TIDMGROW
RNS Number : 2336Q
Draper Esprit PLC
28 November 2016
Strictly Embargoed until: 07.00, 28 November 2016
Draper Esprit plc
("Draper Esprit" or the "Company" or "the Group")
Interim Results
for Six Months Ended 30 September 2016
Draper Esprit (AIM: GROW, ESM: GRW), a leading venture capital
firm involved in the creation, funding and development of
high-growth digital technology businesses, today announces its
maiden Interim Results for the six months ended 30 September
2016.
Highlights
Financial and Operational
-- Successful initial public offering ("IPO") and admission to AIM and ESM
-- Profit after tax of GBP26.1m
-- Gross primary portfolio value increased by 36% to GBP106.9m (GBP78.7m at IPO)
-- Net Assets including goodwill, increased by 11% to GBP143.3m (GBP128.7m at IPO)
-- NAV per share of 352p
-- Current net cash and deposits available for investment,
following post period end realisations, of GBP48.0m excluding
further expected near term exits of Qosmos anticipated to add a
further GBP6.0m (net of escrowed funds)
-- Revenue of GBP0.7m from trading activities, including
secondary and EIS funds, complemented by GBP0.28m in gain of
accrued carried interest (assuming sale of portfolio at NAV),
offsetting costs of GBP1.2m, in line with strategic objective of
subsidising costs through commercial income
-- Successfully completed final close of EIS 5 co-investment
fund, having raised GBP11m and launch of EIS 6
-- Acquisition of minority stake in Elderstreet Investments
Limited, post period end, and option to acquire remaining equity,
adding GBP25m of Assets Under Management ("AUM") and strategic VCT
platform
-- Total Group Venture Capital AUM of approx. GBP350m
-- Appointment of Ben Wilkinson as new CFO in October 2016,
strengthening team and taking the total number of investment
professionals to 10, including Elderstreet
Portfolio Update
-- Gross primary portfolio value of GBP106.9m, an increase of
GBP28.1m since IPO, including new investments of GBP6.8m (27%
increase in 3 month period excluding new investments)
-- Portfolio realisations: GBP39.0m (including amounts held in
escrow) generated from exits of Movidius (GBP27.4m) and post period
Qosmos (GBP8.0m) and Datahug (GBP3.6m)
-- Uplift in value for Graze following further growth in the USA
with smaller uplifts from positive currency effects across
portfolio due to significant non sterling revenues
-- GBP8.9m invested by the Company, alongside a further GBP6.2m
from our co-investment funds, including Lifesum, Graphcore,
Resolver and post period Pushdoctor and Perkbox
-- Follow-on investments of GBP2.2m in existing smaller holdings in portfolio
-- Cumulative turnover of portfolio companies for 2016 now
forecast to be in excess of $710m, a growth rate of almost 30% over
2015
-- GBP106m of equity capital raised by portfolio companies year
to date, including co-investment funds
Simon Cook, CEO Draper Esprit commented:
"It has been a transformational year for Draper Esprit and it is
my pleasure to present our first interim results as a public
company. As we report on our first set of Interim Results it is
pleasing to demonstrate that we are successfully working towards
our goals. We have continued to experience strong deal-flow and
have invested over GBP17.0m in the year to date into new and
existing technology companies, across the UK and Europe. Our plc
portfolio companies now have a combined turnover in excess of
$710m, growing nearly 30% on 2015.
"We had a wider mission when we listed Draper Esprit early this
year - not just to create value for shareholders, but to offer
investors a stake in our vision. We believe in democratising the
venture capital model and making our expertise and high growth
opportunities in private technology businesses accessible to a
wider, broader market. We invest in high margin, innovative
businesses and similarly we hold ourselves to the same standard -
as we continue to break new ground in our marketplace."
"We have an experienced management team, which we will continue
to grow and develop. Our acquisition of Elderstreet is just one
example of our growth strategy in action - developing Draper Esprit
into a significant European venture capital leader.
"Although it is relatively early in our life as a listed
evergreen vehicle, we have shown that we are focussed on putting
our patient capital model to work to grow Net Assets substantially
to the benefit of our shareholders and to generate meaningful cash
returns over time.
"Our existing portfolio is progressing well and following our
recent successful exits we have significant cash resources of over
GBP60.0m across our plc balance sheet and co-investment vehicles
available to invest. We believe that we are well positioned to
capitalise further on opportunities in the second half of the year
and look forward to the next financial year with confidence and
optimism."
Enquiries
Draper Esprit plc
Simon Cook (Chief Executive
Officer)
Ben Wilkinson (Chief Financial
Officer) +44 (0)20 7931 8800
-------------------------------- -------------------
Numis Securities
Nominated Adviser & Joint
Broker
Alex Ham
Garri Jones
Richard Thomas
Paul Gillam
Jamie Loughborough +44 (0)20 7260 1000
-------------------------------- -------------------
Goodbody Stockbrokers
ESM Adviser & Joint Broker
Don Harrington
Linda Hickey
Dearbhla Gallagher +353 1 667 0420
-------------------------------- -------------------
Belvedere Communications
(PR)
John West
Kim van Beeck +44 (0)20 3567 0510
-------------------------------- -------------------
Notes to Editors
Draper Esprit (www.draperesprit.com) was founded in 2006, and is
one of the largest and most active VC firms in Europe, helping
entrepreneurs to build global ground-breaking technology companies
through hands-on board level support, internationalisation and
commercialisation activities and investment.
In 2016, with the support of new institutional investors and
existing shareholders, Draper Esprit transformed into a listed PLC
model (LSE: GROW.L, ESM GRW.I) in order to take a longer term,
multi-stage, patient capital approach. In recent years, Draper
Esprit's exits have generated more than $4.0 billion in combined
enterprise value.
Draper Esprit is the exclusive Western European member of the
Silicon Valley-based Draper Global Network with offices around the
world, with portfolio companies including Baidu, Skype, Space X,
Tesla and other world leading companies.
Chairman's Statement
In June 2016 the Company announced that it had successfully
listed on London's AIM and the ESM, in Ireland. The Company had an
unaudited pro-forma Net Asset Value ("NAV") including goodwill at
admission of GBP128.7 million.
The IPO was backed with strong institutional support from new
and existing shareholders including several prominent City
institutions, successful entrepreneurs and family offices, many of
whom have active later stage and IPO investment activities.
Since then we have been proactive across a variety of key
business areas described below and as a result the Company is
delighted to report a GBP14.6 million increase in our VC portfolio
NAV.
We firmly believe that European growth and venture capital
returns are now able to at least match equivalent returns from the
US and importantly Europe continues to offer investors a compelling
growth opportunity given the potential for global expansion
emerging from European entrepreneurs, limited competition and
receptive global exit markets.
Our investment strategy aims to provide investors large and
small with greater diversity to their portfolio through exposure to
private digital growth companies. By creating a listed evergreen
venture capital vehicle which can invest in the new generation of
early and growth stage digital businesses we are confident that we
can deliver attractive long term returns for investors.
Draper Esprit has significant cash resources available and will
continue to provide substantial development and expansion capital
to companies in its portfolio, as well as making new
investments.
Thank you for sharing our vision for the democratisation of the
venture capital model and for helping us to make it a workable
reality.
Karen Slatford
Non-Executive Chair
Chief Executive's Review
Draper Esprit has had a great start to life as a public
company.
At the time of listing we set out some specific goals for the
Group:
-- to continue to invest in our portfolio and in exciting new
digital companies across the UK and Europe;
-- to put our patient capital model into effect, reducing the
need to sell leading European companies early;
-- and to democratise the patient capital model allowing all
investors to benefit from high growth new digital companies.
Since Admission we have been busy putting our strategy into
action. To this end we have invested from our plc balance sheet and
our EIS co-investment funds over GBP17.0m in 9 new Companies, year
to date, and in the existing portfolio, as well as exiting 3
companies, 2 of which were post period end, realising cash of up to
GBP39.0m (including amounts held in escrows).
The Group is well positioned to invest larger amounts in more
companies and to hold our investments, if necessary for longer
periods of time. We currently have in excess of GBP54.0 million of
available cash to use for these purposes including expected near
term exits.
Alongside this Draper Esprit has access to an additional GBP9.0
million of co-investment capital from EIS funds managed within the
wider group.
