Draper Esprit PLC

14 June 2021

Draper Esprit plc

("Draper Esprit", "the Group" or the "Company")

FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2021

Draper Esprit (LSE: GROW, Euronext Growth: GRW), a leading venture capital firm investing in and developing high growth digital technology businesses, today announces its final results for the year ended 31 March 2021.

Financial highlights

·      Gross Portfolio Value of £984m (31 March 2020: £703m).

·      £206m of cash realisations (year to 31 March 2020: £40m).

·      51% Gross Portfolio Value fair value growth (year to 31 March 2020: 10%).

·      £128m invested, and a further £34m from EIS/VCT funds (year to 31 March 2020: £90m and £38m from EIS/VCT funds).

·      NAV per share of 743p (31 March 2020: 555p).

·      Net assets of £1,033m (31 March 2020: £660m).

·      £161m available Plc cash, as well as £43m available from EIS/VCT funds. (31 March 2020: £34m, with c.£50m from EIS/VCT funds).

·      £107m net funds raised during the financial year.

·      £267m profit after tax (year to 31 March 2020: £40m).

·      <1% operating costs (net of fee income) as a percentage of NAV.

Some of the measures above are Alternative Performance Measures ('APMs') - see Note 29 of the Annual Report for further details.

Operational highlights

·      Significant cash proceeds of £206m received during the year from realisations (full and partial) and escrows, which were predominantly generated by the exits from Peak Games, TransferWise and Decibel, and the partial disposals of Trustpilot and UiPath.

·      Invested £128m in the year, increasing the investment cadence in H2 with £96m of investments made.

·      Invested into 9 new companies (as well as 3 new via Earlybird) and 18 existing companies (as well as 3 via Earlybird)*.

·      Committed to 15 new seed funds via our seed fund of funds programme, bringing the overall seed fund of funds portfolio to 35 funds.

·      Acquisition in February 2021 of the shares not previously owned in Elderstreet Holdings Limited, holding company of Elderstreet Investments Limited which is manager of Draper Esprit VCT funds, further scaling the Group.

·      Continued to build the infrastructure for scaling, welcoming six new team members into the Partnership and Platform teams that support the investment function.

·      Continued to progress our ESG roadmap, including approval of our ESG Policy, assessment of our portfolio against the UN Sustainable Development Goals and development of ESG KPIs.

Post year-end

·      Increased and extended our revolving credit facility with SVB and Investec by an additional one year from £60m to £65m.

·      Invested a further £48m post year-end to 11 June 2021, including investments into Manna, FintechOS, Cervest, Ledger, and Lyst.

·      Refreshed fund of funds programme, with the approval by the Board and Investment Committee of an additional £75.0 million investment budget. Commitments deployed over 5 years.

*Reporting threshold for Earlybird of £1m.

Martin Davis, CEO at Draper Esprit, commented:

"Our financial year and my first full year as CEO demonstrated the strength and flexibility of the Draper Esprit model in market conditions at two extremes. Despite market shock in the first half, our scale and maturity gave us room to focus on the needs of our portfolio companies and structuring ourselves for growth. Our close relationship to our portfolio and industry insight enabled us to accelerate into the digital transformation catalysed by the pandemic. Our investment team increased its cadence in the second half, deploying significant funds into existing portfolio companies and new, as intended when we raised equity in October. We look to the future with confidence that our model positions us well for opportunities in a transformed world. In line with the growth and maturity of the business, our intention is to move our listing to the Premium Segment of the Official List and to trading on the London Stock Exchange's Main Market as well as to the secondary listing segment of the Official List of Euronext Dublin and to trading on the regulated market of Euronext Dublin. Preparations to transfer our listing are well advanced and we expect to complete the move within the next couple of months."

 

Availability of Annual Report and Notice of AGM

The Annual Report and Accounts for the financial year ended 31 March will be available today on Draper Esprit's website at http://draperesprit.com/. The notice of the Annual General Meeting ("AGM") of Draper Esprit to be sent separately.

-ENDs-

 

 

 

Enquiries

Draper Esprit plc Martin Davis (Chief Executive Officer) Ben Wilkinson (Chief Financial Officer)	+44 (0)20 7931 8800
Numis Securities Nominated Adviser & Joint Broker Simon Willis Richard Thomas Jamie Loughborough	+44 (0)20 7260 1000
Goodbody Stockbrokers Euronext Growth Adviser & Joint Broker Don Harrington Charlotte Craigie Linda Clarke	+44 (0) 20 3841 6202
Powerscourt Public relations Elly Williamson Jane Glover	+44 (0)7970 246 725 / +44 (0)7961 628 862

 

If you would like to access the 0900 results presentation, please contact Powerscourt at draperesprit@powerscourt-group.com for dial in details.

About Draper Esprit

 

Draper Esprit is one of the most active venture capital firms in Europe, investing in disruptive, high growth technology companies. We believe the best entrepreneurs in Europe are capable of building the global businesses of the future. We fuel their growth with long-term capital, access to international networks and decades of experience building businesses.

 

Currently, Draper Esprit is a shareholder in a diverse portfolio of 71 companies with 17 of those part of our core portfolio which accounts for over 68% of our holdings. Our core companies include Graphcore, UiPath, Trustpilot, Aiven, Ledger, Lyst, Cazoo, Ravenpack, M-files, Smava, Aircall, Revolut, Freetrade, Perkbox, Thought Machine, Endomag, and SportPursuit. We invest across four sectors: Consumer Technology, Enterprise Technology, Hardware and Deeptech, and Digital Health and Wellness, with highly experienced partners constantly looking for new opportunities in each. We look for high-growth companies with strong IP, powerful technology, and the management teams to deliver success. They operate in new markets, with serious potential for global expansion. We also look for businesses with the potential to generate strong margins to ensure rapid, sustainable growth in substantial addressable markets.

 

Draper Esprit provides an opportunity for public market investors to access these fast-growing tech businesses, without having to commit to long term investments with limited liquidity. Since IPO in June 2016, we have deployed circa £550m+ capital into fast growing technology companies and have realised over £300m. In October 2020 we raised gross proceeds of circa £110m to help us

capitalise on a European VC market which is expanding rapidly but is still less than one quarter of the combined size of the US and European market by value. It will also allow us to capitalise on the transition to a digital future that has been given added impetus as a result of the recent pandemic.

 

For more information, go to https://draperesprit.com/

 

 

 

Chair's introduction

Financial Year 2021 has been unprecedented on a global basis for society, for all businesses and for the technology sector. The challenges of Brexit and the uncertainties of the US election seem insignificant compared with the global Coronavirus pandemic.

Looking back over the last 12 months, I don't think anyone would have predicted the pandemic's longevity and far-reaching impact nor the role technology has played in driving digital transformation, creating new opportunities, sustaining the economy and supporting people through successive lockdowns.

I am delighted by the way the team at Draper Esprit managed through these challenging times, accelerating the investment cadence, supporting our portfolio and continuing to improve and strengthen our approach to making investments. At times like these, small gestures and tokens of support for our community make a big difference as well as the determination to continue in "business as usual" mode as much as possible. I was delighted to receive a comforting bar of chocolate by post from Draper Esprit (thank you, Stuart) early on in the first lockdown and even more thrilled to see our annual Investor Day go ahead in early 2021, using the digital events platform provided by one of our portfolio companies, Hopin.

The team has made a number of investments in exciting new companies including Cazoo, Ravelin, PrimaryBid, CoachHub, Riverlane, Focal Point, and Agora and supported some of our other portfolio companies such as Peak Games, Trustpilot, Decibel, and UiPath through major financial milestones. In terms of business performance, we have had an exceptional year with a 51% increase in Gross Portfolio fair value. While the technology market remains buoyant, we continue to search for high quality and exciting investment opportunities with the highest potential to shape the future.

During the year, one of our two founders, Simon Cook, moved to the West Coast of Canada and while he continues as a member and supporter of the extended Draper Esprit family, he will no longer be an active contributor on a day-to-day basis. We will miss Simon's vision, drive and creativity, and wish him every success. Stuart Chapman, our other founder continues to be a member of our Board and our Chief Portfolio Officer, a sounding board and mentor to newer members of the team and to the portfolio companies he works with.

FY2021 represents Martin Davis' first full year as CEO; a year of outstanding performance but also a year in which Martin has been laying the foundations for further sustainable growth. During the year we have fully integrated the EIS fund, Encore Ventures, and the VCT fund, Elderstreet Investments. We are pleased to welcome both teams and to be able to work and co‑invest more seamlessly together.

Among many other activities, Ben Wilkinson has sponsored the Company's increasing focus on sustainability, which is also becoming an even more critical part of what Draper Esprit offers to companies and investors. We are committed to contributing towards a future that is sustainable, fair, and accessible.

In line with the growth and maturity of the business, our intention is to move our listing to the Premium Segment of the Official List and to trading on the London Stock Exchange's Main Market as well as to the secondary listing segment of the Official List of Euronext Dublin and to trading on the regulated market of Euronext Dublin. The Board believes the Company has grown and matured since IPO and that the Main Market is the most appropriate platform for the Company's future development. It is hoped that this will further raise Draper Esprit's profile, as well as potentially increase liquidity and enable its shares to be acquired by a wider group of investors.

In preparation for a Main Market listing, we are looking for additional Non-Executive Board Members to strengthen our team and bring more diversity of thought and experience to the Board.

It is almost exactly five years since Draper Esprit listed on AIM. The Company's scale, its sustained record of delivering growth even through times as uncertain as this year and the impressive maturity of many of the businesses in the portfolio reflect the firm belief that the listed VC model works well both for shareholders and our investee companies.

Karen Slatford

Chair

 

 

CEO's statement

Overview

The period under review was my first full year as CEO and an unprecedented year for the world in that it saw the first global pandemic of the digitally-connected age.

The challenges and the opportunities brought by the pandemic have, by now, been well covered. We took early steps to implement measures to safeguard employees and ensure increased dialogue with portfolio companies but the real story for us was one of opportunity and acceleration, as we predicted in last year's annual report. We continued to perform well because of the accelerated transition to digital, something our portfolio companies foresaw, and our investment strategy enabled. This led to new investment opportunities as well as opportunities for companies within our existing portfolio to succeed.

Our structure provided us with a stable foundation during a year of uncertainty and we are proud of our strong financial performance across all our key measures.

I joined a highly successful business with a proven track record and have focused in the year on developing and further implementing our ambitious strategy to scale and evolve the business. We are intent on backing entrepreneurs to invent the future by accelerating our support to UK and European high‑growth technology businesses in need of longer-term investment via our balance sheet and growing our third-party funds alongside the growth in the Plc balance sheet, which we have continued to build during the year.

We have increased our funding capacity and continued to build the infrastructure required to grow while maintaining the integrity of the investment process and our ability to support our portfolio companies as they scale. We have developed a platform that offers exposure across the Venture Capital value chain, including early-stage funds, direct investments, and via other investment vehicles and have broadened this further during the year.

We all now hope that an end to the pandemic is in sight and we see no cause for our likely gradual emergence from Covid-19 restrictions into a changed world to alter the fundamental dynamics of our growth. Companies in our existing and emerging portfolio have benefited from the accelerated transition to digital and we anticipate this structural shift will continue as global economies emerge into the post-Covid-19 environment.

Operating review

Our vision is to be the VC of choice for the visionaries inventing our future. Our funding enables entrepreneurs from high growth digital technology businesses to build their companies. Our investment platform also provides the support needed over and above the capital invested, including board representation and access to a high-quality network of specialists.

For investors, that means access to high-growth, privately owned technology companies as we continue on our mission to expand access to venture capital.

We made significant strides in building and developing the infrastructure for growth. As at 31 March, the Group manages £1.3 billion of assets (including third party funds), which provides us with a strong and scalable platform. Of these Assets Under Management ('AUM'), £294.6 million relates to AUM from third party funds. Our co-investment strategy allows us to lead more deals and increase the total size of investment in portfolio companies. Draper Esprit is building multiple investment strategies (seed funds, series A and growth) to increase third party AUM and fee income alongside the growth of the Company balance sheet.

During the year, we also continued to rationalise our EIS and VCT business with our acquisition of the manager of Draper Esprit VCT Plc, Elderstreet Investments Limited, in February 2021.

We have continued to build and bed in our internal dual platform, Partnership team and Platform team as introduced in last year's annual report, to put in place the resource to support our continued growth.

The Partnership team, which focuses on deals, portfolio companies and their founders, has continued to grow with a new principal, Dr Inga Deakin, joining in the year and Will Turner joining at the start of the financial year as a Managing Partner, Growth. We now have seven partners and principals with varying specialisms across our four key sectors of consumer technology, enterprise technology, digital health & wellness, and hardware & deeptech.

