TIDMGROW
RNS Number : 0023B
Draper Esprit PLC
04 June 2019
Draper Esprit plc
("Draper Esprit", "the Group" or the "Company")
FINAL RESULTS FOR THE YEARED 31 MARCH 2019
Draper Esprit (LSE: GROW, Euronext Growth: GRW), a leading
venture capital firm investing in and developing high growth
digital technology businesses, today announces its final results
for the year ended 31 March 2019.
Financial highlights
-- Gross Primary Portfolio value has grown by 144% to GBP594.0
million (2018: 116% increase to GBP243.5 million) with fair value
increase since the start of the year of 58%
-- GBP16.0 million in cash generated via 2 exits, with an
additional GBP15.3 million realised post-period end - have now
exited 18 companies since 2016 IPO, realising over GBP81.6 million
in cash
-- Profit after tax increased 83% to GBP111.2 million (2018: GBP60.9 million)
-- Invested GBP226.4 million by plc including GBP106.2 million
invested into Earlybird fund acquisitions and strategic
partnership, and a further GBP35.1 million by EIS/ VCT
-- Capital raised by plc of GBP215.0 million in the financial
year and a further GBP64.0 million across EIS and VCT funds
-- Net Assets, including goodwill, increased by 106% to GBP618.6
million (2018: GBP300.5 million)
-- NAV per share, of 524.0 pence (2018: 416.0 pence), increased by 26%
-- Cash for future investment over GBP150.0 million including
over GBP50.0 million plc cash, GBP50.0 million new EIS/VCT cash and
new undrawn Revolving Credit Facility ("RCF") of GBP50.0 million
which provides additional financing flexibility
Operational highlights
-- Investments in 21 new companies (including 9 new portfolio
company investments via Earlybird partnership) and follow on
investments in 12 existing portfolio companies*
-- Core Portfolio Holdings increased in value by 143% to
GBP415.3 million (2018: GBP171.1 million)
-- Strategic partnership with Earlybird Digital West to share
dealflow, investment resources and expertise
-- GBP5.3 million invested in seed funds (further commitments of
GBP24.0 million in 13 new seed funds invested over 5 years) into
150 companies averaging GBP30,000 seed investment in each,
enhancing future dealflow as the best companies will seek further
growth capital
Post FY End Highlights
-- GBP15.3 million gross proceeds realised from the partial realisation of Transferwise
-- Entered into a credit agreement for a GBP50.0 million RCF
with Silicon Valley Bank and Investec providing additional funding
flexibility
*Reporting threshold - companies with a NAV of GBP1.0 million or
more.
Simon Cook, CEO at Draper Esprit, commented:
"The twelve months ended 31 March 2019 were a transformational
period for the business which saw us undertake two successful
fundraisings for the plc, invest GBP226.4 million in high growth
tech firms across Europe (as well as a further GBP35.1 million from
EIS/VCT), strengthen our dealflow across Europe with our strategic
partnership with Earlybird, realise significant cash from exits
and, once again, exceed our core strategic aim of delivering a
portfolio return of 20% per annum with an annual return of 58% on
opening portfolio value.
As a result, we have cemented our standing as one of Europe's
largest VCs, delivering growth and scale across our portfolio, as
well as in our own business, which will continue to drive
long-term, sustainable returns for our shareholders giving them
access to high growth private technology companies through a listed
company.
We have started the new financial year well and, while we are
maintaining our customary discipline with regards to new
investments, we continue to see exciting opportunities to work with
attractive businesses, providing early and growth-stage technology
companies with the capital, international networks, and hands-on
support they need in order to achieve their global growth
ambitions."
Availability of Annual Report and Notice of AGM
The Annual Report and Accounts for the financial year ended 31
March 2019 and notice of the Annual General Meeting ("AGM") of
Draper Esprit will be available today on Draper Esprit's website at
http://draperesprit.com/.
-s-
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
Euronext Growth Adviser & Joint
Broker
Don Harrington
Charlotte Craigie
Richard Tunney +44 (0) 20 3841 6202
Powerscourt
Public relations
Elly Williamson
Oliver Norgate +44 (0)20 7250 1446
Chairman's Introduction
I am pleased to be able to introduce our third annual report as
a listed company, following our listing on the AIM and Euronext
Growth markets in 2016.
Once again, we have exceeded our targeted portfolio return of
20% per annum while investing in the future of our business and
helping our portfolio companies push the boundaries of what is
possible.
Technology is playing an increasingly significant role in our
daily lives. I am immensely proud of the role that Draper Esprit is
able to play in helping entrepreneurs who have the vision, passion,
and creativity to deliver this future across our four key
subsectors; enterprise, digital health & wellness, hardware
& deeptech and consumer technology.
During the period, we continued to provide long-term, patient
capital to the businesses we work with, in line with the strategy
we outlined at our 2016 IPO. This has enabled the technology
entrepreneurs in our portfolio to access the capital they need to
grow their businesses, while simultaneously giving our investors
exposure to exciting early and growth-stage technology
companies.
Our own business has evolved significantly over the course of
the last year. We have further scaled the business through
investment and acquisition and entered a strategic partnership with
Earlybird Digital West ("Earlybird"), with whom we share dealflow,
investment resources, and expertise to co-invest including in the
German speaking market. In parallel, we have grown our own team and
extended our market reach through this partnership. We were also
able to deliver two successful fundraisings during the period,
strengthening our commitment to invest in the very best technology
companies across Europe. We are grateful for the ongoing support of
our shareholders and welcome new investors to our register.
Our investments in FY19 spanned a number of sectors and
geographies, from a Finnish microsatellite company and a
Dublin-based travel software business, to a London-headquartered
fintech Unicorn and a Cambridge-based surgical guidance company.
All have big ambitions and a clear focus with the energy and
dynamism needed to deliver on their growth ambitions.
Our success this year was driven by the teams who run our
portfolio companies and the excellence of our people. Therefore, on
behalf of the Board, I would like to thank all of them for their
contribution and commitment to building the very best early and
growth-stage technology companies Europe has to offer.
The European venture capital market continues to gather strength
and winning firms are beginning to emerge. As one of Europe's
largest venture capital firms in terms of capital deployment, we
are at the vanguard of this movement. In addition, with the
continued support of our team, Board colleagues, shareholders,
advisers and our wider network of contacts, I am very confident
that Draper Esprit can build on our impressive 2019 performance in
the years ahead.
Karen Slatford
Non-Executive Chair
See more at:
draperesprit.com
CEO's Statement
Overview
The year ended 31 March 2019 was a period of significant
development for Draper Esprit. We continue to deliver on our
strategy of providing early and growth-stage technology companies
with the capital, international networks, and hands-on support they
need in order to achieve their global growth ambitions. Meanwhile,
we have considerably increased the scale and breadth of our own
business.
During the year, we undertook two successful fundraisings,
signed a strategic partnership with Earlybird Digital West, and
invested GBP226.4 million in new and existing companies including
GBP106.5m through our strategic fund acquisition and strategic
partnership with Earlybird, and a further GBP35.1 million from EIS
and VCT, cementing our standing as one of Europe's largest VCs.
Our mission is to empower Europe to invent the future, and the
progress we have made towards achieving this aim is reflected in
the growth across our portfolio, our strong financial performance
for the period, exciting new investments and multiple exits.
We remain passionate about democratising entrepreneurship and
the twelve months ended 31 March 2019 have seen us deliver growth
and scale in our portfolio, as well as our own business, that will
drive long-term, sustainable returns for our shareholders.
Operating review
The strong momentum generated by the Company in 2018 has
continued into 2019 with further progress made across all areas of
the business.
The pace at which new technologies are disrupting, shaping, and
improving the world around us shows no signs of relenting with
developments around machine learning, artificial intelligence,
mobility, and blockchain opening up exciting new possibilities
across our areas of focus in enterprise, digital health, hardware
& deeptech, and consumer technology.
At the same time, we continue to invest in high quality
companies, which fulfil our strict investment criteria; we met
thousands of businesses over the course of the year, but only the
very best met these criteria and secured investment from us.
Similarly, as the private capital markets continue to evolve, with
greater funding opportunities available for companies to stay
private for longer, we remain focused on price discipline.
Over the course of the 2019 financial year, we scaled our
investments in line with the opportunities presented. The plc
invested GBP89.0 million into new and existing portfolio companies,
with a further GBP25.9 million via the acquisition of DFJ Europe X,
increasing our stakes in existing portfolio companies, GBP5.3
million invested in fund of funds vehicles, and a further GBP35.8
million invested via Earlybird. We also furthered our relationship
with Earlybird, acquiring underlying holdings in Earlybird IV and
Earlybird Digital East for GBP70.4 million.
During the year, we generated cash of GBP16.0 million through
exits including amounts held in escrow (with a further GBP15.3
million gross post period end). We once again exceeded our core
strategic aim of targeting a portfolio return of 20% per annum,
with 58% fair value growth in the portfolio across the period.
We achieved this with costs of less than 1% of year end NAV.
Successful exits
During the year, the Company announced two disposals, with one
further exit post the period end.
In April 2018, we announced the sale of our portfolio company
Tails.com, the direct-to-consumer, tailor-made dog nutrition
business to Purina Petcare, a subsidiary of Nestlé SA. The
transaction was executed at a valuation supportive of NAV and
represented an attractive return for Draper Esprit.
In February 2019, we sold our holding in Graze, the UK's leading
healthy snacking brand, as part of its acquisition by Unilever plc,
generating an IRR of 19%.
Post period end, we also announced a partial disposal of our
share in TransferWise, the international money transfer platform,
following its successful $292.0 million share sale which values the
business at $3.5 billion.
Having originally acquired a stake in TransferWise as part of
the acquisition of Seedcamp Funds I and II, which were acquired for
GBP17.9 million in October 2017, we took the opportunity in April
2019 to sell down part of our stake while retaining an ongoing
investment in the business.
Following this partial sale, Draper Esprit will have generated
cash realisations of GBP18.1 million from TransferWise and three
other companies from the Seedcamp portfolio, exceeding the original
GBP17.9 million initial investment for the portfolio in October
2017. The remaining stake in Seedcamp I and II are also currently
valued at above the GBP17.9 million original cost.
This transaction can be seen as part of an active secondary
market developing as part of the maturing European ecosystem.
In addition, Grapeshot, part of the EIS portfolio, was sold to
Oracle in April. Since IPO, we have exited 18 companies, realising
over GBP81.6 million in cash (including GBP15.3 million for
Transferwise post period-end).
Building scale to invest in high-growth technology companies
The European venture capital market is maturing, with companies
able to access larger pools of capital in order to achieve their
growth ambitions, therefore leading to these firms remaining
private for longer.
However, investment into technology on a per capita basis is
over 165% higher in the US and 79% higher in China than in Europe.
Europe is still under-ventured and, if entrepreneurs from Europe
are to compete on an international level, they need to access funds
with the ability to back their businesses over the long term.
In order to maintain continued access to the best dealflow
across Europe, alongside our ambition to build a platform of scale,
we entered into a Strategic Partnership Agreement with Earlybird
Digital West ("Earlybird") with a view to sharing dealflow,
investment resources, and expertise.
This partnership has already delivered success and, having taken
a significant stake in Earlybird's VI fund as part of the original
agreement, we further strengthened our partnership in January 2019
when we acquired interests in two of Earlybird's funds, EB IV and
DEF, increasing the Group's underlying position within the
German-speaking market and our broader position with fast-growing
European companies.
With over 100 high growth companies across Europe in our
respective portfolios, the Draper Esprit and Earlybird teams
perfectly complement one another with our existing offices in
London, Dublin, Paris and Cambridge, working closely with
Earlybird's offices in Berlin, Munich, Cologne, and Istanbul to
create one of the most active venture capital partnerships in
Europe.
To fund our continued growth, we successfully raised GBP115.0
million and GBP100.0 million in June 2018 and February 2019
respectively, from both new and existing shareholders. These
placings broadened our shareholder base and were accompanied by a
further GBP64.0 million raised from across Draper Esprit's EIS and
VCT funds.
The proceeds from the placings have been used to fund our
primary strategy of direct investing as well as the acquisitions of
the Earlybird funds. More broadly, our ambition is to grow NAV
organically, through investment and realisations, to over GBP1.0
billion, utilising selective secondary acquisitions to generate
scale and enhance returns.
New investments in portfolio businesses
During the period, we invested in a range of innovative and high
growth technology businesses, which, we believe, have the potential
to become global leaders in their respective fields. These included
the following new core holdings in:
- GBP25.4 million in Peak Games, the leading mobile games
company based in Turkey. The plc acquired the underlying holding in
the company via its relationship with Earlybird in February 2019.
Peak Games is one of the top 10 mobile games companies in the USA,
with over 275 million users.
- GBP14.5 million in Smava, the consumer loans portal based in
Germany, striving to make loans transparent, fair, and affordable.
The plc acquired the underlying holding in the company via its
relationship with Earlybird in February 2019. The company has
raised $135 million to date and has over 300,000 customers who have
made transactions of over EUR3 billion on the platform.
- GBP13.3 million in UiPath, the comprehensive robotic software
solution for IT-based process automation. The plc acquired the
underlying holding in the company via its relationship with
Earlybird in February 2019 based on a value of UiPath of $3.0
billion. Post period end, UiPath raised a further $568.0 million at
a post-money valuation of $7.0 billion.
- GBP12.4 million in FINALCAD, the leading building,
infrastructure and construction mobile software platform, bringing
the total funds raised by FINALCAD to $60m to date, with the
proceeds being used to extend the product platform into the energy,
operations and maintenance sectors, increase headcount globally,
and further invest in R&D.
- GBP9.9 million in Aircall, a leading provider of cloud-based
call centre software bringing the total funds raised by Aircall to
$40.5 million to date, with the proceeds from the round being used
to accelerate the buildout of Aircall's cloud-based phone
system.
