TIDMGROW
RNS Number : 9471L
Draper Esprit PLC
25 July 2017
Strictly embargoed until 07.00: 25 July 2017
Draper Esprit plc
("Draper Esprit" or "the Company")
FINAL RESULTS FOR THE YEARED 31 MARCH 2017
Draper Esprit (AIM: GROW, ESM: GRW), a leading venture capital
firm involved in the creation, funding and development of
high-growth digital technology businesses, today announces its
maiden final results for the year ended 31 March 2017.
Financial highlights
-- Gross Primary Portfolio value increased by 43% to GBP112.7
million as at 31 March 2017 (30 September 2016 GBP106.9 million, at
IPO GBP78.7 million)
-- Net Assets including goodwill increased by 17% to GBP150.7
million as at 31 March 2017 (GBP128.7 million at IPO)
-- NAV per share of 370 pence (as at 31 March 2017)
-- NAV per share, excluding goodwill, of 319 pence (as at 31 March 2017)
-- Profit after tax of GBP33.2 million
Operational highlights
-- Invested across the Group in 13 new and 6 existing portfolio companies
-- Core portfolio holdings have grown by 30%
-- Significant cash realisations of GBP42.0 million in plc
(including amounts held in escrow), generating an uplift in value
of GBP24.4 million against the holding value at IPO and
highlighting the Group's prudent approach to valuation
-- GBP37.1 million of these cash proceeds already deployed in
the period into the next generation of opportunities and to further
support our existing portfolio
-- Hired experienced team as the next generation of investment
professionals to lead the business into the next stage with 6 hires
across London and Ireland, taking the total investment team to 14
(including Elderstreet) and appointed Ben Wilkinson as new CFO
Post FY End Highlights
-- GBP160.0 million additional capital raised across the Group
post year end, comprising GBP100.0 million raised from new and
existing shareholders in the plc, GBP25.0 million across the EIS
and VCT funds and further GBP35.0 million for secondary deals
-- GBP25.0 million invested across the Group in new and existing
portfolio companies, including Push Doctor, Perkbox, Graphcore and
Trustpilot
Simon Cook, CEO Draper Esprit commented:
"At the time of the IPO in June 2016, we set out to demonstrate
our model in a public market setting of investing in high growth
private technology start-ups. Through our fast-growing portfolio
and a series of successful exits and further investments, we have
demonstrated that the public venture capital model is working.
"Post year end we continued onto the next stage of the strategy
by raising an additional GBP100.0 million equity from our
supportive institutional shareholder base. As a wider Group, we
have also raised significant co-investment funds through our EIS,
VCT and secondary funds, with GBP60.0 million raised in 2017 to
date.
"Having scaled our capital resources, the Group is now even
better positioned to invest larger amounts in more companies,
growing our holdings in our most promising investments.
"We invest in companies that build the future. In the year ended
31 March 2017, the Company or co-investment funds managed by the
Group invested GBP43.0 million including GBP34.0 million in 13 new
companies, including Graphcore, LifeSum, PushDoctor, Resolver,
Perkbox, Realeyes, Clavis, Clue, RavenPack and Podpoint. The
portfolio is diverse: whether they are building a whole new
infrastructure for developing Artificial Intelligence applications
(Graphcore), the future of tracking female health (Clue) or the
infrastructure necessary for electric vehicles (Podpoint), all the
companies are united by a strong team and an ability to be global
leaders.
"As we reflect on our maiden set of results, it is clear our
model is working and we are growing Net Asset Value substantially
to the benefit of our shareholders."
Availability of Annual Report and Notice of AGM
The Annual Report and Accounts for the financial year ended 31
March 2017 and notice of the Annual General Meeting ("AGM") of
Draper Esprit will be will be available on Draper Esprit's website
at http://draperesprit.com/ and posted to shareholders by 11 August
2017
- ends -
ENQUIRIES
Draper Esprit plc
Simon Cook (Chief Executive
Officer)
Ben Wilkinson (Chief
Financial Officer) +44 (0)20 7931 8800
Numis Securities
Nominated Adviser & Joint
Broker
Alex Ham
Richard Thomas
Jamie Loughborough +44 (0)20 7260 1000
Goodbody Stockbrokers
ESM Adviser & Joint Broker
Don Harrington
Linda Hickey +353 1 667 0420/+44 20
Charlotte Craigie 3841 6202
Belvedere Communications
(PR)
John West
Kim van Beeck +44 (0)20 3567 0510
NOTES TO EDITORS
Draper Esprit (www.draperesprit.com) was founded in 2006, and is
one of the largest and most active VC firms in Europe, helping
entrepreneurs to build global ground-breaking technology companies
through hands-on board level support, internationalisation and
commercialisation activities and investment.
CHAIRMAN'S STATEMENT
It has been an extremely active and productive year for the
Company since we listed in June 2016 on London's AIM and the ESM,
in Ireland.
The IPO, which included the acquisition of Esprit Capital
Partners LLP and Draper Esprit (Ireland) Limited to form the Group,
received strong support from new and existing shareholders,
including several prominent City institutions, successful
entrepreneurs and family offices.
Since then, the management has expanded the team by adding new
talent to give us the capacity to drive more investments in
high-growth companies, and has increased our investments into
selective portfolio companies. We have been very focused and
determined to do what we said we would do at the time of the IPO.
We aim to deliver significant returns to shareholders over the
longer term by growing our Net Asset Value ("NAV") and target a
portfolio return of 20% per annum, underpinned by an average of 30%
revenue growth in our core investee companies.
We provide long-term capital and have significant resources to
deploy. Our ambition is to build a bridge between institutional and
retail capital and high growth private companies. We not only
screen deal flow but actively manage the portfolio companies,
helping the entrepreneurs with a hands-on approach to build
businesses that scale. Post year end, we have implemented the next
stage of this strategy by raising a further GBP100.0 million from
new and existing institutional shareholders, to invest in the next
generation of tech entrepreneurs in Europe and the UK. In addition
to this, we have raised GBP60.0 million across our EIS, VCT and
Secondary funds.
We continue to invest in forward-thinking and innovative
businesses, a standard we also hold ourselves to as we continue to
break new ground in our marketplace. In this regard, we have made a
great start and I would like to thank our entire team, Board
colleagues, Shareholders, advisers and wider network of contacts
for their support and hard work over the year.
Karen Slatford
Non-Executive Chair
CHIEF EXECUTIVE'S STATEMENT
I am pleased to report that the year ended 31 March 2017 has
been a year of substantial change and progress for the Company.
At the time of the IPO in June 2016, we set out to demonstrate
our model in a public market setting of investing in high growth
private technology start-ups. Through a series of successful exits,
further investments and our fast-growing portfolio, we have
demonstrated that the public venture capital model is working.
Having scaled our capital resources following the recent equity
capital raise, the Group is now even better positioned to invest
larger amounts in more companies, growing our holdings in our most
promising investments.
Operating review
The environment for innovation in Europe is growing at a
sustainable rate and the venture capital market in Europe is now
worth US$15.0 billion. However, Europe still lags behind the US,
most notably in the provision of growth capital. In Europe, only
42% of start-ups go onto complete a growth round, compared to 85%
in the US. By starving start-ups of follow-on investment, it limits
their ability to grow internationally and therefore compete on a
global stage. Our ambition is to fill this gap with long term
capital for the best teams in Europe.
