TIDMGROW
RNS Number : 8427G
Draper Esprit PLC
30 November 2020
Draper Esprit plc
("plc", "Draper Esprit", "the Group" or the "Company")
INTERIM RESULTS FOR THE SIX-MONTH PERIODED 30 SEPTEMBER 2020
Draper Esprit (LSE: GROW, Euronext Growth: GRW), a leading
venture capital firm investing in and developing high growth
digital technology businesses, today announces its interim results
for the six-month period ended 30 September 2020.
Financial highlights
-- Gross Portfolio Value, even after significant cash
realisations of GBP106m, of GBP702m (31 March 2020: GBP703m).
-- 10% Gross Portfolio Value fair value growth in the six-month
period to 30 September 2020 (six months to 30 September 2019:
12%).
-- Net assets increased by 8% to GBP715m (31 March 2020: GBP660m).
-- NAV per share increase to 600p (31 March 2020: 555p).
-- GBP62m available plc cash, as well as GBP39m available from EIS/VCT funds.
-- Cash realisations of GBP106m (six months to 30 September 2019: GBP23m).
-- Profit after tax of GBP54m (GBP59m for the six months to 30 September 2019).
-- Operating costs (net of fee income) continue to be less than
the targeted 1% of period-end NAV.
Operational highlights
-- Significant realisations during the period with proceeds of
GBP106m, predominantly generated by the realisations of Peak Games
and TransferWise (as well as escrows and partial disposals).
-- Invested GBP32m in the period into 2 new companies, Cazoo and
Ravelin, (and 2 via our partnership with Earlybird*), and 7
follow-ons (as well as a further 2 through our partnership with
Earlybird*).
-- Committed to 2 new seed funds, bringing the total seed fund
of funds portfolio to 22. Total commitments of approximately
GBP41m, with total drawn of GBP17m, of which GBP3m within the
period. The majority of the remaining commitments will be drawn
over 3-5 years.
-- Increased and extended our revolving credit facility with SVB
and Investec by 1 year to GBP60m.
Post period-end
-- GBP110m additional gross capital raised by plc in an
oversubscribed placing to new and existing investors.
-- Deployment of GBP18m post period-end, including our investment into PrimaryBid.
*Reporting threshold - companies with a NAV of GBP1 million or
more.
Some of the above measures are Alternative Performance Measures
("APMs") - see note 21 to the condensed consolidated interim
financial statements for further details
Martin Davis, CEO at Draper Esprit, commented:
"Despite the challenges of the pandemic, our investment process
continues to deliver, with a portfolio value maintained at a record
level even after over GBP100m of realisations.
We have also made significant progress in building the model
which allows us to scale our delivery, support our talented
partners to identify and nurture even more of the best
opportunities in European technology.
We look forward to building on our strong first half performance
with the goal of rewarding our investors further for their
support."
Availability of Interim Report
The Interim Report for the period ending 30 September 2020 will
be available today on Draper Esprit's website at
http://draperesprit.com/ .
-s-
Enquiries
Draper Esprit plc
Martin Davis (Chief Executive
Officer)
Ben Wilkinson (Chief Financial
Officer) +44 (0)20 7931 8800
Numis Securities
Nominated Adviser & Joint Broker
Simon Willis
Richard Thomas
Jamie Loughborough +44 (0)20 7260 1000
Goodbody Stockbrokers
Euronext Growth Adviser & Joint
Broker
Don Harrington
Charlotte Craigie
Dearbhla Gallagher +44 (0) 20 3841 6202
Powerscourt
Public relations
Elly Williamson +44 (0)7970 246 725 / +44 (0)7961
Donjeta Miftari 628 862
If you would like to access the 9.00am results presentation,
please contact Powerscourt at draperesprit@powerscourt-group.com
for dial in details.
About Draper Esprit
Draper Esprit is one of the most active venture capital firms in
Europe, investing in disruptive, high growth technology companies.
We believe the best entrepreneurs in Europe are capable of building
the global businesses of the future. We fuel their growth with
long-term capital, access to international networks and decades of
experience building businesses.
Currently, Draper Esprit is a shareholder in a diverse portfolio
of 67 companies with 15 of those part of our core portfolio which
accounts for over 60% of our holdings. Our core companies include
Trustpilot, UiPath, Aircall, Graphcore and Revolut. We invest
across four sectors: Consumer Technology, Enterprise Technology,
Hardware and Deeptech, and Digital Health and Wellness, with highly
experienced partners constantly looking for new opportunities in
each. We look for high-growth companies with strong IP, powerful
technology, and the management teams to deliver success. They
operate in new markets, with serious potential for global
expansion. We also look for businesses with the potential to
generate strong margins to ensure rapid, sustainable growth in
substantial addressable markets.
Draper Esprit provides an opportunity for public market
investors to access these fast growing tech businesses, without
having to commit to long term investments with limited liquidity.
Since IPO in June 2016, we have deployed circa GBP450m+ capital
into fast growing technology companies and have realised over
GBP210m. In October 2020 we raised gross proceeds of circa GBP110m
to help us capitalise on a European VC market which is expanding
rapidly but is still less than one quarter of the combined size of
the US and European market by value. It will also allow us to
capitalise on the transition to a digital future that has been
given added impetus as a result of the recent pandemic.
For more information, go to https://draperesprit.com/
Strategic report
Chief Executive's review
Overview
The six months to the end of September was my first complete
six-month reporting period as CEO, having joined in November 2019.
We entered it hoping for the global pandemic to be short-lived and
exited it with governments worldwide still debating approaches to
manage its impact.
When reporting our final results in June, I reflected on our
priority being to support our existing portfolio in this difficult
period and to identify those businesses with strong models which
would continue to succeed and in some cases play an important role
in the recovery of the world from this crisis. We are proud to have
done precisely this, despite the day to day challenges facing our
people. I am deeply grateful for their contribution to helping
European VC invent the future at a time when we all hope for
better, soon.
We also reflected on our belief that the recovery from the
pandemic would accelerate the trends that our portfolio businesses
focus on, and there is now plenty of evidence to support this.
This, along with the ongoing rapid expansion of the European VC
market, with much more expansion still to come, encouraged us to
raise GBP110.0 million post period-end by way of an oversubscribed
placing to accelerate our investment strategy. These funds, along
with proceeds from strong exits in the period, and the availability
of the full revolving debt facility of GBP60.0 million, will
support us as we plan to increase our rate of investment to
c.GBP120.0 million per annum to capture a greater share of the
technology investment opportunities we see.
We were active in investing and in strengthening our business in
a way which will now support accelerated deployment of capital into
high growth, privately owned technology companies. Our activities
and performance during the period should be viewed through this
lens.
Operating review
We are a scalable platform building the model and infrastructure
to enable us to capture the growing European market opportunities,
whilst maintaining the integrity of our investment process.
We continue to explore ways to scale the co-investment model,
which provides improved access to the best deals and third-party
funds, as well as being a source of management fees. Our platform
enables our investors to access the best deal flow across Europe,
via our fund of funds programme, and across smaller and early stage
investments and larger growth stage deals. Our evergreen model of a
listed vehicle provides additional flexibility to build stakes in
the top performing investments over time.
We continue to believe that the high standards of governance,
oversight, and transparency to which we are held as a result of our
listing are fundamental to our success at a time when the companies
we invest in are increasingly mindful of who they choose to partner
with. In this context, we have continued to implement our 12-month
roadmap to progress our ESG journey as detailed below.
We have also continued to invest in best-in-class processes and
capabilities, building on the expansion last year of our
Partnership and Platform teams, as well as our HR, IT and legal
functions.
In order to identify, attract and originate the most exciting
technology prospects in Europe, the Group has worked to establish
an internal dual-platform investment process. The Partnership team
focuses on deals, our portfolio companies and their founders, while
the Platform team focuses on optimising deal flow and collaborating
with the entrepreneur community, other investors and the wider
ecosystem. We continue to hire and grow our teams to complement the
knowledge and experience already within the business.
Successful realisations
During the period, we generated GBP105.6 million of cash through
realisations. The Company has announced fair value uplifts
amounting to GBP23.0 million with respect to two exits, Peak Games
and TransferWise.
The sale of Peak Games represented a significant return on our
original investment. It also reinforced the value of our
partnership with Earlybird, which provides us with a broader
opportunity to invest in the best European technology companies on
behalf of our shareholders.
The TransferWise disposal highlighted our focus on active
management in the portfolio and was also an excellent example of a
successful secondary transaction that enabled us to generate a
healthy return on our initial investment in a relatively short
space of time.
Investments
Our unique structure enables us to offer funding options to
entrepreneurs at all stages of their growth. We have the
flexibility to back companies through the lifecycle, from seed via
our seed funds strategy to scale-up, through to IPO or
acquisition.
In the first six months, we invested at a reduced rate, though a
healthy one in the context of the pandemic, deploying GBP32.3
million into new and existing portfolio companies (six months to 30
September 2019: GBP41.5 million). We invested GBP11.2 million of
primary investment into new portfolio companies, Cazoo and Ravelin,
GBP17.8 million in follow-ons into existing portfolio companies
(and drawdowns relating to our partnership with Earlybird), and a
further GBP3.3 million was drawn down as part of our fund of funds
programme.
Sustainability
Our ESG Committee, established in the previous financial year,
continues to implement our twelve-month roadmap to progress our ESG
journey. This continues to be seen as a key focus by the Board with
regular updates provided to them on progress against the roadmap by
CFO, Ben Wilkinson, sitting as an executive sponsor on the ESG
Committee.
Key activities within the period include the development and
approval of the Group's Responsible Investment Policy, progression
of the process of mapping our existing portfolio to the UN
Sustainable Development Goals (of which a significant proportion
aligned to the goals), and engagement of an external ESG consultant
to support with training and ESG processes.
Summary
We have used the period to support our portfolio companies,
further strengthen our high-quality portfolio and develop the model
to support us to scale further while maintaining strong discipline
over valuation process and methodology.
Despite the challenges of the pandemic, our investment process
continues to deliver, with a gross fair value increase in the
period of GBP72.7 million (gross fair value growth of 10%).
As part of the recent capital raising process we set out a clear
set of priorities for deploying further capital. We have a strong
portfolio from which we will back the emerging winners, as well as
invest in new deal flow, and continue to support our seed funds
strategy and Earlybird partnership, via a planned investment in
Earlybird Fund VII. With a stronger balance sheet, we can lead more
deals and increase our average equity holdings over time. We also
recognise the potential opportunity to raise capital alongside
company investment via a growth fund. Third party funds alongside
Draper Esprit investment would provide a greater ability to lead
deals and secure influence and allocation while management fees
would provide additional income to reduce our cost base.
Outlook
We believe there is significant opportunity to deploy further
capital driven by a growing European venture capital market, and an
accelerated transition to digital driven in part by the COVID-19
pandemic. However, we remain mindful of market uncertainty and
increased pressures on the global economy resulting from the
ongoing pandemic. Our unique model positions us well to realise
value for shareholders, even in highly uncertain times, from the
fast growth in European private technology businesses. Our
investment into infrastructure will allow us to scale while
maintaining the discipline for which we have become known.
We have performed well in the first half of the year and we feel
well placed for continuing momentum into the full year.
Martin Davis
Chief Executive Officer
Portfolio review
*Reporting threshold - companies with a NAV of GBP1 million or
more.
During the six-month period ended 30 September 2020, against the
backdrop of the continuing uncertainty resulting from the COVID-19
pandemic, the Group has seen strong exits resulting in the receipt
of proceeds of GBP105.6 million, mostly generated from the disposal
of two core companies, Peak Games and TransferWise. Further to
this, the gross portfolio has returned a 10% fair value growth
during the period, and we believe we have good momentum for the
full financial year. The current COVID-19 related environment has
accelerated the transition to digital which in turn is benefiting
the business models of much of our portfolio.
Portfolio
As at 30 September 2020, the Gross Portfolio Value (gross value
of the Group's investment holding before deductions for carry and
deferred tax) is GBP702.4 million (31 March 2020: GBP702.9 million)
following proceeds of GBP105.6 million received from realisations
during the period (which reduces the size of the portfolio),
investments of GBP32.3 million during the period and a gross fair
value movement of GBP72.7 million. The Gross Portfolio Value Table
in the Interim Financial Review provides further detail on the
movements in the portfolio.
