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Molten Ventures
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== Financials == '''27% fair value growth in H122, c 35% expected for FY22''' After recent sector weakness, Molten’s shares have slipped from a premium to a discount to NAV and are trading at a meaningful discount to both the H122 NAV of 887p per share. This is despite continued strong portfolio performance and portfolio revenue growth. GPV rose 37% in H122 to £1,350m (FY21 £984m), representing 27% growth in fair value, allowing for net investment. Management reconfirmed its expectation in February 2022 for c 35% fair value growth for FY22 ‘subject to wider market conditions’, from which we estimate a GPV of c £1,475m (9% growth in H222) and an FY22 NAV/share of c 929p (5% growth in H222). However, with the announcement on 9 March 2022 of a funding round for an unnamed portfolio company leading to a £76m fair value increase for Molten (c 50p per share pre-costs and carry), we now expect FY22 NAV to be considerably above this target. H122 NAV per share increased to 887p (FY21 743p), a 19% rise. Plc cash at period end was £156m (FY21 £160m), including £16m of restricted cash, after investments of £165m in H122 (H121 £32m) and cash realisations of £67m (H121 £106m), together with net proceeds from the June 2021 funding round of £108m. Cash realisations included proceeds from the exits from SportPursuit, Conversocial, Decibel and PremFina, as well as post-IPO share sales in Trustpilot and UiPath. The group also has a £65m undrawn credit facility, meaning that total available liquidity at 30 September 2021 was £221m. Net portfolio value rose to 91% of GPV in H122 from 88% in FY21, as external carry fell from 10% to 9% of GPV, largely due to a reduction in deferred tax from £20m in FY21 to a credit of £0.2m in H122. In H122, Molten Ventures benefited from foreign exchange gains (£13m profit), having suffered a £51m foreign exchange loss in FY21. '''Post period-end: February trading update''' At the end of January 2022 (the first 10 months of FY22), Molten Ventures had invested £259m in portfolio companies, of which c £106m had been committed to 12 new investments and £153m to follow-ons. Net investment YTD rose to £149m from £98m as at 30 September 2021, with cash proceeds from realisations reaching £110m (11% of GPV). Portfolio companies saw strong revenue growth in 2021, which management forecast to continue for 2022, with a healthy pipeline of investment opportunities ahead. New investments since the H122 results included Molten leading a US$10.8m seed round in an agtech company, Gardin (December 2021); a US$25m Series B funding round in MOSTLY AI (artificial intelligence, January 2022); and a US$45m Series A round in causaLens (artificial intelligence, January 2022). Molten also participated with a £20m investment in a US$200m Series C round for Thought Machine, a provider of cloud native core banking technology (November 2021) and sold its holding in Bright Computing to NVIDIA for a 1.6x return on invested capital (January 2022), having initially invested in 2014. '''Net operating costs remain well below 1% of NAV''' H122 income came from £252m of investment gains (H121 £56m), together with fee income from management fees and directors’ fees of £10m (H121 £6m). G&A costs rose substantially to £11.2m (H121 £6.6m) as Molten Ventures continued to invest in its team and infrastructure. Despite this, net operating costs of £5.7m (net of fee income) (H121 £1.3m), including £2.4m of exceptional costs relating to the move to the main market, when annualised stayed below management’s target of 1% of NAV. Net income was £218m (H120 £54m).
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