We have been busy building a group which covers all segments of
the funding market and alongside our plc and EIS funds we were
pleased to announce after the reported period end that we had
acquired a significant minority stake in Elderstreet Investments,
with an option to acquire the remaining share capital in the
business. This gives us access to their excellent team of
investment managers and means that their VCTs will co-invest
alongside us in future deals. We plan to launch new EIS and VCT
co-investment funds which are expected to close in mid 2017.
Exits and Investments
Since April 2016, the Company has announced three major
disposals.
Firstly we announced the sale of Movidius Ltd ("Movidius") to
Intel Corporation. Movidius is a leader in high performance,
ultra-low power computer vision technology for connected
devices.
This sale brings an estimated total cash return to the Company
of approximately GBP27.4 million before provision for accrued tax
and carried interest payments.
Subsequently, we also recently announced that ENEA, a leading
global information technology company that provides real-time
operating systems and consulting services, has signed an agreement
to acquire portfolio company, Qosmos for a total cash consideration
of approximately EUR52.7 million resulting in cash to the Company,
including escrows, of GBP8.0 million.
Qosmos is a supplier of Network Intelligence software based on
Deep Packet Inspection and commands a dominating share of its
market. Closing of the transaction is subject to approvals from
French government authorities and is expected to be completed in
December 2016.
In November 2016 we announced the sale of Datahug, a sales
forecasting software company, to Callidus Software Inc for a cash
consideration of approx $13.0 million, resulting in a cash return
to the Company of approximately GBP3.6 million, including funds
held in escrow. Separately, during 2016 secondary funds managed or
associated with Draper Esprit were also involved in the sale of
optical switch business Polatis to Huber+Suhner; and GreenPeak
Technologies, a leader in ultra-low power, short range RF
communication technology to NASDAQ listed Qorvo, Inc. These exits
returned GBP23.0 million to our Limited Partners, and resulted in
proceeds to the Company in fees and carry of approx. GBP0.28 millon
to offset Group costs.
These exits highlight the truly European nature of Draper
Esprit's portfolio with Movidius based in Dublin, Qosmos in Paris,
Polatis in Cambridge (UK) and GreenPeak in the Benelux countries.
All companies were very active in the US market, as per Draper
Esprit's strategy of helping European companies become global
leaders.
Draper Esprit and secondary managed funds associated with the
Company held significant minority stakes in each portfolio company;
the acquirers were all respected international blue-chip companies;
and the aggregate total value of these transactions was in excess
of $600 million in 2016.
New Investments
Our model is predicated on putting our capital to work and to
actively support companies in monetising their technology and
exploiting market position. Accordingly, we have been busy during
the period investing in the next generation of European technology
focused companies.
In the year to date, the Company or co-investment funds managed
by the Group invested over GBP17.0 million in 9 new companies.
Notable new additions to the portfolio include:
-- GBP2.3 million of GBP3.1 million invested by the Group in
Graphcore, a machine intelligence semiconductor company,
-- GBP3.0 million invested in LifeSum, a leading health tracking mobile app company,
-- GBP1.0 million of GBP1.5 million by the Group in PushDoctor,
an on-demand healthcare mobile app company (post period end),
-- GBP0.6 million of GBP1.0 million invested in Resolver, a
customer service software company, (post period end); and
-- GBP1.7 million of GBP2.5 million invested in Perkbox, an
employee benefits and engagement platform, (post period end).
Follow-on Investments and Existing Portfolio Company News
Similarly the Group has been active in supporting the growth of
its existing portfolio companies and has made GBP2.2 million of
follow-on investments in several smaller holdings.
The existing portfolio is progressing well and companies in
which Draper Esprit currently has a holding now have combined
turnover in excess of $710m, growing by almost 30% in 2016. All of
our top holdings, including: Graze, Trustpilot, Lyst, Sportpursuit,
M-Files and Conversocial have continued to make strong commercial
progress, growing sales significantly and reporting positive
newsflow. More detail is given below.
Investment Environment
In the US, the number of companies raising smaller VC funding
rounds below US$5.0 million is similar to the number of companies
raising larger growth funding rounds over US$5.0 million.
In Europe, however, only about a quarter of companies which
raise a smaller VC funding round go on to raise a larger growth
funding round of more than US$5.0 million. The overall market for
$5m+ growth rounds is growing at about 10% per annum.
This follow-on nancing risk is perhaps the key difference
between growth and VC investment in the US and Europe, and it is
precisely why Draper Esprit invests 70% of its capital in later
stage follow-on opportunities.
The UK's EU membership referendum has led to much uncertainty in
the UK economy as a whole, but despite this we believe strongly in
the investment opportunities in Europe and little has changed for
us post the referendum. If anything the macro environment is now
even more attractive for our patient capital model.
Outlook and Summary
It has been a transformational year for Draper Esprit with the
transition to life as a public company. As we report on our first
set of Interim Results it is pleasing to demonstrate that we are
successfully working towards our goals. We have continued to
experience strong deal-flow and have invested over GBP17.0 million
in the period into new and existing exciting next generation
technology companies, across the UK and Europe. Our plc portfolio
companies now have a combined turnover in excess of $710m.
We had a wider mission when we listed Draper Esprit early this
year - not just to create value for shareholders, but to offer
investors a stake in our vision. We believe in democratising the
venture capital model and making our expertise accessible to a
wider, broader market. We invest in forward-thinking and innovative
businesses and similarly we hold ourselves to the same standard -
as we continue to break new ground in our marketplace.
We have an experienced management team, which we will continue
to grow and develop. Our acquisition of Elderstreet is just one
example of our growth strategy in action - developing Draper Esprit
into a significant European leader.
Although it is relatively early in our life as a listed
evergreen vehicle, we have shown that we are focussed on putting
our patient capital model to work to grow Net Assets substantially
to the benefit of our shareholders.
Our existing portfolio is progressing well and following our
recent successful exits we have significant cash resources of over
GBP60.0 million across a range of vehicles (PLC and co-investment
through EIS and VCT funds) available to invest. We believe that we
are well positioned to capitalise further on opportunities in the
second half of the year and look forward to the next financial year
with confidence and optimism.
Simon Cook
CEO
Portfolio Review
We continue to be excited by the growth potential of the
underlying portfolio companies. Sales of Movidius, Qosmos (post
period end) and Datahug (post period end) demonstrate the
investment and value realisation model in practice.
Pro Forma at Acquisition Investment Fair Value Interest
IPO * Adjustment** Portfolio Movement in of Investments FD***
15th June 15th June 15th June Investments Fair Value 30th Sept 30th Sept
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
2016 2016 2016 2016 2016
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Investment GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Cat N.o
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Conversocial 5,384 (876) 4,508 876 5,384 4
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Graze 7,186 (1,169) 6,017 3,581 9,597 2
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Lyst 9,277 (1,509) 7,768 691 8,459 3
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
M-Files 6,677 (1,086) 5,591 1,711 7,302 2
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Movidius**** 7,563 (1,230) 6,333 19,312 25,645 3
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Qosmos**** 4,891 (796) 4,095 2,790 6,885 4
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
SportPursuit 8,226 (1,338) 6,887 1,669 8,557 4
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Trustpilot 8,896 (1,447) 7,449 1,919 9,368 1
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Remaining
Portfolio 18,261 (2,969) 15,292 6,794 686 22,772
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Co-invest
assigned
to PLC 2,385 (118) 2,267 612 2,880
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
Total 78,745 (12,538) 66,347 6,794 33,848 106,848
---------------- ------------- -------------- ----------- ------------ ------------ --------------- -----------
* Based on 30th December 2015 valuation adjusted solely for currency
** Reflects arms length price agreed for the acquisition of initial portfolio for GBP63.9m,
carried interest and co-invest assigned to PLC
*** Fully Diluted Interest categorised as follows: Cat 1: 0-5%, Cat 2: 6-10%, Cat 3: 11-15%,
Cat 4: 16-25%, Cat 5: >25%
Holdings are often through preferred equity, hence the equity interest does not indicate an
underlying value of the portfolio company
**** Sale post period end, valuation net of escrowed funds
Revenue growth from the portfolio remains strong at a combined
$710.0 million. Average revenue growth of c.30% per annum
demonstrates the differentiated portfolio opportunity investors can
access through Draper Esprit.