Fifteen core holdings represent over 60% of the Gross Portfolio
Value. The core holdings as at 30 September 2020 are Trustpilot,
Graphcore, UiPath, Ravenpack, M-files, Aircall, Revolut, Smava,
Perkbox, Ledger, ThoughtMachine, SportPursuit, ICEYE, Aiven, and,
following investments in its Series C and Series D in the period,
Cazoo is now also a core holding. SportPursuit returns to the core
in this period, while Finalcad was in the core at 31 March 2020 but
falls below the threshold for the core in this period. Peak Games
and TransferWise were also formerly core holdings but were fully
realised during the period.
Investments
GBP32.3 million was invested by Draper Esprit plc between 1
April 2020 and 30 September 2020. This represents a reduced rate to
our anticipated cadence as the impacts of the COVID-19 pandemic
were assessed. A further GBP17.7 million was invested from EIS/VCT
funds. Of the GBP32.3 million invested during the period, GBP11.2
million was invested in new portfolio companies, GBP17.8 million
was invested in follow-ons into existing portfolio companies (and
drawdowns relating to our partnership with Earlybird), and GBP3.3
million of this was drawn down within our fund of funds
strategy.
New investments
During the period, plc invested in 2 new portfolio companies (as
well as 2 via our partnership with Earlybird), both of which
benefit from increased online activity:
-- Cazoo - Draper Esprit invested in British digital used car
marketplace, Cazoo, as part of the company's GBP25.0 million second
close of their Series C funding round and subsequently participated
in Cazoo's GBP240.0 million Series D round; and
-- Ravelin - Draper Esprit led a US$20.0 million Series C
investment round in Ravelin, a fraud detection company. Ravelin has
pioneered the use of machine learning and graph network
technologies to help online businesses accept more payments with
confidence. Further investments were also made from the EIS/VCT
funds.
We also invested in a range of new investments via our
partnership with Earlybird, including Conny GmbH (ex LexFox GmbH),
a Berlin-based Legal Tech company that enforces consumer rights
across multiple verticals, and Curio Labs Limited, the London-based
company building a global platform for curated journalism, consumed
over audio.
Follow-on investments
The Group continued to support existing portfolio companies and
made 7 follow-on investments (as well as 2 via our partnership with
Earlybird), notably:
-- Push Doctor - GBP2.9 million invested into Push Doctor,
providing online doctor and prescription services in the UK, as an
extension to their Series C round;
-- Pollen - GBP1.3 million invested into Pollen (formerly
Verve), building a global platform to enable users to discover and
buy aspirational brands from their network;
-- Form3 - GBP0.9 million invested during the period into Form3,
the leading cloud-native payment and technology provider for banks
and regulated fintechs, as part of their US$33.0 million strategic
investment round. Alongside the plc, the EIS/VCT funds invested
GBP3.1 million during the period; and
-- Aircall - GBP0.8 million invested into Aircall, the
cloud-based call centre software for teams, as part of a US$65.0
million Series C round led by DTCP.
Investments made via our partnership with Earlybird included
GetSafe GmbH, a Heidelberg-based company which uses AI to manage
insurance via smartphones, and space tech company, Isar Aerospace
Technologies GmbH.
Seed funds
We continue with our fund of funds strategy allowing us to
identify Series A and B investment opportunities early as well as
supporting seed stage funding across Europe, with commitments made
to 2 new funds during the period:
-- DraperB1 (early stage, Spanish ecosystem) -
Valencia-headquartered Draper B1 Fund III is the third venture
capital fund intended to invest in technology-based start-ups in
the seed phase. Draper Esprit has committed US$0.5 million into the
fund; and
-- EKA Ventures (early stage, focus on companies with positive
societal impact) - EKA Ventures invests in consumer technology
companies building a healthy, inclusive and sustainable economy.
Draper Esprit has committed GBP1.0 million into the fund.
Including the 2 new funds during the period, plc has committed a
cumulative total of approximately GBP40.6 million to 22 funds with
a total drawn to 30 September 2020 of GBP16.6 million, of which
GBP3.3 million was drawn during the current period.
Realisations
Proceeds of GBP105.6 million were received during the period to
30 September 2020 from the full realisations of our holdings in
Peak Games (via our partnership with Earlybird) and TransferWise,
as well as partial disposals of UiPath (via our partnership with
Earlybird) and escrow proceeds from disposals in previous periods
of Clavis and Podpoint.
We announced our disposal of Peak Games in June 2020, following
confirmation by Zynga Inc that it would enter into an agreement
with Earlybird to acquire Istanbul-based mobile games developer
Peak Games for US$1.8 billion, comprised of approx. US$900.0
million in cash and approx. US$900.0 million of Zynga common stock.
Draper Esprit received the cash tranche and forward sold the
majority of the share tranche. The multiple on exit for the Peak
Games realisation was 3.5x.
The plc sold its remaining share in TransferWise in July 2020 in
a secondary transaction at an equity value of US$5.0 billion. The
multiple on exit for the TransferWise realisation was 3.1x.
Post period-end
Post period-end, we have continued to see a strong pipeline of
investments and have deployed GBP18.3 million post period-end,
including our investment co-leading PrimaryBid's Series B round.
PrimaryBid is a technology platform that allows retail investors
fair access to public companies raising capital.
Core portfolio updates
Aircall
Aircall is a cloud-based call centre system. It is headquartered
in Paris and New York. It has more than 300 employees, is available
in over 80+ countries, with 60,000 users world-wide.
In May 2020, demonstrating the value of the product to provide
its customers with integrations, flexibility, productivity tools,
Aircall raised US$65.0 million in Series C funding, led by DTCP
with participation from new investors Swisscom and Adam Street.
Existing investors including Draper Esprit, eFounders, Balderton
Capital and NextWorld participated in the round. This most recent
round brings the company's total funding to date to over US$100.0
million and will be used to expand with more developers, a bigger
sales team, and a new office in Australia.
The company's new customers include food delivery startup Door
Dash Inc. Aircall is adding features to improve sales and service,
such as features that analyse the emotion in customers voices.
Invested: GBP10.7 million
Investment valuation: GBP23.3 million
Aiven
Aiven, the data infrastructure management platform, allows
developers to focus on application building while the platform
manages open-source databases and messaging systems for business
clients on all major cloud platforms. The company operates with 8
open-source products, 6 Cloud platforms, and covers 87 regions with
headquarters in Boston, Berlin, Sydney, and Helsinki.
The company released Kafka MirrorMaker 2 as a stand-alone
service, enabling enterprises to access the Apache Kafka ecosystem
more easily. In July it announced the launch of Karapace, an
open-source tool that serves as a drop-in replacement for
Confluent's Kafka REST and Schema Registry. Aiven announced two
executive hires, VP of marketing and VP of sales EMEA to fuel
Aiven's global expansion.
Invested: GBP5.0 million
Investment valuation: GBP12.8 million
Cazoo
Cazoo is one the UK's fastest-growing digital businesses and
leading online car retailers. Launched in 2018 by founder Alex
Chesterman, founder of LoveFilm and Zoopla, the company allows
customers to research and purchase cars online. The cars can be
delivered to customers' homes or picked up at customer centres with
11 locations across the UK with 3 more opening shortly.
Draper Esprit initially invested in Cazoo as part of our fund of
funds investment programme via Stride Capital who backed Cazoo in
November 2018. In June 2020, Plc invested directly in the company's
GBP25.0 million Series C round, and then participated in their
latest GBP240.0 million Series D round in October 2020. Other
investors in the Series D round include General Catalyst, D1
Capital Partners, and Blackrock, amongst others.
The company has a team of over 700 employees and growing, and
appointed Fern Wake as COO and Stephen Morana as CFO in June
2020.
Invested: GBP10.0 million
Investment valuation: GBP17.5 million
Graphcore
Graphcore, the machine intelligence semi-conductor company,
develops IPUs (Intelligent Processing Units) which enable
unprecedented levels of compute.
In July 2020 the IPU developer launched a new chip, the GC200,
and a new IPU Machine that runs on it, the M2000, which Graphcore
says is the first AI computer to achieve a petaflop of processing
power "in the size of a pizza box." Post period-end Graphcore
released new polar SDK 1.3, which includes new optimisations and
improvements to help developers run their models faster and more
efficiently.
With offices in Bristol, London, Cambridge, Palo Alto, Oslo,
Beijing, Hsinchu, Seoul, New York, Seattle, and Austin, the global
company continues to scale in size, increasing to 450+ employees
from its previously reported +200 employees.
Invested: GBP13.7 million
Investment valuation: GBP80.5 million
ICEYE
Commercial radar imaging satellite company, ICEYE, provides
imaging services, designed to deliver frequent coverage, both day
and night, to help clients resolve challenges in sectors such as
maritime, disaster management, insurance, and finance.
During the period, ICEYE raised a US$87.0 million Series C round
with participation from return investors True Ventures, OTB
Ventures, Finnish Industry Investment (Tesi), Draper Esprit, DNX
Ventures, Draper Associates, Seraphim Capital, Promus Ventures and
Space Angels. The funding round was joined by New Space Capital and
Luxembourg Future Fund. The European Investment Fund (EIF)
participated both as advisor to Luxembourg Future Fund and as
investor through the InnovFin For Equity (IFE) programme, which is
backed by the European Commission.
The company has successfully launched 5 satellite missions,
starting with the first ever small SAR satellite launched in
January 2018. ICEYE plans to launch 4 additional SAR satellites
this year and is on course to launch at least an additional 8 in
2021.
The company provides radar imaging data from its commercial
synthetic-aperture radar (SAR) satellite constellation to the
International Charter: Space and Major Disasters for use in
monitoring and response activities. ICEYE provides these images to
the Charter's Authorised Users to enable wider and more timely
information access for disaster events worldwide. The European
Space Agency (ESA) also announced ICEYE as a data provider under
assessment through its Earthnet Third Party Mission programme.
Invested: GBP7.5 million
Investment valuation: GBP14.0 million
Ledger
Ledger, the cryptocurrency and blockchain hardware security
wallet successfully launched the Nano X product and Ledger live
companion software. The Nano X received CSPN (First Level Security
Certificate) certification issued by the National Agency for
Information Systems Security (ANSSI). The Ledger Vault continues to
be sold across Europe, Asia, and the US as an enterprise solution,
and the company is committed to furthering its pursuit of
partnerships like the ones with Engie, the French multinational
electric utility business, and Nomura, to augment the ways in which
its technology can support IOT applications.
The company launched a new capability allowing for crypto assets
to be secured, bought, managed, and exchanged directly through
Ledger Live via its partner Changelly. Ledger also announced
support for Algorand (ALGO) and Algorand Standard Assets (ASA) in
its software application, Ledger Live, bringing the total amount of
supported coins to 27 and more than 1500 tokens.
The company now has 200 global employees working in its Paris,
New York, Hong Kong, and Vierzon bases and 1 million users in over
165 countries with 1.5 million units sold.
Invested: GBP17.7 million
Investment valuation: GBP17.7 million
M-Files
Intelligent information management platform, M-Files, organises
customers' content with the ability to connect to existing network
folders and systems to enhance them with the help of AI to
categorise and protect information.
M-Files was named 2020 Top Rated Enterprise Content Management
("ECM") Software by End-Users on TrustRadius. The company received
one of the highest overall rankings, including top scores for
product scalability, and likelihood to renew. It also was named a
"Leader" in the 2020 Nucleus Research Content Manager Value Matrix
Report, which marks the seventh consecutive year that M-Files has
achieved "leader" status earning the highest recognition for both
usability and functionality.
The company has expanded a number of its strategic international
partnerships with Iron Mountain, Fulton Hogan, Devoteam Management
Consulting Denmark, and Fuji Xerox Asia Pacific Pte LTD. It has
also received SOC 3 accreditation, certifying it is in compliance
with the Trust Services Criteria of security, availability and
confidentiality developed by the American Institute of CPAs
(AICPA).
Invested: GBP5.0 million
Investment valuation: GBP27.0 million
Perkbox
Perkbox is an employee wellbeing 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, Recognition, Insights and
Medical.
In the period, Perkbox secured new partnerships with Action Aid,
Dakota Hotel, Igloo Energy, and Landmark, while existing partners
Gymshark and Krispy Kreme have enhanced their benefits.
Invested: GBP14.0 million
Investment valuation: GBP18.6 million
Ravenpack
Leading big data analytics provider for financial services,
Ravenpack, products allow clients to enhance returns, reduce risk
and increase efficiency by systematically incorporating the effects
of public information in their models or workflows. RavenPack's
clients include some of the most successful global hedge funds,
banks, and asset managers.