Furthermore, high growth technology businesses are also staying
private for longer. Our decision to go public has positioned us to
play a leading role by enabling us to offer a partnership model
with investors who wouldn't otherwise have access to, or the
capacity to actively manage these types of investments.
We have been very active in putting our long-term capital model
to work. Across the Group, we have invested GBP34.0 million in 13
new Companies, as well as GBP9.0 million in the existing portfolio
including GBP6.0 million co-invested from EIS funds. In addition,
we have exited 4 companies realising cash of GBP42.0 million
(including amounts held in escrows). Going forward further
co-investment will come from the VCT following the acquisition of
30.77% in Elderstreet 2016.
The cash available for investment across the Group is reviewed
periodically and the allocations split according to the resources
available. During 2016/17, we have invested 66% from the plc and
34% from EIS funds into qualifying companies.
Successful exits
During the year, the Company has announced four major
disposals.
Firstly, we announced the sale of Movidius Ltd ("Movidius") to
Intel Corporation. Movidius is a leader in high performance,
ultra-low power computer vision technology for connected devices.
The sale generated an estimated total cash return to the Company of
approximately GBP27.4 million including amounts held in escrow,
generating a 7.6x uplift on invested capital.
In October 2016, we announced that ENEA, a leading global
information technology company agreed to acquire portfolio company,
Qosmos for a total cash consideration of approximately EUR52.7
million resulting in cash to the Company, including amounts held in
escrows, of GBP8.0 million, generating a 1.9x uplift on invested
capital.
In November 2016, we announced the sale of Datahug, a sales
forecasting software company, to Callidus Software Inc for a cash
consideration of around US$13.0 million, resulting in a cash return
to the Company of approximately GBP3.6 million, including funds
held in escrow, generating a 1.6x uplift on invested capital.
In addition, we sold the remaining stake (following the partial
exit pre-IPO) held by the Company in Horizon Discovery, resulting
in a cash return of GBP2.9 million, generating a 2.6x uplift on
invested capital.
Separately, during 2016 secondary funds managed or associated
with Draper Esprit were also involved in the sale of optical switch
business Polatis to Huber+Suhner; and GreenPeak Technologies, a
leader in ultra-low power, short range RF communication technology
to NASDAQ listed Qorvo, Inc. These exits returned GBP23.0 million
to our Limited Partners, and resulted in proceeds to the Company in
fees and carry of approx. GBP0.3 million to partially offset Group
costs.
These exits highlight the truly European nature of Draper
Esprit's portfolio with Movidius based in Dublin, Qosmos in Paris,
Polatis in Cambridge (UK) and GreenPeak in the Benelux countries.
All companies were very active in the US market, as per Draper
Esprit's strategy of helping European companies become global
leaders. Moreover, they demonstrate the investment and value
realisation model in practice.
Draper Esprit and secondary managed funds associated with the
Company held significant minority stakes in each portfolio company;
the acquirers were all respected international blue-chip companies;
and the aggregate total value of these transactions was in excess
of US$600.0 million in 2016.
Growing our diverse portfolio: investments
We invest in companies that build the future. In the year to
date, the Company or co-investment funds managed by the Group
invested GBP34.0 million in 13 new companies, including Graphcore,
LifeSum, PushDoctor, Resolver, Perkbox, Realeyes, Clavis, Clue,
RavenPack and Podpoint. The portfolio is diverse: whether they are
building a whole new infrastructure for developing Artificial
Intelligence applications (Graphcore), the future of tracking
female health (Clue) or the infrastructure necessary for electric
vehicles (Podpoint), all the companies are united by a strong team
and an ability to be global leaders.
Key to our strategy is to increase our holdings into the rising
stars within the portfolio. To that effect, the Company has
increased its investment in Trustpilot, the global multi-language
review company, bringing the total that it has invested in new and
existing portfolio companies to GBP37.1 million (excluding cash
invested by EIS and VCT co-investment funds) since the IPO. Post
year end, the Group has invested a further GBP25.0 million in new
and existing companies.
We continue to be excited by the growth potential of the
underlying portfolio companies with all of our top holdings
continuing to make strong commercial progress, growing sales
significantly and reporting positive news flow.
Outlook and Summary
It has been a remarkable year for the Group as we made the
transition to a publicly listed model following Admission. We serve
as a leading player on the European Venture Capital stage with
significant resources to deploy.
By democratising the venture capital model and making our
expertise accessible to a wider market, we are breaking new ground.
We offer a partnership model with investors who otherwise wouldn't
have access to, or the capacity to actively manage, these types of
investments. The recent Placing and Subscription of GBP100.0
million is a superb validation of that model. We are grateful for
the support that existing shareholders such as Woodford Investment
Management, Baillie Gifford and the Ireland Strategic Investment
Fund have shown and are delighted to welcome new investors such as
Invesco Perpetual and Hargreave Hale as major new shareholders.
Across the Group, in 2017 we have now raised over GBP160.0
million (including plc, secondaries, EIS and VCT). We have a
powerful investment platform which will enable us to capture the
increasing innovation and entrepreneurship in Europe, especially in
enterprise software, digital hardware, consumer services and
digital health. Our funds will be used to continue investing in
these areas from early stage to growth stage, with 70% of our
capital reserved for scaling-up and increasing our stakes in
existing portfolio companies through later rounds.
If we continue to grow our co-investment funds and make further
realisations for reinvestment, over the five years of a typical LP
fund, we will have the equivalent of GBP800.0 million(1)
(approximately US$1.0 billion) to deploy, making us a strong
partner in Europe.
We will continue to adopt a measured and considered approach.
Our goal is to achieve at least 20% year on year growth in
portfolio value in line with our historical record, whilst
retaining the ability to hold and grow our companies for longer
than our non-listed competitors can and with larger sums available
for later rounds to maximise the opportunity and build large
successful European technology businesses.
We have an experienced management team, which we will continue
to grow and develop our young talent. I would like to thank not
only that team, but the wider investee company management teams,
who share our vision to create European technology leaders that can
become the world leaders in their respective fields of tomorrow; as
well as all our stakeholders.
Our model is working and we are growing Net Asset Value
substantially to the benefit of our shareholders.
We are well positioned to capitalise further on opportunities in
2017/18 and look forward to the next financial year with confidence
and optimism.
Simon Cook
Chief Executive Officer
(1) Calculated by aggregating: (i) the funds raised by the Company at the IPO and the Placing and Subscription; (ii) 5 years' worth of Company's realisations (based on the value of the realisations since IPO); and (iii) 5 years' worth of funds raised across the Group's other platforms (based on the funds raised by such platforms since IPO). Does not include any future capital raises by the Company. This is an illustrative calculation only and not a profit forecast or estimate of future growth of the Group or its platforms.
PORTFOLIO REVIEW
Overview
At the year ended 31 March 2017 the fair value of the Company's
Gross Primary Portfolio had increased to GBP112.7 million, from
GBP78.7 million at the time of Admission in June 2016. Excluding
new investments and realisations across our portfolio of companies,
the gross portfolio value has increased 39% since Admission and 10%
over the six-month period since 30 September 2016. Since Admission,
the Group has realised the investment holdings in Movidius,
Datahug, Qosmos, Horizon Discovery and Worldstores with GBP42.0
million of cash generated (including amounts held in escrow). The
Company has invested GBP37.1 million in the period, with a further
GBP6.0 million co-invested from EIS funds, into the next generation
of high growth digital technology companies and to further support
our existing portfolio.