In addition, GBP49.3 million has been invested into a further 28
new emerging portfolio companies including 6 via Earlybird VI.*
These include Iceye, the Finnish microsatellite company, Revolut,
the London-headquartered fintech company, Fluidic Analytics, the
Cambridge-based protein detection platform with research, medical
and consumer applications, N26, the digital mobile bank,
Onefootball, the football app, and Hadean, the London-based deep
tech company building a cloud-first operating system.
Seed fund strategy
As we have consistently outlined, our seed fund strategy gives
us access to the best early stage deals across the sectors and
geographies in which we operate while also ensuring that the early
stage market in Europe is well seeded with capital.
During the period, Draper Esprit plc has continued to expand its
fund of funds strategy and has invested GBP5.3 million in top seed
funds. This GBP5.3m investment gives strategic seed stakes of an
average of GBP30,000 in 150 companies, enhancing future dealflow as
the best will seek growth capital. We have now invested in 17 seed
funds, having committed GBP34.0 million in total, which will be
invested by the funds across a broad range of subsectors within the
European technology market over the next five years.
Fund secondaries
Secondary activity has always been central to the entrepreneurs
we support given the role it plays in driving value and creating
liquidity in the market, allowing founders to scale their
businesses for the long term. By investing in primary and secondary
deals, we are able to provide entrepreneurs with broader capital
solutions to allow them to build their companies while finding high
quality opportunities for our shareholders at attractive
valuations.
During the period, we invested GBP70.4 million in Earlybird Fund
IV and Digital East, where we gained underlying holdings in
companies such as UiPath, Smava, Peak Games, B2X, and
Socialbakers.
In addition, we acquired DFJ X for GBP25.9 million, increasing
our stakes in existing core portfolio companies including
Trustpilot, M-Files, Sportspursuit and Lyst.
Follow on investments and portfolio update
Our core portfolio companies have performed strongly, driven by
revenue growth and from financing rounds at higher valuations. As
the European venture capital market matures, the ability for
companies to stay private for longer, by raising significant
capital in later rounds, is generating global companies that can
compete with the very best internationally. Our growing scale and
patient capital model mean we can back the companies we invest in
for longer.
Graphcore and Trustpilot are two particularly good examples of
this model in action, with Draper Esprit working closely with both
businesses since our original investment. These firms, and others
such as Ravenpack and Perkbox, have been in our portfolio from an
early stage. We have continued to support their development via
participation in later funding rounds, as well as hands-on support
to help them to scale in their respective markets.
Building on our momentum - outlook and summary
We have entered the new financial year in a strong position and
have built on this positive momentum with strong progress within
the portfolio, including the recent equity raises by Perkbox,
UiPath, and the secondary sale of Transferwise.
In May 2019, we have secured a new revolving credit facility,
provided by Silicon Valley Bank ("SVB") and Investec, of GBP50.0
million over a 3 year term which will provide us with greater
financing flexibility. We enter the new financial year with over
GBP150.0 million investment capacity, including over GBP50.0
million in cash, GBP50.0 million debt, and GBP50.0 million from our
co-investment funds, EIS and VCT, to invest in new, exciting
investment opportunities and continue backing the winners in our
portfolio.
As we continue to source the best deals via the provision of
growth capital to entrepreneurs, we have been able to deliver both
consistent returns for investors and increased scale across our
business.
Our relationship with Earlybird continues to strengthen our
position in the German speaking market, providing us with exciting
opportunities to invest in some of Europe's brightest tech
start-ups, while the ongoing revenue growth within our portfolio,
combined with attractive exits and a healthy pipeline of future
investment opportunities, means we are well placed to build on our
strong track record of delivery to date.
I would also like to place on record my thanks to the management
teams of our portfolio companies who remain central to our whole
business model.
We enter the new financial year well positioned to capitalise
further on opportunities in 2019/20 and remain focused on executing
our strategy driving long-term, sustainable returns for our
shareholders.
Simon Cook
CEO
*Reporting threshold - companies with a NAV of GBP1.0 million or
more.
Portfolio Review
Overview
This year has seen an increase in the investment rate, taking
advantage of the opportunities in the market that are afforded by
our flexible model and strategic co-operation with our partnership
with Earlybird. Our core portfolio companies have performed
strongly, driven by revenue growth and from financing rounds.
At the year ended 31 March 2019, the fair value of the Group's
Gross Portfolio had increased to GBP594.0 million (2018: GBP243.5
million).
During the year, the Group has realised its investment holdings
in Graze and Tails.com with GBP16.0 million (2018: GBP15.9 million)
of cash generated including amounts held in escrow. The Group
invested GBP226.4 million in the year (2018: GBP71.5 million), with
a further GBP35.1 million co-invested from EIS/ VCT funds (2018:
GBP24.8 million), into the next generation of high-growth digital
technology companies as well as supporting our existing portfolio
companies.
The increase in gross fair value in the period of GBP140.1
million (58%) is driven by continued strong performance across the
portfolio with notable uplifts in the value of the core portfolio
companies, in particular Graphcore, UiPath, Peak Games, Trustpilot,
Transferwise, and Smava.
At year-end, the portfolio held by the plc including via
Earlybird consists of significant minority interests in 54*
companies (2018: 31 companies). The fair value of the Gross
Portfolio is underpinned by 15 core holdings (2018: 10), which
account for approximately 70% (2018: 70%) of the total portfolio
value, with the remaining value spread across emerging investee
companies, which have the potential to grow into the core holdings
of the future. The investments made in the period and over the last
number of years have added strength and breadth to the
portfolio.
As we scale the business, the fair value of the core portfolio
holdings is increasing. New investments in the year and
realisations have been reflected such that the core companies now
comprise of: Graphcore, Trustpilot, Peak Games, UiPath, Lyst,
TransferWise, Smava, Perkbox, Ledger, M-Files, Ravenpack,
SportPursuit, Finalcad, Podpoint and Aircall. This is a natural
progression of the portfolio as the core companies scale and meet
value inflexion points that highlight an acceleration in their
growth.
These portfolio companies now have an average turnover in excess
of US$142.0 million (2018: $98.0 million), growing in aggregate
over 45% annually from 2018. The high average revenues continue to
grow in excess of our 30% per annum target and now reflects the
scale and maturity of the core companies. The gross profit margin
of the core holdings average approximately 65% and demonstrates the
ability of the companies to reinvest for future revenue growth and
also the opportunity for future profitability at the appropriate
time in the company's life cycle.
The fair value growth in the period reflects the strong revenue
growth of the portfolio companies, the flexible model of the plc to
be able to acquire positions at a discount by providing liquidity
to private markets and the upside impact of portfolio companies
achieving financing rounds at higher valuations.
* Reporting threshold - companies with a NAV of GBP1.0 million
or more.
Investments
To date, we have targeted investments of GBP60.0 million per
annum from the plc and GBP40.0 million from co-invest funds into
primary investments. In addition, the Group looks to
opportunistically acquire portfolios of assets to provide investors
with access to the best technology companies in Europe at
attractive valuations.
During the financial year a total of GBP226.4 million (2018:
GBP71.5 million) was deployed by the plc and a further GBP35.1
million (2018: GBP24.8 million) from EIS/VCT funds in 21 new
companies (plc: 12, Earlybird: 9), 12 existing companies, and 12
seed funds. 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. The
intention is to increase the size of the equity interest held in
the portfolio companies over time in line with the available
capital of the Group.
New investments
In the year, the Company invested GBP91.7 million in 21 new
investments (including GBP31.5 million in 9 new investments via
Earlybird VI), with a further GBP21.0 million invested from EIS/VCT
funds. Some of the notable new investments made in the financial
year include:
- GBP12.4 million into FINALCAD, the leading building,
infrastructure and construction mobile software platform.
- GBP9.9 million into Aircall, the leading provider of
cloud-based call centre software.
- GBP8.0 million (including GBP4.0 million from EIS/VCT funds)
into Fluidic Analytics, the Cambridge based deep tech protein
detection platform with research, medical and consumer
applications.
- GBP7.4 million into Revolut, the London headquartered fintech
company.
- GBP7.3 million (including GBP5.0 million from EIS/VCT funds)
into Endomagentics, the Cambridge based cancer diagnostic clinical
platform.
- GBP6.0 million (including GBP2.0 million from EIS/VCT funds)
into Crowdcube, the UK based lending platform.
- GBP6.0 million (including GBP3.0 million from EIS/VCT funds)
into Roomex, the Dublin headquartered SaaS enabled business travel
platform.
- GBP4.3 million via Earlybird into N26, the Berlin
headquartered digital banking company.
- GBP3.7 million into ICEYE, the Finnish microsatellite
manufacturer.
- GBP31.2 million via Earlybird VI in high profile growing
technology companies including Crosslend (a digital marketplace for
loans), Shapeshift (the cryptocurrency exchange which offers global
trading of a variety of digital assets via web and mobile
platforms) together with further follow-on opportunities in the
remaining portfolio.
Follow-on investments
To grow our holdings in line with our stated strategy, and to
continue to back the growth of our best companies, the Group
invested GBP33.1 million into 12 existing portfolio companies. A
further GBP14.1 million was invested from EIS/VCT funds increasing
existing holdings in:
- Graphcore, a machine intelligence semiconductor company.
- Trustpilot, the global online review community.
- Ravenpack, the provider of analytics as a service to financial
professionals by transforming unstructured data / content into
actionable information in real-time.
- Perkbox, digital employee engagement platform.
- Pod Point, the UK's leading provider of electric car charging
solutions for home, workplace and public charging.
- Resolver, the customer support and complaints resolution
software business.
- Realeyes, machine learning technology measuring emotions
through facial recognition.
Secondary investments
To provide investors with access to the best high growth
technology companies in Europe, the Company sources investment
opportunities through secondary acquisitions.
In the period, the Company acquired a 27% stake in Earlybird IV
and a 5% stake in Earlybird Digital East which added a further
GBP70.4 million of notable investments in the year including:
- GBP25.4 million in Peak Games (the leading mobile games
company based in Turkey) and GBP14.5 million in Smava (the consumer
loans portal based in Germany), which have been added to the Core
Portfolio, via Earlybird VI together with further follow-on
opportunities in the remaining portfolio.
- GBP13.3 million in UiPath the comprehensive robotic software
solution for IT-based process automation acquired via Earlybird
Digital East Fund together with further follow-on opportunities in
the remaining portfolio.
The secondary acquisition of DFJ Europe X Fund for GBP25.9
million in the year increased our percentage holdings in several of
our Core Portfolio companies, including Ravenpack, Trustpilot,
M-Files, and Lyst.
Seed funds
In addition to the above, the Company has continued to expand
its seed fund strategy investing GBP5.3 million in the year
together with further commitments to a number of Europe's top seed
funds: Byfounders (Denmark), Hardware Club (France), 5 Seasons
(France), Episode1(UK), Seedcamp Fund IV (UK), Join Capital
(Germany), Icebreaker (Finland). During the year, commitments have
been made to 13 new seed funds across Europe.
Post-year end the following investments were made:
- A further GBP2.5 million invested by the Company in Verve.
- A further GBP2.2 million invested by the Company in Realeyes.
- A further GBP0.5 million invested by the Company in Push Doctor.
- A further GBP0.4 million invested by the Company in Kaptivo.
Realisation
During the year, the Company realised GBP16.0 million from the
disposal of Graze and Tails.com, including amounts held in escrows.
Post period end GBP15.3 million gross proceeds were received for
the part realisation of Transferwise bringing the total cash
returned since IPO to GBP81.6 million to the balance sheet.
Core Portfolio Companies
Aircall
Draper Esprit invested GBP9.9 million in 2018.
Aircall makes phone support easy to manage. It offers instant
phone numbers in over 40 countries for over 3000 business customers
and provides a collaborative phone app for teams using connective
CRM or customer support tools.
In 2018, the company raised a series B round, led by Draper
Esprit totalling US$29.0 million. Opening new offices in New York
and Paris, Aircall has hired a team of over 150 people and released
integrations with ecommerce giant Shopify as well as CRM systems MS
Dynamics and Copper.
In May, Aircall announced a partnership with Intercom. Aircall
Now, an application that instantly transitions text chat with
customers into a phone conversation within Intercom Messenger,
streamlines the sales, marketing, and customer workflow. This
partnership sees Aircall Now available to Intercom's 25,000+
customers, giving the company ample firepower to scale
globally.
Alongside Draper Esprit, other investors include Balderton
Capital, NextWorld Capital, eFounders and Newfund.
FINALCAD
Draper Esprit invested GBP12.4 million in 2018.
FINALCAD improves construction companies' operational efficiency
through a mobile digital platform. Site engineers, Foremen,
Architects and Consultants can collaborate using FINALCAD's app,
enabling collaboration across a wide variety of workflows both on
site and at the office. The app is not just a communication tool,
but also enables users to work on drawings, BIM models, tasks,
controls, safety procedures and progress monitoring. FINALCAD then
provide insights and best practices at a company level.
During the period, the company launched FINALCAD Live, an app
allowing users to write a digital site diary with images, a
location, and description, creating a news feed for short duration
construction projects. The app transforms the way in which site
managers oversee costs, collaboration, and processes.
The company also made key hires in its sales teams, bringing in
Olivier Remy, Head of Sales for Northern Europe and Jaime Urquiza,
Head of Sales for Southern Europe and Latam. Additionally, it
signed Groupe Fayat, France, the no.1 independent construction
group in France and worldwide leader in road equipment.
Investors alongside Draper Esprit are CapHorn Invest, Aster,
Serena Capital, Salesforce Ventures, and Cathay innovation.
Graphcore
Draper Esprit first backed Graphcore in 2016 and has invested
GBP13.7 million to date with the most recent investment of GBP9
million in December 2018, part of a wider US$200.0 million plus
Series D funding round. This latest round valued Graphcore at $1.7
billion, making it one of a handful of British technology
unicorns.