In October 2019 the business raised a Series B Round of US$10.0
million from the technology advisory and investment firm GP
Bullhound. Ravenpack has used the funds to expand to Asia,
establishing an office in Sydney, Australia and to diversify their
product offering to better serve corporate customers.
Ravenpack has announced partnerships with both Wall Street
Horizon, a leading provider of market-moving corporate event data,
and Cosaic, a leader in the field of interactive visualization
tools. The company has also launched an Insider Transactions Data
Solution and a free 2020 US Election Media Monitoring Insights and
free Coronavirus monitoring insights.
Invested: GBP7.5 million
Investment valuation: GBP31.9 million
Revolut
In September 2020 fintech company, Revolut, celebrated 3 years
of business and 500k business customers since its launch in 2017.
The company currently boasts 12 million+ personal customers, is
supported in 35 countries and has 30+ in-app currencies.
In February 2020, Revolut raised a US$500.0 million Series D
round led by TCV, which was subsequently topped up in July by a
further US$80.0 million by TSG Consumer Partners. The funding has
enabled the company to build new products, grow into new markets,
enhance its existing product suite for existing users, and to
further develop the company's operational infrastructure to support
its continued growth.
During the period, Revolut has launched Revolut Jr. for under
17s to help teach financial literacy and money management to
children at a young age and delivered a number of accounting
software integrations on Revolut Business including Clearbooks,
Sage in the UK , QuickBooks in France, and Bullet in Ireland.
Revolut Business perks now include Indeed, Zipcar, Advertio, PayFit
UK, and Covve Scan. The company also introduced SEPA Instant Euro
Transfer on Revolut Business, and launched in Australia and
Japan.
Invested: GBP7.4 million
Investment valuation: GBP21.9 million
Smava
Online lending platform, Smava, provides easy access to the best
conditions for consumer loans from more than 25 banks. The company
is the largest specialised loan marketplace in Germany, providing
access to over EUR3.0 billion a year in loans.
In May, the company secured EUR57.0 million in financing with
debt from Kreos Capital, along with equity from existing investors
Earlybird, Verdane, Vitruvian Partners and Runa Capital. The
platform offers an overview of 70 loans between EUR1,000 and
EUR120,000 from over 20 banks and lending partners. Consumers
select the loan that suits them and take it out directly. On
average, Smava borrowers pay about 35 percent less interest than
the German national average.
The company also announced a new partnership with
Commerzbank.
Invested: GBP14.5 million
Investment valuation: GBP18.7 million
SportPursuit
SportPursuit is a membership-based eCommerce business using data
to inspire consumers to treat themselves to the best products from
the world's best sports and outdoor brands at unbeatable prices in
a premium, content-rich, personalised environment.
Sales are focused on outdoor, running, snowsports, triathlon,
cycling, and health & wellbeing. The company works with over
1,000 top sport and outdoor brands like Rapha, Arc'teryx, Garmin,
Spyder, and Rab to deliver market-beating prices to their
members-only platform. In addition, the business has built a
portfolio of high-quality, owned brands.
Data is at the heart of every aspect of the business, from
recruiting new customers to delivering 1-2-1 personalised content
to their audience. The proprietary technology platform uses
sophisticated algorithms and artificial intelligence to surprise
and delight SportPursuit's customers, delivering market leading
retention rates and CLTV / CAC.
SportPursuit continues to contribute to the preservation of the
great outdoors through their partnership with Size of Wales which
works with the Welsh Government, partners in Uganda, and experts in
Wales to deliver tree planting programs in Uganda and Kenya. In the
last year, SportPursuit have funded the planting of 100,000
trees.
Invested: GBP5.6 million
Investment valuation: GBP14.3 million
Thought Machine
Thought Machine offers cloud native core banking infrastructure
to both incumbent and challenger banks. The company's technology
provides an alternative more flexible cloud-based solution that can
be configured to provide any product, user experience, operating
model or data analysis capability.
In early 2020, Thought Machine completed an US$83.0 million
round led by Draper Esprit and joined by Lloyds Banking Group, IQ
Capital, Backed and Playfair Capital. In July 2020 Thought Machine
extended the Series B round to US$125.0 million - the US$42.0
million extension was led by Eurazeo, with British Patient Capital
and SEB also joining the round as new investors. Former HSBC Group
COO Andy Maguire joined as new Chairman in September of this
year.
The business' core offering, Vault, now runs on every major
cloud infrastructure provider including Google Cloud Platform,
Amazon Web Services, Microsoft Azure and IBM Cloud. In addition,
Vault can be deployed on either the bank's choice of cloud
provider, on premise, in a hybrid cloud using Red Hat OpenShift, or
as a SaaS product.
Monese and Curve, the popular pan-European fintechs have
announced they will be adopting Thought Machine's platform,
Vault.
Thought Machine was selected to join the Mastercard StartPath
programme, an industry collaboration which convenes banks,
merchants and startups to scale new technology solutions for the
financial services and payments industries.
The company has also been awarded ISO 27001 certification: a
globally recognised standard for information security practices
which covers the full spectrum of people, processes and
technology.
Invested: GBP16.5 million
Investment valuation: GBP17.4 million
Trustpilot
Online global review site, Trustpilot, has tracked over 100
million reviews, of over 400,000 companies since it launched in
2007. With offices in Copenhagen, London, New York, Denver, Berlin,
Melbourne and Vilnius, Trustpilot's 750 employees represent more
than 40 different nationalities.
In July, founder Peter Mühlmann announced new initiatives to
'fight for trust online' in his Trust promise. The initiatives, set
to be implemented by the end of 2020, demonstrate Trustpilot's
ongoing commitment to leading the reviews industry, which remains
useful for, and trusted by, both consumers and businesses.
Trustpilot announced the creation of a new global R&D and
Innovation Hub in Edinburgh, Scotland, to develop new,
world-leading technology that proactively tackles the behaviour
that threatens trust online. The Hub is being supported through a
GBP1.8 million R&D grant from Scottish Enterprise, bringing new
investment into Scotland's leading digital and technology sector
with the aim to initially create 30 new advanced data science jobs
as well as a number of new local partnerships in Edinburgh over the
course of the next three years.
Invested: GBP29.7 million
Investment valuation: GBP80.9 million
Uipath
In July, Uipath, the robotic process automation (RPA) software
company raised a US$225.0 million Series E Round led by Alkeon
Capital Management. Other participants included Accel, Coatue,
Dragoneer, IVP, Madrona Venture Group, Sequoia Capital, Tencent,
Tiger Global and Wellington. At over US$400.0 million in ARR,
UiPath is one of the fastest growing enterprise software companies
worldwide.
UiPath earned the number 3 spot on Forbes 2020 Cloud 100, the
definitive ranking of the top 100 private cloud companies in the
world. Published annually by Forbes in partnership with Bessemer
Venture Partners and Salesforce Ventures, the Cloud 100 has
recognized UiPath on the strength of its market leadership, its
culture and valuation, and revenue and growth for the third year in
a row. The company was also named a 2020 CNBC Disruptor 50, and
positioned by Gartner, Inc. as a leader in the 2020 "Magic Quadrant
for Robotic Process Automation".
The company has created a Legal Automation Task Force to drive
the development and implementation of end-to-end legal automation
solutions in legal and compliance departments and corporations and
has launched a virtual streaming solution that allows customers,
prospects, and partners to explore enterprise automation solution
showcases, attend demos and participate in workshops as part of a
fully remote UiPath Immersion Lab experience.
The company has made enhancements to its Business Partner
Program to enable organizations around the world to leverage the
power of hyper automation, and is offering new training,
certification, and marketing programs for business partners through
the launch of its UiPath Services Network (USN). It also announced
it would be working with Deloitte to deliver Deloitte Intelligent
Document Processing (DIDP).
In October, Renzo Taal has joined the Company as Senior Vice
President and Managing Director of EMEA. Renzo joins UiPath from
Salesforce, where he held several international roles and most
recently served as Senior Vice President and General Manager of
Asia. UiPath also appointed former VMware and Microsoft Global
Executive, Thomas Hansen to lead worldwide sales. In response to
the COVID-19 pandemic, the company launched a 1-hour Academy Live
programme for children aged 8-13 to learn about software robots and
the functions they can perform.
Invested: GBP10.3 million
Investment valuation: GBP36.7 million
Interim financial review
The six-month period to 30 September 2020 created challenges
brought about by the COVID-19 pandemic but ultimately contained
many bright spots with the initial robustness of the underlying
portfolio being reinforced by enhanced opportunity. At the
corporate level we delivered a strong period of cash realisations,
increased the size of the revolving credit facility, and raised
further equity to take advantage of the growing opportunities in
the European venture capital market.
We ended the period with a strong liquidity position of GBP62.1
million of plc cash (including restricted cash) complemented by
GBP39.2 million of available cash resources from EIS/VCT, GBP60.0
million undrawn on the revolving credit facility (increased and
extended by 1 year to GBP60.0 million in June 2020), as well as
proceeds post period-end of GBP106.6 million net of fees (GBP110.0
million gross) from the fundraise announced in October 2020. During
the period, GBP105.6 million of proceeds were received from exits
(including escrows).
Portfolio valuation
The Gross Portfolio Value as at 30 September 2020 is GBP702.4
million (31 March 2020: GBP702.9 million). Proceeds of GBP105.6
million were received from realisations (including escrows) during
the period. Investments of GBP32.3 million were made and a gross
fair value movement was recognised of GBP72.7 million, including
the impact of currency movement during the period (10% gross fair
value growth).
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 GBP644.8 million (31 March 2020: GBP657.3
million), which is reflected in the condensed consolidated interim
statement of financial position as a financial asset held at fair
value through profit or loss. The Gross Portfolio Value Table below
reflects the gross and net movement in value of the portfolio
during the period. The net fair value gain on investments of
GBP56.4 million is reflected in the consolidated statement of
comprehensive income.
A deferred tax provision of GBP6.6 million is accrued against
the gains in the portfolio to reflect those portfolio companies
where less than 5% of the equity holding is owned. The amount is
netted off against the investments in the condensed consolidated
interim statement of financial position. Carry balances of GBP51.4
million are accrued to management teams, including previous and
current employees of the Group based on the current fair value at
the period-end and deducted from the Gross Portfolio Value.
Value drivers in the period have been a combination of
realisations and funding rounds with third party investors at
higher values, as well as revenue growth in the underlying
portfolio businesses. Key movements in the period include Peak
Games (increased value on realisation), UiPath, Trustpilot, M-Files
and Cazoo.
Condensed consolidated interim statement of financial
position
Net assets have increased by 8.4% to GBP714.7 million from 31
March 2020 (31 March 2020: GBP659.6 million). GBP105.6 million of
proceeds for realisations and escrow payments were received during
the period, facilitating the repayment of drawn amounts on the
revolving credit facility with Silicon Valley Bank and Investec.
Performance on target from the portfolio during the period has led
to a net fair value uplift of GBP56.4 million, which has translated
through to equivalent NAV growth.
The consolidated cash balance at 30 September 2020 is GBP62.1
million, including GBP2.3 million of restricted cash. The cash
balance has increased by GBP28.0 million since 31 March 2020 (31
March 2020: GBP34.1 million) as a result of GBP105.6 million of
realisations, offset by investments made of GBP32.3 million and
repayments of the revolving credit facility of GBP45.0 million, and
other operational and financing related cash movements.
In June 2020, the plc's revolving credit facility was extended
and increased by 1 year to GBP60.0 million. As a revolving credit
facility, drawdowns and paydowns will continue to be driven by
portfolio investments and realisations. With the facility undrawn,
there is no borrowing liability recognised on the condensed
consolidated interim statement of financial position as at 30
September 2020. The balance recognised under borrowings of GBP0.5
million relates to the capitalised fees from the setup and
extension of the facility, which are being amortised over its life.
Plc has been in compliance with all covenants throughout the
duration of the facility and at 30 September 2020.
Condensed consolidated interim statement of comprehensive
income
Investment income for the period ended 30 September 2020
comprises GBP56.4 million of unrealised investment gains (six
months to 30 September 2019: GBP57.6 million) and fee income of
GBP6.1 million (six months to 30 September 2019: GBP5.5 million),
which is generated from management fees and director fees. General
and administration costs are GBP6.6 million (six months to 30
September 2019: GBP5.0 million), the majority of which relate to
employee costs. Net operating costs (net of fee income) as a
percentage of NAV are substantially less than our target of 1%.