The Platform team, which focuses on supporting deal flow and collaborating with the entrepreneur community, other investors, and the wider ecosystem, grew across the three segments of Marketing, Deal Execution and Dealflow. We welcomed three new team members to Dealflow, in addition to Robby Glass, Legal Counsel to Deal Execution, and James Clark as Marketing Director.

We also continued to progress with our Environmental, Social & Governance ('ESG') roadmap, as set out in more detail below. We see ESG and sustainability as a journey, and aim to ensure that our learnings along the way benefit our portfolio companies, our investors and our wider community and stakeholders.

Financial performance

We are proud of our strong financial performance across all our key measures: fair value growth; cash realisations; investments; and available capital resources.

Fair value growth

We achieved Gross Portfolio fair value growth of £359.2 million. This increase in fair value of the gross portfolio of 51% is significant relative to the targeted 20% gross portfolio returns through the cycle.

 

Cash realisations and available capital resources

During the period, we generated £206.3 million of cash through realisations. This included the disposals of Decibel, Transferwise and Stripe, and via our partnership with Earlybird, the disposals of Peak Games, Social bakers, NFON, Ubitricity and the partial disposals of Trustpilot and UiPath.

We ended the year with a strong cash position following these realisations and our oversubscribed October placing, which raised £110.0 million (gross). At 31 March 2021, we had £160.7 million of Draper Esprit Plc cash (including restricted cash of £2.3 million), along with £42.6 million of EIS/VCT fund cash, and £60.0 million of undrawn debt from our revolving credit facility. This provides us with the ability to continue to increase our investment cadence and take advantage of the enhanced near-term investment opportunities we see.

Investments

We expressed our intention at the time of our October placing to increase deployment to c.£120.0 million per annum to capture a greater share of the technology investment opportunities we see. We have already exceeded the targeted rate having invested £128.0 million overall, with an increase from £32.3 million deployed in the first half to £95.7 million in the second. This breaks down as £51.1 million for new companies, £34.1 million for existing companies, £30.5 million for Earlybird drawdowns, and £12.3 million for fund of funds drawdowns. A further £33.8 million was invested via the EIS/VCT funds during the year.

Sustainability

During the year, we continued to progress with our ESG roadmap. We recognise the importance of focus on ESG at all levels and continue to monitor progress at the Board.

Our activities during the year included the approval by the Board of our ESG Policy, which includes a target set of ESG standards for our portfolio companies, the introduction of our updated investment checklist including ESG risk assessment, ESG training for the investment team, mapping the portfolio to the UN Sustainable Development Goals, and the first submission of UN PRI reporting. We continue into the new financial year with our carbon reduction/balancing, TCFD and diversity projects. Please see further details in the Sustainability section on pages 60-70 of the Annual Report.

Summary and opportunity

We have used the year to further scale our AUM and further develop our infrastructure, teams, and processes. This positions us well for the enhanced near-term investment opportunities we see on many fronts. These include:

•  direct follow-on opportunities which we have already identified within our core and emerging companies and new deal flow beyond our portfolio;

•  larger rounds as European technology companies continue to mirror US investment trends, which we can lead more often thanks to our balance sheet and co-investment structure;

•  a potential growth fund for growth stage (Series B+) dealflow, using third-party funds alongside our own to provide a greater ability to lead deals and secure influence and allocation;

•  the next Earlybird fund, Earlybird Fund VII, which will continue to target Series A investments in Germany and other parts of continental Europe; and

•  our Fund of Funds programme, which also allows us to identify potential dealflow opportunities from within seed stage portfolios.

Outlook

While remaining mindful of continuing uncertainty in the environment in which we operate due to the ongoing Covid-19 pandemic, we look positively to the new financial year and anticipate increasing our investment cadence to over £150.0 million per annum, continuing to build our model, including with third-party funding, further enhancing our dealflow processes and continuing to build our team. We target 20% fair value growth through the cycle and, given the higher growth this year, our target for the coming financial year will be 15%.

The market for technology companies has certainly been buoyant this year and we apply a degree of caution to the anticipated growth for the coming year. However, our model has proven to be resilient across market environments and we see further opportunity to scale the business. In line with the growth and maturity of the business, our intention is to move our listing to the Premium Segment of the Official List and to trading on the London Stock Exchange's Main Market as well as to the secondary listing segment of the Official List of Euronext Dublin and to trading on the regulated market of Euronext Dublin. Preparations to transfer our listing are well advanced and we expect to complete the move within the next couple of months.

 

 

 

 

 

Portfolio review

During the year

During the year, we have continued with our objective to deploy further capital by backing the identified growth opportunities in the existing portfolio and by leading rounds in exciting high‑growth technology companies, with investments of £128.0 million from Plc (increasing our cadence in the second half of the year following H1 investments of £32.3 million), as well as investments from EIS/VCT funds of £33.8 million. This enhanced level of investment has continued into the new financial year. The year to 31 March 2021 delivered a record year in capital returned through exits, with cash received from realisations in the year amounting to £206.3 million. The accelerated transition to digital has increased the opportunity set for both investments and realisations as the pace of disruption in global economies is amplified.

Portfolio

The Gross Portfolio Value (gross value of the Group's investment holding before deductions for carry and deferred tax) is £983.8 million (31 March 2020: £702.9 million). Movements in the year result from cash proceeds of £206.3 million received from realisations (reducing the size of the portfolio), investments made of £128.0 million, and a gross fair value movement of £359.2 million. The Gross Portfolio Value Table in the Financial Review below provides further detail on the movements in the portfolio.

Our core portfolio of 17 companies represents 68% of our Gross Portfolio Value. Our core holdings at 31 March 2021 are Graphcore, Trustpilot, Smava, Perkbox, M-Files, Ledger, RavenPack, UiPath, Revolut, Aircall, Thought Machine, Aiven, Sportpursuit and Cazoo as well as new companies moving into the core, Lyst, Endomag, and Freetrade. ICEYE was in the core at 30 September 2020, but has fallen below the threshold at 31 March 2021 for inclusion. The threshold is defined as the largest company holdings that represent approximately 70% of our Gross Portfolio Value.

Investments

Continued application of our strategy of accelerating capital deployment into high-growth opportunities in our existing portfolio and securing exciting new investment opportunities is demonstrated with total investments in the year of £128.0 million, up from £89.9 million in the year to 31 March 2020. £51.1 million was invested into primary deals, £34.1 million as follow-ons into existing companies, £12.3 million was drawn down as part of our seed fund of funds programme, and £30.5 million was invested into new and existing Earlybird funds.

New investments

We have invested £51.1 million from Draper Esprit Plc into the following new companies during the year:

•  CoachHub: Draper Esprit was lead investor into the December 2020 US$30.0 million round in digital coaching platform, CoachHub, with an investment from Plc of £12.4 million.

•  Unannounced: Draper Esprit Plc invested £10.8 million into the Series B of an unannounced intelligent process automation platform.

•  Cazoo: Draper Esprit Plc invested £10.0 million during the year in British digital used car marketplace, Cazoo, as part of the company's £25.0 million second close of their Series C funding round and subsequently as part of their £240.0 million Series D round.

•  Riverlane: Draper Esprit Plc led a US$20.0 million Series A investment round in Riverlane, the ground-breaking quantum computing software specialist. Plc invested £5.1 million, with a further £3.9 million invested from the EIS/VCT funds.

•  Hopin: Draper Esprit Plc invested £4.4 million into Seedcamp SPV (a fund that invested in Hopin's Series B round in December 2020). Hopin is a virtual venue for live online events.

•  Focal Point: Draper Esprit Plc invested £3.4 million, with further amounts expected to be invested in the second close from the Group, as sole investor into Focal Point, the deep-tech company revolutionising the accuracy of GPS and other global satellite positioning systems (GNSS).

•  PrimaryBid: Draper Esprit co-led the US$50.0 million Series B fundraising by PrimaryBid, a technology platform that allows retail investors fair access to public companies raising capital. Plc has invested £5.4 million, of which £3.1 million was paid post year-end, with a further £4.0 million from EIS/VCT funds.

•  AGORA: In December 2020, Draper Esprit led a £5 million investment round in AGORA, a London-based startup disrupting the beauty industry through social commerce, with £1.5 million invested from Plc.

•  Ravelin: Draper Esprit led a US$20.0 million Series C investment round in Ravelin, a fraud detection company, investing £1.1 million. Ravelin has pioneered the use of machine learning and graph network technologies to help online businesses accept more payments with confidence. Further investments were also made from the EIS/VCT funds.

Follow-ons

We invested £34.1 million from Draper Esprit Plc into existing companies in the year, including the following over £1.0 million::

•  Graphcore: Draper Esprit participated with a £10.3 million investment in a Series E funding round in Graphcore, maker of the Intelligence Processing Unit ("IPU"), which raised a total of US$222.0 million.

•  Endomag: Draper Esprit led a round with a £12.3 million investment (£7.0 million from Plc and £5.3 million from EIS/VCT funds) into existing portfolio company Endomag, a breast cancer market leader.

•  Freetrade: Draper Esprit participated in a US$69.0 million Series B fundraising round for existing portfolio company, Freetrade with an investment of £4.0 million.

•  Push Doctor: Draper Esprit Plc invested £3.4 million into Push Doctor, as well as £1.2 million from EIS/VCT funds. Push Doctor provides online doctor and prescription services in the UK.

•  Form3: £1.6 million was invested by Draper Esprit Plc in the year into leading cloud-native payment and technology provider for banks and regulated fintechs, Form3, as well as a further £3.0 million from EIS/VCT funds.

•  M-files: Draper Esprit participated in an US$80.0 million investment round in portfolio company M-Files, with a £1.5 million investment. M-Files is an intelligent information management company that is using AI technologies in its proprietary Intelligent Metadata Layer.

•  Pollen: £1.3 million was invested from Draper Esprit Plc and a further £1.0 million from EIS/VCT funds into Pollen (formerly Verve), an invite-only marketplace that makes it easy to invite friends to exclusive experiences and share rewards.

•  Hadean: £1.0 million was invested from Plc into deep tech software business, Hadean, during the year. Hadean is focused on enabling distributed computing at a massive scale.

Fund of funds

Following our commitment to two new seed funds during the first half of the year, we committed to a further 13 funds in H2, bringing our overall commitments to 35 seed funds at 31 March 2021. Our commitment to these funds allows us to provide investors with access to earlier stage companies and provide support to seed stage companies, as well as giving Draper Esprit enhanced dealflow and numerous specialisms throughout across Europe. New portfolio companies in the year, Cazoo and Hopin, received seed investment from seed funds within our programme, Stride as well as Seedcamp IV and Amaranthine respectively.

New fund commitments during the year have included a mix of regional champions, such as Icebreaker II with a focus on investing in the Nordics and Draper B1 with a focus on Spanish startups, as well as thesis-driven managers, such as Atelier, with a focus on passion economy, and Quatonation, with a focus on quantum computing. We have further supported our existing fund managers by investing in their latest funds, for example in Seaya Ventures III, Icebreaker II, Stride II, Seedcamp V, and Amaranthine fund II. Our seed fund of funds programme includes several impact or sustainable funds, including new funds committed to in the year, which we discuss in more detail in our Sustainability section on pages 60-70 of the Annual Report.

At 31 March 2021, we have committed a total of £67.2 million (converted at year-end exchange rates) to our 35 seed fund of funds investments. £25.5 million of these commitments have been drawn as at 31 March 2021, £12.3 million of which was drawn within the year. We expect remaining commitments to be drawn over the coming five to eight years. Post year-end a further £75.0 million investment budget was approved by the Board and Investment Committee.

 

Earlybird

We invested £30.5 million into our partnership with Earlybird during the year into existing and new funds, such as Earlybird Fund VII.

Via our investment in Earlybird fund VI, we invested in a range of companies during the year, including Conny GmbH (ex LexFox GmbH), a Legal Tech company that enforces consumer rights across multiple verticals, Curio Labs Limited, which is building a global platform for curated journalism, consumed over audio, and the high-tech startup that has developed game‑changing technology for synthetic data, Mostly AI.

We also invested further amounts into existing portfolio companies via our partnership with Earlybird Fund VI, including Isar aerospace, Get Safe, and fintech company, Bitwala.

Realisations

During the year, we received cash proceeds (including escrows from previous realisations) of £206.3 million, including the proceeds from the realisations of Peak Games, TransferWise and Decibel, as well as partial realisations of Trustpilot and UiPath (pre-IPO secondary sale). These proceeds also included escrow releases from previous realisations of Clavis and Podpoint, as well as disposals of Stripe and, via our partnership with Earlybird, Social Bakers, NFON, and Ubitricity.

We announced our disposal of Peak Games in June 2020, following the acquisition by Zynga Inc for US$1.8 billion, comprised of approx. US$900.0 million in cash and approx. US$900.0 million of Zynga common stock. Draper Esprit received the cash tranche and forward sold the majority of the share tranche. The multiple on exit for the Peak Games realisation was 3.5x.