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 and machine learning across diverse industries - from
autonomous vehicles to personalised healthcare, intelligent mobile
devices and collaborative robots. The appetite for an easier and
more powerful way to develop such applications is growing
rapidly.
During the year, the company began product rollout. In May, it
shipped its C2 IPU (Intelligence Processing Unit) cards to early
access customers. In December, it announced the Rackscale
IPU-Pod(TM) reference design, which takes full advantage of the
IPU's scale-up and scale out features, harnessing its capability of
massive machine intelligence training tasks or the support of huge
deployments with 1000s of users.
The team are also scaling significantly, with around 500 new
hires expected across the business by end of Q1 2019. Notable hires
include Scott Hover-Smoot as SVP and General Counsel bringing
considerable experience of the semiconductor industry and Jason Lu
as VP of China Sales in October 2018, building out the Graphcore
team in China.
Investors alongside Draper Esprit are Sequoia Capital, Atomico,
Microsoft, and BMW iVentures.
Ledger
Draper Esprit invested GBP17.7 million from the plc in January
2018.
During the period, Ledger, the hardware security wallet for
cryptocurrencies and blockchain applications, launched three new
products: the Ledger Nano X, a Bluetooth hardware wallet that
received an innovation award at the CES, the Ledger Vault, a
security solution for financial institutions and Ledger Live, the
standalone companion computer app for Ledger devices.
Ledger has opened new offices in New York and Hong Kong,
deploying sales teams to the ground for the Ledger Vault. The
Ledger Plex, a 3500m(2) production facility in Vierzon (France),
has broken ground and will be delivered in September 2019.
To date the company has clients in over 165 countries and has
sold over 150 million wallets globally. In May, the team also
announced a joint-venture named Komainu with global investment
bank, Nomura, and pioneer investment house, Global Advisors.
Komainu is being established to bring together the traditional and
disruptive worlds of asset custody, paving the way for secure and
compliant institutional investment in digital assets.
Other investors include Draper Network funds, Draper Associates
(US), Draper Dragon (China) and Boost VC (US), as well as FirstMark
Capital, Cathay Capital and Korelya Capital.
Lyst
Draper Esprit has invested a total of GBP5.3 million in the
company.
Lyst is a global fashion search platform used by over 72 million
shoppers from 120 countries. It is one of the world's largest
e-commerce websites, bringing together 5 million products from
12,000 of the world's leading fashion brands and retailers. Lyst
keeps customers at the centre of its offering, providing a one stop
solution to find fashion that's perfectly right for them.
In 2018, the French multinational luxury goods conglomerate
LVMH, led a funding round of US$60.0 million in the company. This
new funding will be used to drive global expansion. During the
period, revenues grew by 23%, it opened offices in The Netherlands,
Russia, and Japan, now operates in over 11 markets, and had a big
brand refresh.
Investors include LVMH, Balderton Capital, Accel Partners, and
Susa Ventures.
M-Files
Draper Esprit has invested a total of GBP4.0 million to
date.
M-Files is a software company which provides enterprise content
management (ECM) solutions to eliminate information silos and to
provide access to content from core business systems and devices.
By using software based on the meta-data contained within the
document, it is not constrained by where the document is stored or
resides.
During the period, the company launched M-Files Online, a fully
cloud-enabled subscription-only offering, and began selling to new
customers exclusively via recurring subscription licenses while
growing annual recurring revenue (ARR) by more than 30% year on
year. M-Files also raised EUR27.0 million from the European
Investment Bank (EIB), fuelling technology development and
international expansion.
With this recent investment, the company has aggressively scaled
its team, totalling 500 employees globally and now has 9,000
worldwide customers, including Thyssenkrupp, Mazars, Apex Oil
Company and Kinsmen Group.
M-Files was honoured with the prestigious Internationalisation
Award by the President of the Republic of Finland for its global
success, innovative intelligent information management solutions
and positive impact on the Finnish economy.
Investors include Partech Ventures, Tesi, and the European
Investment Bank.
Peak Games
As part of our strategic partnership with Earlybird, the plc
acquired a 27 per cent. interest in Earlybird GmbH & Co.
Beteiligungs-KG IV ("EB IV") for GBP55.0 million, adding Peak Games
to the core portfolio.
Peak Games is a leading name in the gaming industry. Founded in
2010 and based in Turkey, Peak Games produces highly-rated mobile
games which includes the top-10 grossing Toy Blast and the launch
of Toon Blast in July 2018. Peak Games is one of the top 10 mobile
games companies in the USA, with over 275 million users globally
having installed at least one product.
In July 2018, to support the debut of puzzle game, Toon Blast,
the company launched the first celebrity performance marketing
campaign with actor, Ryan Reynolds. This saw the creation of 30
unique videos, promoted across online channels to varying
demographics, allowing the company to measure the effectiveness of
each video in precise detail. Toon Blast has now achieved over 80
million downloads.
Investors include Earlybird VC, Hummingbird Ventures, and
Endeavor Catalyst.
Perkbox
Draper Esprit has invested a total of GBP14.0 million to
date.
Perkbox is a platform that provides a unique employee
experience, enriching the personal and working life of employees.
It offers a suite of products including a platform with access to
best in class Perks, Perkbox Recognition and Perkbox Insights. It
serves organisations of all sizes from SMEs to large companies in
the UK such as OpenTable, Rentalcars, and Purplebricks.
In February 2019, the company opened an office in Sydney,
Australia, sending existing team members from its London HQ to
ensure the company starts off with an experienced talent pool. The
company has already signed up several providers including coworking
workspace, Emerge Sydney; food and beverage startup, Hey You; suit
maker, Institchu and SME loans company, Valiant Finance. It is
estimating to onboard another 2,000 companies by the end of the
year.
Perkbox also expanded their team with several key hires
including ex Yahoo! Veteran, Paul Schulz as CTO and Edenred CEO,
Jacques Stern as a Non-exec director. It has grown the size of its
tech team from 32 to 65 employees in order to accelerate product
development cycles.
Draper Esprit first invested in Perkbox in 2016 alongside the
crowd on the Seedrs platform.
Pod Point
Draper Esprit has invested a total of GBP5.4 million to
date.
The electric charge point supplier, which has now partnered with
13 car manufacturers including household names Audi, Volkswagen,
and Volvo raised GBP13.0 million of funding from Legal and General
in March 2019, taking a 13 per cent. stake in the company.
PodPoint is one of the UK's largest electric vehicle charging
point operators, boasting more than 1,500 charging stations across
the UK. The company has charged over 44 million miles of electric
motoring and shipped in excess of 40,000 charging points.
During the year, the company signed a partnership with Tesco to
roll out POD Points across their 400 stores, installed the UK's
largest workplace charging array with Skanska and began installing
across the Lloyds Bank estate.
Investors include Legal and General, Barclay's Capital,
QVentures.
RavenPack
Draper Esprit has invested a total of GBP7.5 million to
date.
During the year, the company closed deals with several large
financial institutions and research houses, including Citi Bank,
CloudQuant, and Wolfe Research. Meanwhile, they launched a new
portfolio sentiment ranking tool, enabling users to search from
50,000 companies, addressing specific risks across 19,000 sources
including news, social media, regulatory filings, and transcripts.
Hundreds of thematic factors can be considered for their stock
rankings to monitor for headline risk, identify sentiment leaders
and laggards, or flag companies that are no longer aligned with
their strategy.
Investors can also apply a selection of screening criteria and
better manage reputational risks by identifying controversial
companies in their portfolio. For example, users can filter out
companies experiencing negative environmental, social, or
governance (ESG) events, or rank higher those with positive
earnings and product sentiment. Combined with RavenPack's sentiment
scoring and analytics, the company can now empower their clients
with a better understanding of events and how markets might react
to them.
During the year, the plc made a follow-on investment of GBP4.3
million, enabling the company to expand internationally and scale
its team. By end of Q2 2019 the company will have over 100
employees
Smava
As part of our strategic partnership with Earlybird, the plc
acquired a 27 per cent. interest in Earlybird Fund IV for GBP55.0
million, adding Smava to the core portfolio.
Launched in 2007, Smava is consumer loans portal based in
Germany, striving to make personal loans transparent, fair, and
affordable. Based on digital processes, Smava provides a market
overview of 70 loan offers from 25 banks, ranging in value from
EUR1,000 to EUR120,000. Borrowers can then choose a deal that suits
them best.
In August 2018, the company announced a partnership with eBay's
car portal in Germany, mobile.de, so users can access financing
facilities when purchasing vehicles.
The company has raised $135.0 million to date and has over
300,000 customers who have transacted over EUR3 billion through its
platform over the lifetime of the start-up.
Investors include Earlybird VC, Vitruvian, Phenomen Ventures,
and Neuhaus Partners.
Sportspursuit
Draper Esprit has invested a total of GBP5.6 million to
date.
Founded in 2011, SportPursuit is as a UK-based sport-specific
ecommerce website where members receive access to sales from brand
partners within the technical sportswear and outdoor clothing and
equipment space. It aims to be the world's largest private shopping
club for sports enthusiasts, helping them to find the best clothing
for them at the best rates.
During the period the company partnered with Eurosport, the
Discovery-owned sports broadcaster, to launch a white-label
platform for sports fans to purchase clothing, footwear, equipment
and accessories. The Eurosports shop is now live in France, Germany
and the UK via dedicated local-language microsites, with plans to
extend this to Belgium, Monaco, Austria and Switzerland. In efforts
to build a stronger brand presence in Germany and bolstering its
move towards Europe, the company launched TV advertising campaigns
raising brand awareness in new markets.
SportPursuit made several moves to improve its carbon footprint.
It became the first online retailer to use sustainable packaging
made entirely from sugar cane, achieving a carbon negative impact
and planted 10,000 new trees in Uganda alongside the "Size of
Wales" charity organisation.
Investors include CIT Growth Capital and Scottish Equity
Partners, Secret Escapes co-founder Alex Saint and Zoopla founder
Alex Chesterman.
Transferwise
Draper Esprit has invested a total of GBP10.5 million to
date.
TransferWise is an international money transfer platform - using
real exchange rates with no hidden fees. Co-founded by Taavet
Hinrikus and Kristo Kaarmann, TransferWise was launched in 2010
with the vision of making international money transfers cheap,
fair, and simple.
During the period, TransferWise became the first fintech company
to hold a settlement account, allowing the company direct access to
Bank of England's Real Time Gross Settlement. Through the
settlement account, TransferWise became the first tech company to
be a direct member of the Faster Payment Scheme.
In June 2018, they announced a partnership with UK neobank
Monzo, and France's second largest bank, BCPE, making exchange
rates low-cost and transparent. Additional partnerships include
accountancy software company Xero, Dutch digital banking company
Bunq, and food delivery service Wolt.
TransferWise continues to demonstrate strong growth. In
September 2018, the company released their FY18 annual report,
showing 75% revenue growth to GBP117.0 million and GBP6.2 million
net profit after tax.
The company now serves 5 million customers worldwide, processing
GBP4.0 billion every month.
Post period end, the company announced a $292.0 million share
sale in which (through a partial sale of its stake) Draper Esprit
generated cash of GBP15.3 million.
Trustpilot
Draper Esprit has invested a total of GBP29.7 million to
date.
Founded in 2007, Trustpilot is a global, multi-language review
community. Trustpilot has customers in 65 countries including
Denmark, Sweden, the UK, France, Italy, Germany, The Netherlands
and the US. The company has more than 58 million reviews of over
265,000 companies from 150+ countries and is one of the top 1% most
visited websites worldwide.
With offices in Copenhagen, London, New York, Denver, Berlin,
Melbourne and Vilnius, Trustpilot's 700 employees represent more
than 40 different nationalities. In June 2018, the company also
launched a successful brand refresh, alongside plans for changes
and upgrades to its platform after a year of research and
collaboration with consumers.
Trustpilot will now offer companies new features for customer
engagement and has launched its "Find Reviewer" tool, which enables
companies and reviewers to engage with each other more freely and
directly. The company has also now secured partnerships with
leading ecommerce platforms, Magento (based in the US) and
PrestaShop (based in Paris) alongside leading digital knowledge
platform, Yext (based in the US). The partnerships will enable
Trustpilot to expand its business further while improving user
experience by providing them with more opportunity to gain
insights. In March 2019, the company successfully raised $55.0
million in a Series E equity round led by Sunley House Capital
Management. This funding will enable Trustpilot to strengthen its
market leading position through investment in marketing, platform
development and team expansion.
Investors include Sunley House Capital management, Vitruvian
Partners, Index Ventures, Northzone, SEED Capital Denmark.
UiPath
As part of our strategic partnership with Earlybird, the plc
acquired a 5 per cent. interest in the Digital East Fund 2013 SCA
SICAR for GBP16.0 million, adding UiPath to the portfolio. When
Draper Esprit invested, UiPath was valued at $3.0 billion. Post
period end, the company announced in April a $568.0 million
investment round at a post-money valuation of $7.0 billion.
UiPath provides a comprehensive robotic software solution for
IT-based process automation. Built on a comprehensive, fully
integrated platform with centralised instrumentality, UiPath is
designed for the highest standards of enterprise management,
security, scalability and auditability.
In February 2019, the company released the UiPath Computer
Vision which enables human-like recognition of user interfaces,
enabling robots to "see" the screen and visually identify
individual elements of software platforms such as Citrix, VMware,
VNC, and Windows Remote Desktop. This development is a huge leap in
the path to empowering robots AI skills to solve complex problems
in the most effective way.
In April 2019, Bruno Ferreira joined the company as VP of UK
& Ireland. Bringing with him 20+ years of experience in the
technology sector, Ferreira will help the firm to continue its
exponential growth. In the same month, UiPath announced a
partnership with RPAbox, a specialist UiPath implementation partner
helping organisations scale RPA capabilities in their business
units by providing a fast, reliable and efficient delivery model.