The current portfolio held by the plc consists of significant
minority interests in 29 companies. The fair value of the Gross
Primary Portfolio is underpinned by eight core holdings which
account for 75% of the total portfolio value, with the remaining
value spread across 21 investments which have the potential to grow
into the core holdings of the future.
The core portfolio, comprising: Graze, Trustpilot, M-Files,
Conversocial, Lyst, Sportpursuit, Clavis Insights and Perkbox, is
progressing well and these portfolio companies now have average
turnover in excess of US$40.0 million (GBP32.0 million), growing in
aggregate over 29% annually from 2016. The gross profit margin of
the core holdings average 69% and demonstrate the ability of the
companies to re-invest for future revenue growth and also the
opportunity for future profitability at the appropriate time in the
company lifecycle.
An important facet of the investment model employed by the Group
is to target growth stage companies that have a proven customer
base and revenue generation model that can be leveraged
internationally. The fair value of the portfolio is underpinned by
the revenue generation of the portfolio companies and the growth in
this revenue in turn drives the growth in the fair value.
Investments
The Group's overall rate of capital deployment increased during
the financial year, with a total of GBP37.1 million deployed by the
plc and a further GBP6.0 million across the Group in 19 companies
(13 new and 6 existing). Since the period end the Group has
invested a further GBP25.0 million, GBP19.3 million of which was
through the Company. The Group continues to balance the portfolio
by deploying approximately 30% of the Group's investment capital
towards smaller rounds in early stage companies with approximately
70% being invested in larger later stage growth rounds. As the
Group grows, and following the recent equity raise, the intention
is to increase the size of the equity interest held in the
portfolio companies over time.
New investments made during the financial year include:
-- GBP2.3 million invested by the Company of GBP3.1 million
invested by the Group in Graphcore, a machine intelligence
semiconductor company
-- GBP3.0 million invested by the Company in LifeSum, a leading
health tracking mobile app company
-- GBP1.0 million invested by the Company of GBP1.5 million
invested by the Group in PushDoctor, an on demand healthcare mobile
app company
-- GBP0.9 million invested by the Company of GBP1.3 million
invested by the Group in Resolver, a customer service software
company
-- GBP1.7 million invested by the Company of GBP2.5 million
invested by the Group in Perkbox, an employee benefits and
engagement platform
-- GBP1.1 million invested by the Company of GBP1.7 million
invested by the Group in Realeyes, a machine learning technology
that measures emotions
-- GBP8.1 million invested by the Company in Clavis, a leading ecommerce Insights company
-- GBP4.3 million invested by the Company in Clue, the digital female health company
-- GBP3.3 million invested by the Company in Ravenpack, the big
data analytics provider for financial services
-- GBP3.4 million invested by the Company in Podpoint, one of
the UK's leading providers of electric car charging solutions for
home, workplace and public charging.
-- GBP5.5 million invested by the Company in Trustpilot, a
global multi-language review community.
The following investments were made post year end:
-- A further GBP1.9 million invested by the Company in
Graphcore's GBP24.0 million Series B investment round
-- A further GBP3.5 million invested by the Company of GBP7.0
million invested by the Group in PushDoctor's GBP20.0 million
Series B investment round
-- A further GBP6.6 million invested by the Company in Perkbox,
an employee benefits and engagement platform
-- A further GBP5.6 million invested by the Company in
Trustpilot, a global multi-language review community
-- GBP1.8 million invested by the Company of GBP3.6m invested by
the Group in an as yet undisclosed insuretech company
Gross Portfolio Value Table
Movement Draper Fair
Pro-Forma Investment in Esprit Value Interest
at
IPO Fair of
* Adjustment** Portfolio Investments Realisations*** Value (Ireland) Investments FD****
15th 15th 15th 31st At
June June June Limited March Reporting
2016 2016 2016 2017 Date
Investment GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----------------- ---------------------- ------------------ -------------------- ------------------------ ---------------------- ----------------------- ------------ ----------
Trustpilot 8,896 (1,447) 7,449 5,521 - 5,256 - 18,226 3
Clavis
Insight - - - 8,080 - 2,593 - 10,673 4
SportPursuit 8,226 (1,338) 6,888 - - 3,182 - 10,070 4
M-Files 6,677 (1,086) 5,591 - - 4,198 - 9,789 2
Graze 7,186 (1,169) 6,017 - - 3,666 - 9,683 2
Lyst 9,277 (1,509) 7,768 - - 284 - 8,052 3
Conversocial 5,384 (876) 4,508 - - 2,391 - 6,899 4
Perkbox - - - 1,650 - 0 - 1,650 3
Remaining
Portfolio 30,714 (4,995) 25,719 21,889 (34,279) 21,130 - 34,459
Draper Esprit
(Ireland)
Limited - - - - - - 1,293 1,293
Total 76,360 (12,420) 63,940 37,140 (34,279) 42,700 1,293 110,794
-------------- ----------------- ---------------------- ------------------ -------------------- ------------------------ ---------------------- ----------------------- ------------ ----------
Co-invest
assigned
to plc 2,385 (734) 1,651 - (839) 1,123 - 1,935
Gross
Portfolio
Value 78,745 (13,154) 65,591 37,140 (35,118) 43,823 1,293 112,729
-------------- ----------------- ---------------------- ------------------ -------------------- ------------------------ ---------------------- ----------------------- ------------ ----------
Carry
external - - - (5,621) - (5,621)
Portfolio
deferred
tax - - - (3,413) - (3,413)
Trading carry
& co-invest 1,847 (676) 1,171 150 - 955 - 2,276
Net portfolio
value 80,592 (13,830) 66,762 37,290 (35,118) 35,744 1,293 105,971
-------------- ----------------- ---------------------- ------------------ -------------------- ------------------------ ---------------------- ----------------------- ------------ ----------
* Based on 30 December 2015 valuation adjusted
solely for currency
** Reflects arm's length price agreed for the
acquisition of initial portfolio for GBP63.9
million, carried interest and co-invest assigned
to plc plus currency adjustments to 15 June 2016
*** Realisations do not include amounts held
in escrow. Total cash realisations including
amounts held in escrow was GBP42.0 million
**** Fully diluted interest categorised as follows:
Cat 1: 0-5%, Cat 2: 6-10%, Cat 3: 11-15%, Cat
4: 16-25%, Cat 5: >25%
Select Portfolio Companies
Graze
Draper Esprit Funds first invested in Graze in 2010, with follow
on investment in 2012 bringing the total investment by the Group to
GBP3.7 million.
Graze is an online and offline retailer and manufacturer of
healthier snacks, operating in the UK and the US. Founded in 2009,
it developed a subscription model based on experiences of founder
Graham Bosher at Lovefilm, the DVD rental business. The company has
developed logistics technology that allows it to deliver cost
effectively across the UK and the US. It utilises data generated
from user reviews to innovate and develop new products for evolving
taste preferences and growing consumer demand for wholesome
on-the-go snack options.