Draper Esprit Plc sold its remaining share in TransferWise in July 2020 in a secondary transaction at an equity value of US$5.0 billion. The multiple on exit for the TransferWise realisation was 3.1x.

In March, Medallia announced that it had agreed to acquire Decibel, a digital experience analytics solution, for $160 million in an all cash deal. This acquisition represented a fair value uplift of £4 million from September 2020, resulting in a return of £14 million (including anticipated escrow to be received), with a 1.4x multiple on invested capital.

As part of Trustpilot's IPO, in March 2021, Plc sold down part of its holding in the leading global review platform, generating proceeds during the year of £75.5 million with a 5.3x multiple on invested capital for the realised tranche at the IPO offer price of 265p. At 31 March 2021, we continued to hold 7.9% of Trustpilot shares subject to a customary 180-day lock-up period from the date of admission in line with other institutional investors in the company.

Core company updates

Graphcore

Graphcore, the machine intelligence semi-conductor company, develops IPUs (Intelligent Processing Units) which enable unprecedented levels of compute.

In December 2020, Graphcore raised US$222.0 million in its Series E funding round led by Ontario Teachers' Pensions Plan Board which also added funds managed by Fidelity International and Schroders as new investors. Also participating in this round were existing Graphcore investors, including Draper Esprit and Baillie Gifford. This investment brings the total funds raised by Graphcore to more than US$710.0 million.

Major updates were released for the Poplar v1.4 analysis tool including 30 new features to the Popvision graph analyser. Graphcore released SDK 1.3, which includes new optimisations and improvements to help developers run their models faster and more efficiently. The company also announced the addition of MEGWARE to its Global Partner Program, which was launched in September 2020. Graphcore now supports Alibaba Cloud's Open Deep Learning API (ODLA). Alongside these product developments, the company participated in research with University of Massachusetts, Amherst, and Facebook to publish a paper to demonstrate how important Covid-19 analysis using Approximate Bayesian Computation can be massively accelerated with IPU processors. The results indicate 30x speedup on IPUs compared with CPUs and a significant 7.5x speedup compared with GPUs.

With a new office in Germany and existing offices in Bristol, London, Cambridge, Palo Alto, Oslo, Beijing, Hsinchu, Seoul, New York, Seattle, and Austin, the global company continues to scale in size, increasing to 450+ employees from its previously reported 200+ employees.

£24.0m	£108.8m
Invested	Investment valuation

 

UiPath

Post-year-end in April 2021, UiPath listed on the New York Stock Exchange under the ticker symbol "PATH", closing at a price to the public of US$56.00 per share.

In February 2021 the robotic process automation (RPA) company, raised a US$750m Series F round, co-led by existing investors Alkeon Capital and Coatue. Other returning investors include Altimeter Capital, Dragoneer, IVP, Sequoia, Tiger Global, and funds and accounts advised by T. Rowe Price Associates, Inc.

In the twelve month period ending January 2021, the company recorded revenues of more than US$607m, which is almost double the year prior. Over the past year with COVID there has been an increased demand for skills in the area of RPA.

UiPath has made a number of improvements and advancements like releasing its App in October 2020, adopting a SaaS-first strategy - UiPath Automation Cloud, releasing over 100 customer driven features on its platform, launching its Legal Automation task force in late 2020, and releasing a virtual streaming solution for customers. UiPath also enhanced its Business Partner Program to enable organisations around the world to leverage the power of hyper automation, and now offers training, certification, and marketing programs for business partners through the launch of its UiPath Services Network (USN). The company further announced it would be working with Deloitte to deliver Deloitte Intelligent Document Processing (DIDP).

In October 2020, Renzo Taal has joined the company as Senior Vice President and Managing Director of EMEA. Renzo joins UiPath from Salesforce, where he held several international roles and most recently served as Senior Vice President and General Manager of Asia. UiPath also appointed former VMware and Microsoft Global Executive, Thomas Hansen to lead worldwide sales.

£10.3m	£100.3m
Invested	Investment valuation

 

Trustpilot

Online global review site, Trustpilot, has detected and stamped out over 2.2 million fake or harmful reviews in the 2020 calendar year. Over 120 million consumer reviews of businesses or products relating to over 530,000 domains have been reviewed on Trustpilot.

CEO and founder, Peter Mühlmann, announced his Trust Promise in June 2020 to "fight for trust online." One of the steps taken is that the platform will now allow all consumer reviews to remain visible when "flagged" by a business, ensuring that while claims were investigated, they are still represented. The company also launched a Transparency report, downloadable on the platform's website, to explain exactly how it manages and protects the platform's integrity.

The international company has over 700 employees and is headquartered in Copenhagen, with operations in London, New York, Denver, Vilnius, Berlin, Melbourne, and Edinburgh. To support the company's forward momentum in international growth, Tim Hilpert was appointed as Chief Operating Officer. For 16 years Hilpert held various management and leadership positions at the OLX Group & Ebay.

In November 2020, during the third quarter, the company surpassed US$100.0 million of revenue. Since it was founded, Trustpilot has raised US$173.0 million from Sunley House Capital Management (an affiliate of global private equity firm Advent International), Vitruvian Partners, Draper Esprit, Index Ventures, Northzone, and Seed Capital to fuel its mission and growth. The company has valuable partnerships and integrations with PayPal, BigCommerce, Yext, Magento, PrestaShop, Shopify, WooCommerce, Sprinklr, and Zendesk, amongst others. The company listed on the London Stock Exchange in March 2021 with the ticker TRST.

£15.7m	£85.5m
Invested	Investment valuation

 

Smava

Online lending platform, Smava, provides easy access to the best conditions for consumer loans from more than 20 banks. The company is the largest specialised loan marketplace in Germany, providing access to over €3.0 billion a year in loans. In May 2020, the company secured €57.0 million in financing with debt from Kreos Capital, along with equity from existing investors Earlybird, Verdane, Vitruvian Partners and Runa Capital.

The platform offers an overview of 70 loan types ranging between €1,000 and €120,000 from over 20 banks and lending partners. Consumers select the loan that suits them and take it out directly. The company also announced a new partnership with Commerzbank, Deutsche Bank, and Younited Credit.

 

£14.5m	£23.8m
Invested	Investment valuation

 

Perkbox

Perkbox is an employee wellbeing platform that provides a unique employee experience, enriching the personal and working life of employees. It offers a suite of products including a platform with access to best-in-class Perks, Recognition, Insights and Medical.

During the year Perkbox, Europe's fastest growing global 'employee experience' platform, partnered with the global buy-now-pay-later Fintech, Zip. The partnership will provide flexible payment solutions on shopping for employees. Perkbox also secured new partnerships with Action Aid, Dakota Hotel, Igloo Energy, and Landmark, while existing partners, Gymshark and Krispy Kreme, have enhanced their benefits. The company appointed co-founder Gautam Sahgal as CEO, and Saurav Chopra, co-founder, stepped into a new role of Executive Chairman of the Board. Ex-Groupon Director, Higor Torchia joined the Perkbox team as Chief Revenue Officer and Ankur Sharma was hired as VP Product & Engineering. The two new hires will help to continue Perkbox's mission to improve the employee experience.

Perkbox offers resources that have become particularly useful in light of Covid-19. The platform offers online GPs on-demand, online employee recognition, real-time feedback, and perks like online shopping discounts, free online fitness classes, and 24/7 online learning.

£14.0m	£18.6m
Invested	Investment valuation

 

M-Files

Intelligent information management platform, M-Files, organises customers' content with the ability to connect to existing network folders and systems and to enhance them with the help of AI to categorise and protect information. The SaaS business has more than 500 employees based in 11 global offices.

In January 2021, the company raised a US$80.0 million round led by Bregal Milestone. Existing investors Draper Esprit, Partech, and Tesi also participated. M-Files has been a part of Draper Esprit's portfolio since 2013. Since leading the company's Series A, Draper Esprit has invested in each consecutive round.

The company completed its transition to SaaS in 2020 with 94% of its ARR in 2020 contributed to subscription-based sales. M-Files gained additional strategic international partnerships adding Iron Mountain, Fulton Hogan, Devoteam Management Consulting Denmark, Fuji Xerox Asia Pacific Pte Limited, Kyocera UK, and Adobe to its list.

M-Files has been featured in the Gartner Magic Quadrant for Content Services Platforms (formerly Enterprise Content Management) since 2021 and named a Visionary for the last five years. Thousands of organisations in more than 100 countries use M-Files for managing their business information and processes, including NBC Universal, OMV, Valmet, SAS Institute and Thyssenkrupp.

£6.5m	£29.7m
Invested	Investment valuation

 

Ledger

Ledger, the security and infrastructure solution provider for cryptocurrencies and block chain application, celebrated its five-year anniversary at the end of 2019. The global company now has 250 global employees working in its Paris, New York, San Francisco, Singapore, and London offices and one million users in over 165 countries with 1.5 million units sold.

The company offers Ledger-Nano, Ledger-Live, and Ledger-Vault which help to provide infrastructure solutions for enterprises and hardware crypto wallets for consumers.

Ledger announced support for Algorand (ALGO) and Algorand Standard Assets (ASA) in its software application, Ledger Live. Post period end Ledger launched eight new coins available for purchase including Polkadot (DOT), Dogecoin (DOGE), Litecoin (LTC), Chainlink (LINK), Uniswap (UNI), MakerDao (MKR), Compound (COMP) and Celsius (CEL) through the buy feature. These coins come in addition to Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Stellar (XLM) and Tether (USDT), which are already available.

Ian Rodgers, formerly the chief digital officer at LMVH, took on a new role as "chief experience officer" at Ledger in November 2020. Apple Music veteran Parker Todd Brooks also joined the team in April 2021 as head of NFT (non-fungible tokens).

 

£17.7m	£41.8m
Invested	Investment valuation

 

RavenPack

RavenPack, leading big data analytics provider for financial services, allows clients to enhance returns, reduce risk and increase efficiency by systematically incorporating the effects of public information on their models or workflows.

The company announced its partnership with Synechron Inc. (a leading digital transformation consulting firm focused on the financial services industry) to develop and provide two new products - an ESG Booster which will perform ESG analysis for clients as part of its wider risk-analysis, and 360+ which provides an individualized 360-degree view of each customer. This new, enhanced data analytics capability will enable investment professionals to make more informed decisions by incorporating the effects of public information into their models and workflows. RavenPack also announced its partnerships with market-moving corporate event data provider, Wall Street Horizon and data analytics provider, Cosaic.

In the financial year, the company launched an Insider Transactions Data Solution, a free 2020 US Election Media Monitoring Insights, and free Corona virus monitoring insights.

 

£7.5m	£29.9m
Invested	Investment valuation

 

Revolut

Revolut celebrated three years of business in September 2020, marking 500k business customers since its launch in 2017. The company currently boasts over 15 million personal customers, 500k business customers, is supported in 35 countries, and has 30+ in-app currencies.

The company added a number of updates and new features to its offering, including an online web app through which users can access a complete overview of account transaction history and cards via their laptop or desktops as well as a smart subscriptions feature, which allows users to track all subscriptions, direct debits, and reoccurring payments all in one place.

Furthering its expansion into the US, Revolut applied for a US banking licence and launched business accounts in all 50 states. The company also announced the launch of its acquiring solution in 16 additional European countries, with 29 European countries now able to accept card payments online, directly into their accounts. Revolut Business added a suite of new features for businesses including a metal card plan for freelancers, QR codes for socially distanced payments, and updates to its range of expenses tools.

£7.4m	£20.4m
Invested	Investment valuation

 

Aircall

Cloud-based call centre system, Aircall, provides an integrated and easy to use solution for its customers. In September Aircall's IOS mobile app was rebuilt and relaunched to accommodate more integrations, features, and utilise better code. The company's App Marketplace currently provides over 85 integrations with its solution, including SalesForce, Zendesk, Hubspot, Zoho, Freshdesk, and Slack.

Since Aircall's Series C US$65.0 million fundraise in May 2020 the company has expanded its sales team to over 350 employees and opened its third office in Sydney to coincide with its recent launch into Australian markets. The Series C in May was led by DTCP with participation from new investors Swisscom and Adam Street and existing investors including Draper Esprit, eFounders, Balderton Capital and NextWorld. This round brings the company's total funding to date to over US$100.0 million.

£10.7m	£32.8m
Invested	Investment valuation

 

Thought Machine

Cloud native core banking technology company, Thought Machine, provides core banking infrastructure to both incumbent and challenger banks. The company's technology provides an alternative more flexible cloud-based solution that can be configured to provide any product, user experience, operating model, or data analysis capability.