2013 2014 2015 2016
Portfolio Company Revenues $'million $'million $'million $'million
------------------------------------------ ------------ ------------ ------------ ------------
Revenue 319 422 556 711
------------------------------------------ ------------ ------------ ------------ ------------
% Growth 32% 32% 28%
------------------------------------------ ------------ ------------ ------------ ------------
Average of Top 8 Companies by Fair Value 17 21 27 36
------------------------------------------ ------------ ------------ ------------ ------------
% Growth 28% 28% 33%
------------------------------------------ ------------ ------------ ------------ ------------
The following is an overview of some of Draper Esprit's key
investments:
Graze
Draper Esprit first invested in Graze in 2010 with follow on
investment in 2012 bringing the total investment by the Group to
GBP3.7 million.
Graze is an online and offline retailer and manufacturer of
healthier snacks, operating in the UK and the USA. Founded in 2009,
it developed a subscription model based on experiences of founder
Graham Bosher at Lovefilm, the DVD rental business. The company has
developed logistics technology that allows it to deliver cost
effectively across the UK and USA. It utilises data generated from
user reviews to innovate and develop new products for evolving
taste preferences and growing consumer demand for wholesome on the
go snack options.
The company has launched its own retail product with wide
availability in the UK across 3,000+ stores including retailers
such as Boots, Tesco, WH Smith and Sainsburys. This will drive
further UK growth together with new online ecommerce sales through
a subscription based model. The company has recently launched into
4,000+ retail stores in the USA and further online growth is
forecast. Graze remains profitable with strong gross margins.
Graze's vision is to become the number one health snack brand in
the world. Alongside the Company investors in Graze include The
Carlyle Group and Octopus Investments.
Trustpilot
Draper Esprit first invested in Trustpilot in 2013 with follow
on investment in 2015 bringing the total investment by the Group to
GBP5.5 million.
Founded in 2007, Trustpilot is a global, multi-language review
community. Trustpilot has customers in 65 countries including
Denmark, Sweden, the U.K., France, Italy, Germany and the
Netherlands, as well as the U.S. Trustpilot has locations in New
York, London, Copenhagen and Melbourne.
Trustpilot's aim is to build the world's single most trusted
review company.
Consumers visit the Trustpilot website to leave positive or
negative reviews about an online merchant where they purchased a
product. Once a merchant has a paid subscription to use Trustpilot,
they are able to respond directly and openly with consumers who
have left reviews. Merchants may embed the Trustpilot widget onto
their site in order to highlight their ratings amongst customers,
and can opt into having starred reviews showing up on ad-words when
a customer searches for that merchant.
Trustpilot has built a strong SaaS revenue model with excellent
growth in Europe over the last 3 years.
Trustpilot raised US$73.5 million in 2015 led by Vitruvian
Partners, alongside existing investors, including Draper Esprit,
Index Ventures, Northzone and SEED Capital Denmark.
Lyst
Draper Esprit first invested in Lyst in 2012 with follow on
investment in 2013 and 2015 bringing the total investment by the
Group to GBP2.4 million.
Lyst is an online fashion marketplace that lets people shop
across over 11,500 different online stores using a single
check-out. Lyst was founded in 2010. Lyst is differentiated from
other "aggregation" websites by the size of the pool of online
stores and designers that it aggregates. Lyst develops technology
to personalise the experience for visitors, suggesting new items to
customers based on previous purchases, with a real-time ability to
show the customer what is actually in stock and where.
Lyst raised US$35 million in 2015 from investors including Group
Arnault (owner of LVMH Moet Hennessy Louis Vuitton SE), with
support from existing investors including Draper Esprit, Accel and
Balderton.
SportPursuit
Draper Esprit first invested in SportPursuit in 2012 with follow
on investment in 2013 and 2014 bringing the total investment by the
Group to GBP3.2 million.
SportPursuit was founded in 2011 as a UK-based sport specific
e-commerce website where members receive access to sales from brand
partners targeting the technical sportswear and outdoor clothing
and equipment space. The company offers up to 70 per cent.
discounts on sports and outdoor brands. SportPursuit has customers
in the UK, Australia, Germany, France and Scandinavia. It aims to
be the world's largest private shopping club for sports
enthusiasts.
Currently sales are focused across the following niches:
outdoor, running, skiing & snowboarding, health &
wellbeing, athletics, swimwear, cycling, golf, tennis and
experiences (gyms, clubs). The vision of the team is to utilise the
power of the online channel, the SportPursuit brand and the
community they build up around it to realise a greater value
opportunity.
Alongside Draper Esprit investors include CIT Growth Capital and
Scottish Equity Partners. The company raised GBP9.0 million
announced in November 2015.
M-Files
Draper Esprit first invested in M-Files in 2013 with follow on
investment in 2015 bringing the total investment by the Group to
GBP2.4 million.
M-Files is a software company which provides enterprise
information management (EIM) solutions to eliminate information
silos and provides access to content from core business systems and
devices. The M-Files EIM system uses software based on the
meta-data contained within the document. This provides it with a
unique advantage as it is not constrained by where the document is
stored or resides. The EIM system is used as a single platform for
managing front office and back office business operations, which
improves productivity and quality while ensuring compliance with
industry regulations and standards.
M-Files is performing well with strong revenues and growth
rates. New initiatives in product (mobile), geography (UK, Germany,
Australia and NZ) and enterprise are driving the company's revenue
and enhancing its reputation. Recent wins with the IMF, the
Romanian Government and Abbott, continue to demonstrate the
products strength and potential.
The Company is well regarded by the analyst community and was
recently named as the only visionary in Gartner's 2016 Magic
Quadrant for Enterprise Content Management. This relates to their
ability to manage meta-data across multiple formats and
depositories.
Alongside Draper Esprit investors include Finnish Industry
Investment and Partech Ventures, raising $36 million in February
2016
Conversocial
Draper Esprit first invested in Conversocial in 2011 with follow
on investments each year to 2015 bringing the total investment by
the Group to GBP2.3 million.
Conversocial aims to be the leading provider of cloud-based
social customer service solutions using analytics to provide
accurate, actionable insights on customer trends over time and
comprehensive application program interfaces that integrate into
customer relationship management and contact centre
technologies.
Conversocial is expanding its executive team to help innovate
its product as companies invest in customer service applications in
order to accelerate their customer engagement. During the past
year, Conversocial has increased its office presence and has
recorded new client wins across North America, UK and Europe.
Conversocial announced the signing of a new partnership
agreement with Twitter which is expected to drive larger enterprise
sales over the next two years.
Conversocial raised $11 million in 2015 from the Company, Dawn
Capital and previous investor Octopus Investments.
New investments
Lifesum
Draper Esprit has invested $4.0 million in a $10m Series B round
in Stockholm-based digital health company Lifesum (www.lifesum.com)
("Lifesum"). Draper Esprit has invested for the first time
alongside Nokia Growth Partners, and existing investors Bauer Media
and VC SparkLabs Global Ventures. Lifesum, launched in 2013, has
created one of Europe's fastest growing health apps with over 15
million users. Lifesum has created a platform that focuses on
engaging and inspiring users online and offline to help them
maintain and achieve a healthy lifestyle and work towards their
personal health and fitness goals. The app is available on iOS,
Android and Apple Watch.
Graphcore
Draper Esprit has participated with $4.0 million (plc $3.0
million ) in the $30m Series A funding round for Graphcore, a
semiconductor startup targeting solutions for machine learning and
artificial intelligence (AI) applications. The round was led by
Robert Bosch Venture Capital with Samsung Catalyst Fund and also
included Amadeus, C4 Ventures, Foundation Capital and Pitango
Venture Capital. The business is a spin-out of XMOS, another VC
backed semiconductor business based near Bristol, UK. The CEO is
Nigel Toon and CTO is Simon Knowles, who were both founders of
Icera, a VC backed semiconductor company which was sold to nVidia
for $367m in 2011. The market for AI and machine learning is
developing very rapidly at present in many applications such as
autonomous cars, collaborative robots and intelligent mobile
devices. Graphcore is planning to bring a processing system to
market in 2017 which will enable material performance increases (in
the 10-100x range) for AI computing.
Perkbox (post period end)
Digital employee engagement firm Perkbox received backing of
GBP2.5 million (plc GBP1.7 million) from Draper Esprit in a GBP4.5m
round. Perkbox provides a digital engagement platform that enables
companies of all sizes, including startups, to incentivise,
motivate and attract staff through over 200 perks and benefits and
a sophisticated rewards & recognition infrastructure. Launched
in 2015, the company already has over 300,000 paying members
ranging from SMEs to large corporations such as British Gas and
BUPA. Monthly recurring revenue has grown more than 10 times in 18
months to GBP1.4m/month. Perkbox was recently listed no. 2 in the
Startups 100 Index for being one of the most innovative emerging
ventures in the country.