The company has launched its own retail product with wide
availability in the UK across 3,000+ stores including retailers
such as Boots, Tesco, WH Smith and Sainsbury's. This will drive
further UK growth together with new online ecommerce sales through
a subscription-based model. The company has recently launched into
4,000+ retail stores in the USA and further online growth is
forecast. Graze remains profitable with strong gross margins.
Graze's vision is to become the number one health snack brand in
the world. Alongside the Company investors in Graze include The
Carlyle Group and Octopus Investments.
Trustpilot
Draper Esprit Funds first invested in Trustpilot in 2013, with
follow-on investment in 2015 and 2017 bringing the total investment
by the Group to GBP17.0 million, including GBP5.6 million invested
post year end.
Founded in 2007, Trustpilot is a global, multi-language review
community. Trustpilot has customers in 65 countries including
Denmark, Sweden, the U.K., France, Italy, Germany and the
Netherlands, as well as the U.S. Trustpilot's aim is to build the
world's single most trusted review company.
Consumers visit the Trustpilot website to leave positive or
negative reviews about an online merchant where they purchased a
product. Once a merchant has a paid subscription to use Trustpilot,
they are able to respond directly and openly with consumers who
have left reviews.
Trustpilot has built a strong SaaS revenue model with excellent
growth in Europe over the last 3 years. They are now successfully
expanding into the US with the recent additional capital
raised.
Trustpilot raised US$73.5 million in 2015 led by Vitruvian
Partners, alongside existing investors, including Draper Esprit
Funds, Index Ventures, Northzone and SEED Capital Denmark.
SportPursuit
Draper Esprit Funds first invested in SportPursuit in 2012, with
follow-on investment in 2013 and 2014 bringing the total investment
by the Group to GBP3.2 million.
SportPursuit was founded in 2011 as a UK-based sport specific
ecommerce website where members receive access to sales from brand
partners targeting the technical sportswear and outdoor clothing
and equipment space. The company offers up to 70%. discounts on
sports and outdoor brands. SportPursuit has customers in the UK,
Australia, Germany, France and Scandinavia. It aims to be the
world's largest private shopping club for sports enthusiasts.
Currently sales are focused across the following niches:
outdoor, running, skiing & snowboarding, health &
wellbeing, athletics, swimwear, cycling, golf, tennis and
experiences (gyms, clubs). The vision of the team is to utilise the
power of the online channel, the SportPursuit brand and the
community they build up around it to realise a greater value
opportunity.
Alongside Draper Esprit, investors include CIT Growth Capital
and Scottish Equity Partners. The company raised GBP9.0 million,
announced in November 2015.
Clavis Technologies
Clavis Technologies, the provider of ecommerce store analytics
to consumer goods companies. Draper Esprit acquired a significant
minority stake for GBP8.1 million in 2016.
Clavis' service gives companies detailed, real-time information
about how their products are being positioned in online stores.
Using an online dashboard or mobile app, a manager can see the
answers to questions such as: What do I have online? How is the
product presented? The service also lets managers see how products
are ranking against search terms and what online reviewers are
writing about products. The product monitors online retailers
across more than 20 countries and is growing in the US, Europe and
China.
Alongside Draper Esprit, investors include Accel KKR and
Unilever Ventures
PushDoctor
Push Doctor is Europe's largest online GP marketplace. The
company has raised a total of GBP8.8 million from the Group across
two rounds of funding, in 2016 and 2017. Of this, the plc invested
GBP1.0 million in 2016 and GBP3.5 million in 2017, post year
end.
PushDoctor.co.uk is changing the way everyone can access
healthcare using its' on-demand online GP surgery, making
healthcare accessible for the tens of millions of people in the UK
who find seeing a doctor difficult. The Care Quality
Commission-regulated and NHS-commissioned service allows patients
to book and attend secure video GP appointments seven days per
week, 365 days of the year, via a website and iOS app.
The company has treated more cases digitally than anyone in
Europe and has consistently grown over 35% month-on-month for 16
months. The company has a unique dataset that provides a unique
view of the medical issues facing the nation. They are creating a
data-driven digital health platform that will treat the whole
person. No one before Push Doctor has provided consumers with
access to a single digital health platform that combines responsive
medicine and chronic condition management as well as fitness and
nutritional conditioning.
Alongside Draper Esprit, investors include ADV, Oxford Capital
Ventures, Partech Ventures and Seventure Partners.
Perkbox
Perkbox, a digital employee engagement platform, received GBP2.5
million (plc GBP1.7 million) from the Group in 2016. Post year end,
a further GBP6.6 million has been invested by the plc.
Perkbox provides a platform that enables companies of all sizes
(from large corporates to small startups) to incentivise, motivate
and attract staff through over 200 perks and benefits, including a
sophisticated rewards and recognition infrastructure. Launched in
2015, the company already has over 300,000 paying members ranging
from SMEs to large corporations such as British Gas and BUPA.
Perkbox was recently listed number two in the Startups 100 Index
for being one of the most innovative emerging ventures in the
country.
Draper Esprit first invested in Perkbox alongside the crowd on
the Seedrs platform.
Graphcore
The Group first backed Graphcore last year and has now invested
GBP4.9 million in total, with the most recent investment post year
end of GBP1.9 million. Draper Esprit's latest investment is part of
a wider US$30.0 million Series B funding round.
Graphcore is a machine intelligence semiconductor company,
changing the way that developers can build AI and machine learning
applications through its cutting-edge processing capabilities. Its
technology will be indispensable for advancements in Artificial
Intelligence across diverse industries. The Graphcore processors
will be used in machine intelligence applications from autonomous
vehicles to personalized healthcare, intelligent mobile devices and
collaborative robots. The appetite for an easier and more powerful
way to develop such applications is growing rapidly.
The business is a spin-out of XMOS, another VC- backed
semiconductor business based near Bristol, UK. Nigel Toon, the CEO
and Simon Knowles, the CTO, were previously founders of Icera, a VC
backed semiconductor business which was sold to nVidia for US$360
million in 2011. The company will be bringing a processing system
to market in 2017 which will enable material performance increases
(from 10- 100x) for machine learning computation.
Alongside Draper Esprit, investors include: Atomico, Amadeus
Capital, Robert Bosch Ventures, C4 Ventures, Dell Technologies
Capital, Foundation Capital, Pitango Venture Capital, the Samsung
Catalyst Fund and AI experts such as Demis Hassabis (DeepMind) as
angel investors.
POD Point
POD Point, the innovative electric charge point supplier,
received GBP3.0 million for new shares and GBP2.0 million for
secondaries from the Group. POD Point is a well established,
leading player in the UK's electric vehicle sector, having
manufactured and sold over 27,000 charging points since it was
founded in 2009.
Globally, the electric vehicles market is going from strength to
strength, driven by advances in technology, infrastructure
developments and cost efficiencies. Here in the UK, over 38,000
plug-in vehicles were registered in 2016, compared to just 1,052 in
2011. Following recent partnerships with Barratt Homes, Holiday
Extra and Hyundai, POD Point intends to have one of its stations
installed everywhere people park for an hour or more by 2020.