This partnership will assist clients and partners with projects and
increase the reach of UiPath globally.
Investors include Accel, Coatue, Capital IG, Credo, Earlybird
VC, IVP, KPCB, Madrona, Meritech, Seedcamp, Sequoia.
Financial Review
The year ended 31 March 2019 has been another active year for
the Group with significant investment activity and two equity
raises in the period. The progress in the year has built on the
strategy of scaling our operations while providing investors with
access to the best private technology companies in Europe.
New equity capital of GBP100.0 million was raised in June 2018
to further scale the balance sheet and broaden the shareholder
base. In February 2019, a further raise of GBP115.0 million was
undertaken to secure the secondary acquisition of 27% in Earlybird
IV and 5% in Earlybird Digital East. With a strong balance sheet,
the Group has been able to increase investments in high growth
technology companies, take advantage of secondary opportunities to
create value and increase the breadth of operations.
The Gross Portfolio Value, the gross value of the Group's
investment holdings before deductions for carry and any deferred
tax, has more than doubled to GBP594.0 million (2018: GBP243.5
million) as a consequence of the GBP226.4 million of investment
(2018: GBP71.5 million) and fair value growth of GBP140.1 million
(2018: GBP73.6 million) net of realisations of GBP16.0 million
(2018: GBP15.9 million).
The Gross Portfolio Value is subject to deductions for the fair
value of the carry liabilities and deferred tax to generate the net
investment value of GBP562.1 million (2018: GBP231.9 million) which
is reflected on the consolidated statement of financial position as
financial assets held at fair value through the profit or loss. The
below table has been generated to reflect gross and net movement in
value of the portfolio during the period.
The net fair value gain on investments of GBP114.7 million (31
March 2018: GBP66.6 million) is reflected in the consolidated
statement of comprehensive income. A deferred tax provision of
GBP5.4 million (2018: GBP1.8 million) is accrued against the gains
in the portfolio where future tax liabilities are anticipated to be
due. This amount is netted against the investments in the
consolidated statement of comprehensive income. Carry balances of
GBP27.7 million (2018: GBP11.2 million) are accrued to management
teams, including previous and current employees of the Group based
on the current fair value at the year-end and deducted from the
Gross Portfolio.
Net assets have increased by 106% to GBP618.6 million (GBP300.5
million at 31 March 2018) and net assets excluding goodwill have
grown by 109% to GBP608.9 million (GBP290.8 million at 31 March
2018). The increase in the balance sheet assets reflects the
positive portfolio performance, particularly in the core portfolio,
including the new secondary acquisitions, and the equity raises
undertaken in the year of GBP215.0 million (GBP207.6 million net of
fees) from both existing and new institutional investors.
Fair value growth of the gross portfolio of GBP140.1 million
(2018: GBP73.6 million) reflects fair value gains in the portfolio
of GBP157.5 million and fair value reductions of GBP17.4 million
including GBP16.2 million of positive currency movements.
In the Summer of 2018, the Group entered into a Strategic
Partnership Agreement with Earlybird to share dealflow and
resources to co-invest in high growth technology companies across
Europe. The first stage of this partnership included a 50%
commitment of GBP76.0 million to 2022 to Earlybird Fund VI, of
which GBP31.5 million has been deployed to date. As approximately
20% of the European Venture Capital dealflow occurs in Germany,
this commitment reflected the amount the Company would have
otherwise invested in that market directly. As part of this first
stage, the Company acquired a minority stake in the Earlybird Fund
VI management company for a total consideration of GBP0.6 million.
The consideration was satisfied by cash and the issuance of 64,820
new ordinary shares of one pence each in the capital of the Company
to the Earlybird Digital West partners.
The subsequent phase of the partnership trajectory was enacted
in February of 2019 with the acquisition of stakes in Earlybird IV
and Earlybird Digital East. These acquisitions strengthened the
relationship and provided significant value creation opportunity
for the Group.
In addition to the shares outlined above, the fund raises led to
an increase in the issued share capital with the issuance of
27,380,952 and 18,867,925 new shares on 14 June 2018 and 8 February
2019 respectively to trading on AIM and Euronext Growth.
During the year, a change in the underlying accounting treatment
of the Company's acquisition of Esprit Capital Partners (ECP) in
June 2016 has led to a reduction in the goodwill carried on the
balance sheet of GBP10.8 million. This is not indicative of an
impairment to the goodwill or the inherent value of Esprit Capital
Partners LLP but a change in presentation. The reduction in the
goodwill is matched by a reduction in the merger reserve on the
balance sheet of GBP10.8 million and the income statement reflects
an equivalent charge over the current and restated reporting
periods. The prior period balance sheet and income statement
comparatives have been restated to reflect how the reduced goodwill
would have impacted the accounts in those periods. There are no
ongoing charges related to this accounting change.
Year-end cash balances of GBP50.4 million reflect the cash
balance of GBP56.6 million at 31 March 2018, the subsequent equity
raise of GBP207.6 million net of fees, investments in the period of
GBP226.4 million net of proceeds from disposals in the portfolio
and the operating costs of the business.
Consolidated statement of comprehensive income
Investment income for the year comprises the GBP114.7 million
(2018: GBP66.6 million) of unrealised investment gains (gains are
unrealised as they have not been disposed of at period end and are
held within Draper Esprit (Ireland) Limited, which is accounted for
as an investment company) and fee income of GBP6.1 million which is
generated from management fees and director fees. At the year-end
31 March 2018, performance fees were recognised of GBP3.5 million,
of which GBP1.0 million was attributable to the plc with the
remainder reflected in non-controlling interests. Under the new
IFRS 15 accounting standard, there has been a change in the test
for recognition and this revenue has not been recognised in the
current period; it is anticipated that these balances will now be
recognised at the point of cash realisation. General administrative
costs of GBP7.8 million (2018: GBP5.8 million), predominantly
relate to employment, professional and office expenses, while
investment and acquisition costs of GBP0.2 million (2018: GBP0.4
million) relate directly to portfolio investment costs. The cost
base of the Group in the year is less than 1% of year end NAV on a
net basis (costs less income).
Post balance sheet events
The Group has made further investments and realised GBP15.3
million gross proceeds from the partial sale of TransferWise.
Post year-end the Company entered into a GBP50.0 million
Revolving Credit Facility with Silicon Valley Bank and Investec.
The facility is for a 3 year term and carries an interest rate at
the Bank of England base rate + 6.75% (min 7.5%). The facility
provides additional funding flexibility to fund the future growth
plans of portfolio companies.
After a further successful year of transformational growth, the
Group has a strong balance sheet with the cash resources to harvest
the opportunities presented by its deep networks across Europe.
Ben Wilkinson
CFO
Gross Portfolio Value Table
Fair Value
of Draper Fair Value Interest
Investments Esprit Movement of Investments FD category
31st March (Ireland) in Fair 31st March **
2018 Investments Realisations* Limited Value 2019 at reporting
Investments GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 date
--------------- -------------- ------------ -------------- ----------- --------- --------------- --------------
Graphcore 23,381 9,491 - - 45,740 78,612 B
Trustpilot 34,333 11,623 - - 16,016 61,972 C
Peak - 25,374 - - 16,312 41,686 B
UiPath - 13,250 - - 19,704 32,954 A
Lyst 18,341 2,633 - - 6,788 27,762 C
TransferWise 12,189 - - - 15,530 27,719 A
Smava - 14,549 - - 9,138 23,687 B
Perkbox 17,495 5,740 - - 455 23,690 C
Ledger 17,703 - - - - 17,703 B
M-Files 14,359 1,506 - - 1,308 17,173 B
Ravenpack 5,478 4,207 - - 5,930 15,615 D
SportPursuit 13,366 1,959 - - (1,990) 13,335 E
FinalCad - 12,444 - - - 12,444 C
Podpoint 9,884 - - - 1,175 11,059 C
Aircall - 9,916 - - - 9,916 B
Remaining
Portfolio 74,663 113,740 (15,984) - 4,258 176,677 -
--------------- -------------- ------------ -------------- ----------- --------- --------------- --------------
Total 241,192 226,432 (15,984) - 140,364 592,004
--------------- -------------- ------------ -------------- ----------- --------- --------------- --------------
Co-invest
assigned
to plc 2,320 - - - (308) 2,012
--------------- -------------- ------------ -------------- ----------- --------- --------------- --------------
Gross Portfolio
Value 243,512 226,432 (15,984) - 140,056 594,016
--------------- -------------- ------------ -------------- ----------- --------- --------------- --------------
Carry external (11,177) - - - (16,534) (27,711)
Portfolio
deferred
tax (1,848) - - - (3,504) (5,352)
Trading carry &
co-invest 1,423 - - - (315) 1,108
Draper Esprit
(Ireland)
Limited - - - 4,988 (4,988) -
--------------- -------------- ------------ -------------- ----------- --------- --------------- --------------
Net portfolio
value 231,910 226,432 (15,984) 4,988 114,715 562,061
--------------- -------------- ------------ -------------- ----------- --------- --------------- --------------
* Realisations do not include amounts held in escrow. Total cash
realisations including amounts held in escrow were GBP16.0 million
(2017: GBP15.9 million)
** Fully diluted interest categorised as follows: Cat A: 0-5%,
Cat B: 6-10%, Cat C: 11-15%, Cat D: 16-25%, Cat E: >25%
Financials
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2019
Year ended Year ended
Year ended 31 Mar 31 Mar
31 Mar 2018 2017
2019 GBP'000s GBP'000s
Note GBP'000s Restated* Restated*
-------------------------------------------------- ------- ---------- ---------- ----------
Unrealised gains on investments held at fair
value through the profit and loss 5 114,715 66,603 35,744
Fee income 6 6,101 7,163 1,673
-------------------------------------------------- ------- ---------- ---------- ----------
Total investment income 120,816 73,766 37,417
-------------------------------------------------- ------- ---------- ---------- ----------
Operating expenses
General administrative expenses 7 (7,774) (5,785) (3,705)
14, 17,
Depreciation and amortisation 21 (163) (160) (127)
Share based payments - resulting from company
share option scheme 9 (1,100) (490) (123)
Share based payments - resulting from acquisition
of subsidiary 18 (1,989) (4,406) (4,428)
Investments and acquisition costs (207) (424) -
Exceptional items (34) (229) -
-------------------------------------------------- ------- ---------- ---------- ----------
Total operating costs (11,267) (11,494) (8,383)
-------------------------------------------------- ------- ---------- ---------- ----------
Profit from operations 109,549 62,272 29,034
-------------------------------------------------- ------- ---------- ---------- ----------
Net foreign exchange gain/(loss) 10 1,481 (1,530) 221
-------------------------------------------------- ------- ---------- ---------- ----------
Finance income on cash and cash equivalents 120 112 -
-------------------------------------------------- ------- ---------- ---------- ----------
Operating profit before tax 111,150 60,854 29,255
-------------------------------------------------- ------- ---------- ---------- ----------
Income taxes 11, 21 11 43 (438)
-------------------------------------------------- ------- ---------- ---------- ----------
Profit for the year 111,161 60,897 28,817
-------------------------------------------------- ------- ---------- ---------- ----------
Other comprehensive income/(expense) - - -
-------------------------------------------------- ------- ---------- ---------- ----------
Total comprehensive income for the year 111,161 60,897 28,817
-------------------------------------------------- ------- ---------- ---------- ----------
Profit attributable to:
Owners of the parent 110,579 57,766 28,487
Non-controlling interest 582 3,131 330
-------------------------------------------------- ------- ---------- ---------- ----------
Earnings per share attributable to owners
of the Parent:
Basic earnings per weighted average shares
(pence) 12 115 89 88
Diluted earnings per weighted average shares
(pence) 12 110 88 87
-------------------------------------------------- ------- ---------- ---------- ----------
*Certain amounts shown here do not correspond to the Annual
Report for the year ended 31 March 2018 and 31 March 2017 and
reflect adjustments made, refer to Note 3(a) and Note 18.
The Notes on pages 72 to 99 are an integral part of these
consolidated financial statements.
Consolidated Statement of Financial Position
For the year ended 31 March 2019
31 Mar 31 Mar
31 Mar 2018 2017
2019 GBP'000s GBP'000s
Non-current assets Note GBP'000s Restated* Restated*
-------------------------------------------- ------ --------- ---------- ----------
Non-current assets
Intangible assets 14 10,130 10,232 10,335
Investments in associates 15 258 258 258
Financial assets held at fair value through
the profit or loss 16 562,061 231,910 105,971
Property, plant and equipment 17 209 229 152
-------------------------------------------- ------ --------- ---------- ----------
Total non-current assets 572,658 242,629 116,716
-------------------------------------------- ------ --------- ---------- ----------
Current assets
Trade and other receivables 19 1,140 4,840 527
Cash and cash equivalents 50,358 56,641 24,892
-------------------------------------------- ------ --------- ---------- ----------
Total current assets 51,498 61,481 25,419
-------------------------------------------- ------ --------- ---------- ----------
Current liabilities
Trade and other payables 20 (4,959) (2,948) (1,548)
-------------------------------------------- ------ --------- ---------- ----------
Total current liabilities (4,959) (2,948) (1,548)
-------------------------------------------- ------ --------- ---------- ----------
Non-current liabilities
Deferred tax 21 (631) (651) (716)
-------------------------------------------- ------ --------- ---------- ----------
Total non-current liabilities (631) (651) (716)
-------------------------------------------- ------ --------- ---------- ----------
Net assets 618,566 300,511 139,871
-------------------------------------------- ------ --------- ---------- ----------
Equity
Share capital 22 1,179 716 407
Share premium account 22 395,783 188,229 93,248
Merger relief reserve 22 13,097 13,097 13,097
Share-based payments reserve - resulting
from company share option scheme 1,713 613 123
Share-based payments reserve - resulting
from acquisition of subsidiary 10,823 8,834 4,428
Retained earnings 195,737 86,230 28,464
-------------------------------------------- ------ --------- ---------- ----------
Equity attributable to owners of parent 618,332 297,719 139,767
-------------------------------------------- ------ --------- ---------- ----------
Non-controlling interests 234 2,792 104
-------------------------------------------- ------ --------- ---------- ----------
Total equity 618,566 300,511 139,871
-------------------------------------------- ------ --------- ---------- ----------
Net assets per share (pence) 12 524 416 343
-------------------------------------------- ------ --------- ---------- ----------
*Certain amounts shown here do not correspond to the Annual
Report for the years ended 31 March 2018 and 31 March 2017 and
reflect adjustments made, refer to Note 3(a) and Note 18.