In early 2020, Thought Machine completed an US$83.0 million round led by Draper Esprit and joined by Lloyds Banking Group, IQ Capital, Backed and Playfair Capital. In July 2020 Thought Machine extended the Series B round to US$125.0 million. The extension was led by Eurazeo, with British Patient Capital and SEB also joining the round as new investors.

In September 2020, Former HSBC Group COO Andy Maguire joined Thought Machine as Chair. Thought Machine also announced partnerships with TransferGo and Monese. Responsible lending start-up Curve Credit, selected Thought Machine to power its new credit and loan offering.

 

£16.5m	£18.4m
Invested	Investment valuation

 

Sportpursuit

Membership-based eCommerce business, Sportpursuit, helps sportsmen and women find products from the world's best brands at unbeatable prices in an attractive, content rich, and personalised environment. Sales are focused on the following segments: outdoor, running, skiing & snowboarding, triathlon, cycling, health & wellbeing, athletics, swimwear, cycling, golf, tennis, and others.

The company established new alternative categories, to adapt to customer preference during COVID, which catered to home based exercise rather than visits to the gym, garden equipment, new high street lifestyle brands, etc. Sportpursuit also had strong growth in its 'owned brands' which the company owns and operates under its own labels with a quality product selection.

 

£5.6m	£18.5m
Invested	Investment valuation

 

Aiven

Aiven, allows developers to focus on application building while the platform manages open-source databases and messaging systems for business clients on all major cloud platforms. The company operates with 11 open-source products, 6 Cloud platforms, and covers 90+ regions with headquarters in Boston, Berlin, Sydney, and Helsinki (HQ). Its most recent open-source product, Aiven for M3, launched in October 2020.

Since its establishment in 2006 the company has partnered with over 100 ambitious teams including Graphcore, Klarna, Supercell, Compass, MessageBird, Masterclass, Attentive Mobile, Pipedrive, and Hinge Health.

The management platform now offers its products on Google Cloud Marketplace and is one of the first service providers to quote and contract services in AWS Marketplace to help customers implement, support, and manage their software. It also announced a partnership with Humanitec, Internal Developer Platform and the expansion of its partnership with leading French DIY and home improvement company, AEDO.

In March 2021 the company raised a US$100.0 million Series C round, which was led by Atomico, with new investors Salesforce Ventures and World Innovation Lab also joining. Draper Esprit participated via our investment in Earlybird fund VI. Aiven plans to use the proceeds from the round to bring new products to market, increase contributions to developing open-source technologies and continue the company's international expansion. The round in March brings total funds raised by Aiven to US$150.0 million.

Two new hires joined the company in February 2021, Julian Lange as Chief Financial Officer and James Arlen as Chief Information Security Officer, collectively bringing 30+ years of industry experience.

£5.0m	£45.5m
Invested	Investment valuation

 

Cazoo

 

Cazoo, founded in 2018 by Alex Chesterman (founder of Zoopla and LoveFilm) remains one of the UK's fastest-growing digital businesses and leading online car retailers. With a team of over 1,800 people based across the UK, Germany, France, and Portugal, the company continues to grow and has delivered over 20,000 cars to consumers across the UK. Following the acquisition of car subscription service, Drover, in December, Cazoo has also established itself as a leading car subscription player with over 6,000 subscribers across the UK, Germany, and France.

Draper Esprit initially invested in Cazoo as part of our fund of funds investment programme via Stride Capital who backed the company in November 2018. In June 2020, Plc invested directly in the company's £25.0 million Series C round, and subsequently participated in their latest £240.0 million Series D round in October 2020. Other investors in the Series D round included General Catalyst, D1 Capital Partners, and Blackrock.

In March Cazoo announced US$7.0 Billion business combination with SPAC, AJAX I. The transaction is expected to close in the third quarter of 2021. Once closed Cazoo will be listed on NYSE ticker "CZOO." The transaction will support Cazoo's mission to continue to transform the car buying experience across Europe, as they work to further build out their brand and infrastructure.

Cazoo raised £100,000 for charities such as Mind, Cazoo's charity partner, NHS heroes, Everton In the Community, and The Aston Villa Foundation in 2020, and they have pledged to double the amount in 2021.

£10.0m	£25.7m
Invested	Investment valuation

 

Lyst

During the last year, London-based Lyst, the leading platform for the world's fashion shoppers, helped 70 million users from 120 countries find and discover the perfect fashion item from a selection of more than 18,000 leading brands. The company tracks more than 10 million global searches each month and captures the data to tell retailers what consumers want to wear.

The company has had a successful year as Covid-19 accelerated e-commerce adoption. Lyst's app averages about 660,000 monthly downloads according to Apptopia.

Lyst continues to evolve, going through a rebrand and hiring a new CPO.

£6.0m	£35.1m
Invested	Investment valuation

 

Endomag

 

Endomag utilizes technology to improve cancer care by preventing unnecessary surgery and improving outcomes and patient experience where surgery is needed.

The company has a number of products including the Magseed marker, which is a tiny seed-sized device made of surgical steel designed to accurately mark the site of a cancer and help with its removal. Endomag's Magtrace lymphatic tracer is a liquid tracer that has been developed specifically for sentinel node biopsies. The Sentimag system is the probe that enables users to operate the company's Magseed marker and Magtrace lymphatic tracer. Over 550 hospitals in more than 40 different countries have utilised Endomag's technology on over 130,000 patients.

In November 2020 the company announced its £15.0 million Series D funding round led by Draper Esprit. Existing investors Sussex Place Ventures, among others, also participated. This investment follows on from Draper Esprit's initial investment in Endomag's 2018 Series C round, bringing the Company's total funding to over £32.0 million. The funds will help the company expand its global reach while advancing breast cancer care to the next level.

Endomag has its headquarters in Cambridge, with a second office in Austin, Texas.

£9.3m	£15.7m
Invested	Investment valuation

 

Freetrade

 

Freetrade continues to make trading commission-free and easy by adding thousands of new stocks and ETFs to invest in for members, with exclusive options for Plus members like David Beckham's Guild Esports, and Papa John's.

Draper Esprit joined the company's US$69.0 million Series B round, led by Left Lane Capital with L Catterton also participating. Freetrade plans to use the funds to supercharge its expansion and product development. Draper Esprit initially invested in Freetrade's Series A round in October 2019.

Registered users for the app have surpassed 600,000 and Q1 2021 trade volumes exceeded US$1.0 billion. The company has opened new offices in Stockholm and Brisbane and has doubled the size of its team in the last 12 months as part of its ongoing recruitment drive.

Freetrade has begun its expansion into the Netherlands and Ireland and has announced its plans to be available everywhere in the EEA.

Freetrade also launched its own Self-invested personal pensions (SIPP), an investment account designed to allow individuals to manage their own pensions.

 

£8.0m	£20.0m
Invested	Investment valuation

 

Financial review

 

The financial year to 31 March 2021 was a year of strong performance that contrasted with the uncertainty resulting from the Covid-19 pandemic at the beginning of the year. Following the cautious focus in the first months of the financial year on liquidity and the potential impact of lockdowns to portfolio company revenues, it quickly became apparent that an accelerated transition to digital was exacerbating wider existing trends towards tech in the global economies. Technology companies became enablers of the shifting work and living practices the pandemic created and with much discussion highlighting multiple years of change compressed into months, it was unsurprising to see capital being directed to the beneficiaries and enablers of change. Both public and private investors sought out the quality of recurring revenue streams, e-commerce, remote networking facilitators, cloud native applications, security infrastructure and technology enhancing automation.

As a consequence the Group was able to accelerate its own scaling strategy by deploying further capital and realising investments at increased levels, while overseeing strong growth in the underlying portfolio.

Gross Portfolio Value increased by £280.9 million in the year to £983.8 million notwithstanding significant realisations of £206.3 million which were in excess of £128.0 million of investments. Fair value growth of £359.2 million (51%) was underpinned by significant corporate activity in the portfolio with IPOs of Trustpilot and UiPath and new funding rounds across the portfolio. After taking account of the accrued carry and deferred tax, the Net Portfolio Value increased by £209.8 million to £867.1 million, reflecting an increase in the movement between the Gross Portfolio and Net Portfolio value in the year due to increased carry liabilities as the underlying fund performance progresses.

The balance sheet Net Asset Value of over £1.0 billion highlights the strong investment performance and robust capital position driven by an equity raise in the year and realisations within the portfolio. In line with the investment opportunities coming through our deep network across Europe and our scaling platform, we anticipate increasing our investment cadence to over £150.0 million in the coming year, as well as continuing to further expand the infrastructure we require for growth.

Portfolio valuation

The Gross Portfolio Value at 31 March 2021 is £983.8 million (31 March 2020: £702.9 million). Proceeds of £206.3 million were received from realisations (including escrows) during the period. Investments of £128.0 million were made and a gross fair value movement was recognised of £359.2 million, even with the impact of strong currency headwinds of £51.2 million. The increase in fair value of the gross portfolio of 51% is significant relative to the targeted 20% gross portfolio returns through the cycle, notwithstanding realisations of £206.3 million. We target 10-15% realisations through the cycle.

The fair value growth in the year reflects strong performance across the breadth of the portfolio. Key value drivers are a combination of realisations and funding rounds with third-party investors at higher values. Valuations have also seen the impact of overall technology market trends. Many of the core have seen large uplifts in their year-end valuations; key movements include Trustpilot, Lyst, Ledger, and UiPath and Aiven (both held via our partnership with Earlybird).

The Gross Portfolio Value is subject to deductions for the fair value of the carry liabilities and deferred tax to generate the net investment value of £867.1 million (31 March 2020: £657.3 million), which is reflected in the consolidated statement of financial position as financial assets held at fair value through profit or loss. The Gross Portfolio Value Table below and on page 59 of the Annual Report reflects the gross and net movement in value of the portfolio during the year. The net fair value gain on investments of £276.3 million is reflected in the consolidated statement of comprehensive income.

A deferred tax provision of £20.0 million is accrued against the gains in the portfolio to reflect those portfolio companies where less than 5% of the equity holding is owned. The amount is netted off against the investments in the consolidated statement of financial position. Carry balances of £97.0 million are accrued to management teams, including previous and current employees of the Group based on the current fair value at the period-end and deducted from the Gross Portfolio Value. The percentage of Net Portfolio Value to Gross Portfolio Value has been trending lower as underlying investment funds continue to perform and therefore reflect an increased proportion that is subject to carried interest at 15%. In line with the strong portfolio performance in the year, the Gross to Net Portfolio has moved to 88%, particularly as assets held through third party funds, which are subject to higher carry proportions, have driven some of this increase. As investments turn to cash through realisations this carry will be paid out over time. The Gross Portfolio Value is an APM (see Note 29) and the reconciliation from Gross to Net can be found below and on page 59 of the Annual Report.

Consolidated Statement of Financial Position

Net assets have increased by £373.5 million to £1,033.1 million from the prior year (31 March 2020: £659.6 million). Our fundraise in October 2020 raised net proceeds of £106.6 million and we have received cash proceeds from realisations and escrows during the year of £206.3 million. During the year, we fully repaid drawn amounts from our revolving credit facility with Silicon Valley Bank and Investec. We have increased our investment cadence in the second half of the financial year, with investments for the year totalling £128.0 million. Strong performance in the fair value growth in the portfolio has generated a net fair value uplift of £276.3 million. During the year, we saw an uplift in trade and other payables, resulting from timing differences in payments of items such as bonuses, carry, and tax, and a decrease in trade and other receivables, mainly resulting from the repayment of the loan to a non-consolidated group entity.

The consolidated cash balance at 31 March 2021 is £160.7 million (31 March 2020: £34.1 million), of which £2.3 million is restricted cash. Increases to our cash balance result from net proceeds received from our October fundraise and cash proceeds received from realisations and escrows, offset by our investments made during the year, repayment of the revolving credit facility of £45.0 million, and other operational and financing related cash movements. We target maintaining 12-18 months of cash resources.

In October a further £110.0 million (£106.6 million net of fees) was raised through a placing to shareholders with 19,819,820 shares being issued at 555p per share, representing a premium of c.0.5% to the closing mid-market price of 552p per share on 1 October 2020 and was equal to the reported NAV per share as at 31 March 2020. The increased number of shares is reflected in the share capital and share premium accounts. The proceeds were raised to increase the investment cadence to take advantage of opportunities both in the market and within the existing portfolio and the £95.7 million in the second half of the year reflected this enhanced deployment.

As we announced in our September 2020 interim results, the Company's revolving credit facility was extended and increased by one year to £60.0 million (from £50.0 million) in June 2020. This facility was further extended and increased post year-end by an additional year to £65.0 million. We have been in compliance with all covenants throughout the duration of the facility and at 31 March 2021. The facility was undrawn at 31 March 2021, therefore no borrowing liability is recognised in the consolidated statement of financial position. Drawdowns and paydowns will continue to be driven by portfolio investments and realisations. The balance recognised under borrowings of £0.4 million relates to the capitalised fees from the setup and extension of the facility, which are being amortised over its life.