Alongside Draper Esprit, investors include Barclay's Capital and
QVentures.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
MARCH 2017
Year Period
ended ended
31 Mar 31 Mar
2017 2016
GBP'000s GBP'000s
Unrealised gains on investments 35,744 -
held at fair value through
the profit and loss
Fee income 1,673 -
--------- ----------------
Total investment income 37,417 -
Operating expenses
Administrative expenses (3,934) -
Other expenses (21) (3)
--------- ----------------
Operating profit/(loss) from
operations 33,462 (3)
Finance income 221 -
--------- ----------------
Operating profit/(loss) before
tax 33,683 (3)
Income taxes (438) -
--------- ----------------
Profit/(Loss) for the year/period 33,245 (3)
Share of profit/(loss) attributable (330) -
to non-controlling interests
Profit/(Loss) from continuing operations 32,915 (3)
========= ================
Other comprehensive income/(expense):
Other comprehensive expense - -
Total comprehensive income/(loss)
for the year/period 32,915 (3)
========= ================
Earnings per share attributable
to:
Equity holders of parent (pence) 80.8 (6)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEARED 31
MARCH 2017
Year ended Period
31 Mar ended 31
2017 Mar 2016
Notes GBP'000s GBP'000s
Non-current assets
Intangible assets 6 21,158 -
Investments in associates 260
Financial assets held
at fair value through
the profit or loss 7 105,971 -
Property, plant & equipment 152 -
-------------------------- ------------------------
Total non-current assets 127,541 -
Current assets
Trade & other receivables 527 50
Cash and cash equivalents 24,892 -
-------------------------- ------------------------
Total current assets 25,419 50
Current liabilities
Trade & other payables (1,550) 3
-------------------------- ------------------------
Total current liabilities (1,550) 3
Non-Current Liabilities
Deferred tax (716) -
-------------------------- ------------------------
Total non-current liabilities (716) -
Net assets 150,694 47
========================== ========================
Equity
Share Capital 9 407 50
Share Premium Account 9 93,248 -
Merger relief reserve 9 23,920 -
Share-based payments 123 -
reserve
Retained Earnings 32,892 (3)
Equity attributable
to owners of parent 150,590 47
========================== ========================
Non-controlling interests 104 -
-------------------------- ------------------------
Total equity 150,694 47
========================== ========================
Net assets per share
(pence) 5 370 94
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARED 31 MARCH
2017
Notes
Year Period
ended ended
31 Mar 31 Mar
2017 2016
GBP'000s GBP'000s
Cash flows from operating
activities
Operating profit/(loss)
before tax 33,683 (3)
Adjustments to reconcile
operating profit to net
cash flows used in operating
activities
Revaluation of investments (35,744) -
held at fair value through
the profit and loss
Depreciation and amortisation 155 -
Share based payments 123 -
Bad debt provision 37 -
Increase in trade & other
receivables 681 (50)
Increase in trade & other
payables 224 3
---------- ---------
Net cash used in operating
activities (841) (50)
Tax paid - -
---------- ---------
Net cash inflow/(outflow)
from operating activities (841) (50)
Cash flows from investing
activities
Purchase of property, plant (166) -
and equipment
Cash acquired on purchase 495 -
of subsidiary
Loans repaid from underlying
investment vehicles 7 17,137 -
Purchase of initial portfolio 7 (40,000)
Purchase of investments 7 (20,602) -
---------- ---------
Net cash outflow investing (43,136) -
activities
Cash flows from financing
activities
Cash paid to non-controlling (246) -
interests
Proceeds from issue of
share capital net of fees 9 69,336 50
---------- ---------
Net cash outflow from financing
activities 69,090 50
Net increase/(decrease) 25,113 -
in cash & cash equivalents
========== =========
Cash & cash equivalents - -
at beginning of period
Exchange differences on (221) -
cash and cash equivalents
Cash & cash equivalents 24,892 -
at end of period
========== =========
CONSOLIDATED Share Share Share-based Retained Total Attributable Total
STATEMENT OF attributable to
CHANGES IN non-controlling
EQUITY Merger
capital premium payments earnings to equity interests equity
reserve holders
relief of the
reserve parent
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Balance at 29 - - - - - - -
September 2015^
Total
comprehensive
Income
for the period
Loss for the
period - - - (3) (3) - (3)
--------- --------- --------- ------------ --------- ------------- ---------------- ---------
Total
comprehensive
income/(loss)
for the period - - - (3) (3) - (3)
Contributions by
and
distributions
to the owners:
Issue of share
capital 50 - - - - 50 - 50
--------- --------- --------- ------------ --------- ------------- ---------------- ---------
Balance at 31
March 2016 50 - - (3) 47 - 47
Comprehensive
Income for
the year
Profit for the
year - - - - 32,915 32,915 330 33,245
Acquired
reserves due to
non-controlling
interest - - - - (20) (20) 20 -
Amounts
withdrawn by
non-controlling
interest - - - - - - (246) (246)
Share based - - - - - - - -
payments
--------- --------- --------- ------------ --------- ------------- ---------------- ---------
Total
comprehensive
income
for the year - - - - 32,895 32,895 104 32,999
Contributions by
and
distributions
to the owners:
Issue of share
capital (note
9) 357 - - - 357 - 357
Share premium
(note 9) - 93,248 - - - 93,248 - 93,248
Merger relief
reserve (note
9) - - 23,920 - - 23,920 - 23,920
Share based
payment - - - 123 - 123 - 123
Balance at 31
March 2017 407 93,248 23,920 123 32,892 150,590 104 150,694
========= ========= ========= ============ ========= ============= ================ =========
^Draper Esprit plc was incorporated on 29(th) September
2015.
Notes to the consolidated financial statements for the year
ended 31 March 2017
1. General information
Draper Esprit plc (the "Company") is a public limited company
incorporated and domiciled in England and Wales. On 15 June 2016,
the Company listed on the London Stock Exchange's AIM market and
the Irish Stock exchange's ESM market (the "IPO"). This is the
Company's first Annual Report as a public company. The Company's
registered address is 20 Garrick Street, London WC2E 9BT.
The Company is the ultimate parent company in which results of
all subsidiaries are consolidated. The consolidated financial
statements ("the Group accounts") for the year ended 31 March 2017
comprise the financial statements of the Company and its
subsidiaries (together, "the Group"). The comparative period
presents the consolidated statement of comprehensive income, cash
flows and statement of changes in equity for the period since 29th
September 2015 (incorporation date of the Company) through to 31
March 2016. The comparative consolidated and Company balance sheets
are presented as at 31 March 2016.
The consolidated financial statements are presented in Pounds
Sterling (GBP) which is the currency of the primary economic
environment the Group operates in. All amounts are rounded to the
nearest thousand, unless otherwise stated.
2. Adoption of new and revised standards
In the current year, the following new and revised Standards and
Interpretations have been adopted and have affected the amounts
reported in these consolidated financial statements.
Standards affecting the reported results or financial
position
In the current year, there were no new and revised standards and
Interpretations that have been adopted which affected the amounts
reported in these consolidated financial statements.
Standards not affecting the reported results or financial
position
At the date of authorisation of these consolidated financial
statements, the following Standards and Interpretations which have
not been applied in these financial statements were in issue but
not yet effective:
-- IFRS 15 Revenue from Contracts with Customers is the only new
Standard effective from 1 January 2017. IFRS 15 establishes
principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity's contracts with
customers. The Directors have not yet fully determined the impact
on the Group's consolidated financial statements as a result of
adopting this standard.