The financial statements on pages 68 to 99 were approved by the
Board of Directors on 4 June 2019 and signed on its behalf by
S. M. Chapman
Chief Operating Officer
The Notes on pages 72 to 99 are an integral part of these
consolidated financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 March 2019
Year ended Year ended
Year ended 31 Mar 31 Mar
31 Mar 2018 2017
2019 GBP'000s GBP'000s
Note GBP'000s Restated* Restated*
--------------------------------------------------- ------ ---------- ---------- ----------
Cash flows from operating activities
Operating profit after tax 111,161 60,897 28,817
Adjustments to reconcile operating profit
to net cash flows used in operating activities:
Revaluation of investments held at fair
value through the profit and loss 5 (114,715) (66,603) (35,744)
Depreciation and amortisation 163 160 155
Share-based payments - resulting from company
share option scheme 1,100 490 123
Share-based payments - resulting from acquisition
of subsidiary 1,989 4,406 4,428
Bad debt provision - - 37
Exchange differences on cash and cash equivalents 10 (1,481) 1,530 (221)
Decrease/(increase) in trade and other receivables 189 (4,314) 681
Increase in trade and other payables 2,011 1,401 441
--------------------------------------------------- ------ ---------- ---------- ----------
Purchase of investments 16 (226,432) (74,674) (20,602)
Proceeds from disposals in underlying investment
vehicles 16 15,984 15,338 17,137
Net loans made to/returned from underlying
investment vehicles 16 (4,679) - -
Purchase of initial portfolio - - (40,000)
--------------------------------------------------- ------ ---------- ---------- ----------
Net cash (used in)/generated from operating
activities (214,710) (61,369) (44,478)
Tax paid (32) (107) -
--------------------------------------------------- ------ ---------- ---------- ----------
Net cash (outflow)/inflow from operating
activities (214,742) (61,476) (44,748)
--------------------------------------------------- ------ ---------- ---------- ----------
Cash flows from investing activities
Purchase of property, plant and equipment (58) (204) (166)
Interest received 120 112 -
Cash acquired on purchase of subsidiary - - 495
--------------------------------------------------- ------ ---------- ---------- ----------
Net cash inflow/(outflow) from investing
activities 62 (92) 329
--------------------------------------------------- ------ ---------- ---------- ----------
Cash flows from financing activities
Cash paid to non-controlling interests (638) (443) (246)
Proceeds from issue of share capital 22 215,035 100,000 72,060
Equity issuance costs 22 (7,481) (4,710) (2,724)
--------------------------------------------------- ------ ---------- ---------- ----------
Net cash inflow from financing activities 206,916 94,847 69,090
--------------------------------------------------- ------ ---------- ---------- ----------
Net (decrease)/increase in cash & cash equivalents (7,764) 33,279 24,671
--------------------------------------------------- ------ ---------- ---------- ----------
Cash and cash equivalents at beginning of
year 56,641 24,892 -
Exchange differences on cash and cash equivalents 10 1,481 (1,530) 221
--------------------------------------------------- ------ ---------- ---------- ----------
Cash and cash equivalents at end of year 50,358 56,641 24,892
--------------------------------------------------- ------ ---------- ---------- ----------
*Certain amounts shown here do not correspond to the Annual
Report for the year ended 31 March 2018 and 31 March 2017 and
reflect adjustments made, refer to Note 3(a) and Note 18.
The Notes on pages 72 to 99 are an integral part of these
consolidated financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
Attributable to equity holders of the
parent (GBP'000s) (GBP'000s) (GBP'000s)
---------------- -------------------------------------------------------------------------- ------------ ----------
Share-based
payments reserve
resulting from:
---------------- -------- -------- --------- --------- ------- ------------ ----------
Company Attributable
Merger share to non-
Share Share relief option Acquisition Retained controlling Total
capital premium reserve^ scheme of subsidiary earnings Total interests equity
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Balance at 1
April 2016 50 - - - - (3) 47 - 47
Total
comprehensive
Income
for the year
Profit for the
year - - - - - 28,487 28,487 330 28,817
Acquired
reserves due to
non-controlling
interest - - - - - (20) (20) 20 -
Amounts
withdrawn by
non-controlling
interest - - - - - - - (246) (246)
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Total
comprehensive
income/(loss)
for the year - - - - - 28,467 28,467 104 28,571
Contributions by
and
distributions
to the owners:
Issue of share
capital (Note
22) 357 - - - - - 357 - 357
Share premium
(Note 22) - 93,248 - - - - 93,248 - 93,248
Merger relief
reserve (Note
22) - - 13,097 - - - 13,097 - 13,097
Share based
payments -
resulting
from company
share option
scheme (Note
13) - - - 123 - - 123 - 123
Share based
payments -
resulting
from
acquisition of
subsidiary
(Note 18) - - - - 4,428 4,428 - 4,428
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Balance at 31
March 2017
(Restated*) 407 93,248 13,097 123 4,428 28,464 139,767 104 139,871
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Comprehensive
Income for the
year
Profit for the
year - - - - - 57,766 57,766 3,131 60,897
Amounts
withdrawn by
non-controlling
interest - - - - - - - (443) (443)
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Total
comprehensive
income
for the year - - - - - 57,766 57,766 2,688 60,454
Contributions by
and
distributions
to the owners:
Issue of share
capital (Note
22) 309 - - - - - 309 - 309
Share premium
(Note 22) - 94,981 - - - - 94,981 - 94,981
Share based
payments -
resulting
from company
share option
scheme (Note
13) - - - 490 - - 490 - 490
Share based
payments -
resulting
from
acquisition of
subsidiary
(Note 18) - - - - 4,406 - 4,406 - 4,406
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Balance at 31
March 2018
(Restated*) 716 188,229 13,097 613 8,834 86,230 297,719 2,792 300,511
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Comprehensive
Income for the
year
Adjustments for
transitioning
to IFRS 15
(Note 2i) - - - - - (1,072) (1,072) (2,502) (3,574)
Profit for the
year - - - - - 110,579 110,579 582 111,161
Acquired
reserves due to
non-controlling
interest - - - - - - - - -
Amounts
withdrawn by
non-controlling
interest - - - - - - - (638) (638)
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Total
comprehensive
income
for the year - - - - - 109,507 109,507 (2,558) 106,949
Contributions by
and
distributions
to the owners:
Issue of share
capital (Note
22) 463 - - - - - 463 - 463
Share premium
(Note 22) - 207,554 - - - - 207,554 - 207,554
Share based
payment (Note
13) - - - 1,100 - - 1,100 - 1,100
Share Based
payment
resulting
from
acquisition of
Subsidiary
(Note 18) - - - - 1,989 - 1,989 - 1,989
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
Balance at 31
March 2019 1,179 395,783 13,097 1,713 10,823 195,737 618,332 234 618,566
---------------- -------- -------- --------- ------- -------------- --------- ------- ------------ ----------
*Certain amounts shown here do not correspond to the Annual
Report for the year ended 31 March 2018 and 31 March 2017 and
reflect adjustments made, refer to Note 3(a) and Note 18.
The notes on pages 72 to 99 are an integral part of these
consolidated financial statements.
Notes to the Consolidated Financial Statements
1. General information
Draper Esprit plc (the "Company") is a public company limited by
shares incorporated and domiciled in England and Wales. The Company
is listed on the London Stock Exchange's AIM market and the Irish
Stock Exchange's Euronext Dublin market.
The Company is the ultimate parent company into which the
results of all subsidiaries are consolidated. The consolidated
financial statements for the year ended 31 March 2019, 31 March
2018, and 31 March 2017 comprise the financial statements of the
Company and its subsidiaries (together, "the Group").
The consolidated financial statements are presented in Pounds
Sterling (GBP), which is the currency of the primary economic
environment the Group operates in. All amounts are rounded to the
nearest thousand, unless otherwise stated.
2. Adoption of new and revised standards
Information on the Draper Esprit Group's structure is given in
Note 3(b). Information on other related party relationships of the
Draper Esprit Group is provided in Note 29.
In the current year, the new and revised Standards and
Interpretations below have been adopted which affected the amounts
reported in these consolidated financial statements:
i. IFRS 15 Revenue from Contracts with Customers is a new
Standard, effective from 1 January 2018. 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 core principal of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration, which the
entity expects to be entitled in exchange for those goods or
services.
The only material impact from the adoption of this standard
relates to the recognition of performance fees, which under IFRS 15
will no longer be recognised following analysis in line with the
Standard's higher threshold for recognition. The underlying status
of the fees has not changed.
The impact on the consolidated statement of financial position
and consolidated statement of changes in equity can be seen in the
table below:
PY reported
Previously IFRS 15 under
reported reclassification IFRS 15
GBP000's GBP000's GBP000's
--------------------------------------------------- ---------- ----------------- -----------
Performance fee revenue (recognised in year ending
31 March 2018) 3,574 (3,574) 0
--------------------------------------------------- ---------- ----------------- -----------
Performance fees attributable to the Group 1,072 (1,072) 0
--------------------------------------------------- ---------- ----------------- -----------
Performance fees attributable to non-controlling
interest 2,502 (2,502) 0
--------------------------------------------------- ---------- ----------------- -----------
Accrued Revenue 3,574 (3,574) 0
--------------------------------------------------- ---------- ----------------- -----------
The Group has elected not to restate comparative information
from prior periods upon adoption of IFRS 15 and has applied the
practical expedient under which contracts that began and were
completed prior to 1 April 2018 are not restated. For ongoing
contracts, any changes required are taken straight to the condensed
consolidated interim statement of changes in equity.
ii. In the current year, the Group has applied IFRS 9 Financial
Instruments (as revised in July 2014) and the related consequential
amendments to other IFRSs. IFRS 9 introduces new requirements for
the 1) classification and measurement of financial assets and
financial liabilities, 2) impairment for financial assets and 3)
general hedge accounting. There is no material impact on the Group
in relation of the implementation of IFRS 9. The Standard has been
adopted from 1 April 2018 with no restatement of prior periods
required.
1) Classification and measurement
On 1 April 2018, the Group has classified its financial
instruments in the appropriate IFRS 9 categories; there were no
changes.
2) Impairment of financial assets
The Group has one type of financial asset that is subject to
IFRS 9's new expected credit loss model:
-- Trade and other receivables (See Note 19)
On 1 April 2018, there was no material impact on the trade and
receivables balance resulting from the expected credit loss
model.
3) General Hedge Accounting
The Group does not use hedge accounting, therefore there is no
impact on the financial statements from this change to IFRS 9.
Standards not affecting the reported results or financial
position
At the date of authorisation of these consolidated financial
statements, the following Standards and Interpretations that have
not been applied in these financial statements were in issue but
not yet effective:
-- IFRS 16 Leases applies to annual reporting periods beginning
on or after 1 January 2019. 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,(See Note 23). The Directors have determined that
commitments of GBP1.6 million would be recognised on the balance
sheet as a liability with an equivalent asset in fixed assets for
the financial year commencing 1 April 2019. There will not be a
material impact on the Consolidated Statement of Comprehensive
Income. The impact on the Consolidated Statement of Comprehensive
Income is expected to be to reclassify operating lease expenses to
depreciation and interest expenses.
3. Significant accounting policies
Basis of preparation
To note within the year are the adoption by the Group of IFRS 9
and IFRS 15, which is discussed in further detail above, as well as
the restatement discussed in 3(a) below. The consolidated financial
statements 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 and, endorsed by the European
Union ("EU") and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. 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
Practice). The Company has taken advantage of disclosure exemptions
available under FRS 101 as explained further in Note 1 of the
Company's financial statements. The financial statements are
prepared on a going concern basis as disclosed in the Directors'
Report.
The consolidated financial statements have been prepared under
the historical cost convention as modified for the revaluation of
financial assets and financial liabilities held at fair value.
A summary of the Group's principal accounting policies, which
have been applied consistently across the Group is set out
below.
a) Prior period restatements
In accordance with IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors, the comparative periods presented
in these financial statements have been restated in line with IFRS
3 Business Combinations to recognise the impact of terms in the
Lock-in and Vesting Deed dated 10 June 2016 on the acquisition of
Esprit Capital Partners LLP, (See Note 18 for further details).