Post-balance sheet events
An oversubscribed fundraise was announced post period-end in
October 2020, in which Draper Esprit raised proceeds of GBP106.6
million net of fees (GBP110.0 million gross).
Ben Wilkinson
Chief Financial Officer
Gross Portfolio Value table
Fair Draper Movements Fair
Value Esprit in Value Interest
of Fair of
investments Investments Realisations (Ireland) Value investments FD category*
31-Mar-20 Limited 30-Sep-20 at reporting
Investments GBPm GBPm GBPm GBPm GBPm GBPm date
------------- ------------- ------------ ------------- ---------- ---------- ------------- -------------
1 Trustpilot 65.3 - - - 15.6 80.9 C
2 Graphcore 86.8 - - - (6.3) 80.5 A
3 Ui Path 28.0 - (2.5) - 11.2 36.7 A
4 Ravenpack 30.9 - - - 1.0 31.9 D
5 M-files 20.0 - - - 7.0 27.0 B
6 Aircall 24.3 1.0 - - (2.0) 23.3 B
7 Revolut 21.9 - - - - 21.9 A
8 Smava 16.7 - - - 2.0 18.7 B
9 Perkbox 19.9 - - - (1.3) 18.6 C
10 Ledger 17.7 - - - - 17.7 B
11 Cazoo - 10.0 - - 7.5 17.5 A
Thought
12 Machine 17.4 - - - - 17.4 B
13 SportPursuit 11.1 - - - 3.2 14.3 E
14 ICEYE 14.0 - - - - 14.0 A
15 Aiven 12.8 - - - - 12.8 B
Remaining
portfolio 314.4 21.3 (103.1) - 34.4 267.0 -
------------- ------------- ------------ ------------- ---------- ---------- ------------- -------------
Total 701.1 32.3 (105.6) - 72.3 700.2
Co-invest
assigned to
plc 1.8 - - - 0.4 2.2
-------------
Gross
Portfolio
Value 702.9 32.3 (105.6) - 72.7 702.4
------------- ------------- ------------ ------------- ---------- ---------- ------------- -------------
Carry
external (40.6) - - - (10.8) (51.4)
Portfolio
deferred tax (5.3) - - - (1.3) (6.6)
Trading
carry
& co-invest 0.3 - - - 0.1 0.4
Draper
Esprit
(Ireland)
Limited 0.0 - - 4.3 (4.3) 0.0
Net
portfolio
value 657.3 32.3 (105.6) 4.3 56.4 644.8
------------- ------------- ------------ ------------- ---------- ---------- ------------- -------------
* Fully diluted interest categorised as follows:
Cat A: 0-5%, Cat B: 6-10%, Cat C: 11-15%, Cat
D: 16-25%, Cat E: >25%
Condensed consolidated interim statement of comprehensive
income
for the period ended 30 September 2020
Unaudited Unaudited
Period Ended Period Ended Audited
30 Sep 2020 30 Sep 2019 Year Ended 31 March 2020
Notes GBP'000s GBP'000s GBP'000s
Change in unrealised gains on investments held at fair
value through the profit and loss 10 56,416 57,646 40,755
Fee income 6,053 5,480 11,255
------------------------------------------------------ ----- ------------- ------------- -------------------------
Total investment income 62,469 63,126 52,010
------------------------------------------------------ ----- ------------- ------------- -------------------------
Operating expenses
General administrative expenses (6,611) (5,005) (9,810)
Depreciation and amortisation (310) (219) (520)
Share based payments - resulting from Company share
option scheme (283) (442) (990)
Investment and acquisition costs (121) (45) (239)
Total operating costs (7,325) (5,711) (11,559)
------------------------------------------------------ ----- ------------- ------------- -------------------------
Profit from operations 55,144 57,415 40,451
------------------------------------------------------ ----- ------------- ------------- -------------------------
Finance (expense)/income
Net finance (expense)/income 6 (1,534) 1,288 (68)
Operating profit before tax 53,610 58,703 40,383
------------------------------------------------------ ----- ------------- ------------- -------------------------
Income taxes 13 199 - (17)
------------------------------------------------------ ----- ------------- ------------- -------------------------
Profit for the period/year 53,809 58,703 40,366
------------------------------------------------------ ----- ------------- ------------- -------------------------
Other comprehensive income/(expense) - - -
Total comprehensive income for the period/year 53,809 58,703 40,366
------------------------------------------------------ ----- ------------- ------------- -------------------------
Profit attributable to:
Owners of the parent 53,809 58,307 39,707
Non-controlling interest^ - 396 659
--------------------------- ------ ------ ------
Earnings per share attributable to owners of the parent:
Basic earnings per weighted average shares (pence) 745 49 34
Diluted earnings per weighted average shares (pence) 745 47 33
---------------------------------------------------------
^ On 10 March 2020, the Group acquired the remaining interest in
Encore Ventures LLP and as such no profit after 10 March 2020 is
attributable to the non-controlling interest.
The notes below are an integral part of these condensed
consolidated interim financial statements.
Condensed consolidated interim statement of financial
position
As at 30 September 2020
Unaudited Unaudited Audited
30 Sep 2020 30 Sep 2019 31 March 2020
Notes GBP'000s GBP'000s GBP'000s
------------------------------------------------------------------- ----- ------------ ------------ --------------
Non-current assets
Intangible assets 8 9,977 10,079 10,028
Investments in associates 9 258 258 258
Financial assets held at fair value through the profit or loss 10 644,809 638,452 657,333
Property, plant and equipment 1,596 1,823 1,760
------------------------------------------------------------------- ----- ------------ ------------ --------------
Total non-current assets 656,640 650,612 669,379
------------------------------------------------------------------- ----- ------------ ------------ --------------
Current assets
Trade and other receivables 3,734 8,357 7,719
Cash and cash equivalents 59,870 43,654 32,255
Restricted cash 12 2,255 1,878 1,883
------------------------------------------------------------------- ----- ------------ ------------ --------------
Total current assets 65,859 53,889 41,857
------------------------------------------------------------------- ----- ------------ ------------ --------------
Current liabilities
Trade and other payables (6,708) (5,361) (5,038)
Lease liabilities 16 (372) (310) (358)
------------------------------------------------------------------- ----- ------------ ------------ --------------
Total current liabilities (7,080) (5,671) (5,396)
------------------------------------------------------------------- ----- ------------ ------------ --------------
Non-current liabilities
Deferred tax 13 (412) (621) (611)
Loans and borrowings 12 536 (19,538) (44,636)
Lease liabilities 16 (805) (1,176) (975)
------------------------------------------------------------------- ----- ------------ ------------ --------------
Total non-current liabilities (681) (21,335) (46,222)
------------------------------------------------------------------- ----- ------------ ------------ --------------
Net assets 714,738 677,495 659,618
------------------------------------------------------------------- ----- ------------ ------------ --------------
Equity
Share capital 14 1,192 1,179 1,189
Share premium account 14 401,752 395,747 400,726
Merger relief reserve 13,097 13,097 13,097
Share-based payments reserve - resulting from Company share option
scheme 15 2,621 2,155 2,339
Share-based payments reserve - resulting from acquisition of
subsidiary 15 10,823 10,823 10,823
Retained earnings 285,253 254,044 231,444
------------------------------------------------------------------- ----- ------------ ------------ --------------
Equity attributable to owners of Draper Esprit Plc 714,738 677,045 659,618
------------------------------------------------------------------- ----- ------------ ------------ --------------
Non-controlling interests^ - 450 -
------------------------------------------------------------------- ----- ------------ ------------ --------------
Total equity 714,738 677,495 659,618
------------------------------------------------------------------- ----- ------------ ------------ --------------
Net assets per share (pence) 7 600 574 555
------------------------------------------------------------------- ----- ------------ ------------ --------------
^ On 10 March 2020, the Group acquired the remaining interest in
Encore Ventures LLP and as such no equity is attributable to
non-controlling interest after 10 March 2020.
The condensed interim financial statements were approved by the
Board of Directors and authorised for issue on 27 November
2020.
B.D. Wilkinson
Chief Financial Officer
The notes below are an integral part of these condensed
consolidated interim financial statements.
Condensed consolidated interim statement of cash flows
for the period ended 30 September 2020
Unaudited Unaudited Audited
Period Period Year
30 Sep 2020 30 Sep 2019 31 March 2020
Notes GBP'000s GBP'000s GBP'000s
------------------------------------------------------------------- ----- ------------ ------------ --------------
Cash flows from operating activities
Profit after tax 53,809 58,703 40,366
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 10 (56,416) (57,646) (40,755)
Depreciation and amortisation 310 219 520
Share-based payments - resulting from Company share option scheme 15 283 442 990
Net finance expense/(income) 1,534 (1,288) 68
Decrease/(Increase) in trade and other receivables and other
working capital movements 292 (3,525) (2,886)
Increase/(decrease) in trade and other payables and other working
capital movements 1,314 402 79
Purchase of investments (32,343) (41,453) (89,935)
Proceeds from disposals in underlying investment vehicles 105,565 22,674 39,533
Net loans made (to)/returned from underlying investment vehicles
and Group companies (771) (3,751) (8,541)
Net cash used in operating activities 73,577 (25,223) (60,561)
Tax paid - (10) (3)
------------------------------------------------------------------- ----- ------------ ------------ --------------
Net cash (outflow) from operating activities 73,577 (25,233) (60,564)
Cash flows from investing activities
Purchase of property, plant and equipment (95) (267) (368)
Interest received 6 187 100 289
Net cash (outflow)/inflow from investing activities 92 (167) (79)
------------------------------------------------------------------- ----- ------------ ------------ --------------
Cash flows from financing activities
Cash paid to non-controlling interests - (180) (893)
Net borrowing cash movements 12 (46,386) 19,401 43,588
Repayments of lease liabilities 16 (220) (109) (166)
Net equity cash movements 973 (36) 660
Net cash (outlow)/inflow from financing activities (45,633) 19,076 43,189
------------------------------------------------------------------- ----- ------------ ------------ --------------
Net (decrease)/ increase in cash & cash equivalents 28,036 (6,324) (17,454)
------------------------------------------------------------------- ----- ------------ ------------ --------------
Cash and cash equivalents at beginning of period/year 34,138 50,358 50,358
Exchange differences on cash and cash equivalents (49) 1,498 1,234
------------------------------------------------------------------- ----- ------------ ------------ --------------
Cash and cash equivalents at end of period/year 59,870 43,654 32,255
------------------------------------------------------------------- ----- ------------ ------------ --------------
Restricted cash at period/year end 2,255 1,878 1,883
------------------------------------------------------------------- ----- ------------ ------------ --------------
Total cash and cash equivalents and restricted cash at period/year
end 62,125 45,532 34,138
------------------------------------------------------------------- ----- ------------ ------------ --------------
The notes below are an integral part of these condensed
consolidated interim financial statements.
