag at approximately $310 million. There is the potential of further escrow proceeds of c. £0.8 million.

The VCT first invested in Endomag in 2018 and since then the company has grown its revenue fourfold. The acquisition demonstrates our ability to support innovative businesses as they scale and create value for our Shareholders through the cycle. Endomag's platform has been installed in over 1,350 hospitals in over 45 countries globally, and more than 500,000 women have received a better standard of breast cancer surgery with Endomag's technologies. The Company received many accolades on its journey and more recently was awarded the King's Award for Enterprise.

To assist with its future wider portfolio exit strategy Molten has a relationship with a leading investment bank advising international technology and climate companies, developing and executing growth financings and strategic sell-side M&A. Its CEO is well known to the Molten team having worked on many exits with Molten partners in the past.

Portfolio

At the period end, Molten technology companies represented 53.6% of the portfolio and pre-Molten legacy companies 13.0%. The net asset valuation of £118.9 million was split 67.9% in investments, and 32.1% in cash and cash equivalents.

Molten Ventures takes an active role in building businesses and typically has board representation on investee companies as a director or observer.

Valuation movements

Within the period 10 companies had positive valuation uplifts totalling £6.7 million and 14 companies had negative valuation movements totalling £12.9 million.

Positive meaningful movements (movements above £0.25 million) within the portfolio include Riverlane, Melio Healthcare, Freetrade and Pulsar Group.

Riverlane is the largest uplift where a major new investment round of $75 million increased the valuation by £3.9 million. This $75 million in Series C funding will allow Riverlane to deliver its groundbreaking quantum error correction (QEC) roadmap, and to expand operations to meet surging global market demand for QEC technology, with the goal of achieving one million error- free quantum computer operations by 2026.

Post the period end proceeds of £0.3 million were received from the sale of Hampshire Sport and Leisure, a legacy portfolio company, that was previously valued at nil.

Valuation reductions have been recorded in some companies with sound prospects where market valuation multiples have declined. This includes Thought Machine where the valuation declined by £3.8 million as market multiples have fallen; and Macranet, a legacy business where a new investment round has subordinated the VCT returns position where the VCT was unable to invest due to the non-qualifying nature of the business. The valuation has been reduced by £0.9 million.

Another company in this category is IESO where a further provision of £0.9 million was taken. Here the technology build and commercial roll out has taken longer than expected. While disappointing, the revenue potential from IESO's technology is very large and if the company can commercialise its new AI- enabled digital mental health platform it could prove to be a very valuable technology. There is scope from this for the value of the holding to increase again in the future. The encouraging news was a very successful clinical trial that completed on the new digital product and demonstrated performance on a par with human therapists. IESO's other service-based business, utilising its unique database, grew its revenue in the year from single digit to double digit millions.

Regrettably there have been a number of other write-downs including:

Evonetix (write down of £1.3 million) and Gardin (write down of £1.3 million). These deep tech companies are both struggling to find commercial market fit. Morressier (write down of £3.2 million) has failed to convert its projected customer pipeline into realised revenues; and Allplants (write down of £0.8 million) has entered into administration post-period end.

New investments

New investments alongside the Molten EIS and Molten Ventures plc funds were made during the period into the following qualifying companies:

Deal Flow

At the time of publication, five further new investments and three follow-on investments have completed post the period end.

Outlook

The aggregate portfolio performance in first half of the year has been disappointing however we maintain the belief that investing in cutting edge technology companies can yield returns over the long term. The exit of VCT company Endomag is a good example of this.

We are actively working on a pipeline of further exits and expect to be able to report on successful, profitable outcomes as transactions complete.

With the ongoing expectation of a more normalised realisations market, we remain cautiously optimistic for the portfolio as the technology markets continue to stabilise.

Elderstreet Investments Limited

Part of the Molten Ventures Group

11 December 2024

SUMMARY OF INVESTMENT PORTFOLIO

Portfolio of investments

The following investments were held at 30 September 2024. All companies are registered in England and Wales, with the exception of Fulcrum Utility Services Limited, which is registered in the Cayman Islands, and Anima, which is incorporated in Delaware with a UK establishment.