Resolver (post period end)
Draper Esprit has also participated GBP1.2 million (plc GBP0.6
million) in a GBP2.8 million investment round for Resolver, a free
and independent website dedicated to making it easier for consumers
to make complaints or raise issues with brands, companies and
organisations to get redress or money back. Currently
Resolver.co.uk boasts 556,000 registered users and raises an
average of 1,500 new cases on any given day. It is growing at a
rate of more than 10% month-on-month and receives more than 600,000
visits each month. Resolver.co.uk now has more than 30,000
companies, brands and organisations in its database and users can
sign up in seconds via the website or through the iOS or Android
apps.
Pushdoctor (post period end)
PushDoctor.co.uk, Europe's largest online GP marketplace has
raised GBP1.5 million (plc GBP1.0 million) investment from Draper
Esprit. PushDoctor.co.uk is changing the way everyone can access
healthcare using its' on-demand online GP surgery, making
healthcare accessible for the tens of millions of people in the UK
who find seeing a doctor difficult. The Care Quality
Commission-regulated and NHS-commissioned service allows patients
to book and attend secure video GP appointments seven days per
week, 365 days of the year, via a website and iOS app.
Financial Review
Welcome to our maiden Interim Accounts as a listed company,
covering the six month period to 30(th) September 2016. The period
was defined by the successful IPO in June 2016 which received
strong backing from new and existing shareholders. The proceeds
from the IPO have been used to acquire Draper Esprit Ireland, which
holds the initial portfolio of minority interests in 24 digital
technology companies, for GBP63.9 million, the management company
Esprit Capital Partners LLP and to provide cash for further
investment of GBP30.0 million.
These interim results reflect the accounting of the fund raise
and of the subsequent acquisitions. The impact of these events is
predominantly observed on the balance sheet where the Net Assets of
GBP143.3 million reflect fair value gains of GBP26.7 million
against the underlying portfolio of GBP76.4 million at the time of
IPO (using 31 December 2015 values adjusted purely for currency
movements), cash balances of GBP22.2 million and the goodwill
attributed to the acquisition of Esprit Capital Partners LLP of
GBP20.5 million.
The plc corporate entity had no trading activity prior to the
IPO and subsequent acquisition of the initial portfolio and the
management company; as a result the comparative information is
limited. The consideration paid for the initial portfolio was
GBP63.9 million and the below table reflects the movement in Net
Asset Value during the period, using the pro-forma values from the
IPO as a reference point:
Pro-Forma Change
at IPO * Adjustment** Fair Value Fair Value from Pro Forma
15th June 15th June 15th June Movement 30th Sept to
2016 2016 2016 Investments in Period 2016 30 Sept
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ----------- ------------ ----------- ----------- -----------------
Investment Portfolio 76,360 (12,421) 63,940 6,794 33,235 103,969 27,608
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Co-invest assigned to
PLC 2,385 (118) 2,267 612 2,880 495
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
78,745 (12,538) 66,207 6,794 33,848 106,848 28,103
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Carry External (2,624) 1,209 (1,415) (3,111) (4,526) (1,902)
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Portfolio deferred tax
provision*** 0 0 (3,571) (3,571) (3,571)
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Trading Carry &
Co-invest**** 1,847 (676) 1,171 954 2,126 278
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
77,969 (12,005) 65,963 6,794 28,120 100,877 22,908
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Cash 30,444 (238) 30,206 (6,794) (1,230) 22,182 (8,262)
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Goodwill 21,132 170 21,302 (828) 20,475 (658)
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Other Tax provision*** 0 0 (733) (733) (733)
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Other
Assets/(Liabilities) (848) (848) 1,377 529 1,377
----------------------- -------- ------------- ----------- ------------ ----------- ----------- -----------------
Net Asset Value 128,696 (12,073) 116,623 0 26,707 143,330 14,634
* Based on 30th December 2015 valuation adjusted solely for currency
** Reflects arms length price agreed for the acquisition of
initial portfolio for GBP63.9m, carried interest and co-invest
assigned to PLC plus currency adjustments to 15th June 2016
*** Participation exemption for funds held through Ireland
anticipated once investments held for period >12 months..
Realisations of Movidius, Qosmos and Datahug all within a shorter
holding period than envisaged and <12 months
**** Historical funds managed by the Company with a remaining economic interest
The Consolidated Financial Statements for the Interim period to
30(th) September 2016 have been prepared under the principles of
IFRS 3 Business Combinations and IFRS 10 Consolidated Financial
Statements. The assets and liabilities of the acquired entities
have been fair valued and reflected on the balance sheet with a
subsequent gain presented on the income statement representing the
difference between the fair value of the entities acquired versus
the consideration paid.
Net assets have increased by 11% to GBP143.3 million (GBP128.7
million at IPO) in the period while net assets excluding cash,
goodwill and new investments have grown by 22% to GBP93.9 million
(GBP77.1 million at IPO). Movements in cash balances reflect the
cash component of the acquisition of the initial portfolio for
GBP40.1 million, GBP6.8 million of investments made in the period
and the costs of the Company. Cash proceeds from the IPO are shown
net of GBP2.7 million of directly attributable costs, which are
reflected in the share premium account on the statement of
financial position.
The fair value gain on investments of GBP26.7 million reflected
through the Income Statement is attributable to the net fair value
gain on investments of GBP22.9 million to GBP100.9 million (GBP78.0
million at IPO) and further movements in the fair value of
liabilities. A deferred tax provision of GBP3.6 million has been
recognised in the period against the gains in the portfolio to
reflect holdings for a period of less than 12 months. This amount
is netted off the Investments in the consolidated statement of
financial position. It is anticipated that these balances will
benefit from participation exemption once they have been held for
over 12 months; with the exception of the recent realisations of
Movidius, Qosmos and Datahug.
The business model of the Company is to deploy investment
capital and management expertise into supporting high growth
technology companies. During the period to 30 September 2016 the
plc invested GBP4.6 million in 2 new investments and GBP1.7 million
in 2 existing portfolio companies. Post period end the Group has
continued to deploy capital with investments of a further GBP4.8
million in 7 companies.
The Company seeks capital gains from its underlying portfolio
investments and the period can be viewed as a success with the
announced sale of Movidius, and post period end of Qosmos and
Datahug, serving as a key driver to the fair value gains on the
investment portfolio of 36% post IPO. As at 30 September 2016 the
fair value of investments was GBP106.9 million, reflecting fair
value gains of GBP28.1 million in the period, compared to the
pro-forma IPO balances of GBP78.7 million. GBP6.0 million of this
gain is attributable to movements in exchange rates.
Revenues in the period of GBP0.7 million are generated from
investment management fees. It is anticipated that revenues will
continue to increase as assets under management are grown by the
EIS, and through the recently announced acquisition of Elderstreet,
VCT platform.
Operating expenses in the period of GBP1.2 million are in line
with the planned expenditure. The expenses predominantly relate to
staff costs of GBP0.8 million and professional fees of GBP0.25
million. A further GBP0.28 million has been generated from trading
carry and co-invest on historical secondary investments, which
demonstrates the value creation across the Company, to further
offset the cost base.
With available cash of GBP48.0 million, plus a further GBP6.0
anticipated from the sale of Qosmos, the Company has adequate
resources to meet its strategic investment objectives and meet its
ongoing commitments.