During the year ending 31 March 2021, Draper Esprit Plc acquired the remaining 69.23% of the issued share capital in Elderstreet Holdings Limited, the holding company of Elderstreet Investments Limited (manager of Draper Esprit VCT plc). Elderstreet Holdings Limited was recognised as an Investment in Associate on the Consolidated Statement of Financial Position as at 31 March 2020. This transaction is accounted for under IFRS 3 as a business combination achieved in stages (or "step acquisition") and has resulted the recognition of £0.6 million of goodwill at 31 March 2021 (£0.7 million including deferred tax). For further details of the acquisition, please see Note 18.

During the year, the Board approved the inception of the Draper Esprit Employee Benefit Trust and its trustee, Grow Trustees Limited, to administer the employee share option schemes (see further details in Note 13 to the consolidated financial statements). Shares in Draper Esprit Plc held by the trust will be recognised as treasury shares for the Group and the impact can be seen in the Consolidated Statement of Changes in Equity below and on page 127 of the Annual Report.

Consolidated statement of comprehensive income

Income recognised during the year ending 31 March 2021 comprises investment gains of £276.3 million (year ending 31 March 2020: £40.8 million) and fee income of £12.5 million (year ending 31 March 2020: £11.3 million), which is generated from management fees and directors' fees. General and administration costs of £13.8 million are recognised in the year (year ending 31 March 2020: £9.8 million), with the increase in the year reflecting scaling of our team to build the infrastructure for growth with higher employee costs. Net operating costs (net of fee income) as a percentage of NAV are less than our target of 1%. As we continue to expand the third‑party funds that co-invest alongside the Plc's balance sheet capital, we anticipate that fee income will increase further. The net finance expense of £5.2 million (year ending 31 March 2020: £0.1 million) mainly reflects net foreign exchange fluctuations on cash balances held and interest on the revolving credit facility.

Post balance-sheet events

•    Increased and extended our revolving credit facility with SVB and Investec by an additional one year from £60m to £65m post year-end.

•    Invested a further £48m post year-end to 11 June 2021, including investments into Manna, FintechOS, Cervest, Ledger, and Lyst.

•    Refreshed fund of funds programme, with the approval by the Board and Investment Committee of an additional £75.0 million investment budget.

Ben Wilkinson

Chief Financial Officer

 

 

Gross Portfolio Value Table

Company	Fair Value of Investments 31-Mar-20 £m	Investments £m	Realisations £m	Draper Esprit (Ireland) Limited £m	Movement in Foreign Exchange (A)  £m	Movement in Fair Value (B) £m	Total Fair Value Movement  (A+B) £m	Fair Value of Investments 31-Mar-21 £m	Interest FD category* at reporting date
Graphcore	86.8	10.3	-	-	(7.5)	19.2	11.7	108.8	A
UiPath	28.0	-	(5.3)	-	(6.8)	84.4	77.6	100.3	A
Trustpilot	65.3	-	(75.0)	-	-	95.2	95.2	85.5	B
Aiven	12.8	-	-	-	(3.1)	35.8	32.7	45.5	B
Ledger	17.7	-	-	-	(2.9)	27.0	24.1	41.8	B
Lyst	10.8	-	-	-	(2.4)	26.7	24.3	35.1	C
Aircall	24.3	-	-	-	(1.6)	10.1	8.5	32.8	B
RavenPack	30.9	-	-	-	(2.1)	1.1	(1.0)	29.9	D
M-files	20.0	1.5	-	-	(1.6)	9.8	8.2	29.7	B
Cazoo	-	10.3	-	-	-	15.4	15.4	25.7	A
Smava	16.7	-	-	-	(1.6)	8.7	7.1	23.8	B
Revolut	21.7	-	-	-	(1.5)	0.2	(1.3)	20.4	A
Freetrade	-	4.0	-	-	-	16.0	16.0	20.0	B
Perkbox	19.9	-	-	-	-	(1.3)	(1.3)	18.6	C
SportPursuit	11.1	-	-	-	-	7.4	7.4	18.5	E
Thought Machine	17.4	-	-	-	-	1.0	1.0	18.4	B
Endomag	6.9	7.0	-	-	-	1.8	1.8	15.7	C
Remaining Portfolio	310.8	94.9	(125.4)	-	(20.1)	50.5	30.4	310.7	-
Total	701.1	128.0	(205.7)	-	(51.2)	409.0	357.8	981.2	-
Co-Invest	1.8	-	(0.6)	-	-	1.4	1.4	2.6	-
Gross Portfolio Value	702.9	128.0	(206.3)	-	(51.2)	410.4	359.2	983.8	-
Carry External	(40.6)	-	-	-	-	(56.4)	(56.4)	(97.0)	-
Portfolio Deferred tax	(5.3)	-	-	-	-	(14.7)	(14.7)	(20.0)	-
Trading carry & co‑invest	0.3	-	-	-	-	-	-	0.3	-
DE Ireland Limited	-	-	-	11.8	-	(11.8)	(11.8)	-	-
Net Portfolio value	657.3	128.0	(206.3)	11.8	(51.2)	327.5	276.3	867.1	-

* Fully diluted interest categorised as follows: Cat A: 0-5%, Cat B: 6-10%, Cat C: 11-15%, Cat D: 16-25%, Cat E: >25%

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income

	Note	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Change in gains on investments held at fair value through the profit and loss	5	276,307	40,755
Fee income	6	12,507	11,255
Total income		288,814	52,010
Operating expenses
General administrative expenses	7	(13,844)	(9,810)
Depreciation and amortisation	14, 17	(650)	(520)
Share-based payments - resulting from company share option scheme	13	(1,548)	(990)
Investments and acquisition expenses		(262)	(239)
Total operating expenses		(16,304)	(11,559)
Other income	18	94	-
Profit from operations		272,604	40,451
Finance (expense)
Net finance (expense)	10	(5,157)	(68)
Operating profit before tax		267,447	40,383
Income taxes	11	(26)	(17)
Profit for the year		267,421	40,366
Other comprehensive income/(expense)		-	-
Total comprehensive income for the year		267,421	40,366
Profit attributable to:
Owners of the parent		267,421	39,707
Non-controlling interest^	18	-	659
Earnings per share attributable to owners of the Parent:
Basic earnings per weighted average shares (pence)	12	208	34
Diluted earnings per weighted average shares (pence)	12	206	33

 

^ On 10 March 2020, the Group acquired the remaining interest in Encore Ventures LLP and as such no profit after 10 March 2020 is attributable to the non-controlling interest - see Note 18 for further details.

The Notes below and on pages 128 to 158 of the Annual Report are an integral part of these consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Financial Position

	Note	31 March 2021 £'000s	31 March 2020 £'000s
Non-current assets
Intangible assets	14	10,936	10,028
Investments in associates	15, 18	-	258
Financial assets held at fair value through the profit or loss	16	867,088	657,333
Property, plant and equipment	17, 20	1,368	1,760
Total non-current assets		879,392	669,379
Current assets
Trade and other receivables	19	3,700	7,719
Cash and cash equivalents		158,417	32,255
Restricted cash	20ii	2,260	1,883
Total current assets		164,377	41,857
Current liabilities
Trade and other payables	21	(9,645)	(5,038)
Financial liabilities	20	(345)	(358)
Total current liabilities		(9,990)	(5,396)
Non-current liabilities
Deferred tax	22	(362)	(611)
Financial liabilities	20	(276)	(45,611)
Total non-current liabilities		(638)	(46,222)
Net assets		1,033,141	659,618
Equity
Share capital	23	1,391	1,189
Share premium account	23	508,279	400,726
Own shares reserve	24i	(331)	-
Other reserves	24ii	26,258	26,259
Retained earnings		497,544	231,444
Equity attributable to owners of parent		1,033,141	659,618
Non-controlling interests	18	-	-
Total equity		1,033,141	659,618
Net assets per share (pence)	12	743	555

 

The financial statements on pages 124 to 127 of the Annual Report were approved by the Board of Directors on 11 June 2021 and signed on its behalf by

 

B.D. Wilkinson
Chief Financial Officer

The Notes below and on pages 128 to 158 of the Annual Report are an integral part of these consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Cash Flows

	Note	Year ended 31 March 2021 £'000s	Year ended 31 March  2020 £'000s
Cash flows from operating activities
Profit after tax		267,421	40,366
Adjustments to reconcile operating profit to net cash flows used in operating activities:
Revaluation of investments held at fair value through the profit and loss	5	(276,307)	(40,755)
Depreciation and amortisation	14,17	650	520
Share-based payments - resulting from company share option scheme	13	1,548	990
Net finance expense	10	5,157	68
Decrease/(Increase) in trade and other receivables and other working capital movements		402	(2,886)
Increase in trade and other payables		4,039	79
Purchase of investments	16	(127,976)	(89,935)
Proceeds from disposals in underlying investment vehicles	16	206,341	39,533
Net loans made to underlying investment vehicles and Group companies	16, 31	(8,122)	(8,541)
Net cash generated from/(used in) in operating activities		73,153	(60,561)
Tax (paid)		(2)	(3)
Net cash inflow/(outflow) from operating activities		73,151	(60,564)
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired	18	(650)	-
Purchase of property, plant and equipment	17	(143)	(368)
Net cash (outflow)/inflow from investing activities		(793)	(368)
Cash flows from financing activities
Cash paid to non-controlling interests		-	(893)
(Net loan repayments)/proceeds from loan	20	(45,000)	45,000
Fees paid on issuance of loan	20	(300)	(525)
Interest paid		(2,093)	(887)
Interest received		283	289
Repayments of leasing liabilities	20	(440)	(166)
Net acquisition of own shares	24	(720)	-
Gross proceeds from issue of share capital	23	111,872	993
Equity issuance costs	23	(3,520)	(40)
Cash paid out for share options exercised		(2,553)	(293)
Net cash inflow from financing activities		57,529	43,478
Net increase/(decrease) in cash & cash equivalents		129,887	(17,454)
Cash and cash equivalents at beginning of year		34,138	50,358
Exchange differences on cash and cash equivalents	10	(3,348)	1,234
Cash and cash equivalents at end of year		158,417	32,255
Restricted cash at year end		2,260	1,883
Total cash and cash equivalents and restricted cash at year end		160,677	34,138

 

The Notes below and on pages 128 to 158 of the Annual Report are an integral part of these consolidated financial statements.

 

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity

Year ended 31 March 2021		Attributable to equity holders of the parent (£'000s)
	Note	Share capital	Share premium	Own shares reserve	Other reserves	Retained earnings	Total equity
Brought forward as at 1 April 2020		1,189	400,726	-	26,259	231,444	659,618
Comprehensive income for the year
Profit for the year		-	-	-	-	267,421	267,421
Total comprehensive income/(expense) for the year		-	-	-	-	267,421	267,421
Contributions by and distributions to the owners:
Issue of share capital	23	198	106,282	-	-	-	106,480
Options granted and awards exercised	13, 24	4	1,271	1,936	(1)	(1,321)	1,889
Acquisition of treasury shares	24	-	-	(2,267)	-	-	(2,267)
Total contributions by and distributions to the owners		202	107,553	(331)	(1)	(1,321)	106,102
Balance as at 31 March 2021		1,391	508,279	(331)	26,258	497,544	1,033,141

 

Year ended 31 March 2020		Attributable to equity holders of the parent (£'000s)						Attributable to non-controlling interest (£'000s)	Total equity (£'000s)
	Note	Share capital	Share premium	Own shares reserve	Other reserves	Retained earnings	Total equity
Brought forward as at 1 April 2019		1,179	395,783	-	25,633	195,737	618,332	234	618,566
Comprehensive income for the year
Profit for the year		-	-	-	-	39,707	39,707	659	40,366
Acquired reserves from non‑controlling interest		-	-	-	-	-	-	-	-
Amounts withdrawn by non-controlling interest		-	-	-	-	-	-	(893)	(893)
Total comprehensive income/(expense) for the year		-	-	-	-	39,707	39,707	(234)	39,473
Contributions by and distributions to the owners:
Adjustment for Encore Ventures acquisition	18	-	-	-	-	(4,000)	(4,000)	-	(4,000)
Issue of share capital	23	10	4,943	-	-	-	4,953	-	4,953
Options granted and awards exercised	13,24	-	-	-	626	-	626	-	626
Total contributions by and distributions to the owners		10	4,943	-	626	(4,000)	1,579	-	1,579
Balance as at 31 March 2020		1,189	400,726	-	26,259	231,444	659,618	-	659,618

 

The Notes below and on pages 128 to 158 of the Annual Report are an integral part of these consolidated financial statements.