Condensed consolidated interim statement of changes in
equity
for the period ended 30 September 2020
Share-based Share-based
payments payments
reserve - reserve
resulting - resulting
from Company from
Share Share Merger relief share option acquisition Retained
capital premium reserve scheme of subsidiary earnings Total equity
Unaudited GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------------- ------------------ --------- ------------- ------------- -------------- --------- ------------
Balance at
31 March 2020 1,189 400,726 13,097 2,339 10,823 231,444 659,618
--------------- ------------------ --------- ------------- ------------- -------------- --------- ------------
Comprehensive
Income for
the year
Profit for
the period - - - - - 53,809 53,809
Total
comprehensive
income for
the period - - - - - 53,809 53,809
Contributions
by and
distributions
to the owners:
Issue of share
capital (note
14) 3 - - - - - 3
Share premium
(note 14) - 1,026 - - - - 1,026
Merger relief
reserve - - - - - - -
Net movements
in share based
payments -
resulting
from Company
share option
scheme (note
15) - - - 282 - - 282
Balance at
30 September
2020 1,192 401,752 13,097 2,451 10,823 285,253 714,738
--------------- ------------------ --------- ------------- ------------- -------------- --------- ------------
Share-based
payments Share-based
reserve - payments
resulting reserve -
from resulting Total
Company from attributable
Merger share acquisition to equity Attributable to
Share Share relief option of Retained holders of non-controlling Total
capital premium reserve scheme subsidiary earnings the parent interests equity
Unaudited GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
--------- -------- --------- -------- ----------- ----------- -------- ------------ --------------- ---------
Balance at 31 March 2019 1,179 395,783 13,097 1,713 10,823 195,737 618,332 234 618,566
--------------------------------------------- ----- ------- ------ ----- ------ ------- ------- ----- -------
Comprehensive Income for the year
Profit for the period - - - - - 58,307 58,307 396 58,703
Amounts paid to non-controlling interest - - - - - - - (180) (180)
--------------------------------------------- ----- ------- ------ ----- ------ ------- ------- ----- -------
Total comprehensive income for the period - - - - - 58,307 58,307 216 58,523
Contributions by and distributions to the
owners:
Issue of share capital (note 14) - - - - - - - - -
Share premium (note 14) - (36) - - - - (36) - (36)
Merger relief reserve - - - - - - - - -
Net movements in share based payments -
resulting from Company share option scheme
(note 15) - - - 442 - - 442 - 442
Balance at 30 September 2019 1,179 395,747 13,097 2,155 10,823 254,044 677,045 450 677,495
--------------------------------------------- ----- ------- ------ ----- ------ ------- ------- ----- -------
Share-based
payments Share-based
reserve - payments
resulting reserve -
from resulting Total
Company from attributable
Merger share acquisition to equity Attributable to
Share Share relief option of Retained holders of non-controlling Total
capital premium reserve scheme subsidiary earnings the parent interests equity
Audited GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------- -------- --------- -------- ----------- ----------- -------- ------------ --------------- ---------
Balance at
31 March 2019 1,179 395,783 13,097 1,713 10,823 195,737 618,332 234 618,566
---------------------- ----- ------- ------ ----- ------ ------- ------- ----- -------
Comprehensive
Income for
the year
Profit for
the year - - - - - 39,707 39,707 659 40,366
Amounts withdrawn
by non-controlling
interest - - - - - - - (893) (893)
---------------------- ----- ------- ------ ----- ------ ------- ------- ----- -------
Total comprehensive
income for
the year - - - - - 39,707 39,707 (234) 39,473
Contributions
by and distributions
to the owners:
Adjustment
for Encore
Ventures acquisition - - - - - (4,000) (4,000) - (4,000)
Issue of share
capital (note
14) 10 - - - - - 10 - 10
Share premium
(note 14) - 4,943 - - - - 4,943 - 4,943
Net movements
in share based
payments -
resulting
from Company
share option
scheme (note
15) - - - 626 - - 626 - 626
Balance at
31 March 2020 1,189 400,726 13,097 2,339 10,823 231,444 659,618 - 659,618
---------------------- ----- ------- ------ ----- ------ ------- ------- ----- -------
The notes below are an integral part of these condensed
consolidated interim financial statements.
Notes to the condensed consolidated interim financial
statements
1. General information
Draper Esprit plc (the "Company") is a public limited company
limited by shares incorporated and domiciled in England and Wales.
The Company is listed on the London Stock Exchange's AIM market and
Euronext Dublin's Euronext Growth market.
The Company is the ultimate parent company in which results of
subsidiaries are consolidated in line with IFRS 10 (see the Draper
Esprit plc annual report for the year ended 31 March 2020 for
further details). The condensed consolidated interim financial
statements for the period ended 30 September 2020 comprise the
condensed consolidated interim financial statements of the Company
and its subsidiaries (together, "the Group"). The information for
the six-month period ended 30 September 2020 and 2019 do not
constitute statutory accounts as described in section 80 of the
Companies Act 2006. Comparative figures for the year ended 31 March
2020 are taken from the full statutory accounts, which contained an
unqualified audit opinion.
The condensed consolidated interim financial statements are
presented in Pounds Sterling (GBP/GBP), which is the currency of
the primary economic environment in which the Group operates. All
amounts are rounded to the nearest thousand, unless otherwise
stated.
2. Standards not affecting the reported results or financial position
No upcoming changes under IFRS are likely to have a material
effect on the reported results or financial position. Management
will continue to monitor upcoming changes.
3. Adoption of new and revised standards
No changes to IFRS have impacted this period's financial
statements.
4. Significant accounting policies
Basis of accounting
The condensed consolidated interim financial statements are for
the six-month period ended 30 September 2020 and have been prepared
on a going concern basis in accordance with IAS 34 'Interim
Financial Statements' (IAS 34). They are unaudited and do not
include all of the information required in statutory annual
financial statements in accordance with the IFRSs as adopted by the
EU and should be read conjunction with the consolidated financial
statements for the year ended 31 March 2020.
The condensed consolidated interim financial statements have
been approved for issue by the Board of Directors on 27 November
2020.
a) Significant accounting policies
The condensed consolidated interim financial statements have
been prepared in accordance with the accounting policies adopted by
the Group's most recent annual financial statements for the year
ended 31 March 2020.
5. Critical accounting estimates and judgements
The Directors have made the following judgements and estimates
that have had the most significant effect on the carrying amounts
of the assets and liabilities in the consolidated financial
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, (5)(a) and (5)(b), and judgements, (5)(c) and (5)(d),
are discussed below. There have been no changes to the accounting
estimates and judgements in the period ended 30 September 2020.
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 period/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 period-/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 or partner reports 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 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 as well as the IPEV Board, Special Valuation
Guidance issued on 31 March 2020 in response to the COVID-19 crisis
( together the "IPEV Guidelines"). An assessment will be made at
each measurement date as to the most appropriate valuation
methodology.
The Group invests in early-stage and growth technology
companies, through predominantly unlisted securities. Given the
nature of these investments, there are often no current or
short-term future earnings or positive cash flows. Consequently,
although not considered to be the default valuation technique, the
appropriate approach to determine fair value may be based on a
methodology with reference to observable market data, being the
price of the most recent transaction. Fair value estimates that are
based on observable market data will be of greater reliability than
those based on estimates and assumptions and accordingly where
there have been recent investments by third parties, the price of
that investment will generally provide a basis of the
valuation.
If this methodology is used, its initial use and 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. In addition, the inputs to the
valuation model (e.g. revenue, comparable peer group, product
roadmap) will be recalibrated to assess the appropriateness of the
methodology used in relation to the market performance and
technical/product milestones since the round and the company's
trading performance relative to the expectations of the round.
The Group considers alternative methodologies in the IPEV
Guidelines, being principally price-revenue or price-earnings
multiples, depending upon the stage of the asset, requiring
management to make assumptions over the timing and nature of future
revenues and earnings when calculating fair value. Since March we
have updated company valuations using portfolio companies revised
forecasts reflecting the anticipated impact due to COVID-19.
We continue to monitor cash runway, supply chain risk, sector
risk, and average length of customer contract, amongst other things
across the portfolio.
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 17 and
18 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 as at the end of March unless there is a trigger event
during the period. The recoverable amount is based on "value in
use" calculations, which requires estimates of future cash flows
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 goodwill as at the statement
of financial position date was GBP9.7 million. 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. This 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.
d) Business combinations
In June 2016, the Company acquired the underlying investment
vehicles and Esprit Capital Partners LLP and its subsidiaries. The
Directors undertook a detailed assessment of the substance of this
transaction 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 was appropriately
accounted for as an acquisition.
In March 2020, the Group acquired the remaining membership
interest in Encore Ventures LLP. Prior to this, the Group held a
membership interest of 71% and had determined based on its control
assessment that the Group had control over Encore Ventures LLP and
consolidated this entity in accordance with IFRS 10. As a result,
the acquisition of the remaining membership interest has been
assessed to be a change in ownership interest and is accounted for
as such under IFRS 10. This is not deemed to be a business
combination.
6. Net finance (expense)/income
Period ended 30 September Period ended 30 September Year ended 31 March 2020
2020 GBP'000s 2019 GBP'000s GBP'000s
---------------------------- ---------------------------- ---------------------------- ----------------------------
Interest on leases (Note 16) (45) (43) (94)
Interest and expenses on
loans and borrowings (Note
12) (1,627) (267) (1,497)
Net foreign exchange loss (49) - -
---------------------------- ---------------------------- ---------------------------- ----------------------------
Finance costs (1,721) (310) (1,591)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Net foreign exchange gain - 1,498 1,234
Interest income on cash and
cash equivalents 187 100 289
---------------------------- ---------------------------- ---------------------------- ----------------------------
Finance income 187 1,598 1,523
---------------------------- ---------------------------- ---------------------------- ----------------------------
Net finance (expense)/income (1,534) 1,288 (68)
---------------------------- ---------------------------- ---------------------------- ----------------------------
7. Earnings per share and net asset value
The calculation of basic earnings per weighted average shares is
based on the profit attributable to shareholders and the weighted
average number of shares. When calculating the diluted earnings per
share, the weighted average number of shares in issue is adjusted
for the effect of all dilutive share options and awards.
Basic earnings per ordinary share
Profit after tax Pence
GBP'000s Weighted average no. of shares '000 per share
------------------ ---------------- ----------------------------------- ----------
30 September 2020 53,809 118,962 45
------------------ ---------------- ----------------------------------- ----------
30 September 2019 58,307 117,925 49
------------------ ---------------- ----------------------------------- ----------
31 March 2020 39,707 118,013 34
------------------ ---------------- ----------------------------------- ----------
Diluted earnings per ordinary share
Profit after tax Pence
GBP'000s Weighted average no. of shares '000 per share
------------------ ---------------- ----------------------------------- ----------
30 September 2020 53,809 119,485 45
------------------ ---------------- ----------------------------------- ----------
30 September 2019 58,307 122,814 47
------------------ ---------------- ----------------------------------- ----------
31 March 2020 39,707 120,961 33
------------------ ---------------- ----------------------------------- ----------
Net asset value per share is based on the net assets
attributable to shareholders and the number of shares at the
relevant reporting date (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.
Net asset value per ordinary share
Net assets attributable to owners of Draper Esprit plc Pence
GBP'000s No. of shares '000 per share
------------------ ------------------------------------------------------ ------------------ ----------
30 September 2020 714,738 119,208 600
------------------ ------------------------------------------------------ ------------------ ----------
30 September 2019 677,045 117,925 574
------------------ ------------------------------------------------------ ------------------ ----------
31 March 2020 659,618 118,918 555
------------------ ------------------------------------------------------ ------------------ ----------
Diluted net asset value per ordinary share
Net assets attributable to owners of Draper Esprit plc Pence
GBP'000s No. of shares '000 per share
------------------ ------------------------------------------------------ ------------------ ----------
30 September 2020 714,738 119,765 597
------------------ ------------------------------------------------------ ------------------ ----------
30 September 2019 677,045 122,814 551
------------------ ------------------------------------------------------ ------------------ ----------
31 March 2020 659,618 121,609 542
------------------ ------------------------------------------------------ ------------------ ----------
8. Intangible assets
Goodwill(1) Customer contracts(2) Total
30 September 2020 GBP'000s GBP'000s GBP'000s
------------------------------------------------- ----------- --------------------- ---------
Cost
Cost carried forward as at 1 April 2020 9,653 818 10,471
Additions during the period - - -
Cost as at 30 September 2020 9,653 818 10,471
Accumulated amortisation
Amortisation carried forward as at 1 April 2020 - (443) (443)
Charge for the period - (51) (51)
------------------------------------------------- ----------- --------------------- ---------
Accumulated amortisation as at 30 September 2020 - (494) (494)
Net book value:
As at 30 September 2020 9,653 324 9,977
------------------------------------------------- ----------- --------------------- ---------
30 September Goodwill(1) Customer contracts(2) Total
2019 GBP'000s GBP'000s GBP'000s
-------------- ---------------------- ------------------------- ---------------------------------------------------
Cost
Cost carried
forward as at
1 April 2019 9,653 818 10,471
Additions
during the
period - - -
-------------- ---------------------- ------------------------- ---------------------------------------------------
Cost as at 30
September
2019 9,653 818 10,471
Accumulated
amortisation
Amortisation
carried
forward as at
1 April 2019 - (341) (341)
Charge for the
period - (51) (51)
-------------- ---------------------- ------------------------- ---------------------------------------------------
Accumulated
amortisation
as at 30
September
2019 - (392) (392)
Net book
value:
As at 30
September
2019 9,653 426 10,079
-------------- ---------------------- ------------------------- ---------------------------------------------------
Goodwill(1) Customer contracts(2) Total
31 March 2020 GBP'000s GBP'000s GBP'000s
------------------------------------------------ ----------- --------------------- ---------
Cost
Cost carried forward as at 1 April 2019 9,653 818 10,471
Additions during the year - - -
------------------------------------------------ ----------- --------------------- ---------
Cost as at 31 March 2020 9,653 818 10,471
Accumulated amortisation
Amortisation carried forward as at 1 April 2019 - (341) (341)
Charge for the year - (102) (102)
------------------------------------------------ ----------- --------------------- ---------
Accumulated amortisation as at 31 March 2020 - (443) (443)
Net book value:
As at 31 March 2020 9,653 375 10,028
------------------------------------------------ ----------- --------------------- ---------
1 Goodwill of GBP9.7 million recognised 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 from management fees that would be received if
the portfolio of assets were managed by an independent third party
under commercial terms over the next eight years. 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, and the
percentage of management fees. The discount rate used was 10% and
the management fees were charged at 2% of portfolio assets.