Ben Wilkinson
CFO
Independent review report to Draper Esprit plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report of
Draper Esprit plc for the six months ended 30 September 2016 which
comprises the Consolidated statement of comprehensive income,
Consolidated statement of financial position, Consolidated
statement of cash flows, Consolidated statement of changes in
equity and the related explanatory notes. We have read the other
information contained in the half-yearly financial report which
comprises only the Chairman's Statement, Chief Executive's Review,
Portfolio Review and Financial Review and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the company, in accordance with
International Standard on Review Engagements (UK and Ireland) 2410,
'Review of Interim Financial Information performed by the
Independent Auditor of the Entity' issued by the Auditing Practices
Board. Our review work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed
set of financial statements in the half-yearly financial report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2016 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
25 November 2016
INTERIM FINANCIAL INFORMATION ON THE DRAPER ESPRIT PLC GROUP
Consolidated statement of comprehensive income for six months
ended 30 September 2016
30 Sept 2016 31 Mar 2016
Unaudited Audited
Note GBP'000s GBP'000s
------------------------------------------------------------ ----- ------------- ------------
Revenue 716 -
------------------------------------------------------------ ----- ------------- ------------
Staff costs and member's remuneration (773) -
------------------------------------------------------------ ----- ------------- ------------
Other operating charges (435) 3
------------------------------------------------------------ ----- ------------- ------------
Revaluation of investments held at FVTPL 6 26,707 -
------------------------------------------------------------ ----- ------------- ------------
Operating Profit/(loss) 26,215 (3)
------------------------------------------------------------ ----- ------------- ------------
Finance income/(expense) 295 -
------------------------------------------------------------ ----- ------------- ------------
Profit/(Loss) on ordinary activities before tax 26,510 (3)
------------------------------------------------------------ ----- ------------- ------------
Taxation 4 (424) -
------------------------------------------------------------ ----- ------------- ------------
Profit/(Loss) on ordinary activities after tax 26,086 (3)
------------------------------------------------------------ ----- ------------- ------------
Profit attributable to non-controlling interests (210) -
------------------------------------------------------------ ----- ------------- ------------
Total comprehensive profit/(loss) for the period 25,876 (3)
------------------------------------------------------------ ----- ------------- ------------
Total comprehensive income/(loss) for the period attributable to:
------------------------------------------------------------------------------------------------
Owners of the parent 25,876 (3)
------------------------------------------------------------ ----- ------------- ------------
Non-controlling interests 210 -
------------------------------------------------------------ ----- ------------- ------------
Total comprehensive income/(loss) for the financial period 26,086 (3)
------------------------------------------------------------ ----- ------------- ------------
Basic Earnings per share 64p (6p)
---------------------------- ---- -----
Consolidated statement of financial position for the six months
ended 30 September 2016
Note 30 Sept 2016 Unaudited GBP'000s 31 Mar 2016 Audited GBP'000s
--------------------------------------------- ----- -------------------------------- -----------------------------
ASSETS
Non-current assets
---------------------------------------------------------------------------------------------------------------------
Property, plant & equipment 15 -
--------------------------------------------- ----- -------------------------------- -----------------------------
Goodwill 5 20,475 -
--------------------------------------------- ----- -------------------------------- -----------------------------
Other intangible assets 818 -
--------------------------------------------- ----- -------------------------------- -----------------------------
Investments 6 100,879 -
--------------------------------------------- ----- -------------------------------- -----------------------------
Total non-current assets 122,187 -
--------------------------------------------- ----- -------------------------------- -----------------------------
CURRENT ASSETS
---------------------------------------------------------------------------------------------------------------------
Trade & other receivables 932 50
--------------------------------------------- ----- -------------------------------- -----------------------------
Cash at bank and in hand 22,182 -
--------------------------------------------- ----- -------------------------------- -----------------------------
Total current assets 23,114 50
--------------------------------------------- ----- -------------------------------- -----------------------------
CURRENT LIABILITIES
---------------------------------------------------------------------------------------------------------------------
Trade & other payables (1,236) (3)
--------------------------------------------- ----- -------------------------------- -----------------------------
Total current liabilities (1,236) (3)
--------------------------------------------- ----- -------------------------------- -----------------------------
NON-CURRENT LIABILITIES
Deferred Tax (733) -
--------------------------------------------- ----- -------------------------------- -----------------------------
Total non-current liabilities (733) -
--------------------------------------------- ----- -------------------------------- -----------------------------
Net assets 143,332 47
--------------------------------------------- ----- -------------------------------- -----------------------------
EQUITY
---------------------------------------------------------------------------------------------------------------------
Issued share capital 7 407 -
--------------------------------------------- ----- -------------------------------- -----------------------------
Share Premium Account 7 116,911 50
--------------------------------------------- ----- -------------------------------- -----------------------------
Retained Earnings 25,853 (3)
--------------------------------------------- ----- -------------------------------- -----------------------------
Equity attributable to owners of the parent 143,171 47
--------------------------------------------- ----- -------------------------------- -----------------------------
Non-controlling interests 161 -
--------------------------------------------- ----- -------------------------------- -----------------------------
Total Equity 143,332 47
--------------------------------------------- ----- -------------------------------- -----------------------------
Net assets per share 352p 94p
============================================= ===== ================================ =============================
Consolidated statement of cash flows for the six months ended 30
September 2016
30 Sept 2016 Unaudited 31 Mar 2016 Audited
Note GBP'000s GBP'000s
------------------------------------------------------- ----- ----------------------- --------------------
Cash flows from operating activities
-------------------------------------------------------------------------------------------------------------
Profit/(Loss) before tax 26,510 (3)
------------------------------------------------------- ----- ----------------------- --------------------
Adjustments to reconcile operating profit to net cash flows used in operating activities
-------------------------------------------------------------------------------------------------------------
Revaluation of investments at FVTPL (26,707) -
------------------------------------------------------- ----- ----------------------- --------------------
Depreciation & amortisation 1 -
------------------------------------------------------- ----- ----------------------- --------------------
Decrease/(increase) in trade & other receivables (232) (50)
------------------------------------------------------- ----- ----------------------- --------------------
Increase/(decrease) in trade & other payables 424 3
------------------------------------------------------- ----- ----------------------- --------------------
Net cash generated by/(used in) operating activities (4) (50)
------------------------------------------------------- ----- ----------------------- --------------------
Tax paid - -
------------------------------------------------------- ----- ----------------------- --------------------
Net cash inflow/(outflow) from operating activities - -
------------------------------------------------------- ----- ----------------------- --------------------
Cash flows from investing activities
-------------------------------------------------------------------------------------------------------------
Purchase of property, plant and equipment (8) -
------------------------------------------------------- ----- ----------------------- --------------------
Cash acquired on purchase of subsidiary 495
------------------------------------------------------- ----- ----------------------- --------------------
Purchase of investments 6 (47,637) -
------------------------------------------------------- ----- ----------------------- --------------------
Net cash (outflow) from investing activities (47,150) -
------------------------------------------------------- ----- ----------------------- --------------------
Cash flows from financing activities
-------------------------------------------------------------------------------------------------------------
Proceeds from issue of share capital 7 69,336 50
------------------------------------------------------- ----- ----------------------- --------------------
Net cash outflow from financing activities 69,336 50
------------------------------------------------------- ----- ----------------------- --------------------
Net increase/(decrease) in cash & cash equivalents 22,182
------------------------------------------------------- ----- ----------------------- --------------------
Cash & cash equivalents at beginning of period - -
------------------------------------------------------- ----- ----------------------- --------------------
Cash & cash equivalents at end of period 22,182 -
======================================================= ===== ======================= ====================
Consolidated statement of changes in equity for the period ended
30 September 2016
Attributable to
Issued Share non-controlling
Capital Share Premium Account interests Retained Earnings Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Balance at 30 - - - - -
September 2015
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Loss for the period - - - (3) (3)
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Other comprehensive - - - - -
income
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Total comprehensive - - - - -
income
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Transactions with
share holders - 50 - - 50
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Balance at 31 March
2016 - 50 - (3) 47
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Balance at 31 March
2016 - 50 - (3) 47
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Profit for the period - - 210 25,876 26,086
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Other comprehensive - - - - -
income
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Total comprehensive
income - - 210 25,876 26,086
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Acquired reserves due
to minority interests - - 20 (20) -
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Amounts withdrawn by
non-controlling
interests - - (69) - (69)
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Transactions with
share holders 407 116,861 - - 117,268
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Balance at 30
September 2016 407 116,911 161 25,853 143,332
----------------------- ------------- ---------------------- ---------------------- ------------------ ----------
Notes to the financial statements for the six months ended 30
September 2016
1. General information
Draper Esprit PLC is engaged in investment management
activities. Draper Esprit PLC's registered address is 4 More London
Riverside, London, SE1 2AU.
Information on the Draper Esprit Group's structure is given in
note 3. Information on other related party relationships of the
Draper Esprit Group is provided in note 10.
This condensed consolidated half-year financial information does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the period ended
31 March 2016 were approved on 9 June 2016. Those accounts, which
contained an unqualified audit report under Section 498 of the
Companies Act 2006 and which did not make any statements under
Section 498 of the Companies Act 2006, have been delivered to the
Registrar of Companies in accordance with Section 441 of the
Companies Act 2006.