-- IFRS 16 Leases was issued in January 2016. It will result in
almost all leases being recognised on the balance sheet, as the
distinction between operating and finance leases is removed. Under
the new standard, an asset (the right to use the leased item) and a
financial liability to pay rentals are recognised. The only
exceptions are short-term and low value leases. The accounting for
lessors will not significantly change. The standard will affect
primarily the accounting for the Group's operating leases. As at
the reporting date, the Group has non-cancellable operating lease
commitments. The Directors have not yet fully determined the impact
on the Group's consolidated financial statements as a result of
adopting this standard
-- IFRS 9 Financial Instruments: IFRS 9 will eventually replace
IAS 39 in its entirety. The process has been divided into three
main components, being classification and measurement; impairment;
and hedge accounting. The Group provisionally assesses the
potential effect to be immaterial given the majority of its
financial assets will be held 'at fair value through profit or loss
("FVTPL"). IFRS 9 is expected to be implemented in 2018. The
Directors have not yet fully determined the impact on the Group's
consolidated financial statements as a result of adopting this
standard.
3. Significant accounting policies
Basis of accounting
The Group accounts have been prepared and approved by the
Directors in accordance with all relevant IFRSs as issued by the
International Accounting Standards Board ("IASB"), and
interpretations issued by the IFRS Interpretations Committee,
endorsed by the European Union ("EU"). The financial reporting
framework that has been applied in the preparation of the Company
financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting
Practise).
a) Basis of consolidation
The consolidated financial statements comprise the Company and
the results, cash flows and changes in equity of the following
subsidiary undertakings:
Country %
Name of undertaking Nature of business of incorporation ownership
--------------------------- ----------------------- ------------------- -----------
Esprit Capital Partners
LLP Investment Management England 100%
Encore Ventures
LLP Investment management England 71%
Esprit Capital I
GP Limited General partner England 100%
DFJ Esprit III GP
Limited General partner England 100%
Esprit Capital III
Founder GP Limited General partner England 100%
Esprit Capital III
GP LP General partner England 100%
Encore I GP Limited General partner England 100%
Encore I Founder
GP Limited General partner England 100%
Esprit Capital Management
Limited Admin company England 100%
Esprit Capital Holdings
Limited Dormant England 100%
Esprit Nominees
Limited Dormant England 100%
Esprit Capital I
CIP Limited Dormant England 100%
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
de-consolidated 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. Refer to note 4(b) for
further information. The Group has accounted for the acquisition of
Esprit Capital Partners LLP on 15 June 2016 as an acquisition in
accordance with IFRS 3 Business Combinations and not as a reverse
acquisition having assessed the substance of the transaction,
including control and changes of in ownership.
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.
Investment company
In accordance with the provisions of IFRS 10, Draper Esprit plc
considers itself to be an investment entity and its wholly-owned
subsidiary, Draper Esprit (Ireland) Limited to be an investment
company as its sole purpose is hold investments on behalf of the
Group. Consequently, Draper Esprit (Ireland) Limited is not
consolidated in accordance with IFRS 10, instead it is recognised
as an investment held at fair value through the profit and loss on
the consolidated balance sheet. Loans to investment vehicles are
treated as net investments at fair value through the profit and
loss.
The below is a list of entities that are controlled and not
consolidated but held as investments at fair value through the
profit and loss on the consolidated balance sheet.
Name of undertaking Principal activity Country
of incorporation
Draper Esprit (Ireland) Investment company Ireland
Limited
Esprit Capital III Limited partnership England
LP
Esprit Capital IV Limited partnership England
LP
Esprit Investments Limited partnership England
(1) LP
Limited Partnerships (co-investment)
The following limited partnerships that the Group's General
Partners are members of are not considered to be controlled and
therefore not consolidated in these financial statements:
Name of undertaking Principal activity Country
of incorporation
Encore I GP LP General partner England
DFJ Esprit II Founder Co-investment limited England
LP partnership
DFJ Esprit II Founder Co-investment limited England
2 LP partnership
Encore I Founder Co-investment limited England
LP partnership
Encore I Founder Co-investment limited England
2014 LP partnership
Encore I Founder Co-investment limited England
2014-A LP partnership
Esprit Capital III Co-investment limited England
Founder LP partnership
b) Revenue recognition
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 United Kingdom and is stated
exclusive of value added
tax. Revenue from services comprises:
-- Fund management services
Fund management fees are either earned at a fixed annual rate or
are set at a fixed percentage of funds under management, measured
either by commitments or invested cost, depending on the stage of
the fund being managed. Revenues are recognised as the related
services are provided.
-- Arrangement fees
Occasionally Draper Esprit plc may charge a fee as part of
arranging an investment from one of the Funds it manages into a
portfolio company. Such fees are charged at a rate determined on a
case-by-case basis and are payable upon completion of the
investment.
-- Portfolio directors' fees
Portfolio directors' fees are annual fees, charged in arrears,
to an investee company and payable to Draper Esprit plc as the fund
manager. Draper Esprit plc only charges directors' fees on a
limited number of the investee companies.
c) Deferred income
The Groups management fees are typically billed either quarterly
of 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 profit and loss accounting
the period the fees relate to.
d) 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 (ie gain on a bargain purchase) is recognised in profit or
loss immediately.
e) 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 of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds 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 (see note 6). 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 which is
typically the duration of the underlying contracts. The following
useful economic lives are applied:
-- customer contracts: 8 years.
f) 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 which is the higher of fair value less costs to sell and
value-in-use. To determine value-in-use, management estimates
expected future cashflows from each cash-generating unit and
determine a suitable discount rate in order to calculate the
present value of those cashflows. 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 units
recoverable amount exceeds its carrying amount.
g) 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.
h) 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,
which are initially measured at fair value.
Financial assets are classified by the Group into the following
specified categories: financial assets 'at fair value through
profit or loss' (FVTPL) and 'loans and receivables'. The
classification depends on the nature and purpose of the financial
assets and is determined at the time of initial recognition.
Fair value 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 Draper Esprit 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 IAS 39 Financial Instruments: Recognition and
Measurement permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
The Group consider that the investment interests it holds in
Esprit Capital III LP, Esprit Capital III Founder LP, DFJ Esprit II
Founder LP, Esprit Capital IV LP and Esprit Investments(I) LP are
appropriately designated as at FVTPL as they meet criteria (b)
above.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. After initial recognition, these are measured at amortised
cost using the effective interest method, less provision for
impairment. Discounting is omitted where the effect of discounting
is immaterial. The Group's cash and cash equivalents, trade and
most other receivables fall into this category of financial
instruments.
Individually significant receivables are considered for
impairment when they are past due or when other objective evidence
is received that a specific counterparty will default.
The Groups loans and receivables comprise trade and other
receivables and cash and cash equivalents in the consolidated
statement of financial position.
i) Financial liabilities
The Group's financial liabilities may include borrowings and
trade and other payables.