2 An intangible asset of GBP0.8 million was also recognised in
respect of the anticipated profit arising from management fees as a
result of the participation in Encore Ventures LLP following the
acquisition of Esprit Capital Partners LLP.
9. Investments in associates and related undertakings
On 24 November 2016, Draper Esprit acquired a 30.77% stake in
Elderstreet Holdings Limited (registered office: 20 Garrick Street,
London, United Kingdom, WC2E 9BT), the holding company of
Elderstreet with an option to acquire the balance of the
Elderstreet Holdings Limited shares. The initial consideration of
GBP0.26 million has been satisfied by the issue of 73,667 new
ordinary shares of 1 pence each in the capital of the Company. The
Group's share of profits in the period was not material and there
were no indications of impairment at balance sheet date.
Related undertakings
Please see below details of investments held by the Group's
investment companies, where the ownership percentage or partnership
interest exceeds 20%:
Interest FD category* at
reporting date/partnership
Name Address Type of share holding interest
----------------------------- ---------------------------- ---------------------------- ---------------------------
Unit 1.18, Canterbury Court,
Kennington Park, 1-3 Brixton
Road, London, England, SW9 Ordinary shares Preference
SportPursuit Limited 6DE shares E
----------------------------- ---------------------------- ---------------------------- ---------------------------
Kingsfordweg 151, 1043 GR Ordinary shares Preference
Bright Computing Holding B.V. Amsterdam, the Netherlands shares E
----------------------------- ---------------------------- ---------------------------- ---------------------------
Churerstrasse 135, CH-8808 Ordinary shares Preference
Ravenpack Holding AG Pfäffikon, Switzerland shares D
----------------------------- ---------------------------- ---------------------------- ---------------------------
c/o Earlybird Venture
Capital, Maximilianstr. 14,
Earlybird IV 80539, München Partnership interest 27%
----------------------------- ---------------------------- ---------------------------- ---------------------------
c/o Earlybird Venture
Capital, Maximilianstr. 14,
Earlybird VI 80539, München Partnership interest 56.5%
----------------------------- ---------------------------- ---------------------------- ---------------------------
*Fully diluted interest categorised as follows: Cat A: 0-5%, Cat
B: 6-10%, Cat C: 11-15%, Cat D: 16-25%, Cat E: >25%
Details of the FV of the core companies are detailed as part of
the Gross Portfolio Progression table above.
10. 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 detail in the annual
audited consolidated financial statements for the year ended 31
March 2020. 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.
Unaudited Unaudited Audited
As at As at As at
30 Sept 2020 30 Sept 2019 31 Mar 2020
GBP'000s GBP'000s GBP'000s
--------------------------------------------------- ------------- ------------- ------------
As at 1 April 657,333 562,061 562,061
Investments made in the period(1) 32,343 41,453 89,935
Investments settled in shares - - -
Loans repaid from underlying investment vehicles (105,565) (22,674) (39,533)
Loans made to underlying investment vehicles 4,282 (34) 4,115
Unrealised gains on the revaluation of investments 56,416 57,646 40,755
--------------------------------------------------- ------------- ------------- ------------
As at period end 644,809 638,452 657,333
--------------------------------------------------- ------------- ------------- ------------
1 Investments and loans made in the period/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.
11. Operating segments
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. The Group
has one operating segment identified, the investment portfolio of
the Group, which is monitored closely, and strategic decisions are
made on the basis of the investment portfolio performance.
12. Loans and borrowings
In June 2019 the Company entered into a revolving credit
facility agreement with Silicon Valley Bank and Investec (together
the "Financiers") of GBP50.0 million over a 3-year term to provide
financial flexibility and to fund the future growth plans of
investee companies. This was extended in June 2020 by GBP10.0
million to GBP60.0 million with a maturity of June 2023. The
Company incurred initial costs of GBP0.5 million and GBP0.3 million
in respect of the increase and extension of the facility in June
2020, which are presented within loans and borrowings on the
statement of financial position and are amortised over the life of
the facility. Interest-related charges are reported in the
condensed consolidated statement of comprehensive income as finance
costs (see note 6). The bank loans are secured on agreed assets of
the Group within the asset class of investments, updated as agreed
with the Financiers from time to time, and are subject to customary
financial and non-financial conditions with which the Group must
comply.
The facility agreement contains financial and non-financial
covenants.
(a) There must be a minimum of ten core investments at all times
(core investments are not defined in the same way as in this
interim report as it is more broadly defined);
(b) The ratio of the NAV of all investments (as defined in the
agreement) to original investment cost should not be less than
1.1:1.0 at any time; and
(c) The ratio of the NAV (as defined in the agreement) plus
amounts in the collateral account to financial indebtedness (as
defined in the agreement) should not be less than 10:1 at any
time.
In addition, the borrowing base (as defined in the agreement)
must exceed the facility amount.
As collateral for interest payments, an amount equal to the
aggregate amount of interest costs due for the coming six months,
all being equal, must be held in an Interest Reserve Account at all
times. The balance of this at 30 September 2020 was GBP2.3 million
and is reflected on the Condensed Consolidated Interim Statement of
Financial Position as restricted cash.
The debt facility is repayable on maturity (June 2023) but may
become repayable earlier if certain conditions are not met.
As at 30 September 2020, the Company has nil drawn down of the
GBP60.0 million facility.
Period ended 30 Sep 2020 Period ended 30 Sep 2019 Year ended 31 Mar 2020
GBP'000s GBP'000s GBP'000s
---------------------------------------------------------------- ------------------------ -----------------------
Bank loan senior facility amount 60,000 50,000 50,000
---------------------------------------- ----------------------- ------------------------ -----------------------
BOE base rate + 6.75% / BOE base rate + 6.75% / BOE base rate + 6.75% /
Interest rate 7.50% floor 7.50% floor 7.50% floor
---------------------------------------- ----------------------- ------------------------ -----------------------
Drawn at balance sheet date - 20,000 45,000
---------------------------------------- ----------------------- ------------------------ -----------------------
Arrangement fees (536) (462) (364)
---------------------------------------- ----------------------- ------------------------ -----------------------
Loan liability balance (536) 19,538 44,636
---------------------------------------- ----------------------- ------------------------ -----------------------
Undrawn facilities at balance sheet date 60,000 30,000 5,000
---------------------------------------- ----------------------- ------------------------ -----------------------
13. Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 19% (31 March 2020:
19%). The movement on the deferred tax account is shown below:
Period ended 30 Sep 2020 Period ended 30 Sep 2019 Year ended 31 Mar 2020
GBP'000s GBP'000s GBP'000s
------------------------------------------ ------------------------ ------------------------ ----------------------
Arising on business combination (62) (95) (75)
------------------------------------------ ------------------------ ------------------------ ----------------------
Arising on co-invest and carried interest (483) (526) (414)
------------------------------------------ ------------------------ ------------------------ ----------------------
Other timing differences 133 - (122)
------------------------------------------ ------------------------ ------------------------ ----------------------
At the end of the period (412) (621) (611)
------------------------------------------ ------------------------ ------------------------ ----------------------
The tax movement in the condensed consolidated interim statement
of comprehensive income of GBP0.2 million results from the movement
in deferred tax.
14. Share capital and share premium
Ordinary share capital
30 September 2020 - Allotted and fully paid Number Pence GBP'000s
---------------------------------------------------------------------------------- ----------- ------ --------
At the beginning of the period 118,918,124 1 1,189
---------------------------------------------------------------------------------- ----------- ------ --------
Issue of share capital during the period for cash(1) 289,835 1 3
Issue of share capital during the period as consideration for investment purchase - 1 -
---------------------------------------------------------------------------------- ----------- ------ --------
At the end of the period 119,207,959 1 1,192
---------------------------------------------------------------------------------- ----------- ------ --------
1. Between 18 August 2020 and 16 September 2020, 289,835 new 1p
ordinary shares were issued in association with share options being
exercised.
30 September 2019 - Allotted and fully paid Number Pence GBP'000s
---------------------------------------------------------------------------------- ----------- ------ --------
At the beginning of the period 117,925,470 1 1,179
---------------------------------------------------------------------------------- ----------- ------ --------
Issue of share capital during the period for cash - - -
Issue of share capital during the period as consideration for investment purchase - - -
---------------------------------------------------------------------------------- ----------- ------ --------
At the end of the period 117,925,470 1 1,179
---------------------------------------------------------------------------------- ----------- ------ --------
There were no new shares issued in the period.
31 March 2020 - Allotted and fully paid Number Pence GBP'000s
------------------------------------------------------------------------------------- ----------- ------ --------
At the beginning of the period 117,925,470 1 1,179
------------------------------------------------------------------------------------- ----------- ------ --------
Issue of share capital during the period for cash(1) 195,842 1 2
Issue of share capital during the period as consideration for investment purchase(2) 796,812 1 8
------------------------------------------------------------------------------------- ----------- ------ --------
At the end of the period 118,918,124 1 1,189
------------------------------------------------------------------------------------- ----------- ------ --------
2. Between 24 December 2019 and 21 February 2020, 195,842 new 1p
ordinary shares were issued in association with share options being
exercised.
3. On 10 March 2020, as part of the acquisition agreement
relating to the remaining interest in Encore Ventures LLP it was
agreed that the Company would issue 796,812 new ordinary shares at
502p.
Share premium
Period ended Period ended Year ended
30 Sep 2020 30 Sep 2019 31 Mar 2020
Allotted and fully paid GBP'000s GBP'000s GBP'000s
--------------------------------------------------- ------------ ------------ ------------
At the beginning of the period 400,726 395,783 395,783
--------------------------------------------------- ------------ ------------ ------------
Premium arising on the issue of ordinary shares(1) 1,026 - 4,983
Transfer to merger relief reserve - - -
Equity issuance costs(2) - (36) (40)
--------------------------------------------------- ------------ ------------ ------------
At the end of the period 401,752 395,747 400,726
--------------------------------------------------- ------------ ------------ ------------
1. The movement on share premium during the period has arisen as
a result of 289,835 ordinary shares issued at a premium in
association with share options being exercised during the
period.
2. The negative premium movement on ordinary shares in the
period ending 30 September 2019 arises from costs that fell in this
period relating to an issuance of shares in the prior period.
15. Share-based payments
FV per
b/f Granted Lapsed Exercised c/f Exercise granted
Date 1 April in the in the in the 30 September Approved Vesting price instrument
of Grant 2020 period period period 2020 options period (pence) (pence)
----------- ------------ -------------------------------- ------------------------------ ---------- ---------- -------------------------------- --------------------------------- -------- --------- -----------
28/11/2016 1,216,034 - - (289,835) 926,199 67,600 3 years 355 64.1
28/11/2016 101.685 - - - 101,685 - 3 years 355 89.3
11/11/2017 160,000 - - - 160,000 25,068 3 years 354 89.8
28/11/2017 1,155,364 - (20,775) - 1,134,589 15,502 3 years 387 70.9
28/11/2017 116,016 - - - 116,016 - 3 years 387 97.9
30/07/2018 1,027,500 - (150,700) - 876,800 - 3 years 492 152.9
30/07/2018 102,750 - - - 102,750 - 3 years 492 186.4
12/02/2019 796,868 - (61,566) - 735,302 - 3 years 530 67.8
12/02/2019 75,000 - - - 75,000 - 3 years 530 95.2
26/11/2019 200,000 - - - 200,000 6,424 3 years 467 71.5
Draper
Esprit
plc 2016
Company
Share
Options
Plan
(CSOP) 29/06/2020 - 200,000 - - 200,000 - 3 years 449 81.2
Draper
Esprit
plc Long
Term
Incentive
Plan 29/06/2020 - 568,682 - 568,682 - 3 years 1 449.0
----------- ------------ -------------------------------- ------------------------------ ---------- ---------- -------------------------------- --------------------------------- -------- --------- -----------
During the period, 289,835 options granted in November 2016 were
exercised and 233,041 options lapsed.