Going Concern
The Directors have assessed the current financial position of
Draper Esprit PLC, along with future cash flow requirements to
determine if the PLC has the financial resources to continue as a
going concern for the foreseeable future. The conclusion of this
assessment is that it is appropriate that the group be considered a
going concern. For this reason, the Directors continue to adopt the
going concern basis in preparing the Interim Financial
Statements.
Basis of preparation
The condensed interim consolidated financial statements ("the
interim financial statements") incorporate the Financial statements
for the six months ended 30 September 2016 and are presented in
sterling which is the functional currency of the parent company.
They have been prepared in accordance with IAS 34 'Interim
Financial Reporting' (IAS 34). They do not include all of the
information required in annual financial statements in accordance
with International Financial Reporting Standards ("IFRS").
The Interim Financial Statements have also been prepared under
the historical cost convention except for the modification to a
fair value basis for certain financial instruments as specified in
the accounting policies below.
The preparation of Interim Financial Statements in conformity
with IFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in
the process of applying the Company's accounting policies. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the
Interim Financial Information are disclosed later in these
accounting policies.
The Interim Financial Statements are presented in sterling
(GBP), rounded to the nearest thousand pounds.
2. Significant accounting policies
The significant accounting policies disclosed below are those
observed in the periods ending 30 September 2016 and 31 March 2016,
and those that will be observed in the year ending 31 March
2017.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales related taxes. All revenue from
services is generated within the United Kingdom and is stated
exclusive of value added tax. Revenue from services comprises:
a. Fund management services
Fund management fees are either earned at a fixed annual rate or
are set at a fixed percentage of funds under management, measured
either by commitments or invested cost, depending on the stage of
the fund being managed. Revenues are recognised as the related
services are provided.
b. Arrangement fees
Occasionally Draper Esprit PLC may charge a fee as part of
arranging an investment from one of the Funds it manages into a
portfolio company. Such fees are charged at a rate determined on a
case-by-case basis and are payable upon completion of the
investment.
c. Portfolio directors' fees
Portfolio directors' fees are annual fees, charged in arrears,
to an investee company and payable to Draper Esprit PLC as the fund
manager. Draper Esprit PLC only charges directors' fees on a
limited number of the investee companies.
d. Deferred income
The Fund management fees are typically billed either quarterly
of half-yearly in advance. Where fees have been billed for an
advance period the amounts are credited to deferred income, and
then subsequently released through the income statement across the
period the fees relate to.
Leases
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Rentals payable under operating leases are charged to income on
a straight-line basis over the term of the relevant lease, except
where another more systematic basis is more representative of the
time pattern in which economic benefits from the leased asset are
consumed.
Retirement benefit costs
Draper Esprit PLC arranges private pension provision for its
employees and makes a fixed monthly contribution as a percentage of
agreed remuneration into each individuals' scheme. Payments to the
schemes are recognised as an expense in the period when they are
made.
Operating Expenses
Operating expenses are recognised in profit or loss upon
utilisation of the service or as incurred.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax in Draper Esprit PLC and its corporate
subsidiaries. Tax expense recognised in profit or loss comprises
the sum of deferred tax and current tax not recognised in other
comprehensive income or directly in equity.
Calculation of current tax is based on tax rates and tax laws
that have been enacted or substantively enacted by the end of the
reporting period. Deferred income taxes are calculated using the
liability method.
Deferred tax assets are recognised to the extent that it is
probable that the underlying tax loss or deductible temporary
difference will be utilised against future taxable income. This is
assessed based on the Group's forecast of future operating results,
adjusted for significant non-taxable income and expenses and
specific limits on the use of any unused tax loss or credit.
Deferred tax liabilities are generally recognised in full,
although IAS 12 'Income Taxes' specifies limited exemptions. As a
result of these exemptions the Group does not recognise deferred
tax on temporary differences relating to goodwill, or to its
investments in subsidiaries.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss. Depreciation is
recognised so as to write off the cost or valuation of assets less
their residual values over their useful lives, using the
straight-line method, on the following basis:
Leasehold improvements - over the term of the lease
Fixtures and equipment - 33%
Computer equipment - 33%
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective
basis.
Goodwill and intangible assets
Goodwill arising on the acquisition of a subsidiary represents
the excess of the fair value of the consideration given over the
fair value of the identifiable net assets acquired. Goodwill is not
amortised but is reviewed annually for impairment in accordance
with IAS 36, 'Impairment of Assets'.
Other intangible assets that are acquired by the Group and have
finite useful lives are measured at cost less accumulated
amortisation and any accumulated impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
maturing within 90 days from the date of acquisition that are
readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of
exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated
using the rates of exchange at the reporting date and the gains and
losses on translation are included in the income statement.
The individual financial statements of the Group's subsidiary
undertakings are presented in their functional currency. For the
purpose of these consolidated financial statements, the results and
financial position of each subsidiary undertaking are expressed in
pounds sterling, which is the functional currency of the PLC and
the presentation currency for these consolidated financial
statements.
Segmental reporting
The Group considers that it only has a single operating segment,
investment management.
Basis of consolidation
The Group financial statements consolidate those of the parent
entity and all of its subsidiaries as of 30 September 2016. Other
than those listed below all of the groups' subsidiaries have a
reporting date of 31 March.
Esprit Capital Holdings Limited - 30 June
Esprit Nominees Limited - 30 June
Esprit Capital I GP Limited - 31 December
DFJ Esprit II GP Limited - 31 December
Esprit Capital III Founder GP Limited - 31 December
Esprit Capital III GP LP - 31 December
Encore I GP Limited - 31 December
Encore I Founder GP Limited - 31 December
Esprit Capital I (CIP) Limited - 31 December [Dormant]
DFJE III MLP LLP - 31 December [Dormant]
Esprit Capital III GP Limited - 31 December [Dormant]
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the
underlying asset is also tested for impairment from a group
perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of
disposal, as applicable.
The Group attributes total comprehensive income or loss of
subsidiaries between the owners of the parent and the
non-controlling interests based on their respective ownership
interests.
Business combinations
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred and the equity interests issued by the Group, which
includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are
expensed as incurred.
The Group recognises identifiable assets acquired and
liabilities assumed in a business combination regardless of whether
they have been previously recognised in the acquiree's financial
statements prior to the acquisition. Assets acquired and
liabilities assumed are generally measured at their
acquisition-date fair values. Goodwill is stated after separate
recognition of identifiable intangible assets. It is calculated as
the excess of the sum of a) fair value of consideration
transferred, b) the recognised amount of any non-controlling
interest in the acquiree and c) acquisition-date fair value of any
existing equity interest in the acquiree, over the acquisition-date
fair values of identifiable net assets. If the fair values of
identifiable net assets exceed the sum calculated above, the excess
amount (ie gain on a bargain purchase) is recognised in profit or
loss immediately.
Financial instruments
Financial assets and financial liabilities are recognised in the
Draper Esprit Group's balance sheet when the Draper Esprit Group
becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
Financial assets
All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned and are initially
measured at fair value, plus transaction costs, except for those
financial assets classified at fair value through profit or loss,
which are initially measured at fair value.
Financial assets are classified by Draper Esprit into the
following specified categories: financial assets 'at fair value
through profit or loss' (FVTPL) and 'loans and receivables'. The
classification depends on the nature and purpose of the financial
assets and is determined at the time of initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. After initial recognition, these are measured at amortised
cost using the effective interest method, less provision for
impairment. Discounting is omitted where the effect of discounting
is immaterial. The Group's cash and cash equivalents, trade and
most other receivables fall into this category of financial
instruments.
Individually significant receivables are considered for
impairment when they are past due or when other objective evidence
is received that a specific counterparty will default.
Financial assets at FVTPL
A financial asset may be designated as at FVTPL upon initial
recognition if:
(a) such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
(b) the financial asset forms part of a group of financial
assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Draper Esprit Group's documented risk management or investment
strategy, and information about the grouping is provided internally
on that basis; or
(c) it forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments: Recognition and
Measurement permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
The Draper Esprit Group consider that the investment interests
it holds in Esprit Capital III LP, Esprit Capital III Founder LP,
DFJ Esprit II Founder LP, Esprit Capital IV LP and Esprit
Investments(I) LP are appropriately designated as at FVTPL as they
meet criteria (b) above.