All financial liabilities 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.
j) 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 economics
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
k) 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 ordinary shares are classified as equity
instruments.
l) Defined contribution schemes
Contributions to defined contribution pension schemes are
charged to the consolidated statement of comprehensive income in
the year to which they relate.
m) 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. 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.
n) Leased assets
Where substantially all of the risks and rewards incidental to
ownership of a leased asset have been transferred to the Group (a
"finance lease") the asset is treated as if it had been purchased
outright. The amount initially recognised as an asset is the lower
of the fair value of the leased property and the present value of
the minimum payments payable of the term of the lease. The
corresponding lease commitment is shown as a liability. Lease
payments are analysed between capital and interest. The interest
element is charged to the consolidated statement of comprehensive
income over the period of the lease and is calculated so that it
represents constant proportion of the lease liability. The capital
element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to
the ownership are not transferred to the Group (an "operating
lease") the total rentals payable under the lease are charged to
the consolidated statement of comprehensive income on a straight
line basis over the lease term. The aggregate benefit of lease
incentives is recognised as a reduction of the rental expense over
the lease term on a straight line basis.
o) Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends to equity shareholders, this is when
declared by directors. In the case of final dividends, this is when
approved by the shareholders at the AGM.
p) Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
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.
q) Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the income statement, except when it relates
to items charged or credited in other comprehensive income, in
which case the deferred tax is also dealt with in other
comprehensive income.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities Deferred
tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
r) Property, Plant and equipment
Fixtures and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss. Depreciation is
recognised so as to write off the cost or valuation of assets less
their residual values over their useful lives, using the
straight-line method, on the following basis:
Leasehold improvements - over the term of the lease
Fixtures and equipment - 33% per annum straight line
Computer equipment - 33% per annum straight line
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective
basis.
s) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
maturing within 90 days from the date of acquisition that are
readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
t) Segmental reporting
IFRS8, '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 Chief Operating Decision Maker has been identified
by the Board of Directors as the Chief Executive Officer.
u) Financial instruments
Financial assets and financial liabilities are recognised on 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 fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
Fair value measurement
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 4(a))
4 Critical accounting estimates and judgements
The Directors have made the following judgements and estimate
that have had the most significant effect on the carrying amounts
of the assets and liabilities in the consolidated financial
statement. 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.
a) Valuation of unquoted equity investments at fair value through the profit and loss
The judgements and estimations required to determine the
appropriate valuation methodology of unquoted equity investments
means there is a risk of material adjustment to the carrying
amounts of assets and liabilities. These judgements include whether
to increase or decrease investment valuations or not and require
the use of judgement, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily available or
observable.
The fair value of unlisted securities is established with
reference to the International Private Equity and Venture Capital
Valuation Guidelines (IPEVCVG). In line with the IPEVCVG, the Group
may base valuations on earnings or revenues where applicable,
market comparables, price of recent investments in the investee
companies, or on net asset values.
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 cashflows. Consequently, the
most appropriate approach to determine fair value is based on a
methodology with reference to observable market data, that 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.
The length of period for which it remains appropriate to use the
price of recent investment depends on the specific circumstances of
the investment, and the Group will consider whether the basis
remains appropriate each time valuations are reviewed. If the
'price of recent investment' methodology is no longer considered
appropriate, the Group then considers alternative methodologies in
the IPEVCVG 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.
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.
b) Control assessment
The Group has a number of entities within its corporate
structure and consideration has been made of which should be
consolidated in accordance with IFRS 10 and which should not. The
Group consolidates all entities where it has control 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 companies it
controls in accordance with IFRS 10 and instead recognises them as
investments held at fair value through the profit and loss. See
note 3 (a) for further details.
c) Business combinations
The directors have undertaken a detailed assessment of the
substance of the transaction through which the Company acquired the
underlying investment vehicles and Esprit Capital Partners LLP and
its subsidiaries with reference to the requirements of IFRS 10 and
IFRS 3. Following that assessment directors have determined that
this transaction is appropriately accounted for as an
acquisition.
d) Carrying amount of goodwill
Determining whether goodwill is impaired requires an estimation
of the recoverable amount of the cash-generating units ("CGUs") to
which goodwill is allocated. The recoverable amount is based on
'value in use' calculations which requires estimates of future
cashflows expected from the cash generation unit (CGU) and a
suitable discount rate in order to calculate present value. The
carrying amount of goodwill at balance sheet date was GBP20.5
million (31 March 2016: GBPnil)
5. Earnings per share and net asset value
The calculation of basic earnings per share is based on the
profit attributable to shareholders and the number of basic average
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. There was no
dilution during the year as arising from the issue of share
options.
Weighted
average
Profit no. of
after shares Pence
31 March 2017 tax GBP'000 ('000) per share
Basic earnings per
ordinary share 32,915 40,748 80.8
Net asset value ("NAV") per share is based on the net asset
attributable to shareholders and the number of basic average
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. There was no
dilution during the year as arising from the issue of share
options.
Pence
Weighted per
average
no. of
Net assets shares
31 March 2017 GBP'000 (000) share
Net asset value
per ordinary share 150,694 40,748 370
6. Intangible assets
Customer
Goodwill^ Contracts Total
GBP'000s GBP'000s GBP'000s
Cost
Cost carried
forward
as at 1 April
2016
Additions - - -
during
the year
Acquired
through
business
combinations
(note 8) 20,476 818 21,294
-------------------------------------------------------------- ------------------------ ----------------------
Cost as at 31
March
2017 20,476 818 21,294
Accumulated
amortisation
& Impairment
Amortisation - - -
carried
forward as at
1
April 2016
Charge for
the
year - (136) (136)
-------------------------------------------------------------- ------------------------ ----------------------
Accumulated
amortisation
& Impairment
as
at 31 March
2017 - (136) (136)
Net Book
value:
As at 31
March 20,476 682 21,158
2017 - - -
^Goodwill of GBP20.5 million arose on the acquisition of the
entire issued share capital of Esprit Capital Partners LLP, a
Venture Capital manager based in the UK, on 15 June 2016 and
represents the value of the acquired expertise and knowledge of the
fund managers. 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 deal flow and working closely with investee companies
creating value maximising 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 from the realisation of investments for the
next eight years with reference to the most recent financial budget
and forecasts. 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") used was
based on past performance and experience. The discount rate used
was 10% and the IRR used was 20%.
An intangible asset of GBP0.8 million was also recognised in
respect of the anticipated profit from the participation in Encore
Ventures LLP as a consequence of the acquisition of Esprit Capital
Partners LLP.
7. Investments
The Group holds investments through investment vehicles of two
of the Funds it manages. The investments are predominantly unlisted
securities and are carried at fair value through the profit and
loss. The Groups valuation policies are set out in note 4(a). The
table below sets out the movement of 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 Period
ended ended
31 Mar 31 Mar
2017 2016
GBP'000s GBP'000s
As at 1 April 2016 - -
--------- ---------
Initial portfolio acquired 63,940 -
on 15th June 2016^
Carry and Co-invest acquired 2,822 -
on 15th June 2016
Investments made post IPO* 20,602 -
Loans repaid from underlying (17,137) -
investment vehicles
Unrealised gains on the revaluation 35,744 -
of investments
As at 31 March 2017 105,971 -
--------- ---------
^The initial portfolio was acquired on 15th June 2016 as part of
the IPO which was satisfied by a mixture of cash (GBP40.0 million)
and shares of (GBP23.9 million) issued by the Company.
*Investments made post IPO on 15th June 2016 are amounts the
Company has invested in underlying investment vehicles. This is not
the equivalent to the total amount invested in portfolio companies
as existing cash balances from the investment vehicles are
reinvested.