During the period, 200,000 share options were granted under the
Draper Esprit plc 2016 Company Share Options Scheme and 568,682 as
part of the Draper Esprit plc Long Term Incentive Plan under the
Amended and Restated Draper Esprit plc 2016 Company Share Options
Plan (the "LTIP").
For share options granted under the Draper Esprit plc 2016
Company Share Options Plan, the Black Scholes Option Pricing Model
has been used for valuation purposes. All options are settled in
shares. Volatility is expected to be in the range of 20-30% based
on an analysis of the Company's and peer group's share price. The
risk-free rate used was 0.73% and 1.57% and was taken from zero
coupon United Kingdom government bonds on a term consistent with
the vesting period.
There are no performance conditions attached to the share
options granted under the Draper Esprit plc 2016 Company Share
Options Plan.
Share options granted during the period under the LTIP vest if
certain performance standards are met. The amount of options that
will vest depends on performance conditions included within the
agreement relating to realisations, assets under management, and
Total Shareholder Return ("TSR"). These options are granted under
the plan for no consideration and are granted at a nominal value of
1p. All options are settled in shares. The fair value of the LTIP
shares will be valued using an adjusted form of the Black-Scholes
model which includes a Monte Carlo simulation model. A six-monthly
review will take place of non-market performance conditions.
16. Leases
Lessee - Real Estate Leases
The Group leases office buildings in London for use by its
staff. The Group also has offices in Cambridge (closed post
period-end) and in Dublin, however these contracts are classified
as service contracts and not leases. Information about leases for
which the Group is a lessee is presented below.
The Group leases IT equipment such as printers for use by staff.
The Group has elected to apply the recognition exemption for leases
of low-value to these leases.
(i) Amounts recognised in the condensed consolidated interim
statement of financial position
Right-of-use assets Period ending 30 September 2020 Period ending 30 September 2019 Year ending 31 March 2020
---------------------- ------------------------------- ------------------------------- -------------------------
Property 1,134 1,482 1,308
---------------------- ------------------------------- ------------------------------- -------------------------
Total 1,134 1,482 1,308
---------------------- ------------------------------- ------------------------------- -------------------------
No new leases have been entered into during the period and,
therefore, no new right-of-use assets were recognised.
Lease liabilities Period ending 30 September 2020 Period ending 30 September 2019 Year ending 31 March 2020
-------------------- ------------------------------- ------------------------------- -------------------------
Current 372 310 358
Non-current 805 1,176 975
-------------------- ------------------------------- ------------------------------- -------------------------
Total 1,177 1,486 1,333
-------------------- ------------------------------- ------------------------------- -------------------------
(ii) Amounts recognised in the condensed consolidated interim
statement of comprehensive income
The condensed consolidated interim statement of comprehensive
income shows the following amounts relating to leases:
Period ending 30 September Period ending 30 September
2020 2019 Year ending 31 March 2020
----------------------------- ----------------------------- ----------------------------- -------------------------
Interest on lease liabilities 45 43 94
Depreciation charge for the
period on right-of-use
assets 174 131 306
Expenses relating to
short-term leases - - -
Expenses relating to leases
of low-value assets,
excluding short-term leases
of low-value
assets 2 3 5
----------------------------- ----------------------------- ----------------------------- -------------------------
(iii) Amounts recognised in the condensed consolidated interim statement of cash flows
The total cash outflow for leases in the period ending 30
September 2020 was GBP0.2 million (30 September 2019: GBP0.1
million, 31 March 2020: payments of GBP0.3 million net of a
contribution for a rent-free period on the 3(rd) floor of 20
Garrick Street of GBP0.2 million)
17. Fair value measurements
This section should be read with reference to note 5(a) of this
report and note 16 of the Annual Report of Draper Esprit plc for
the year ended 31 March 2020. The Group classifies financial
instruments measured at fair value through the profit and loss
according to the following fair value hierarchy in line with IFRS
13:
-- Level 1: inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
-- Level 2: inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
-- Level 3: inputs are unobservable inputs for the asset or liability.
All investments held at fair value through the profit and loss
are classified as level 3 in the fair value hierarchy. There were
no transfers between Levels 1, 2 and 3 during the period.
Significant unobservable inputs for Level 3 valuations
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.
See note 5(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 3 main
valuation techniques. Valuation techniques can be categorised as
based on last round price (calibrated with reference to market
performance and technical/product milestones since the round and
the companies trading performance relative to the expectations of
the round), revenue multiple or at NAV of the underlying fund
(adjusted where relevant). As at 30 September 2020, financial
instruments measured using last round price valuation methodology
were GBP287.3 million (including those at a discount) (31 March
2020: GBP231.7 million). As at 30 September 2020, financial
instruments measured using revenue-multiple valuation methodology
were GBP321.7 million (31 March 2020: GBP401.3 million). As at 30
September 2020, financial instruments measured at NAV of the
underlying fund (adjusted where relevant) were GBP91.2 million (31
March 2020: GBP68.1 million).
Each portfolio company will be subject to individual assessment.
Where the Group invests in fund of fund investments, the value of
the portfolio will be reported by the fund to the Group. The Group
will ensure that the valuations comply with the Group policy.
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 3.4x.
If the multiple used to value each unquoted investment valued on
a revenue-multiples basis as at 30 September 2020 were to decrease
by 10%, the investment portfolio would decrease by GBP32.2 million
(31 March 2020: GBP40.1 million). If the multiple increases by 10%
then the investment portfolio would increase by GBP32.2 million (31
March 2020: GBP40.1 million).
If the multiple used to value each unquoted investment valued on
a revenue-multiples basis as at 30 September 2020 were to decrease
by 15% the investment portfolio would decrease by GBP48.3 million
(31 March 2020: GBP60.2 million). If the multiple increases by 15%
then the investment portfolio would increase by GBP48.3 million (31
March 2020: GBP60.2 million).
18. Financial instruments risk
Financial risk management
Financial risks are usually grouped by risk type: market,
liquidity and credit risk. These risks are discussed in turn
below.
Market risk - Foreign currency
A significant portion of the Group's investments and cash
deposits are denominated in a currency other than sterling. The
principal currency exposure risk is to changes in the exchange rate
between GBP and USD/EUR. Presented below is an analysis of the
theoretical impact of 10% volatility in the exchange rate on
shareholder equity.
Theoretical impact of a change in the exchange rate of +/-10%
between GBP and USD/EUR would be as follows:
30 Sep 2020 30 Sep 2019 31 Mar 2020
Foreign currency exposures - Investments GBP'000s GBP'000s GBP'000s
----------------------------------------- ----------- ----------- -----------
Investments - exposures in USD/EUR 521,692 486,255 557,567
10% decrease in GBP* 579,658 540,338 619,519
10% increase in GBP** 474,265 415,327 506,879
----------------------------------------- ----------- ----------- -----------
* GBP386.7 million (Sept 2019: GBP280.0 million, March 2020:
GBP376.5 million) denominated in USD and GBP193.0million (Sept
2019: GBP260.0 million, March 2020: GBP242.9 million) denominated
in EUR.
** GBP316.4 million (Sept 2019: GBP215.0 million, March 2020:
GBP 308.1 million) denominated in USD and GBP157.9 million (Sept
2019: GBP200.0 million, March 2020: GBP198.8 million) denominated
in EUR.
Certain cash deposits held by the Group are denominated in Euros
and US Dollars. The theoretical impact of a change in the exchange
rate of +/-10% between GBP and USD/EUR would be as follows:
30 Sep 30 Sep
2020 2019 31 March 2020
Foreign currency exposures - Cash GBP'000s GBP'000s GBP'000s
-------------------------------------------------- --------- --------- -------------
Cash denominated in EUR 19,090 14,473 6,976
10% decrease in EUR: GBP 17,181 13,026 6,278
10% increase in EUR: GBP 20,999 15,921 7,673
Cash denominated in USD 12,879 5,921 3,627
10% decrease in USD: GBP 11,591 5,329 3,264
10% increase in USD: GBP 10% increase in EUR: GBP 14,167 6,513 3,990
-------------------------------------------------- --------- --------- -------------
The combined theoretical impact on shareholders' equity of the
changes to revenues, investments and cash and cash equivalents of a
change in the exchange rate or +/- 10% between GBP and USD/EUR
would be as follows:
30 Sep 2020 30 Sep 2019 31 Mar 2020
Foreign currency exposures - equity GBP'000s GBP'000s GBP'000s
------------------------------------ ----------- ----------- -----------
Shareholders' Equity 714,738 677,045 659,618
10% decrease in EUR:GBP/USD:GBP 643,264 609,341 593,656
10% increase in EUR:GBP/USD:GBP 786,212 744,750 725,580
------------------------------------ ----------- ----------- -----------
Market risk - Price risk
Market price risk arises from the uncertainty about the future
prices of financial instruments held in accordance with the Group's
investment objectives. It represents the potential loss that the
Group might suffer through holding market positions in the face of
market movements, which have been heightened due to COVID-19.
The Group is exposed to equity price risk in respect of equity
rights and investments held by the Group and classified on the
balance sheet as financial assets at fair value through profit or
loss (note 17). These equity rights are held in unquoted high
growth technology companies and are valued by reference to revenue
or earnings multiples of quoted comparable companies, last round
price, or NAV of underlying fund - as discussed more fully in note
5(a). These valuations are subject to market movements.
The Group seeks to manage this risk by routinely monitoring the
performance of these investments, employing stringent investment
appraisal processes.
Theoretical impact of a fluctuation in equity prices of +/-10%
would be as follows:
GBP'000s Revenue-multiple NAV of underlying fund Last round price
------------------------ ---------------- ---------------------- ----------------
As at 30 September 2020 32,170 9,106 28,726
As at 31 March 2020 40,131 6,810 23,169
------------------------ ---------------- ---------------------- ----------------
We further flexed by 15% given the volatility resulting from the
COVID-19 pandemic. Theoretical impact of a fluctuation in equity
prices of +/-15% would be as follows:
GBP'000s Revenue-multiple NAV of underlying fund Last round price
------------------------ ---------------- ---------------------- ----------------
As at 30 September 2020 48,254 13,659 43,090
As at 31 March 2020 60,197 10,216 34,753
------------------------ ---------------- ---------------------- ----------------
Liquidity risk
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of 3 months or less held in
readily accessible bank accounts. The carrying amount of these
assets is approximately equal to their fair value. Responsibility
for liquidity risk management rests with the Board of Draper Esprit
plc, which has established a framework for the management of the
Group's funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and by
continuously monitoring forecast and actual cash flows. The
utilisation of the loan facility and requirement for utilisation
requests is monitored as part of this process.
All trade payable amounts are short-term.
Lease liabilities fall due over the term of the lease - see note
16 for further details. The debt facility has a term of 3 years -
for further details, see note 12. All other Group payable balances
at balance sheet date and prior periods fall due for payment within
one year.
As part of our seed fund of funds strategy, we make commitments
to funds to be drawn down over the life of the fund. Projected
drawdowns are monitored as part of the monitoring process above.
See further details in note 19.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss. The
Group is exposed to this risk for various financial instruments,
for example by granting receivables to customers, placing deposits.
The Group's trade receivables are amounts due from the investment
funds under management, or underlying portfolio companies. The
Group's maximum exposure to credit risk is limited to the carrying
amount of financial assets at 30 September is summarised below:
30 Sep
2020 30 Sep 2019 31 March 2020
Classes of financial assets impacted by credit risk, carrying amounts GBP'000s GBP'000s GBP'000s
---------------------------------------------------------------------- --------- ----------- -------------
Trade receivables 2,938 3,262 2,669
Loan to related investment vehicle - - 3,692
Cash at bank and on hand 59,870 43,654 32,255
Restricted cash 2,255 1,878 1,883
---------------------------------------------------------------------- --------- ----------- -------------
The Directors consider that all the above financial assets that
are not impaired or past due for each of the reporting date under
review are of good credit quality. In respect of trade and other
receivables the Group is not exposed to significant risk as the
principal customers are the investment funds managed by the Group,
and in these the Group has control of the banking as part of its
management responsibilities.