Fair value measurement
Management uses valuation techniques to determine the fair value
of financial assets. This involves developing estimates and
assumptions consistent with how market participants would price the
assets. Management bases its assumptions on observable data as far
as possible but this is not always available. In that case
management uses the best information available. Estimated fair
values may vary from the actual prices that would be achieved in an
arm's length transaction at the reporting date (see Note 7).
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at each balance sheet date. Financial
assets are impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows
of the investment have been affected.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. When a trade
receivable is considered uncollectable, it is written off against
the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in
the carrying amount of the allowance account are recognised in
profit or loss.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through profit or loss to
the extent that the carrying amount of the investment at the date
the impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
Financial liabilities
The Group's financial liabilities may include borrowings and
trade and other payables.
All financial liabilities are recognised and derecognised on a
trade date where the purchase or sale of a financial asset is under
a contract whose terms require delivery of the financial asset
within the timeframe established by the market concerned and are
initially measured at fair value, plus transaction costs.
Financial liabilities are measured subsequently at amortised
cost using the effective interest method. All interest-related
charges and, if applicable, changes in an instrument's fair value
that are reported in profit or loss are included within finance
costs or finance income.
3. Critical accounting judgements
In the application of the Draper Esprit Group's accounting
policies, which are described in note 3, the board of Draper Esprit
are required to make judgements, estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
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.
Critical judgements in applying the Draper Esprit Group's
accounting policies
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the board of Draper Esprit PLC have made in the process of applying
the Draper Esprit Group's accounting policies and that have the
most significant effect on the amounts recognised in financial
information.
Control assessment
The Group has a number of entities within its corporate
structure and consideration has been made of which should be
consolidated in accordance with IFRS 10. The Group consolidates all
entities within this Interim Financial Statement 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. A summary of the conclusions from the
Member's consideration of control and the relevant judgements and
rationale are presented below.
Encore Ventures LLP
At 30 September 2016 and 31 March 2016 the Group held 71.2% of
the capital in Encore Ventures LLP, which entitled it to control
over the relevant activities of the LLP with no restriction arising
from any contractual rights. The minority members in Encore
Ventures LLP are entitled to a fixed proportion of the returns of
the LLP, and as such the Group is fully exposed to variable returns
arising from it. Consequently, the Directors consider Encore
Ventures LLP to be controlled by the group at 30 September 2016 and
31 March 2016.
Esprit Capital Partners LLP
On 15 June 2016 Draper Esprit Plc acquired 100% of the capital
of Esprit Capital Partners LLP. At 30 September 2016, the Group
still held 100% of the capital in Esprit Capital Partners LLP,
which entitled it to control over the relevant activities of the
LLP with no restriction arising from any contractual rights. As
such the Group is fully exposed to variable returns arising from
it. Consequently, the Directors consider Esprit Capital Partners
LLP to be controlled by the group at 30 September 2016.
Investment Entity
In accordance with the provisions of IFRS 10, Draper Esprit Plc
considers itself to be an investment entity and that its wholly
owned subsidiary, Draper Esprit Ireland Limited to be an investment
company as its sole purpose is to hold investments on behalf of the
group. Consequently, Draper Esprit Ireland is not included in the
consolidation, with the investments it holds being brought onto the
balance sheet of the Group at FVTPL instead.
General Partners
Where the Group holds 100% of the (share) capital of each of the
General Partners and there are no contractual rights in place that
limit the Group's power over the relevant activities of the entity
or its exposure to variable returns arising from its ownership, the
general partners are considered to be controlled. This is the case
for all of the General Partners within the Group with the exception
of Encore I GP LP, where the Group does not hold 100% of the
capital and the limited partnership agreement places restrictions
on the returns to members that cannot be removed by the Group
acting alone.
Acquisition accounting
The group has accounted for the acquisition of Draper Esprit LLP
as an acquisition and not a reverse acquisition having assessed the
substance of the transaction, including control and changes in
ownership.
Administrative companies
The Group holds 100% of the share capital of various entities
that form part of the Group's administrative structure. There are
no contractual rights in place that restrict exposure to variable
returns arising from ownership, or that limit the group's power
over the relevant activities of the entities or its ability to
exercise that power. These entities are therefore considered to be
controlled by the Group.
4. Taxation
The charge to tax, which arises in Draper Esprit PLC and the
corporate subsidiaries included within these financial statements,
is:
30 Sept 2016 31 Mar 2016
GBP'000s GBP'000s
------------------------------------------------- ------------- ------------
Deferred tax on investments gains on UK entities 424 -
------------------------------------------------- ------------- ------------
5. Acquisition of Esprit Capital Partners LLP
On 15 June 2016 the Group acquired 100% of the member's capital
of Esprit Capital Partners LLP, a Venture Capital Manager based in
the United Kingdom. The business was acquired in order for Draper
Esprit PLC to become a self-managed investment entity. From the
date of acquisition to 30 September 2016, Esprit Capital Partners
LLP group contributed revenue of GBP0.7 million and profits of
GBP9.1 million towards the group results. Details of the business
combination are as follows:
GBP'000
------------------------------------------------ --------
Fair value of equity shares issued 24,000
------------------------------------------------ --------
24,000
------------------------------------------------ --------
Recognised amounts of identifiable net assets:
------------------------------------------------ --------
Property plant and equipment 5
------------------------------------------------ --------
Intangible assets 818
------------------------------------------------ --------
Investments 2,675
------------------------------------------------ --------
Trade and other receivables 1,165
------------------------------------------------ --------
Cash and cash equivalents 495
------------------------------------------------ --------
Deferred tax liabilities (310)
------------------------------------------------ --------
Trade and other payables (1,323)
------------------------------------------------ --------
Net identifiable assets and liabilities 3,525
------------------------------------------------ --------
Goodwill 20,475
------------------------------------------------ --------
Consideration transferred
The acquisition was settled by issuing 8,000,000 shares of
Draper Esprit plc. The fair value of the equity shares issued was
based on the market value of Draper Esprit plc's traded shares on
the acquisition date.
Intangible assets
Upon acquisition, an intangible asset of GBP0.8m has been
recognised in respect of profit anticipated from the participation
in Encore Ventures LLP based on its current contract. A deferred
tax provision of GBP0.2m has been made against the value.
Goodwill
Goodwill recognised on the acquisition is considered to
represent the value of the acquired expertise and knowledge of the
Esprit Capital Partners management team.
6. Investments
The Draper Esprit Group holds investments through co-investment
vehicles of two of the Funds it manages, DFJ Esprit II LP and
Esprit Capital III LP. The investments are predominantly unlisted
securities and are carried at Fair Value Through Profit and Loss.
The means of valuation of these investments is set out in the
accounting policies above.
Cost 31 Mar Add/(Disp) in Adj. in FMV Cost 30 Sept FMV 30 Sep
2016 FMV 31 Mar 2016 the period in the period 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Draper Esprit PLC
----------------------------------------------------------------------------------------------------------------------
Draper Esprit
Ireland# - - 71,347 17,458 71,347 88,805
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Esprit Capital I GP Limited
----------------------------------------------------------------------------------------------------------------------
Fund 2 Founder
co-invest* - - 166 2 166 168
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Fund 2 Founder
2 Carry* - - 479 (61) 479 418
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Fund 3i
Founder
Carry - - 526 1,014 526 1,540
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Esprit Capital III GP LP
----------------------------------------------------------------------------------------------------------------------
Esprit Capital
III Founder
LP* - - 1,652 23 1,652 1,675
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Esprit Capital III Founder GP Ltd
----------------------------------------------------------------------------------------------------------------------
Esprit Capital
III Founder
LP - - - 3,349 - 3,349
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Esprit Capital
III Carried
Interest LP - - - 3,718 - 3,718
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Esprit Capital
III Founder
LP - - - 1,204 - 1,204
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Other* - - 2 - 2 2
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
- - 74,172 26,707 74,172 100,879
---------------- -------------------------------- --------------- -------------- --------------- ---------------
# Investments held through Draper Esprit Ireland were purchased
with a mixture of cash (GBP47.5m) and shares issued by the Company
(GBP23.9m).
* Investments acquired with Esprit Capital Partners LLP Group
GBP0.4m acquired with Esprit Capital Partners LLP Group, GBP150k
additional cash invested.