The impact on net assets in the consolidated statement of
financial position as at 31 March 2017 and 31 March 2018 was
GBP10.8 million. The impact on profit for the year ended 31 March
2018 in the consolidated statement of comprehensive income was
GBP4.4 million (31 March 2017: GBP4.4 million). For further details
of the restatements, see the primary statements and Note 18.
b) 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%
-------------------------- ---------------------- ------------------ -----------
Draper Esprit (Nominee)
Limited^ Dormant England 100%
-------------------------- ---------------------- ------------------ -----------
Encore Ventures LLP^ Investment Management England 71%
-------------------------- ---------------------- ------------------ -----------
Esprit Capital I
GP Limited^ General Partner England 100%
-------------------------- ---------------------- ------------------ -----------
Esprit Capital II
GP Limited^^^ General Partner Cayman 100%
-------------------------- ---------------------- ------------------ -----------
Esprit Capital III
Founder GP Limited^^ General Partner Scotland 100%
-------------------------- ---------------------- ------------------ -----------
Esprit Capital III
GP LP^^ General Partner Scotland 100%
-------------------------- ---------------------- ------------------ -----------
Encore I GP Limited^^^ General Partner Cayman 100%
-------------------------- ---------------------- ------------------ -----------
Encore I Founder
GP Limited^^ General Partner Scotland 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%
-------------------------- ---------------------- ------------------ -----------
Esprit Capital III
MLP LLP^ Dormant England 100%
-------------------------- ---------------------- ------------------ -----------
Esprit Capital III
GP Limited^ Dormant England 100%
-------------------------- ---------------------- ------------------ -----------
Registered addresses
^20 Garrick Street, London, England, WC2E 9BT
^^50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3
9WJ
^^^Appleby Trust (Cayman) Limited, PO Box 1350, Clifton House,
75 Fort Street, Grand Cayman, KY1-1108, Cayman Islands
Subsidiaries
Subsidiaries are entities controlled by the Group. Control, as
defined by IFRS 10, is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over
the investee. Subsidiaries are fully consolidated from the date on
which the Group effectively obtains control. They are
deconsolidated from the date that control ceases. Control is
reassessed whenever circumstances indicate that there may be a
change in any of these elements of control. Refer to Note 4(c) 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, rather than as a
reverse acquisition having assessed the substance of the
transaction, including control and changes in ownership. All
transactions and balances between Group subsidiaries are eliminated
on consolidation, including unrealised gains and losses on
transactions between Group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the
underlying asset is also tested for impairment from a Group
perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of
disposal, as applicable. The Group attributes total comprehensive
income or loss of subsidiaries between the owners of the parent and
the non-controlling interests based on their respective ownership
interests.
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 in case there are indications that the carrying value
may no longer be recoverable. For further details, please see
investment in associate Note 15.
Investment Company
In accordance with the provisions of IFRS 10, Draper Esprit plc
considers itself to be an investment entity and considers its
wholly-owned subsidiary, Draper Esprit (Ireland) Limited as well as
the limited partnerships listed below to be investment companies,
as their sole purpose is to hold investments on behalf of the
Group. Consequently, Draper Esprit (Ireland) Limited and the
limited partnerships listed below are not consolidated in
accordance with IFRS10, instead they are recognised as investments
held at fair value through 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.
Country
of
Name of undertaking Principal activity incorporation % ownership
------------------------ -------------------- --------------- -----------
Draper Esprit (Ireland)
Limited^^ Investment company Ireland 100%
------------------------ -------------------- --------------- -----------
Esprit Capital III
LP^ Limited partnership England 100%
------------------------ -------------------- --------------- -----------
Esprit Capital IV
LP^ Limited partnership England 100%
------------------------ -------------------- --------------- -----------
Esprit Investments
(1) LP^ Limited partnership England 100%
------------------------ -------------------- --------------- -----------
Esprit Investments
(2) LP^ Limited partnership England 100%
------------------------ -------------------- --------------- -----------
Esprit Investments
(1) (B) LP^ Limited partnership England 100%
------------------------ -------------------- --------------- -----------
Esprit Investments
(2) (B) LP^ Limited partnership England 100%
------------------------ -------------------- --------------- -----------
^20 Garrick Street, London, England, WC2E 9BT
^^ 32 Molesworth Street, Dublin 2, Ireland, D02 Y512
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, they are not consolidated in these financial
statements:
Country
Name of undertaking Principal activity of incorporation
----------------------- --------------------------------- -----------------
Encore I GP LP^ General partner Cayman
----------------------- --------------------------------- -----------------
Esprit Capital II
Founder LP^ Co-investment limited partnership Cayman
----------------------- --------------------------------- -----------------
Esprit Capital II
Founder 2 LP^ Co-investment limited partnership Cayman
----------------------- --------------------------------- -----------------
Encore I Founder LP^ Co-investment limited partnership Cayman
----------------------- --------------------------------- -----------------
Encore I Founder 2014
LP^ Co-investment limited partnership Cayman
----------------------- --------------------------------- -----------------
Encore I Founder 2014-A
LP^ Co-investment limited partnership Cayman
----------------------- --------------------------------- -----------------
Esprit Capital III
Founder LP^^ Co-investment limited partnership Scotland
----------------------- --------------------------------- -----------------
^Appleby Trust (Cayman) Limited, PO Box 1350, Clifton House, 75
Fort Street, Grand Cayman, KY1-1108, Cayman Islands
^^50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
The Group's management does not consider there to be a material
exposure to these entities.
c) Operating Segment
The Group's management considers the Group's investment
portfolio represents a coherent and diversified portfolio with
similar economic characteristics and as a result these individual
investments have been aggregated into a single operating segment.
In the view of the Directors, there is accordingly one reportable
segment under the provisions of IFRS 8.
d) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes. All revenue from
services is generated within the UK and is stated exclusive of
value added tax.
Revenue from services comprises:
i. Fund management services
Fund management fees are either earned at a fixed annual rate or
are set at a fixed percentage of funds under management, measured
by commitments or invested cost, depending on the stage of the fund
being managed. Revenues are recognised as the related services are
provided.
ii. Portfolio Directors' fees
Portfolio Directors' fees are annual fees, charged 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. Revenues are recognised
as services are provided.
iii. Performance fees
Performance fees are earned on a percentage basis on returns
over a hurdle rate in the statement of comprehensive income.
Amounts are recognised as revenue when it can be reliably measured
and highly probable funds will flow to the Group.
e) Deferred income
The Group's management fees are typically billed annually,
either quarterly or half-yearly in advance. Where fees have been
billed for an advance period, the amounts are credited to deferred
income, and then subsequently released through the profit and loss
accounting the period the fees relate to.
f) Business combinations
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred and the equity interests issued by the Group, which
includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are
expensed as incurred. Assets acquired and liabilities assumed are
generally measured at their acquisition-date fair values.
The Group recognises identifiable assets acquired and
liabilities assumed in a business combination, regardless of
whether they have been previously recognised in the acquiree's
financial statements prior to the acquisition. Assets acquired and
liabilities assumed are generally measured at their
acquisition-date fair values. Goodwill is stated after separate
recognition of identifiable intangible assets. It is calculated as
the excess of the sum of: a) fair value of consideration
transferred; b) the recognised amount of any non-controlling
interest in the acquiree; and c) acquisition-date fair value of any
existing equity interest in the acquiree, over the acquisition-date
fair values of identifiable net assets. If the fair values of
identifiable net assets exceed the sum calculated above, the excess
amount (i.e. gain on a bargain purchase) is recognised in profit or
loss immediately.
g) Goodwill and other intangible assets
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net 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 exceed the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
When the consideration transferred by the Group in a business
combination includes an asset or liability resulting from a
contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value and included as part
of the consideration transferred in a business combination. Changes
in fair value of the contingent consideration that qualify as
measurement period adjustments are adjusted retrospectively, with
corresponding adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional information
obtained during the "measurement period" (which cannot exceed one
year from the acquisition date) about facts and circumstances that
existed at the acquisition date.
Other intangible assets
Certain previously unrecognised assets acquired in a business
combination that qualify for separate recognition are recognised as
intangible assets at their fair values e.g. brand names, customer
contracts and lists (See Note 14). All finite-lived intangible
assets are accounted for using the cost model whereby capitalised
costs are amortised on a straight-line basis over their estimated
useful lives. Residual values and useful lives are reviewed at each
reporting date. In addition, they are subject to impairment testing
as described below. Customer contracts are amortised on a
straight-line basis over their useful economic lives, typically the
duration of the underlying contracts. The following useful economic
lives are applied:
i. Customer contracts: eight years.
h) Impairment
For the purposes of assessing impairment, assets are grouped at
the lowest level for which there are largely independent cash
inflows ("cash generating units" or "CGU"). As a result, some
assets are tested individually for impairment and some are tested
at cash-generating unit level. Goodwill is allocated to those
cash-generating units that are expected to benefit from synergies
of the related business combination and represent the lowest level
within the Group at which management monitors goodwill. All other
individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
An impairment loss is recognised in the consolidated statement
of total comprehensive income for the amount by which the assets or
cash generating units carrying amount exceeds its recoverable
amount that is the higher of fair value less costs to sell and
value-in-use. To determine value-in-use, management estimates
expected future cashflows over 5 years 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.
i) Foreign currency
Transactions entered into by Group entities in a currency other
than the functional currency in which they operate are recorded at
the rates prevailing when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates
prevailing at the reporting date. Exchange differences arising on
the retranslation of unsettled monetary assets and liabilities are
recognised immediately in the profit and loss.
The individual financial statements of the Group's subsidiary
undertakings are presented in their functional currency. For the
purpose of these consolidated financial statements, the results and
financial position of each subsidiary undertaking are expressed in
Pounds Sterling, which is the presentation currency for these
consolidated financial statements.
The assets and liabilities of the Group's undertakings, whose
functional currency is not pounds sterling, are translated at
exchange rates prevailing on the reporting date. Income and expense
items are translated at the average exchange rates for the
period.
j) Financial assets
All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned and are initially
measured at fair value, plus transaction costs, except for those
financial assets classified at fair value through profit or loss,
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 'amortised cost'. 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 IFRS 9 Financial Instruments permits the entire
combined contract (asset or liability) to be designated as at
FVTPL.
The Group considers that the investment interests it holds in
Esprit Capital III LP, Esprit Capital III Founder LP, Esprit
Capital II Founder LP, Esprit Capital IV LP, Esprit Investments(I)
LP, Esprit Investments (1)(B) LP, Esprit Investments (2) LP, and
Esprit Investments (2)(B) LP are appropriately designated as at
FVTPL as they meet criteria (b) above.
Amortised cost
A financial asset is held at amortised cost under IFRS 9 where
it is held for the collection of cash flows representing solely
payments of principal and interest. These assets are measured at
amortised cost using the effective interest method, less any
expected losses. Financial assets which were part of the category
of 'loans and receivables' under IAS 39 Financial Instruments:
Recognition and measurement are now categorised within this
group.
The Group's financial assets held at amortised cost comprise
trade and most other receivables, and cash and cash equivalents in
the consolidated statement of financial position.
k) Financial liabilities
The Group's financial liabilities may include borrowings and
trade, and other payables.
All 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.
l) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the outflow of resources embodying the economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
m) Share capital
Financial instruments issued by the Group are classified as
equity only to the extent that they do not meet the definition of a
financial liability or financial asset.
The Group's ordinary shares are classified as equity
instruments. Equity instruments are recorded at the proceeds
received, net of direct issue costs.
n) 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.
o) Share-based payments
Where equity settled share options are awarded to employees, the
fair value of the options at the date of grant is charged to the
consolidated statement of comprehensive income over the vesting
period. 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.
p) 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.
q) Dividends
Dividends are recognised when they become legally payable. In
the case of interim dividends to equity shareholders, this is when
the dividend is paid. In the case of final dividends, this is when
the dividend is approved by the shareholders at the AGM.
r) Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years, and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
s) Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences, and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the income statement, except when it relates
to items charged or credited in other comprehensive income, in
which case the deferred tax is also dealt with in other
comprehensive income.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities. Deferred
tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities, and when they relate to income taxes levied by the
same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis.
t) Property, Plant and equipment
Fixtures and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss. Depreciation is
recognised to write off the cost or valuation of assets less their
residual values over their useful lives, using the straight-line
method, on the following basis:
Leasehold improvements - over the term of the lease
Fixtures and equipment - 33% p.a. straight line
Computer equipment - 33% p.a. straight line
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective
basis.
u) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits at
bank and highly liquid investments with a term of no more than 90
days that are readily convertible into known amounts of cash and
that are subject to an insignificant risk of changes in value. No
cash equivalents are held as at 31 March 2019 (31 March 2018:
nil).
v) Segmental reporting
IFRS 8, "Operating Segments" defines operating segments as those
activities of an entity about which separate financial information
is available and which are evaluated by the Chief Operating
Decision Maker to assess performance and determine the allocation
of resource. The Chief Operating Decision Maker has been identified
by the Board of Directors as the Chief Executive Officer.
w) Financial instruments
Financial assets and financial liabilities are recognised in the
consolidated balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at 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.
x) Exceptional items
The Group classifies items of income and expenditure as
exceptional when the nature of the item or its size is likely to be
material, to assist the reader of the financial statements to
better understand the results of the operations of the Group. Such
items by their nature are not expected to recur and are shown
separately on the face of the consolidated statement of
comprehensive income.
y) Interest income
Interest income earned on cash and deposits and short-term
liquidity investments is recognised when it is probable that the
economic benefits will flow to the Group and the amount of income
recognised can be measured reliably. Interest income is accrued on
a time basis, with reference to the principal outstanding and at
the effective interest rate applicable.
z) Carried interest
The Group has established carried interest plans for the
Executive Directors, other members of the investment team and
certain other employees (together, the "Plan Participants") in
respect of any investments and follow-on investments made from
Admission. Each carried interest plan operates in respect of
investments made during a 24-month period and related follow-on
investments made for a further 36-month period.
Subject to certain exceptions, Plan Participants will receive,
in aggregate, 15% of the net realised cash profits from the
investments and follow-on investments made over the relevant period
once the Group has received an aggregate annualised 10% realised
return on investments and follow-on investments made during the
relevant period. The Plan Participants' return is subject to a
"catch-up" in their favour. Plan Participants' carried interests
vest over five years for each carried interest plan and are subject
to good and bad leaver provisions. Any unvested carried interest
resulting from a Plan Participant becoming a leaver can be
reallocated by the Remuneration and Nomination Committee.