 

 

 

 

 

Notes to the Consolidated Financial Statements

1. General information

Draper Esprit Plc (the "Company") is a public company limited by shares incorporated and domiciled in England and Wales. The Company is listed on the London Stock Exchange's AIM market and Euronext Dublin's Euronext Growth market.

The Company is the ultimate parent company into which the results of subsidiaries are consolidated where in line with IFRS 10 (see Note 3b below for further details). The consolidated financial statements for the years ended 31 March 2021 and 31 March 2020 comprise the financial statements of the Company and its subsidiaries (together, "the Group").

The consolidated financial statements are presented in Pounds Sterling (£), which is the currency of the primary economic environment the Group operates in. All amounts are rounded to the nearest thousand, unless otherwise stated.

2. Adoption of new and revised standards

No changes to IFRS have impacted this year's financial statements.

No upcoming changes under IFRS are likely to have a material effect on the reported results or financial position. Management will continue to monitor upcoming changes.

3. Significant accounting policies

a) Basis of preparation

The consolidated financial statements have been prepared and approved by the Directors in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The financial reporting framework that has been applied in the preparation of the Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The Company has taken advantage of disclosure exemptions available under FRS 101 as explained further in Note 1 of the Company's financial statements. The financial statements are prepared on a going concern basis as disclosed in the Audit, Risk and Valuations Committee Report (pages 101-103 of the Annual Report) and in the Directors' Report (pages 112-114 of the Annual Report).

The consolidated financial statements have been prepared under the historical cost convention as modified for the revaluation of financial assets and financial liabilities held at fair value.

A summary of the Group's principal accounting policies, which have been applied consistently across the Group, is set out below.

b) Basis of consolidation

The consolidated financial statements comprise the Company (Draper Esprit Plc, 20 Garrick Street, London, England, WC2E 9BT) and the results, cash flows and changes in equity of the following subsidiary undertakings as well as the Draper Esprit Employee Benefit Trust:

Name of undertaking	Nature of business	Country of incorporation	% ownership
Esprit Capital Partners LLP^	Investment Management	England	100%
Elderstreet Holdings Limited^	Holding company	England	100%*
Elderstreet Investments Limited^	Investment Management	England	100%*
Grow Trustees Limited^	Trustee	England	100%**
Draper Esprit (Nominee) Limited^	Dormant	England	100%
Encore Ventures LLP^	Investment Management	England	100%
Esprit Capital I (GP) Limited^	General Partner	England	100%
Esprit Capital I General Partner^	General Partner	England	100%
Esprit Capital II GP Limited^^^	General Partner	Cayman	100%
Esprit Capital III Founder GP Limited^^	General Partner	Scotland	100%
Esprit Capital III GP LP^^	General Partner	Scotland	100%
Encore I GP Limited^^^	General Partner	Cayman	100%
Encore I Founder GP Limited^^^	General Partner	Cayman	100%
Esprit Capital Holdings Limited^	Dormant	England	100%
Esprit Nominees Limited^	Dormant	England	100%
Esprit Capital I (CIP) Limited^	Dormant	England	100%
Esprit Capital III MLP LLP^	Dormant	England	100%
Esprit Capital III GP Limited^	Dormant	England	100%

 

3. Significant accounting policies

*
At 31 March 2021, the Company owns 100% of the issued share capital of Elderstreet Holdings Limited, which in turns owns 100% of the issued share capital of Elderstreet Investments Limited, following the acquisition of 69.23% of the issued share capital on 9 February 2021. The Company previously owned 30.77% and the investment was accounted for as an Investment in Associate as at 31 March 2020. See Note 18 for further information.

**
On 27 November 2020, Draper Esprit Employee Benefit Trust was set up to operate as part of the Draper Esprit employee share options schemes. Grow Trustees Limited was incorporated on 5 November 2020 as trustee to the Draper Esprit Employee Benefit Trust. Both entities are consolidated as part of the Group.

Esprit Capital Management Limited has been removed from the above table as this entity was dissolved following a Members Voluntary Liquidation on 6 October 2020.

Registered addresses

^      20 Garrick Street, London, England, WC2E 9BT

^^    50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ

^^^   c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

Subsidiaries

Subsidiaries are entities controlled by the Group. Control, as defined by IFRS 10, is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which the Group effectively obtains control. They are deconsolidated from the date that control ceases. Control is reassessed whenever circumstances indicate that there may be a change in any of these elements of control. Refer to Note 4(c) for further information.

All transactions and balances between Group subsidiaries are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

The Group has accounted for the acquisition of the remaining interest in Elderstreet Holdings Limited on 9 February 2021 as a 'step acquisition' in line with IFRS 3 and considers Elderstreet Holdings Limited and its wholly owned subsidiary to be part of the consolidated Group from the date of the transaction having assessed the substance of the transaction, including control and changes in ownership (see note 18).

Employee Benefit Trust

On 27 November 2020, Draper Esprit Employee Benefit Trust (the "Trust") was set up to operate as part of the Draper Esprit employee share option schemes. The substance of the relationship is considered to be one of control by the Group and, therefore, the Trust is consolidated, and all assets and liabilities are consolidated into the Group. Grow Trustees Limited was appointed trustee and the substance of this relationship is also considered to be one of control by the Group and, as such, Grow Trustees Limited is consolidated as at 31 March 2021.

Associates

Associates are all entities over which the Group has significant influence, but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses of the investee in profit or loss, and the Group's share of movements in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment. When the Group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. The carrying amount of equity-accounted investments is tested for impairment where there are indications that the carrying value may no longer be recoverable.

Following the acquisition of the remaining interest in Elderstreet Holdings Limited on 9 February 2021, no associates are recognised in the consolidated accounts. For further details, please see Note 18.

Investment company

In accordance with the provisions of IFRS 10, Draper Esprit Plc considers itself to be an investment entity as it obtains funds from investors to invest funds for returns from capital appreciation and the performance of substantially all of its investments are held at Fair Value through Profit and Loss. The Directors have also satisfied themselves that Draper Esprit Plc's wholly owned subsidiary, Draper Esprit (Ireland) Limited, as well as the partnerships listed below meet the characteristics of an investment company. Draper Esprit (Ireland) Limited as well as the partnerships listed below have one investor, however, in substance these partnerships and companies are investing funds on behalf of the investors of Draper Esprit Plc. Consequently, Draper Esprit (Ireland) Limited and the limited partnerships listed below are not consolidated in accordance with IFRS 10; instead, they are recognised as investments held at fair value through profit and loss on the consolidated balance sheet. Loans to investment vehicles are treated as net investments at fair value through the profit and loss.

 

3. Significant accounting policies

The below is a list of entities that are controlled and not consolidated but held as investments at fair value through the profit and loss on the consolidated balance sheet.

Name of undertaking	Principal activity	Country of incorporation	% ownership
Draper Esprit (Ireland) Limited^^	Investment company	Ireland	100%
Esprit Capital III LP^	Limited partnership	England	100%
Esprit Capital III(B) LP^	Limited partnership	England	100%
Esprit Capital IV LP^	Limited partnership	England	100%
Esprit Investments (1) LP^	Limited partnership	England	100%
Esprit Investments (2) LP^	Limited partnership	England	100%
Esprit Investments (1)(B) LP^	Limited partnership	England	100%
Seedcamp Holdings LLP^	Limited liability partnership	England	100%
Seedcamp Investments LLP^^^	Limited liability partnership	England	100%
Seedcamp Investments II LLP^^^	Limited liability partnership	England	100%
Esprit Investments (2)(B) LP^	Limited partnership	England	100%

 

^     20 Garrick Street, London, England, WC2E 9BT

^^   32 Molesworth Street, Dublin 2, Ireland, D02 Y512

^^^ 727-729 High Road, London, England, N12 0BP

Limited partnerships (co-investment and carried interest)

The following limited partnerships that the Group's General Partners are members of are not considered to be controlled and, therefore, they are not consolidated in these financial statements:

Name of undertaking	Principal activity	Country of incorporation
Encore I GP LP^	General partner	Cayman
Esprit Capital II Founder LP^	Co-investment limited partnership	Cayman
Esprit Capital II Founder 2 LP^	Co-investment limited partnership	Cayman
Encore I Founder LP^	Co-investment limited partnership	Cayman
Encore I Founder 2014 LP^	Co-investment limited partnership	Cayman
Encore I Founder 2014-A LP^	Co-investment limited partnership	Cayman
Esprit Capital III Founder LP^^	Co-investment limited partnership	Scotland
Esprit Investments (2) (Carried Interest) LP	Carried interest partner	Scotland
Esprit Capital III Carried Interest LP	Carried interest partner	Scotland
Esprit Investments (1) (Carried interest) LP	Carried interest partner	Scotland

 

^   c/o Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

^^  50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ

The Group's management does not consider there to be a material exposure to these entities.

c) Operating segment

The Group's management considers the Group's investment portfolio represents a coherent and diversified portfolio with similar economic characteristics and as a result these individual investments have been aggregated into a single operating segment. In the view of the Directors, there is accordingly one reportable segment under the provisions of IFRS 8.

d) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. All revenue from services is generated within the UK and is stated exclusive of value added tax.

Revenue from services comprises:

i.    Fund management services
Fund management fees are either earned at a fixed annual rate or are set at a fixed percentage of funds under management, measured by commitments or invested cost, depending on the stage of the fund being managed. Revenues are recognised as the related services are provided.

ii.   Portfolio Directors' fees
Portfolio Directors' fees are annual fees charged to an investee company. Directors' fees are only charged on a limited number of the investee companies. Revenues are recognised as services are provided.

3. Significant accounting policies

iii.  Performance fees
Performance fees are earned on a percentage basis on returns over a hurdle rate in the statement of comprehensive income. Amounts are recognised as revenue when it can be reliably measured and is highly probable funds will flow to the Group.

e) Deferred income

The Group's management fees are typically billed quarterly or half-yearly in advance. Where fees have been billed for an advance period, the amounts are credited to deferred income, and then subsequently released through the profit and loss during the period to which the fees relate. Certain performance fees and portfolio directors' fees are also billed in advance and these amounts are credited to deferred income, and then subsequently released through the profit and loss accounting during the period to which the fees relate.

f) Business combinations

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred, and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement.

Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

The Group recognises identifiable assets acquired and liabilities assumed in a business combination, regardless of whether they have been previously recognised in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of: a) fair value of consideration transferred; b) the recognised amount of any non-controlling interest in the acquiree; and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately.

g) Goodwill and other intangible assets

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceed the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

When the consideration transferred by the Group in a business combination includes an asset or liability resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the "measurement period" (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

Other intangible assets

Certain previously unrecognised assets acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair values, e.g. brand names, customer contracts and lists (see Note 14). All finite-lived intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described below. Customer contracts are amortised on a straight-line basis over their useful economic lives, typically the duration of the underlying contracts. The following useful economic lives are applied:

i.    Customer contracts - Encore Ventures LLP: 8 years; Elderstreet Investments Limited: 3 years.

h) Impairment

For the purposes of assessing impairment, assets are grouped at the lowest level for which there are largely independent cash inflows ("cash generating units" or "CGU"). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised in the consolidated statement of total comprehensive income for the amount by which the assets or cash generating units carrying amount exceeds its recoverable amount that is the higher of fair value less costs to sell and value-in-use.

3. Significant accounting policies

To determine value-in-use, management estimates expected future cash flows over five years from each cash-generating unit and determine a suitable discount rate in order to calculate the present value of those cash flows. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profile as assessed by management. Impairment losses for cash generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro-rata to the other assets in the cash-generating unit with the exception of goodwill, and all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating units recoverable amount exceeds its carrying amount.

i) Foreign currency

Transactions entered into by Group entities in a currency other than the functional currency in which they operate are recorded at the rates prevailing when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates prevailing at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the profit and loss.

The individual financial statements of the Group's subsidiary undertakings are presented in their functional currency. For the purpose of these consolidated financial statements, the results and financial position of each subsidiary undertaking are expressed in Pounds Sterling, which is the presentation currency for these consolidated financial statements.

The assets and liabilities of the Group's undertakings, whose functional currency is not Pounds Sterling, are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period.

j) Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned and are initially measured at fair value, plus transaction costs, except for those financial assets classified at 'fair value through profit or loss' (FVTPL), which are initially measured at fair value.

Financial assets are classified by the Group into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL) and 'amortised cost'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Fair value through profit or loss

A financial asset may be designated as at FVTPL upon initial recognition if:

a.   such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

b.   the financial asset forms part of a group of financial assets or financial liabilities, or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Draper Esprit Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

c.   it forms part of a contract containing one or more embedded derivatives, and IFRS 9 Financial Instruments permits the entire combined contract (asset or liability) to be designated as at FVTPL.

The Group considers that the investment interests it holds in Esprit Capital III LP, Esprit Capital III(B) LP, Esprit Capital III Founder LP, Esprit Capital II Founder LP, Esprit Capital IV LP, Esprit Investments(I) LP, Esprit Investments (1)(B) LP, Esprit Investments (2) LP, and Esprit Investments (2)(B) LP are appropriately designated as at FVTPL as they meet criteria (b) above.