Investments in unlisted securities are held within limited
partnerships for which Esprit Capital Partners LLP acts as manager,
and consequently the Group has responsibility itself for collecting
and distributing cash associated with these investments. The credit
risk of amounts held on deposit is limited by the use of reputable
banks with high quality external credit ratings and as such is
considered negligible. Cash at 30 September 2020 is held with the
following institutions: (1) Barclays Bank Plc; (2) Silicon Valley
Bank Plc; and (3) Investec Bank Plc.
Capital management
The Group's objectives when managing capital are to
-- safeguard their ability to continue as a going concern, so
that they can continue to provide returns for shareholders and
benefits for other stakeholders, and
-- maintain an optimal capital structure.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to manage
cash.
Interest rate risk
The Group's interest rate risk arises from borrowings on the
GBP60.0 million loan facility with Silicon Valley Bank and
Investec, which was entered into in June 2019 and increased and
extended in June 2020. Prior to the period ending 30 September
2019, the Group did not have any borrowings. The Group's borrowings
are denominated in GBP and are carried at amortised cost.
A drawdown totalling GBP35.0 million was rolled during the
period (maximum drawn during the period of GBP45.0 million) at an
interest rate of 7.5% - this was repaid as at 30 September 2020
(all drawn amounts were repaid during the period). Future drawdowns
may be subject to a different interest rate. The facility agreement
has an interest rate calculated with reference to the Bank of
England base rate (currently 0.10%) with a Margin of 6.75%. The
agreement has an interest rate floor of 7.5%. As such, if the base
rate increases, the interest charged on future drawdowns will
increase.
If the Bank of England base rate had been 1.0% higher during the
period to 30 September 2020 the difference to the condensed
consolidated interim statement of comprehensive income would have
been an increase in finance costs of GBP0.1 million. If the Bank of
England base rate had been 1.0% higher during the period to 30
September 2020 the difference to the consolidated statement of cash
flows would have been an increase in expenditure of GBP0.1
million.
19. Related party transactions
The Group has various related parties stemming from
relationships with Limited Partnerships managed by the Group, its
investment portfolio, its advisory arrangements (board seats) and
its key management personnel. In addition, the Company has related
parties in respect of its subsidiaries in the form of management
fees and expense recharges.
The Group may require that one of its members be appointed to
the board of a portfolio company in a non-executive role. In
certain cases, an administration fee is charged to the portfolio
company for the provision of Director services. Fees of GBP22k have
been invoiced during the current period (6-month period to 30
September 2019: GBP22k, year to 31 March 2020: GBP44k). At the
period-end, there was a balance of GBP24k outstanding (30 September
2019: GBP16k, 31 March 2020: GBP6k). At times, expenses incurred
relating to director services can be recharged to portfolio
companies - these are immaterial.
During the period, the Company invoiced Elderstreet, an
associate, GBP0.2 million (6-month period to 30 September 2019:
GBP39k, year to 31 March 2020: GBP0.4 million), with a balance
outstanding at period-end of GBP0.2 million (31 March 2020: GBPnil;
30 September 2019: GBPnil).
In the year ended 31 March 2020, the Company loaned GBP3.7
million to Esprit Capital Fund No 1 & No 2 LP on an arm's
length basis. The loan was repaid during the period along with
accrued interest of GBP0.4 million.
For the period ending 30 September 2020, management fees of
GBP4.6 million from related parties are included in the condensed
consolidated interim statement of comprehensive income (6-month
period to 30 September 2019: GBP4.0 million, year to 31 March 2020:
GBP8.4 million).
During the period, employees of Draper Esprit plc exercised
share options - see note 15 for further details.
Unconsolidated structured entities
The Group has exposure to a number of unconsolidated structured
entities as a result of its venture capital investment
activities.
The Group ultimately invests all funds via a number of limited
partnerships and some via Draper Esprit plc's wholly owned
subsidiary, Draper Esprit (Ireland) Limited. 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 of the Draper
Esprit plc annual report for the year ended 31 March 2020 for
further details and for the list of these investment companies and
limited partnerships). The material assets and liabilities within
these investment companies are the investments, which are held at
FVTPL in the consolidated accounts. See further details in the
table below.
30 Sep
Name of Registered 2020 31 Mar 2020
undertaking office Activity Holding Country GBP'm GBP'm
------------ ----------- ------------ ------- ------- ------------------------- ----------------------------------
20 Garrick
Esprit Street,
Investments London, Limited
(1) (B) LP WC2E 9BT Partnership 100% England 6.7 16.5
20 Garrick
Esprit Street,
Investments London, Limited
(2) (B) LP WC2E 9BT Partnership 100% England 86.0 61.6
32
Draper Molesworth
Esprit Street,
(Ireland) Dublin 2, Investment
Limited Ireland company 100% Ireland 529.7 553.3
------------ ----------- ------------ ------- ------- ------------------------- ----------------------------------
Draper Esprit (Ireland) Limited invests via the following
limited partnerships: Esprit Investments (1) LP, Esprit Investments
(2) LP, Esprit Capital IV LP, Esprit Capital III LP.
The investments balance in the condensed consolidated statement
of financial position also includes investments held by
consolidated entities.
The Group also co-invests or historically co-invested with a
number of limited partnerships (see note 3b of the Draper Esprit
plc annual report for the year ended 31 March 2020 for further
details). The exposure to these entities is immaterial.
Capital commitments
The Group has made commitments to fund of funds investments as
part of its investment activity. At 30 September 2020, the Group
was committed to approximately GBP40.6 million (31 March 2020:
GBP39.1 million) in relation to investments in fund of funds
vehicles. As at 30 September 2020, GBP16.6 million of this has been
drawn.
A Strategic Partnership Agreement was entered into with
Earlybird in the year ending 31 March 2019 to share deal flow and
resources to co-invest in high growth technology companies across
Europe. The first stage of this partnership included a 50%
commitment to EB VI of approximately GBP79.7 million (EUR87.5
million) to 2022, of which GBP64.8 million has been deployed to 30
September 2020 (to 31 March 2020: GBP56.4 million). Total exposure
to the Group is GBP152.6 million of NAV (31 March 2020: GBP187.3
million) with undrawn commitments across all Earlybird entities of
GBP19.9 million (31 March 2020: GBP28.5 million).
20. Ultimate controlling party
The Directors of Draper Esprit plc do not consider there to be a
single ultimate controlling party of the Group.
21. Alternative Performance Measures ("APM")
The Group has included the APMs listed below in this report as
they highlight key value drivers for the Group and, as such, have
been deemed by the Group's management to provide useful additional
information to readers of this report. These measures are not
defined by IFRS and should be considered in addition to IFRS
measures.
Gross Portfolio Value
The Gross Portfolio Value is the gross fair value of the Group's
investment holdings before deductions for the fair value of carry
liabilities and any deferred tax. The Gross Portfolio Value is
subject to deductions for the fair value of carry liabilities and
deferred tax to generate the net investment value, which is
reflected on the interim condensed consolidated statement of
financial position as financial assets held at fair value through
profit or loss. Please see the Gross Portfolio Value table above
for a reconciliation to the net investment balance.
NAV per share
The NAV per share is the Group's net assets attributable to
shareholders divided by the number of shares at the relevant
reporting date. See the calculation in note 7.
22. Subsequent events
Post period-end, we have continued to see a strong pipeline of
investments and have deployed GBP18.3 million post period-end,
including our investment co-leading PrimaryBid's Series B round.
PrimaryBid is a technology platform that allows retail investors
fair access to public companies raising capital.
In addition, an oversubscribed fundraise was announced post
period-end in October 2020, in which Draper Esprit secured funding
commitments to raise gross proceeds of GBP110.0 million.
There are no further post balance sheet events requiring
comment.
Glossary
In this document, where the context permits, the expressions set
out below shall have the meanings assigned thereto:
"Admission" or the Admission of the enlarged share capital to trading
"IPO" on AIM and Euronext Growth (formerly ESM) on
15 June 2016 and such admission becoming effective in
accordance with the AIM Rules and the Euronext
Growth 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, Risk the Audit, Risk and Valuations Committee of the Board.
and Valuations
Committee"
------------------------ ------------------------------------------------------------
"BOE" Bank of England.
------------------------ ------------------------------------------------------------
"Company" or Draper Esprit plc, a company incorporated in England
"Draper Esprit" and Wales with registered number 09799594 and having
or "plc" its registered office at 20 Garrick Street, London,
WC2E 9BT.
------------------------ ------------------------------------------------------------
"Core Portfolio the top companies by value that represent over 60% of
Companies" the overall portfolio value.
------------------------ ------------------------------------------------------------
"COVID"/"COVID-19" Coronavirus disease, the infectious disease caused by
/"Coronavirus"/"CV19" a new strain of coronavirus in 2019/20.
------------------------ ------------------------------------------------------------
"DEF" or "Digital Digital East Fund 2013 SCA SICAR
East Fund"
------------------------ ------------------------------------------------------------
"Directors" or the directors of the Company from time to time.
"Board"
------------------------ ------------------------------------------------------------
"Draper Esprit the Esprit Funds and the Encore Funds.
Funds"
------------------------ ------------------------------------------------------------
"Draper Esprit Draper Esprit VCT plc, the Venture Capital Trust managed
VCT" by Elderstreet
------------------------ ------------------------------------------------------------
"Draper Venture the self-governed network of 24 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.
------------------------ ------------------------------------------------------------
"Elderstreet" Elderstreet Investments Limited
------------------------ ------------------------------------------------------------
"Encore Funds" DFJ Esprit Angels' EIS Co-Investment Fund, DFJ Esprit
/ "Draper Angels' EIS Co-Investment II, DFJ Esprit EIS III, DFJ
Esprit's EIS Esprit
funds" EIS IV, Draper Esprit EIS 5, and Draper Esprit EIS,
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.
------------------------ ------------------------------------------------------------
"ESG" Environmental, Social and Governance
------------------------ ------------------------------------------------------------
"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.
------------------------ ------------------------------------------------------------
"Euronext Dublin" the trading name of the Irish Stock Exchange Plc.
------------------------ ------------------------------------------------------------
"Euronext Growth" the Euronext Growth securities market (formerly the
Enterprise Securities Market) operated and regulated
by the Irish Stock Exchange plc (trading as "Euronext
Dublin").
------------------------ ------------------------------------------------------------
"FCA" the UK Financial Conduct Authority.
------------------------ ------------------------------------------------------------
"FOF" or "FoF" Fund of Funds.
------------------------ ------------------------------------------------------------
"Gross Portfolio Gross Portfolio Value is the value of the portfolio
Value" of investee companies held by funds controlled by the
Company before accounting for deferred tax, external
carried interest and amounts co-invested.
------------------------ ------------------------------------------------------------
"Group" the Company and its subsidiaries from time to time and,
for the purposes of this document, including Esprit
Capital Partners LLP and its subsidiaries and subsidiary
undertakings.
------------------------ ------------------------------------------------------------
"HMRC" HM Revenue & Customs.
------------------------ ------------------------------------------------------------
"IFRS" or "IFRSs" International Financial Reporting Standards, as adopted
for use in the European Union.
------------------------ ------------------------------------------------------------
"IPO" the Company's listing on the London Stock Exchange's
AIM market and the Irish Stock Exchange's (trading
as Euronext Dublin) Euronext Growth Dublin market on
15 June 2016.
------------------------ ------------------------------------------------------------
"IRR" the internal rate of return.
------------------------ ------------------------------------------------------------
"Net Asset Value" the value, as at any date, of the assets of the Company
/ "NAV" and/or Group after deduction of all liabilities
determined in accordance with the accounting policies
adopted by the Company and/or Group from time
to time.
------------------------ ------------------------------------------------------------
"Ordinary Shares" ordinary shares of GBP0.01 pence each in the capital
of the Company.
------------------------ ------------------------------------------------------------
"PricewaterhouseCoopers" PricewaterhouseCoopers LLP, a limited liability partnership
or "PwC" registered in England and Wales under the
registration number OC303525 and having its registered
office at 7 More London Riverside, London, SE1 2RT.
------------------------ ------------------------------------------------------------
"IPEV" the International Private Equity and Venture Capital
Valuation Guidelines, as amended from time to time.
------------------------ ------------------------------------------------------------
"SVB" Silicon Valley Bank.
------------------------ ------------------------------------------------------------
"VC" venture capital.
------------------------ ------------------------------------------------------------
"VCT" The VCT funds of Draper Esprit VCT plc, under management
of Elderstreet. VCT (venture capital trust) funds being
UK closed-ended collective investment schemes.
------------------------ ------------------------------------------------------------
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