The Group's interest in carried interest is measured at fair
value through the profit and loss (FVTPL) with reference to the
performance conditions described above, and is deducted from the
valuation of investments measured at FVTPL.
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 estimates
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. Actual results may differ from estimates. The key
estimates, (4)(a) and (4)(b), and judgements, (4)(c) and (4)(d),
are discussed below. There have been no changes to the accounting
estimates and judgements in the financial year ended 31 March
2019.
a) Valuation of unquoted equity investments at fair value through the profit and loss
The Group invests into Limited Companies and Limited
Partnerships which are considered to be investment companies that
invest in unquoted equity for the benefit of the Group. These
investment companies are measured at fair value through the profit
or loss based on their NAV at the year end. The Group controls
these entities and is responsible for preparing their NAV which is
based on the valuation of their unquoted investments. The Group's
valuation of investments measured at fair value through profit or
loss is therefore dependent upon estimations of the valuation of
the underlying portfolio companies.
The Group, through its controlled investment companies also
invests in investment companies which primarily focus on German or
seed investments. These investments are considered to be 'Fund of
Fund investments' for the Group and are recognised at their NAV at
the year-end date. These Fund of Fund investments are not
controlled by the Group and some do not have coterminous year ends
with the Group. To value these investments management obtain the
latest audited financial statements of the investments and discuss
further movements with the management of the companies. Where the
Fund of Funds hold investments that are individually material to
the Group, management perform further procedures to determine that
the valuation of these investments has been prepared in accordance
with the Group's valuation policies for portfolio companies
outlined below and these valuations will be adjusted by the Group
where necessary based on the Group valuation policy for valuing
portfolio companies.
The estimates required to determine the appropriate valuation
methodology of unquoted equity investments means there is a risk of
material adjustment to the carrying amounts of assets and
liabilities. These estimates include whether to increase or
decrease investment valuations or not and require the use of
assumptions about the carrying amounts of assets and liabilities
that are not readily available or observable.
The fair value of unlisted securities is established with
reference to the International Private Equity and Venture Capital
Valuation Guidelines ("IPEV Guidelines"). In line with the IPEV
Guidelines, 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. An assessment
will be made at each measurement date as to the most appropriate
valuation methodology.
The Group invests in early-stage and growth technology
companies, through predominantly unlisted securities. Given the
nature of these investments, there are often no current or
short-term future earnings or positive cash flows. Consequently,
although not considered to be the default valuation technique, the
appropriate approach to determine fair value may be based on a
methodology with reference to observable market data, being the
price of the most recent transaction. Fair value estimates that are
based on observable market data will be of greater reliability than
those based on estimates and assumptions and accordingly where
there have been recent investments by third parties, the price of
that investment will generally provide a basis of the
valuation.
If this methodology is used, 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 this basis remains appropriate each time
valuations are reviewed.
If the "price of recent investment" methodology is not
considered appropriate, the Group considers alternative
methodologies in the IPEV Guidelines, being principally
price-revenue or price-earnings multiples, depending upon the stage
of the asset, requiring management to make assumptions over the
timing and nature of future revenues and earnings when calculating
fair value.
Where a fair value cannot be estimated reliably, the investment
is reported at the carrying value at the previous reporting date
unless there is evidence that the investment has since been
impaired.
In all cases, valuations are based on the judgement of the
Directors after consideration of the above and upon available
information believed to be reliable, which may be affected by
conditions in the financial markets. Due to the inherent
uncertainty of the investment valuations, the estimated values may
differ significantly from the values that would have been used had
a ready market for the investments existed, and the differences
could be material. Due to this uncertainty, the Group may not be
able to sell its investments at the carrying value in these
financial statements when it desires to do so or to realise what it
perceives to be fair value in the event of a sale. See Notes 26 and
27 for information on unobservable inputs used and sensitivity
analysis on investments held at fair value through the profit and
loss.
b) Carrying amount of goodwill
Determining whether goodwill is impaired requires an estimation
of the recoverable amount of the cash-generating units to which
goodwill is allocated. An impairment review is performed on an
annual basis unless there is a trigger event during the period. 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 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 carrying amount of
the restated goodwill as at the statement of financial position
date was GBP9.7 million, which was recognised during the year
ending 31 March 2017 in according with IFRS 3 Business
Combinations. Other than the restatement during the period (See
Note 3(a) and note 18 for further details), the Group has conducted
a sensitivity analysis on the impairment test of the CGU and the
carrying value. A higher discount rate in the range of 15%-20% does
not reduce the carrying value of goodwill to less than its
recoverable amount.
The CGU was determined to be the fund managers, which is a
critical management judgement, as they are responsible for
generating deal flow and working with investee companies creating
value and maximising returns for the Group.
c) Control assessment
The Group has a number of entities within its corporate
structure and a judgement 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(b) for further details.
d) 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 based on the judgement of
Directors, it has been determined that this transaction is
appropriately accounted for as an acquisition.
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 weighted average number
of shares. When calculating the diluted earnings per share, the
weighted average number of shares in issue is adjusted for the
effect of all dilutive share options and awards.
Weighted
Profit average
after no. of
tax shares Pence
Basic earnings per ordinary share GBP'000s '000 per share
---------------------------------------- --------- -------- ----------
31 March 2019 110,579 96,051 115
---------------------------------------- --------- -------- ----------
31 March 2018 *Restated (Note 3a & 18) 57,766 65,011 89
---------------------------------------- --------- -------- ----------
31 March 2017 *Restated (Notes 3a & 18) 28,487 32,230 88
---------------------------------------- --------- -------- ----------
Weighted
Profit average
after no. of
tax shares Pence
Diluted earnings per ordinary share GBP'000s '000 per share
---------------------------------------- --------- -------- ----------
31 March 2019 110,579 100,506 110
---------------------------------------- --------- -------- ----------
31 March 2018 *Restated (Notes 3a & 18) 57,766 65,512 88
---------------------------------------- --------- -------- ----------
31 March 2017 *Restated (Notes 3a & 18) 28,487 32,740 87
---------------------------------------- --------- -------- ----------
Net asset value ("NAV") per share is based on the net asset
attributable to shareholders and the number of shares as at the
balance sheet date. When calculating the diluted earnings per
share, the number of shares in issue at balance sheet date is
adjusted for the effect of all dilutive share options and
awards.
No. of
shares
at balance Pence
Net assets sheet per
Net asset value per ordinary share GBP'000s date '000 share
---------------------------------------- ---------- ----------- ------
31 March 2019 618,332 117,925 524
---------------------------------------- ---------- ----------- ------
31 March 2018 *Restated (Notes 3a & 18) 297,719 71,612 416
---------------------------------------- ---------- ----------- ------
31 March 2017 *Restated (Notes 3a & 18) 139,767 40,748 343
---------------------------------------- ---------- ----------- ------
No. of
shares
at balance Pence
Net assets sheet per
Diluted net asset value per ordinary share GBP'000s date '000 share
--------------------------------------------- ---------- ----------- -------
31 March 2019 618,332 123,325 501
--------------------------------------------- ---------- ----------- -------
31 March 2018 *Restated (Notes 3a & 18) 297,719 74,636 399
--------------------------------------------- ---------- ----------- -------
31 March 2017 *Restated (Notes 3a & 18) 139,767 42,261 331
--------------------------------------------- ---------- ----------- -------
Dividends: There were no Dividends paid out in the year to
31March 2019 (2018: nil)
6. Intangible assets
Customer
Goodwill(1) contracts(2) Total
31 March 2019 GBP'000s GBP'000s GBP'000s
------------------------------------------------ ----------- ------------- ---------
Cost
Cost carried forward as at 1 April 2018 9,653 818 10,471
Additions during the year - - -
------------------------------------------------ ----------- ------------- ---------
Cost as at 31 March 2018 9,653 818 10,471
Accumulated amortisation
Amortisation carried forward as at 1 April 2018 - (239) (239)
Charge for the year - (102) (102)
------------------------------------------------ ----------- ------------- ---------
Accumulated amortisation as at 31 March 2019 - (341) (341)
Net book value:
As at 31 March 2019 9,653 477 10,130
------------------------------------------------ ----------- ------------- ---------
As at 31 March 2018 9,653 579 10,232
------------------------------------------------ ----------- ------------- ---------
Customer
31 March 2018 Goodwill(1) contracts(2) Total
*Restated (Notes 4b & 18) GBP'000s GBP'000s GBP'000s
------------------------------------------------ ------------- ------------- ----------
Cost
Cost carried forward as at 1 April 2017 9,653 818 10,471
Additions during the year - - -
------------------------------------------------ ------------- ------------- ----------
Cost as at 31 March 2018 9,653 818 10,471
Accumulated amortisation
Amortisation carried forward as at 1 April 2017 - (136) (136)
Charge for the year - (103) (103)
------------------------------------------------ ------------- ------------- ----------
Accumulated amortisation as at 31 March 2018 - (239) (239)
Net book value:
As at 31 March 2018 9,653 579 10,232
------------------------------------------------ ------------- ------------- ----------
As at 31 March 2017 9,653 682 10,335
------------------------------------------------ ------------- ------------- ----------
Customer
31 March 2017 Goodwill(1) contracts(2) Total
*Restated (Notes 4b & 18) GBP'000s GBP'000s GBP'000s
------------------------------------------------- ------------- ------------- ----------
Cost
Cost carried forward as at 15 June 2016
Additions during the year - - -
Acquired through business combinations (Note 18) 9,653 818 10,471
------------------------------------------------- ------------- ------------- ----------
Cost as at 31 March 2017 9,653 818 10,471
Accumulated amortisation
Amortisation carried forward as at 15 June 2016 - - -
Charge for the year - (136) (136)
------------------------------------------------- ------------- ------------- ----------
Accumulated amortisation as at 31 March 2017 - (136) (136)
Net book value:
------------------------------------------------- ------------- ------------- ----------
As at 31 March 2017 9,653 682 10,335
------------------------------------------------- ------------- ------------- ----------
1 Goodwill of GBP9.7 million (restated - see Notes 3(a) and 18)
arose on the acquisition of all the capital interests in 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 and 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 fee income from management
fees over the next 5 years from the realisation of investments for
the next eight years with reference to the most recent financial
budget and forecasts. A five-year cashflow period was deemed
appropriate for the value in use calculation given the patient
capital model adopted by the Group. 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%.
2 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. Financial assets held at fair value through profit and loss
The Group holds investments through investment vehicles it
manages. The investments are predominantly in unlisted securities
and are carried at fair value through the profit and loss. The
Group's valuation policies are set out in Note 4(a) and Note 26.
The table below sets out the movement in the balance sheet value of
investments from the start to the end of the year, showing
investments made, cash receipts and fair value movements.
Year ended Year ended Year ended
31 Mar 31 Mar 31 Mar
2019 2018 2017
GBP'000s GBP'000s GBP'000s
--------------------------------------------------- ---------- ---------- ----------
As at 1 April 231,910 105,971 -
Initial portfolio acquired on 15 June 2016(1) - - 63,940
Carry and Co-invest acquired on 15 June 2016 - - 2,822
Investments made in the year(2/3) 226,432 74,674 20,602
Investments settled in shares(3) 309 - -
Loans repaid from underlying investment vehicles (15,984) (15,338) (17,137)
Loans made to underlying investment vehicles 4,679 - -
Unrealised gains on the revaluation of investments 114,715 66,603 35,744
--------------------------------------------------- ---------- ---------- ----------
As at 31 March 562,061 231,910 105,971
--------------------------------------------------- ---------- ---------- ----------
1 The initial portfolio was acquired on 15 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.
2 Investments made in the year 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.
3 Investments made in the period include non-cash consideration
of GBP0.3 million. See separate line.
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 UK. The business was acquired in order for Draper
Esprit plc to become a self-managed investment entity. The revenues
and profits of the acquired entity and its subsidiaries would have
been GBP1.2 million and GBP32.9 million had the entity been
acquired at the beginning of the accounting period being 15 June
2016. Details of the business combination are as follows:
As reported
previously
GBP'000s Adjustment Restated
----------------------------------------------- ----------- ---------- --------
Fair value of equity shares issued 24,000 (10,823) 13,177
----------------------------------------------- ----------- ---------- --------
Total 24,000 (10,823) 13,177
----------------------------------------------- ----------- ---------- --------
Recognised amounts of identifiable net assets:
Property, plant and equipment 5 - 5
Intangible assets 818 - 818
Investments 2,675 - 2,675
Trade and other receivables 1,165 - 1,165
Cash and cash equivalents 495 - 495
Deferred tax liabilities (310) - (310)
Trade and other payables (1,324) - (1,324)
----------------------------------------------- ----------- ---------- --------
Net identifiable assets and liabilities 3,524 - 3,524
----------------------------------------------- ----------- ---------- --------
Goodwill 20,476 (10,823) 9,653
----------------------------------------------- ----------- ---------- --------
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
each sell 681,156 ordinary shares. In the year, a change in the
underlying accounting treatment of the Company's acquisition of
Esprit Capital Partners LLP ("ECP") in June 2016 has led to a
reduction in the goodwill carried on the balance sheet of GBP10.8
million. In accordance with IFRS 3, Business Combinations, GBP10.8
million (3,607,668 shares at GBP3.00 each) was reclassified to the
consolidated statement of changes in equity as a contingent payment
to the members of Esprit Capital Partners LLP and charged to the
consolidated statement of comprehensive income over 2.5 years in
accordance with the Lock-in And Vesting Deed dated 10 June 2016 and
subsequent Waiver Agreement. This is not indicative of an
impairment to the goodwill or the inherent value of ECP but a
change to present approximately half of the original consideration
(8 million shares at 300p per share) as a contingent payment.
The reduction in the goodwill is matched by a reduction in the
merger reserve on the balance sheet of GBP10.8 million and the
income statement reflects an equivalent charge over the current and
restated reporting periods.