Amortised cost

A financial asset is held at amortised cost under IFRS 9 where it is held for the collection of cash flows representing solely payments of principal and interest. These assets are measured at amortised cost using the effective interest method, less any expected losses.

The Group's financial assets held at amortised cost comprise trade and most other receivables, and cash and cash equivalents in the consolidated statement of financial position.

k) Financial liabilities

The Group's financial liabilities may include borrowings and trade, and other payables.

Trade and other payables

Trade and other payables 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. Significant accounting policies

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost using the effective interest rate method. All interest-related charges are reported in profit or loss are included within finance costs or finance income.

l) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the outflow of resources embodying the economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

m) Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

The Group's ordinary shares are classified as equity instruments. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Shares held by Draper Esprit Employee Benefit Trust are held at cost and disclosed as own shares and deducted from other equity.

n) Defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.

o) Share-based payments

Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period on a straight line basis. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period. Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received.

The employee share option plans are administered by the Draper Esprit Employee Benefit Trust (the "Trust"), which is consolidated in accordance with the principles in Note 3.

p) Leased assets

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

•     The contract involves the use of an identified asset - this may be specified, explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

•     The Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

•     The Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:

−   The Group has the right to operate the asset; or

−   The Group designed the asset in a way that predetermines how and for what purpose it will be used.

This policy is applied to contracts entered into, or changed, on or after 1 April 2019. The policy is applied taking into account transitional provisions within IFRS 16 for the existing operating lease as at 1 April 2019.

 

3. Significant accounting policies

contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

Lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in the profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'lease liabilities' in the statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group would recognise the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

q) Dividends

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when the dividend is paid. In the case of final dividends, this is when the dividend is approved by the shareholders at the AGM.

r) Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

s) Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

 

3. Significant accounting policies 

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities, and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

t) Property, plant and equipment

Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is recognised to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following basis:

Leasehold improvements  - over the term of the lease

Fixtures and equipment     - 33% p.a. straight line

Computer equipment         - 33% p.a. straight line

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

See 3(p) above for PPE relating to right-of-use assets resulting from leases.

u) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, deposits at bank and highly liquid investments with a term of no more than 90 days that are readily convertible into known amounts of cash and that are subject to an insignificant risk of changes in value. No cash equivalents are held as at 31 March 2021 (31 March 2020: nil).

v) Segmental reporting

IFRS 8, "Operating Segments", defines operating segments as those activities of an entity about which separate financial information is available and which are evaluated by the Chief Operating Decision Maker to assess performance and determine the allocation of resource. The Chief Operating Decision Maker has been identified by the Board of Directors as the Chief Executive Officer.

w) Financial instruments

Financial assets and financial liabilities are recognised in the consolidated balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

x) Interest income

Interest income earned on cash and deposits and short-term liquidity investments is recognised when it is probable that the economic benefits will flow to the Group and the amount of income recognised can be measured reliably. Interest income is accrued on a time basis, with reference to the principal outstanding and at the effective interest rate applicable.

y) Carried interest

The Company has established carried interest plans for the Executive Directors (see below), other members of the investment team and certain other employees (together the "Plan Participants") in respect of any investments and follow-on investments made from Admission. To 31 March 2020 each carried interest plan operates in respect of investments made during a 24-month period and related follow-on investments made for a further 36-month period. From 1 April 2020 the carried interest plan operates for a five-year period in respect of any investments.

Subject to certain exceptions, Plan Participants will receive, in aggregate, 15% of the net realised cash profits from the investments and follow-on investments made over the relevant period once the Company has received an aggregate annualised 10% realised return on investments and follow-on investments made during the relevant period. The carried interest plan from 1 April 2020 has an aggregate annualised 8% realised return on investments and follow-on investments made during the relevant period, to bring the plans more in line with market. The Plan Participants' return is subject to a "catch-up" in their favour. Plan Participants' carried interests vest over five years for each carried interest plan and are subject to good and bad leaver provisions. Any unvested carried interest resulting from a Plan Participant becoming a leaver can be reallocated by the Remuneration and Nomination Committee. From 2021/22 onwards, the Executive Directors will not be eligible to participate in new carried interest plans, and instead will participate in the Long-Term Incentive Plan.

Carried interest is measured at FVTPL with reference to the performance conditions described above and is deducted from the valuation of investments measured at FVTPL as this is value of the Gross Portfolio, which is not due to the Group.

3. Significant accounting policies 

Fair value measurement

Management uses valuation techniques to determine the fair value of financial assets. This involves developing estimates and assumptions consistent with how market participants would price the assets. Management bases its assumptions on observable data as far as possible, but this is not always available, in that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date (See Note 4(a)).

4. Critical accounting estimates and judgements

The Directors have made the following judgements and estimates that have had the most significant effect on the carrying amounts of the assets and liabilities in the consolidated financial statement. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Actual results may differ from estimates. The key estimates, (4)(a) and (4)(b), and judgements, (4)(c), and (4)(d) are discussed below. There have been no changes to the accounting estimates and judgements in the financial year ended 31 March 2021.

a) Valuation of unquoted equity investments at fair value through the profit and loss

The Group invests into Limited Companies and Limited Partnerships which are considered to be investment companies that invest in unquoted equity for the benefit of the Group. These investment companies are measured at fair value through the profit or loss based on their net asset value ('NAV') at the year end. The Group controls these entities and is responsible for preparing their NAV which is based on the valuation of their unquoted investments. The Group's valuation of investments measured at fair value through profit or loss is therefore dependent upon estimations of the valuation of the underlying portfolio companies.

The Group, through its controlled investment companies also invests in investment companies which primarily focus on German or seed investments. These investments are considered to be 'Fund of Fund investments' for the Group and are recognised at their NAV at the year- end date. These Fund of Fund investments are not controlled by the Group and some do not have coterminous year ends with the Group.

To value these investments, management obtain the latest audited financial statements or partner reports of the investments and discuss further movements with the management of the companies. Where the Fund of Funds hold investments that are individually material to the Group, management perform further procedures to determine that the valuation of these investments has been prepared in accordance with the Group's valuation policies for portfolio companies outlined below and these valuations will be adjusted by the Group where necessary based on the Group valuation policy for valuing portfolio companies.

The estimates required to determine the appropriate valuation methodology of unquoted equity investments means there is a risk of material adjustment to the carrying amounts of assets and liabilities. These estimates include whether to increase or decrease investment valuations and require the use of assumptions about the carrying amounts of assets and liabilities that are not readily available or observable.

The fair value of unlisted securities is established with reference to the International Private Equity and Venture Capital Valuation Guidelines as well as the IPEV Board, Special Valuation Guidance issued on 31 March 2020 in response to the Covid-19 crisis ("IPEV Guidelines"). An assessment will be made at each measurement date as to the most appropriate valuation methodology.

The Group invests in early-stage and growth technology companies, through predominantly unlisted securities. Given the nature of these investments, there are often no current or short-term future earnings or positive cash flows. Consequently, although not considered to be the default valuation technique, the appropriate approach to determine fair value may be based on a methodology with reference to observable market data, being the price of the most recent transaction. Fair value estimates that are based on observable market data will be of greater reliability than those based on estimates and assumptions and accordingly where there have been recent investments by third parties, the price of that investment will generally provide a basis of the valuation. Recent transactions may include post year-end as well as pre year-end transactions depending on the nature and timing of these transactions.

If this methodology is used, its initial use and the length of period for which it remains appropriate to use the calibration of last round price depends on the specific circumstances of the investment, and the Group will consider whether this basis remains appropriate each time valuations are reviewed. In addition, the inputs to the valuation model (e.g. revenue, comparable peer group, product roadmap) will be recalibrated to assess the appropriateness of the methodology used in relation to the market performance and technical/product milestones since the round and the company's trading performance relative to the expectations of the round.

The Group considers alternative methodologies in the IPEV Guidelines, being principally price-revenue or price-earnings multiples, depending upon the stage of the asset, requiring management to make assumptions over the timing and nature of future revenues and earnings when calculating fair value. When using multiples, we consider public traded multiples in similar lines of business, which are adjusted based on the relative growth potential and risk profile of the subject company versus the market and to reflect the degree of control and lack of marketability.

 

4. Critical accounting estimates and judgements

Where a fair value cannot be estimated reliably, the investment is reported at the carrying value at the previous reporting date unless there is evidence that the investment has since been impaired.

In all cases, valuations are based on the judgement of the Directors after consideration of the above and upon available information believed to be reliable, which may be affected by conditions in the financial markets. Due to the inherent uncertainty of the investment valuations, the estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. Due to this uncertainty, the Group may not be able to sell its investments at the carrying value in these financial statements when it desires to do so or to realise what it perceives to be fair value in the event of a sale. See Notes 27 and 28 for information on unobservable inputs used and sensitivity analysis on investments held at fair value through the profit and loss.

b) Carrying amount of goodwill

Determining whether goodwill is impaired requires an estimation of the recoverable amount of the cash-generating units to which goodwill is allocated. An impairment review is performed on an annual basis unless there is a trigger event during the period. The recoverable amount is based on "value in use" calculations, which requires estimates of future cash flows expected from the cash generation unit (CGU) and a suitable discount rate in order to calculate present value. The key assumptions for the value in use calculations are the discount rate using pre-tax rates that reflect the current market assessments of the time value of money and risks specific to the CGU. The internal rate of return ("IRR") used was based on past performance and experience. The carrying amount of the goodwill as at the statement of financial position date was £9.7 million. The Group has conducted a sensitivity analysis on the impairment test of the CGU and the carrying value.

A higher discount rate in the range of 15%-20% does not reduce the carrying value of goodwill to less than its recoverable amount.

The CGU was determined to be the fund managers. This is a critical management judgement, as they are responsible for generating deal flow and working with investee companies creating value and maximising returns for the Group.

c) Control assessment

The Group has a number of entities within its corporate structure and a judgement has been made of which should be consolidated in accordance with IFRS 10, and which should not. The Group consolidates all entities where it has control over the following: power over the investee to significantly direct the activities; exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investor's returns. The Company does not consolidate qualifying investment companies it controls in accordance with IFRS 10 and instead recognises them as investments held at fair value through the profit and loss.

During the year, management have considered the relationships with Elderstreet Holdings Limited, Elderstreet Investments Limited, Draper Esprit Employee Benefit Trust, and Grow Trustees Limited and has deemed their substance to be of control within the Group.

See Note 3(b) for further details.

d) Business combinations

iv.  The Directors have undertaken a detailed assessment of the substance of the transaction through which the Company acquired the underlying investment vehicles and Esprit Capital Partners LLP and its subsidiaries with reference to the requirements of IFRS 10 and IFRS 3. Following that assessment based on the judgement of Directors, it has been determined that this transaction is appropriately accounted for as an acquisition.

v.   During the year ending 31 March 2021, Draper Esprit Plc acquired the remaining 69.23% of the issued share capital in Elderstreet Holdings Limited, the holding company of Elderstreet Investments Limited (manager of Draper Esprit VCT Plc). Elderstreet Holdings Limited was held as an Investment in Associate on the Consolidated Statement of Financial Position as at 31 March 2020. Total consideration for the remaining issued share capital not previously held was cash consideration of £0.8 million. This transaction is accounted for under IFRS 3 as a business combination achieved in stages (or "step acquisition") as this transaction resulted in Draper Esprit Plc obtaining control over Elderstreet Holdings Limited. For further details of the acquisition, please see Note 18.

vi.  During the year ending 31 March 2020, the Group acquired the remaining membership interest in Encore Ventures LLP on 10 March 2020. Prior to this, the Group held a membership interest of 71% and had determined based on its control assessment (see (4)(c) above) that the Group had control over Encore Ventures LLP and consolidated this entity in accordance with IFRS 10. As a result, the acquisition of the remaining membership interest was assessed to be a change in ownership interest and is accounted for as such under IFRS 10. This is not deemed to be a business combination.