7. Share Capital
in thousands of shares Ordinary Shares Management Shares
-------------------------------------------- ------------------------------ ---------------------------------------
In issue as at 31 March 2016 - 50
-------------------------------------------- ------------------------------ ---------------------------------------
Issued for cash 32,674 (50)
-------------------------------------------- ------------------------------ ---------------------------------------
Issued in business combination 8,000 -
-------------------------------------------- ------------------------------ ---------------------------------------
In issue at 30 September 2016 - fully paid 40,674 -
-------------------------------------------- ------------------------------ ---------------------------------------
Authorised - par value GBP0.01 40,674 -
-------------------------------------------- ------------------------------ ---------------------------------------
All ordinary shares rank equally with regard to the company's
residual assets.
Issue of Ordinary Shares
On 15 June 2016, 40,673,909 shares were issued at GBP3 per share
as part of a transaction to purchase Esprit Capital III LP, acquire
the Esprit Capital Partners LLP Group and obtain an AIM listing for
the Company shares. The shares were issued as follows:
23,829,017 shares were issued to investors for cash proceeds net
of issuance costs, totalling GBP69.3 million.
8,844,892 shares (GBP23.9 million) were issued for the
acquisition of investment interests in Esprit Capital III LP (note
6).
8,000,000 shares (GBP24.0 million) were issued for the
acquisition of Esprit Capital Partners LLP (note 5).
8. Fair value measurements
The investment interests held by the Draper Esprit Group are
held at FVTPL based on the underlying values of the Funds (Esprit
Capital III, Esprit Capital III Founder LP, Esprit Investments (1),
Encore I Fund LP and DFJ Esprit II LP) in which the Group directly
or indirectly participates. The interests held yield a preferred
return (a "hurdle") calculated against the cash invested, and
subject to the underlying fund values being sufficient to meet or
exceed the hurdle.
The Funds, Esprit Capital III Founder LP and DFJ Esprit II LP,
invest in a number of early stage and growth companies,
predominantly through unlisted securities. In the accounts of the
Funds these investments are carried at fair value calculated as
detailed below.
Unquoted investments are initially recognised at fair value
adjusted for fees and transaction costs. Thereafter, investments
are re-valued in accordance with the International Private Equity
Valuation Guidelines ("IPEV") published by the European Venture
Capital Association in December 2015. In line with the IPEV, the
Manager may base valuations on earnings or revenues where
applicable, market comparables, price of recent investments in the
investee companies, or on net asset values inter alia.
Where the investment being valued was itself made recently, its
cost will generally provide a good indication of fair value unless
there is objective evidence that the investment has since been
impaired, such as observable data suggesting a deterioration of the
financial, technical, or commercial performance of the underlying
business.
Where there has been any recent investment by third parties, the
price of that investment will provide a basis of the valuation. The
length of period for which it remains appropriate to use the price
of recent investment depends on the specific circumstances of the
investment, and the Draper Esprit Group will consider whether the
basis remains appropriate each time valuations are reviewed.
If the 'price of recent investment' methodology is no longer
considered appropriate, the Draper Esprit Group then considers
alternative methodologies in the IPEV guidelines, being principally
price-revenue or price-earnings multiples, depending upon the stage
of the asset, requiring management to make assumptions over the
timing and nature of future revenues and earnings when calculating
fair value.
Where a fair value cannot be estimated reliably, the investment
is reported at the carrying value at the previous reporting date
unless there is evidence that the investment has since been
impaired.
In all cases, valuations are based on the judgement of the
Draper Esprit Group 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 Partnership 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.
Subsequent to their initial recognition, measurements of fair
values of financial instruments are grouped into Levels 1 to 3
based on the degree to which the fair value is based on observable
inputs.
-- 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.
The investments held by the Group are valued on the basis of the
non-public reported financial performance of the underlying funds
which themselves are valued principally using Level 3 inputs. As a
consequence, the values of investments held within the group at 30
September 2016 are considered to be entirely based on Level 3
inputs and there were no transfers between Levels 1, 2 and 3 during
the years.
The Group's unlisted investments are all classified as Level 3
investments. The fair values of the unlisted investments have been
determined principally through reference to externally generated
data such as investment round share prices, although a significant
proportion are valued using an internally generated revenue
multiple. A quantitative sensitivity analysis of the impact that
changes to the weighted average revenue multiple would have on the
value of investments held by the Group is shown below:
Sensitivity analysis Sept March
- revenue multiple GBP'000s GBP'000s
----------------------------- ---------- ----------
Value of Level 3 investments 100,879 -
----------------------------- ---------- ----------
Value sensitive to change 32,600 -
in revenue multiple
----------------------------- ---------- ----------
Weighted average revenue 3.3x -
multiple used
----------------------------- ---------- ----------
Sensitivity (+/-) 10% -
----------------------------- ---------- ----------
Effect on fair value 3,260 -
(+/-)
----------------------------- ---------- ----------
9. 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 revenue, 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 EUR and GBP. Presented below is an analysis of the
theoretical impact of 10% volatility in the exchange rate on
equity.
A number of the investments held by the Group are denominated in
Euros. The theoretical impact of a change in the exchange rate of
+/-10% between EUR:GBP/USD:GBP would be as follows:
Foreign currency exposures Sept March
- Investments GBP'000s GBP'000s
-------------------------------- ---------- ----------
Investments 100,878 -
-------------------------------- ---------- ----------
10% increase in EUR:GBP/USD:GBP 94,884 -
-------------------------------- ---------- ----------
10% decrease in EUR:GBP/USD:GBP 106,974 -
-------------------------------- ---------- ----------
.
Certain cash deposits held by the group are denominated in
Euros. The theoretical impact of a change in the exchange rate of
+/-10% between EUR:GBP would be as follows:
Foreign currency exposures Sept March
- Cash GBP'000s GBP'000s
--------------------------- ---------- ----------
Cash denominated in EUR 2,834 -
--------------------------- ---------- ----------
10% increase in EUR:GBP 2,576 -
--------------------------- ---------- ----------
10% decrease in EUR:GBP 3,117 -
--------------------------- ---------- ----------
The combined theoretical impact on Members' equity of the
changes to investments and cash and cash equivalents of a change in
the exchange rate of +/-10% between EUR:GBP/USD:GBP would be as
follows
Foreign currency exposures Sept March
- Equity GBP'000s GBP'000s
--------------------------------- ---------- ----------
Members' Equity 143,332 47
----------------------------------- ---------- ----------
10% increase in EUR:GBP/USD:GBP 137,080 47
----------------------------------- ---------- ----------
10% decrease in EUR:GBP/USD:GBP 149,711 47
----------------------------------- ---------- ----------
Market risk - Price risk
The Draper Esprit Group is exposed to equity price risks arising
from the limited number of listed investments it holds within its
co-investment holdings. Such investments are held for strategic
rather than trading purposes as part of the underlying managed
investment portfolios. The Group does not actively trade these
investments.
Liquidity risk
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three 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.
All group payable balances at 30 September 2016 and 31 March
2016 fall due for payment within one year.
10. Related party transactions
Draper Esprit acts as manager to Esprit Capital III LP and
charges a management fee which amounted to GBP312,000 in the period
(March 2016: nil). This fee is included in revenue for the
period.
Draper Esprit may require that one of its members is appointed
to the board of an investee company in a non-executive role. In
such circumstances Draper Esprit charges an administration fee to
the investees for the provision of the director services. These
fees which amounted to GBP7,000 (March 2016: nil) have been
included in revenue for the period. Draper Esprit does not exercise
control or management through any of these non-executive
positions.
11. Post reporting date events
Draper Esprit PLC invested a further GBP1.6 million into Draper
Esprit Ireland after the 30(th) September 2016 for investments
outlined in the CEO Statement. Further commitments to invest in
portfolio companies of GBP3.3 million were also made post period
end.
On 24 October 2016, Draper Esprit announced that ENEA has signed
an agreement to acquire portfolio company, Qosmos for a total cash
consideration of approximately EUR52.7 million. The amount to be
received by Draper Esprit on completion of sale will be
approximately GBP6.0 million with a further EUR1.9 million expected
in 24 months' time.
On 1 November 2016, Draper Esprit sold their stake in Datahug, a
sales forecasting software company, to Callidus Software Inc for a
cash consideration of approx $13.0 million, resulting in a cash
return to the Company of approximately GBP3.6 million, including
funds held in escrow.
On 24 November 2016, Draper Esprit has acquired a 30.77% stake
in Elderstreet Holdings Limited, the holding company of Elderstreet
Investments Limited. The initial consideration has been satisfied
by the issue of 73,667 new ordinary shares of one pence each in the
capital of the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KQLBLQFFLFBZ
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