The comparative periods' consolidated statements of financial
position and consolidated statements of comprehensive income
presented in these consolidated financial statements have been
restated to reflect this reclassification from the period
commencing 1 April 2016 through to 31 March 2018. There are no
ongoing charges related to this accounting change.
Please see below a table reflecting the movements during prior
periods and during the year ending 31 March 2019 resulting from
this restatement:
Balance Sheet Equity P&L*
-------------------------- ---------------- ---------------------------- ---------------- ----------------
Account Date Dr Cr Dr Cr Dr Cr
-------------------------- ---------------- ------------- ------------- ------------ ------------
Merger Reserve 15/06/2016 GBP10,823,004 - - - - -
Goodwill 15/06/2016 - GBP10,823,004 - - - -
Retained earnings Year ending 31
- b/f March 2017 - - GBP4,427,855 - - -
Share-based payment
reserve -arising from Year ending 31
acquisition of subsidiary March 2017 - GBP4,427,855 - - - -
Retained earnings Year ending 31
- b/f March 2018 - - GBP4,405,506 - - -
Share-based payment
reserve -arising from Year ending 31
acquisition of subsidiary March 2018 - GBP4,405,506 - - - -
Share-based payment
charge -arising from Period ending 30
acquisition of subsidiary September 2018 - - - - GBP1,989,643 -
Share-based payment
reserve -arising from Period ending 30
acquisition of subsidiary September 2018 - GBP1,989,643 - - - -
-------------------------- ---------------- ------------- ------------- ------------ ------------
GBP10,823,004 GBP21,646,008 GBP8,833,361 - GBP1,989,643 -
-------------------------- ---------------- ------------- ------------- ------------ ------------
*Consolidated Statement of Comprehensive Income
9. Share capital and share premium
Ordinary share capital
31 March 2019 - Allotted and fully paid Number Pence GBP'000s
-------------------------------------------------------- ----------- ----- --------
At the beginning of the year 71,611,773 1 716
-------------------------------------------------------- ----------- ----- --------
Issue of share capital during the year for cash1
(/ 2) 46,248,877 1 462
-------------------------------------------------------- ----------- ----- --------
Issue of share capital during the year as consideration
for investment purchase3 64,820 1 -
-------------------------------------------------------- ----------- ----- --------
At the end of the year 117,925,470 1 1,179
-------------------------------------------------------- ----------- ----- --------
1 On 14 June 2018, the Company raised gross proceeds of
approximately GBP115.0 million at an issue price of 420 pence per
share by way of the conditional placing of 20,238,095 new ordinary
shares and a subscription of 7,142,857 new ordinary shares.
2 On 8 February 2019, the Company raised gross proceeds of
approximately GBP100.0 million at an issue price of 530 pence per
share by way of the conditional placing of 18,867,925 new ordinary
shares.
3 On the 4 July 2018, the Company raised gross proceeds of
GBP0.3 million at an issue price of 478 pence per share by way of
the placing of 64,820 new ordinary shares.
31 March 2018 - Allotted and fully paid Number Pence GBP'000s
---------------------------------------- ---------- ----- --------
At the beginning of the year 40,747,576 1 407
---------------------------------------- ---------- ----- --------
Issue of share capital during the year 30,864,197 1 309
---------------------------------------- ---------- ----- --------
At the end of the year 71,611,773 1 716
---------------------------------------- ---------- ----- --------
On 5 June 2017 the Company announced a placing and subscription
for GBP100.0 million. 29,012,346 new shares were issued on 20 June
2017 to trading on AIM and ESM with a further 1,851,851 new shares
issued for 324 pence each on 4 August 2017.
31 March 2017 - Allotted and fully paid Number Pence GBP'000s
---------------------------------------- ---------- ----- --------
At the beginning of the year 50,000 100 50
---------------------------------------- ---------- ----- --------
Redeemed during the year(1) (50,000) 100 (50)
---------------------------------------- ---------- ----- --------
Issue of share capital during the year 40,747,576 1 407
---------------------------------------- ---------- ----- --------
At the end of the year 40,747,576 1 407
---------------------------------------- ---------- ----- --------
1 During the year, 50,000 management shares were redeemed by the
Company at par for 100 pence each.
On 15 June 2016, 40,673,909 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:
i. 23,829,017 shares (GBP69.3 million) were issued to investors
for cash proceeds, net of issuance costs;
ii. 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 16 (net of issuance
costs);
iii. 8,000,000 shares (GBP24.0 million) were issued for the
acquisition of Esprit Capital Partners LLP, as described in note
18.
On 26 November 2016, a further 73,667 new ordinary shares of 1
pence each were issued at a price of 350 pence per share to
purchase Elderstreet Holdings limited as described in Note 15.
Share premium
Year ended Year ended Year ended
31 Mar 31 Mar 31 Mar
2019 2018 2017
Allotted and fully paid GBP'000s GBP'000s GBP'000s
------------------------------------------------- ---------- ---------- ----------
At the beginning of the year 188,229 93,248 -
Premium arising on the issue of ordinary shares^ 215,035 100,000 95,972
Equity issuance costs (7,481) (5,019) (2,724)
------------------------------------------------- ---------- ---------- ----------
At the end of the year 395,783 188,229 93,248
------------------------------------------------- ---------- ---------- ----------
^ The premium on ordinary shares in the year arises from the
issue of 27,380,952 new ordinary shares of 1 pence each on 14 June
2018, the issue of 64,820 new ordinary shares of 1 pence each on 4
July 2018, and the issue of 18,867,925 of 1 pence each on 8
February 2019.
Merger relief reserve
In accordance with the Companies Act 2006, a Merger Relief
Reserve of GBP13.1 million (restated) (net of the cost of share
capital issued of GBP80k) 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 June 2016..
10. Fair value measurements
This section should be read with reference to Note 4(a) and Note
16. The Group classifies financial instruments measured at fair
value through the profit and loss according to the following fair
value hierarchy:
(a) Level 1: inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
(b) 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
(c) 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. See Note 4(a)
where valuation policies are discussed in more detail.
Financial instruments, measured at fair value, categorised as
Level 3 within the fair value hierarchy can be split into two main
valuation techniques. Valuation techniques can be categorised as
based on last round price or revenue-multiple. As at 31 March 2019,
financial instruments measured using last round price valuation
methodology GBP405.9 million (year ended 31 March 2018: GBP114.7
million). As at 31 March 2019, financial instruments measured using
revenue-multiple valuation methodology GBP186.1 million (year ended
31 March 2018: GBP117.2 million).
Each portfolio company will be subject to individual assessment.
Where the Group invests in funds of funds investments, the value of
the portfolio will be reported by the seed fund to the Group. The
Group will ensure that the valuations comply with the Group
policy.
The valuation multiple is the main assumption applied to
valuation based on a revenue-multiple methodology. The multiple is
derived from comparable listed companies or relevant market
transaction multiples. Companies in the same industry and
geography, and, where possible, with a similar business model and
profile are selected and then adjusted for factors including
liquidity risk, growth potential and relative performance. They are
also adjusted to represent our longer-term view of performance
through the cycle or our existing assumption. The portfolio we have
is diversified across sectors and geographies and the companies
within our core portfolio holdings which have valuations based on
revenue-multiples have an average multiple of 3x.
If the multiple used to value each unquoted investment valued on
a revenue-multiples basis as at 31 March 2019 was to decrease by
10%, the investment portfolio would decrease by GBP15.2 million (31
March 2018: GBP10.8 million). If the multiple increases by 10% then
the investment portfolio would increase by GBP15.2 million (31
March 2018: GBP10.8 million).
11. Related party transactions
Draper Esprit plc may require that one of its members be
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 Director
services. These fees which amounted to GBP26,957 (2018: GBP9,527,
2017: GBP29,825) have been included in the turnover for the year.
At year end, there was a balance of GBP16,357 outstanding (2018:
GBP8,307). 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 Esprit
Capital Fund III(i) LP to the Group. The fair value of the Esprit
Capital Fund III(i) 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
Esprit Capital III FP LP for GBPnil consideration. The fair value
of the Esprit Capital III FP LP interest assigned, calculated in
accordance with the policies applied with the Group's financial
statements, was GBP444,000. All amounts had been settled by the 31
March 2018. The payments made to Directors during the year ending
31 March 2019 only include salaries and other forms of compensation
disclosed in Remuneration and Nomination Committee Report starting
on page 54.
During the year, GBP840,000 (2018: GBP208,800) was received from
Encore Ventures LLP for overheads, at year end there was a balance
of GBP70,000 (2018: GBP17,400) remained outstanding.
During the year GBP53,737 (2018: GBP59,287) was received from
Draper Esprit VCT for overheads, at year-end a balance of GBP39,154
(2018: GBP4,858) remained outstanding.
Unconsolidated structured entities
The Group has exposure to a number of unconsolidated structured
entities as a result of its venture capital investment
activities.
The Group invests funds via a number of limited partnerships.
These are controlled by the Group and not consolidated, but they
are held as investments at fair value through the profit and loss
on the consolidated balance sheet in line with IFRS 10 (See Note 3b
for further details). The list of these investment companies and
limited partnerships can also be seen in Note 3b. Within these
limited partnerships, there are commitments made to fund of funds
investments that are disclosed in Note 30 below. The material
assets and liabilities within these investment companies are the
investments, which are held at FVTPL in the consolidated
accounts.
A Strategic Partnership Agreement was entered into during the
financial year with Earlybird. Total exposure to the Group is
GBP144.6 million of NAV and further commitments of GBP44.8
million.
The Group also co-invests or historically co-invested with a
number of limited partnerships (see note 3b for further details).
The exposure to these entities is immaterial.
Glossary
In this document, where the context permits, the terms and
expressions set out below shall have the meanings assigned
thereto:
"Admission" or "IPO" the Admission of the enlarged share capital to trading
on AIM and ESM on 15 June 2016 and such admission becoming
effective in accordance with the AIM Rules and the ESM
Rules respectively. The IPO included the acquisition of
Esprit Capital Partners LLP and Draper Esprit (Ireland)
Limited.
"Act" the UK Companies Act 2006.
"AIM" AIM, the market of that name operated by the London Stock
Exchange.
"Audit Committee" the Audit Committee of the Board.
"Company" or "Draper Draper Esprit plc, a company incorporated in England and
Esprit" or "plc" Wales with registration number 09799594 and having its
registered office at 20 Garrick Street, London, England,
WC2E 9BT.
"Core Portfolio Top 15 portfolio companies by value.
Companies"
"DEF" / "Digital Digital East Fund 2013 SCA SICAR
East Fund"
"Directors" or "Board" the Directors of the Company, whose names, as at the date
of this document appear on page 46 and 47 of this document.
"Draper Esprit Funds" the Esprit Funds and the Encore Funds.
"Draper Venture the self-governed network of ten independent growth and
Network" venture funds, of which Esprit Capital is a member.
"EB IV" / "Earlybird Earlybird GmbH & Co. Beteiligungs-KG IV
Fund IV"
"EB VI" / "Earlybird Earlybird DWES Fund VI GmbH & Co. KG
Fund VI"
"EIS" The EIS funds managed by Encore Ventures LLP. EIS funds
being Enterprise Investment Scheme under the provisions
of Part 5 of the Income Tax Act 2007.
"Encore Funds" DFJ Esprit Angels' EIS Co-Investment Fund, DFJ Esprit
Angels' EIS Co-Investment II, DFJ Esprit EIS III and DFJ
Esprit EIS IV and each an "Encore Fund".
"Encore Ventures" Encore Ventures LLP, a limited liability partnership incorporated
in England and Wales under the registration number OC347590
with its registered office at 20 Garrick Street, London,
WC2E 9BT.
"ESM" the Enterprise Securities Market operated and regulated
by the Irish Stock Exchange.
"Esprit Capital" Esprit Capital Partners LLP (previously Draper Esprit
LLP) , a limited liability partnership incorporated in
England and Wales under the registration number OC318087
with its registered office at 20 Garrick Street, London,
WC2E 9BT, the holding vehicle of the Group immediately
prior to Admission.
"Esprit Ireland" Draper Esprit (Ireland) Limited, a wholly owned subsidiary
of the Company incorporated in Ireland under the registration
number 572006 with its registered office at 32 Molesworth
Street, Dublin 2, Ireland.
"FCA" the UK Financial Conduct Authority.
"FOF" or "FoF" Fund of Funds.
"Gross Portfolio Gross portfolio value is the value of the portfolio of
Value" investee companies held by funds controlled by the Company
before accounting for deferred tax, external carried interest
and amounts co-invested.
"HMRC" HM Revenue & Customs.
"IFRS" or "IFRSs" International Financial Reporting Standards, as adopted
for use in the European Union.
"Irish Stock Exchange" Irish Stock Exchange Plc.
"IPO" The Company's listing on the London Stock Exchange's AIM
market and the Irish Stock Exchange's Euronext Dublin
market on 15 June 2016.
"IRR" the internal rate of return.
"NAV" Net asset value.
"Ordinary Shares" ordinary shares of GBP0.01 pence each in the capital of
the Company.
"PwC" Pricewaterhousecoopers LLP, a limited liability partnership
registered in England and Wales under the registration
number OC303525 with its registered office at 1 Embankment
Place, London, England, WC2N 6RH.
"International Private the International Private Equity and Venture Capital Valuation
Equity and Venture Guidelines, as amended from time to time.
Capital Valuation
Guidelines"
"VC" venture capital.
"VCT" The VCT funds managed by Draper Esprit VCT. VCT (venture
capital trust) funds being UK closed-ended collective
investment schemes.
London | HQ
20 Garrick Street London, WC2E 9BT
Tel: +44 (0)20 7931 8800
draperesprit.com
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Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
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contact rns@lseg.com or visit www.rns.com.
END
FR FJMRTMBAMBML
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