8. Acquisition of Esprit Capital Partners LLP
On 15 June 2016, the Company acquired 100% of the member's
capital of Esprit Capital Partners LLP, a Venture Capital Manager
based in the United Kingdom. The business was acquired in order for
Draper Esprit plc to become a self-managed investment entity. The
revenues and profits of the acquired group would have been GBP1.2
million and GBP32.9 million had the entity been acquired at the
beginning of the accounting period being 1(st) April 2016. Details
of the business combination are as follows:
GBP'000
Fair value of equity shares issued 24,000
--------
Total 24,000
--------
Recognised amounts of identifiable net assets:
Property plant and equipment 5
Intangible assets 818
Investments 2,675
Trade and other receivables 1,165
Cash and cash equivalents 495
Deferred tax liabilities (310)
Trade and other payables (1,324)
--------
Net identifiable assets and liabilities 3,524
--------
Goodwill 20,476
--------
Consideration transferred
The acquisition was settled by issuing 8,000,000 shares of
Draper Esprit plc. The fair value of the equity shares issued was
based on the market value of Draper Esprit plc's traded shares on
the acquisition date. Certain directors each received 2,911,311
ordinary shares pursuant to the terms of the Esprit Capital
Acquisition Agreement on 15 June 2016 and agreed to immediately
sell 681,156 of ordinary shares.
9. Share capital and share premium
Ordinary share capital
Allotted and Number Pence
fully paid
At the beginning
of the year 50,000 100
Redeemed during
the year (50,000) 100
Issued of share
capital during
the year 40,747,576 1
At the end of
the year 40,747,576 1
^On 15 June 2016, 50,000 management shares were redeemed by the
Company at par for 100 pence each.
On 15 June 2016, 40,673,909 of new ordinary shares of 1 pence
each were issued for trading on the AIM and ESM at a price of 300
pence per share as part of an IPO transaction to purchase Esprit
Capital III LP and acquire the Esprit Capital Partners LLP Group.
The shares were issued as follows:
-- 23,829,017 shares (GBP69.3 million) were issued to investors
for cash proceeds net of issuance costs;
-- 8,844,892 shares (GBP23.9 million) were issued for the
acquisition of investment interests held by Draper Esprit Ireland
in Esprit Capital III LP as described in note 7; and
-- 8,000,000 shares (GBP24.0 million) were issued for the
acquisition of Esprit Capital Partners LLP as described in note
8.
On 26 November 2016, a further 73,667 of new ordinary shares of
1 pence each were issued at a price of 350 pence per share to
purchase Elderstreet Holdings limited.
Allotted and fully paid GBP'000
Share premium
reserve^
At the beginning of the -
year
Premium arising on issue
of ordinary shares 95,972
Equity issuance costs (2,724)
At the end of the year 93,248
^The premium on the issue of ordinary shares in the year arises
from the issue of 32,747,576 new ordinary shares of 1 pence each
issued on the 15 June 2016 and 26 November 2016.
Merger relief reserve
In accordance with the Companies Acts 2006, a Merger Relief
Reserve of GBP23.9 million was created on the issue of 8,000,000
ordinary shares for 300 pence each in Draper Esprit plc as
consideration for the acquisition of 100% of the capital interests
in Esprit Capital Partners LLP on 15(th) June 2016. The Merger
Relief Reserve forms part of the Groups distributable reserves.
10. Fair value measurements
This section should be read with reference to note 4(a). The
Group classifies financial instruments measured at fair value
through the profit and loss according to the following fair value
hierarchy:
-- Level 1: inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
-- 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 investments are held at fair value through the profit and
loss are classified as level 3 in the fair value hierarchy. As a
consequence, the values of investments at balance sheet date are
considered to be entirely based on Level 3 inputs. There were no
transfers between Levels 1, 2 and 3 during the year.
Significant unobservable inputs for Level 3 Valuations
The Group's investments are all classified as Level 3
investments. The Group may base valuations on earnings or revenues
where applicable, market comparables, price of recent investments
in the investee companies, or on net asset values. The Group mainly
uses most recent investment price as a proxy for fair value where
available. Where such data is not available or no longer
appropriate a revenue multiple is used. See note 4(a) where
valuation policies are discussed in more detail.
11. Related party transactions
Draper Esprit plc may require that one of its members is
appointed to the board of an investee company in a non-executive
role. In such circumstances Draper Esprit plc charges an
administration fee to the investees for the provision of the
Director services. These fees, which amounted to GBP29,825 (period
ended March 2016: GBPnil) have been included in the turnover for
the period. Draper Esprit does not exercise control or management
through any of these Non-Executive positions.
On Admission, Simon Cook and Stuart Chapman assigned a portion
of their personal entitlements in the carried interest in DFJ
Esprit III(i) LP to the Group. The fair value of the DFJ Esprit
IIIi LP interest assigned, calculated in accordance with the
policies applied with the Group's financial statements was
GBP656,000. A payment of GBP75,000 each was made in favour of Simon
Cook and Stuart Chapman in recognition of the transfer. The members
of the LLP also assigned a 61.5% interest in the gains of DFJE III
FP LP for GBPnil consideration. The fair value of the DFJE III FP
LP interest assigned, calculated in accordance with the policies
applied with the Group's financial statements was GBP444,000. All
amounts have been settled by the year end.
GLOSSARY
In this document, where the context permits, the expressions set
out below shall bear the following meaning:
'Admission" or "IPO" the Admission of the Enlarged Share Capital to trading on
AIM and ESM on 15 June 2016. The
IPO included the acquisition of Esprit Capital Partners
LLP and Draper Esprit (Ireland) Limited.
"AIM" AIM, the market of that name operated by the London Stock
Exchange
"Company" or "Draper Esprit" or "plc" Draper Esprit plc, a company incorporated in England and
Wales with registered number 9799594
and having its registered office at 20 Garrick Street,
London WC2E 9BT.
"Gross Portfolio Value" or "Gross Primary Portfolio" Gross portfolio value is the value of the portfolio of
investee companies held by funds controlled
by the Company before accounting for deferred tax,
external carried interest and amounts co-invested.
"Esprit Capital" Esprit Capital Partners LLP (previously Draper Esprit
LLP), a limited liability partnership
incorporated in England and Wales with registration
number OC318087 whose registered office
is at 20 Garrick Street, London WC2E 9BT, the holding
vehicle of the Group immediately prior
to Admission
"ESM" The Enterprise Securities Market operated and regulated
by the Irish Stock Exchange
"Group" the Company and its subsidiaries from time to time and,
for the purposes of this document,
including Esprit Capital and its subsidiaries and
subsidiary undertakings
"IFRS" or "IFRSs" International Financial Reporting Standards, as adopted
for use in the European Union
"Net Asset Value" the value, as at any date, of the assets of the Company
after deduction of all liabilities
determined in accordance with the accounting policies
adopted by the Company from time to
time
"Ordinary Shares" ordinary shares of GBP0.01 pence each in the capital of
the Company
"International Private Equity and Venture Capital the International Private Equity and Venture Capital
Valuation Guidelines" Valuation Guidelines, as amended from
time to time
"VC" venture capital
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEAFMLFWSEIW
(END) Dow Jones Newswires
July 25, 2017 02:00 ET (06:00 GMT)
Molten Ventures (LSE:GROW)
Historical Stock Chart
From Apr 2024 to May 2024
Molten Ventures (LSE:GROW)
Historical Stock Chart
From May 2023 to May 2024