All venture capital investments are unquoted unless otherwise stated.

* These companies have also received investment from other funds managed by the Molten Ventures Group (Molten Ventures plc and Molten Ventures EIS funds) as at 30 September 2024.

**Quoted on AIM

This investment was revalued over time and until sold, with any unrealised gain included in the fair value of investments.

*These companies have also received investment from other funds managed by the Molten Ventures Group (Molten Ventures plc and Molten Ventures EIS funds) as at 30 September 2024.

UNAUDITED INCOME STATEMENT

for the six months ended 30 September 2024

All Revenue and Capital items in the above statement are derived from continuing operations. No operations were acquired or discontinued during the period.

UNAUDITED BALANCE SHEET

as at 30 September 2024

UNAUDITED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 September 2024

* A transfer of £1.0 million, representing realised losses on investment disposals plus capital expenses in the period, has been made from Capital Reserve - realised to the Special reserve.

UNAUDITED STATEMENT OF CASH FLOWS

for the six months ended 30 September 2024

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

for the six months ended 30 September 2024

1.  The unaudited Half-Yearly Report covers the six months to 30 September 2024 and has been prepared in accordance with the accounting policies set out in the statutory accounts for the period ended 31 March 2024, which were prepared in accordance with the Financial Reporting Standard 102 ("FRS 102") and the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" issued in July 2022 ("SORP").

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

3.   The comparative figures are in respect of the six months ended 30 September 2023 and the year ended 31 March 2024, respectively.

4.   Basic and diluted return per share

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

5.   Dividends

  Including £415,000 of DRIS allotments

6.   Basic and diluted net asset value per share

7.   Called up share capital

During the period the Company issued a total of 32,427,788 Ordinary Shares of 5p each ("Ordinary Shares") at an average price of 49.06p per share, under the offer that launched in October 2023. The gross proceeds of the Offer were £15.9 million, with issue costs in respect of the Offer amounting to £0.6 million.

Following the payment of a dividend on 5 April 2024, 300,379 Ordinary Shares at an average price of 47.27p were allotted under the Dividend Reinvestment Scheme ("DRIS"). The amount re-invested totalled £142,000.

Following the payment of a dividend on 26 September 2024, 571,647 Ordinary Shares at an average price of 47.71p were allotted under the DRIS. The amount re-invested totalled £273,000.

During the period, the Company purchased 1,047,051 Ordinary Shares for cancellation for an aggregate consideration of £473,000, equating to an average price of 44.91p per share (approximately equal to a 5% discount to the most recently published NAV at the time of purchase) and representing 0.4% of the issued share capital in issue at 31 March 2024.

8.   Reserves

Distributable reserves are calculated as follows:

*The Special Reserve was created following the cancellation of the Share Premium Account. The VCT regulations restrict the distribution of this Special Reserve until a date at least three years after the year end in which the funds were originally raised. On 1 April 2023 £6.2 million of the Special Reserve became unrestricted and on 1 April 2024 a further £11.5 million became unrestricted. A further £36.0 million of the Special Reserve will become unrestricted on 1 April 2025.

9.   Investments

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

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

Level 1   Reflects financial instruments quoted in an active market (fixed interest investments, and investments in shares quoted on either the Main Market or AIM);

Level 2   Reflects financial instruments that have prices that are observable either directly or indirectly; and

Level 3   Reflects financial instruments that use valuation techniques that are not based on observable market data (unquoted equity investments and loan note investments).

10.  Risks and uncertainties

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

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

·      investment risk associated with investing in small and immature businesses;

·      liquidity risk arising from investing mainly in unquoted businesses; and

·      failure to maintain approval as a VCT.

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

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

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

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

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

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

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

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

12. The unaudited financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the period ended 31 March 2024 have been extracted from the financial statements for that period, which have been delivered to the Registrar of Companies; the Auditor's report on those financial statements was unqualified.

13. Copies of the unaudited Half-Yearly Report can be downloaded from

investors.moltenventures.com/investor-relations/vct .