 

5. Change in gains on investments held at fair value through the profit and loss

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Change in unrealised gains on investments held at fair value through the profit and loss	183,575	(4,266)
Change in realised gains on investments held at fair value through the profit and loss	143,941	21,921
Net foreign exchange (loss)/gain on investments held at fair value through the profit and loss	(51,209)	23,100
Total movements on investments held at fair value through the profit and loss	276,307	40,755

 

6. Fee income

Revenue is derived solely within the UK, from continuing operations for all years. An analysis of the Group's revenue is as follows:

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Management fees	12,462	11,213
Portfolio directors' fees	45	42
Total fee income	12,507	11,255

 

7. General administrative expenses

Administrative expenses comprise:

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
General employee and employee related expenses (Note 9)	9,950	6,074
Legal and professional	1,423	1,827
Travel expenses	97	349
Marketing expenses	705	741
IT expenses	157	85
Building costs and rates	420	503
Other administrative costs	1,092	231
Total administrative expenses	13,844	9,810

 

8. Profit from operations

The profit for the year has been arrived at after charging:

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Fees paid to the Company's auditor for the audit of the Group and Company annual accounts	188	146
Fees payable to the company's auditor for other services:
Audit of the accounts of subsidiaries and related undertakings	76	75
Audit-related assurance services	44	43
Non-audit services	31	-
Total fees payable to the Company's auditors	339	264

Non-audit services paid to the Company's Auditors in the year were £17k in relation to CASS reporting to the FCA in respect of certain subsidiaries, £27k in respect of the review of the Company's interim financial statements and £31k in respect of ESG advisory work (note - this was commenced before 1 December 2020)./

9. Employee and employee-related expenses

Employee benefit expenses (including Directors) comprise:

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Wages and salaries	7,585	4,595
Defined contribution pension costs	677	278
Benefits (healthcare and life assurance)	172	127
Recruitment costs	38	473
Social security contributions and similar taxes	1,478	601
General employee and employee related expenses	9,950	6,074
Share-based payment expense arising from company share option scheme	1,548	990
Total employee benefit expenses	11,498	7,064

 

The monthly average number of persons (including Executive and Non-executive Directors) employed by the Group during the year was:

	Year ended 31 March 2021 Number	Year ended 31 March 2020 Number
Directors	6	6
Investment	12	12
Infrastructure	19	15
Total	37	33

 

Infrastructure comprises finance, marketing, human resources, legal, IT, and administration.

10. Net finance (expense)/income

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Interest on leases (Note 20i)	(84)	(94)
Interest and expenses on loans and borrowings (Note 20ii)	(2,009)	(1,497)
Net foreign exchange loss	(3,348)	-
Finance costs	(5,441)	(1,591)
Net foreign exchange gain	-	1,234
Interest income on cash and cash equivalents	284	289
Finance income	284	1,523
Net finance (expense)/income	(5,157)	(68)

11. Income taxes

The charge to tax, which arises in the Group and the corporate subsidiaries included within these financial statements, is:

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Current tax expense
Current tax on profits for the year	339	2
Adjustments for under/(over) provision in prior years	(65)	35
Total current tax	274	37
Deferred tax expense
Arising on business combinations (Note 18)	(23)	(20)
Other temporary differences	(225)	-
Total deferred tax	(248)	(20)

 

The UK standard rate of corporation tax is 19% (for the year ending 31 March 2020: 19%).

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profit/(loss) for the year before tax are as follows:

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Profit/(loss) for the year before tax	267,421	40,383
Profit/(loss) on ordinary activities of Group companies before tax
Tax using the Company's domestic tax rate of 19% (2020: 19%)	50,810	7,673
Income not subject to tax	(18)	-
Unrealised gains on investments	(50,713)	(7,743)
Others	(53)	87
Total tax charge for the year	26	17

12. Earnings per share and net asset value

The calculation of basic earnings per share is based on the profit attributable to shareholders and the weighted average number of shares. When calculating the diluted earnings per share, the weighted average number of shares in issue is adjusted for the effect of all dilutive share options and awards.

Basic earnings per ordinary share	Profit after tax £'000s	Weighted average no. of shares '000	Pence per share
For the year ended 31 March 2021	267,421	128,860	208
For the year ended 31 March 2020	39,707	118,013	34

 

Diluted earnings per ordinary share	Profit after tax £'000s	Weighted average no. of shares '000	Pence per share
For the year ended 31 March 2021	267,421	129,741	206
For the year ended 31 March 2020	39,707	120,961	33

 

Net asset value per share is based on the net asset attributable to shareholders and the number of shares as at the balance sheet date. When calculating the diluted earnings per share, the number of shares in issue at balance sheet date is adjusted for the effect of all dilutive share options and awards.

Net asset value per ordinary share	Net assets £'000s	No. of shares at balance sheet date '000	Pence per share
31 March 2021	1,033,141	139,097	743
31 March 2020	659,618	118,918	555

 

Diluted net asset value per ordinary share	Net assets £'000s	No. of shares at balance sheet date '000	Pence per share
31 March 2021	1,033,141	140,044	738
31 March 2020	659,618	121,609	542

 

Dividends: There were no Dividends paid out in the year to 31 March 2021 (2020: nil).

13. Share-based payments

	Date of Grant	b/f 1 April 2020 (No.)	Granted (No.)	Lapsed (No.)	Exercised (No.)	c/f 31 March 2021	Approved options (No.)	Vesting period	Exercise price (p)	FV per granted instrument (p)
Draper Esprit Plc 2016 Company Share Options Plan (CSOP)	28/11/2016	1,216,034	-	-	(603,075)	612,959	33,800	3 years	355	64.1
	28/11/2016	101,685	-	-	-	101,685	-	3 years	355	89.3
	11/11/2017	160,000	-	(20,000)	(20,000)	120,000	8,356	3 years	354	89.8
	28/11/2017	1,155,364	-	(45,775)	(741,254)	368,335	6,831	3 years	387	70.9
	28/11/2017	116,016	-	-	-	116,016	-	3 years	387	97.9
	30/07/2018	1,027,500	-	(184,950)	-	842,550	-	3 years	492	152.9
	30/07/2018	102,750	-	-	-	102,750	-	3 years	492	186.4
	12/02/2019	796,868	-	(61,566)	-	735,302	-	3 years	530	67.8
	12/02/2019	75,000	-	-	-	75,000	-	3 years	530	95.2
	26/11/2019	200,000	-	-	-	200,000	-	3 years	467	71.5
	29/06/2020	-	200,000	-	-	200,000	-	3 years	449	81.2
Draper Esprit Plc Long Term Incentive Plan (LTIP)	29/06/2020	-	583,645	(1,949)	-	581,696	-	3 years	1	449.0
Total		4,951,217	783,645	(314,240)	(1,364,329)	4,056,293	48,987

 

Both the CSOP and LTIP are as of 31 March 2021 partly administered by the Draper Esprit Employee Benefit Trust ("Trust"). The Trust is consolidated in these consolidated financial statements. The Trust may purchase shares from the market and, from time to time, when the options are exercised, the Trust transfers the appropriate amount of shares to the employee or sells these as agent for the employee. The proceeds received, net of any directly attributable transaction costs, are credited directly to equity. Shares held by the Trust at the end of the reporting period are shown as own shares in the financial statements (see Note 24i). Of the 1,364,329 options exercised during the year, 359,131 were satisfied with new ordinary shares issued by Draper Esprit Plc (see Note 23).

For share options granted under the Draper Esprit Plc 2016 Company Share Options Plan, the Black-Scholes Option Pricing Model has been used for valuation purposes. All options are settled in shares. Volatility is expected to be in the range of 20-30% based on an analysis of the Company's and peer group's share price. The risk-free rate used was 0.73% and 1.57% and was taken from zero coupon United Kingdom government bonds on a term consistent with the vesting period.

There are no performance conditions attached to the share options granted under the Draper Esprit Plc 2016 Company Share Options Plan.

Share options granted during the year under the LTIP vest if certain performance standards are met. The amount of options that will vest depends on performance conditions included within the agreement relating to realisations, assets under management, and Total Shareholder Return ("TSR"). These options are granted under the plan for no consideration and are granted at a nominal value of 1p. All options are settled in shares. The fair value of the LTIP shares will be valued using an adjusted form of the Black-Scholes model which includes a Monte Carlo simulation model. A six-monthly review takes place of non-market performance conditions and as at 31 March 2021 we are currently on target for LTIPs issued in 2020.

The share-based payment charge for the year is £1.5 million (year ended 31 March 2020: £1.0 million). This also includes amounts of £0.7 million, which was paid out during the year and was in substance deemed to be a cash-settled share based payment.

14. Intangible assets

Year ended 31 March 2021	Goodwill1 £'000s	Customer contracts2 £'000s	Total £'000s
Cost
Cost carried forward as at 1 April 2020	9,653	818	10,471
Acquisition of business (see Note 18)	697	328	1,025
Cost as at 31 March 2021	10,350	1,146	11,496
Accumulated amortisation
Amortisation carried forward as at 1 April 2020	-	(443)	(443)
Charge for the year	-	(117)	(117)
Accumulated amortisation as at 31 March 2021	-	(560)	(560)
Net book value:
As at 31 March 2021	10,350	586	10,936
As at 31 March 2020	9,653	375	10,028

 

Year ended 31 March 2020	Goodwill1 £'000s	Customer contracts2 £'000s	Total £'000s
Cost
Cost carried forward as at 1 April 2019	9,653	818	10,471
Additions during the year	-	-	-
Cost as at 31 March 2020	9,653	818	10,471
Accumulated amortisation
Amortisation carried forward as at 1 April 2019	-	(341)	(341)
Charge for the year	-	(102)	(102)
Accumulated amortisation as at 31 March 2020	-	(443)	(443)
Net book value:
As at 31 March 2020	9,653	375	10,028
As at 31 March 2019	9,653	477	10,130

 

1. During the year, goodwill of £0.7 million arose on the step acquisition of all issued share capital in Elderstreet Holdings Limited. Elderstreet Holdings Limited is the holding company of Elderstreet Investments Limited, a VCT manager incorporated in the UK, on 9 February 2021 and represents the value of the acquired expertise and knowledge of the investment team. The Directors have identified the fund managers as the cash-generating unit ("CGU") being the smallest group of assets that generates cash inflows independent of cash flows from other assets or groups of assets. The fund managers are responsible for generating deal flow and working closely with the investee companies to create value and maximise returns for the Group. The Group tests Goodwill annually for impairment comparing the recoverable amount using value-in-use calculations and the carrying amount. Value-in-use calculations are based on future expected cash flows generated by the CGU fee income from management fees over the next three years with reference to the most recent financial budget and forecasts. A three-year cash flow period was deemed appropriate for value in use calculation given the terms of the Investment Management Agreement. The key assumptions for the value in use calculations are the discount rate using pre-tax rates that reflect the current market assessments of the time value of money and risks specific to the CGU. The internal rate of return ("IRR") will be based on past performance and experience.

    Goodwill of £9.7 million arose on the acquisition of all the capital interests in Esprit Capital Partners LLP, a Venture Capital manager based in the UK, on 15 June 2016 and represents the value of the acquired expertise and knowledge of the fund managers. The Directors have identified the fund managers as the cash-generating unit ("CGU") being the smallest group of assets that generates cash inflows independent of cash flows from other assets or groups of assets. The fund managers are responsible for generating deal flow and working closely with investee companies to create value and maximising returns for the Group. The Group tests goodwill annually for impairment comparing the recoverable amount using value-in-use calculations and the carrying amount. Value-in-use calculations are based on future expected cash flows generated by the CGU fee income from management fees over the next five years with reference to the most recent financial budget and forecasts.

    A 5-year cash flow period was deemed appropriate for the value in use calculation given the patient capital model adopted by the Group. The key assumptions for the value in use calculations are the discount rate using pre-tax rates that reflect the current market assessments of the time value of money and risks specific to the CGU. The internal rate of return ("IRR") used was based on past performance and experience. The discount rate used was 10% and the IRR used was 20%.

2. An intangible asset of £0.3 million was recognised in respect of the anticipated profit from the participation in Elderstreet Investments Limited following the acquisition of the remaining issued share capital the Group did not previously owned on 9 February 2021.

    In FY17, an intangible asset of £0.8 million was recognised in respect of the anticipated profit from the participation in Encore Ventures LLP as a consequence of the acquisition of Esprit Capital Partners LLP.

15. Investments in associates and related undertakings

Investments in associates

Until 9 February 2021, Elderstreet Holdings Limited (registered office: 20 Garrick Street, London, United Kingdom, WC2E 9BT), the holding company of Elderstreet Investments Limited, was accounted for as an Investment in Associate following acquisition of a 30.77% stake in the entity on 24 November 2016. The initial consideration of £0.26 million was satisfied by the issue of 73,667 new ordinary shares of 1 pence each in the capital of the Company. The Group's share of profits until 9 February 2021 was not material.

On 9 February 2021, the remaining stake in Elderstreet Investments Limited was purchased by Draper Esprit Plc and this was accounted for as a step acquisition. Please see Note 18 for further details. No Investment in Associate is recognised on the Consolidated Statement of Financial Position at 31 March 2021.

Related undertakings

Please see below details of investments held by the Group's investment companies, where the ownership percentage or partnership interest exceeds 20%:

Name	Address	Type of share holding	Interest FD category* at reporting date / partnership interest
SportPursuit Limited	Unit 1.18, Canterbury Court, Kennington Park, 1-3 Brixton Road, London, England, SW9 6DE	Ordinary shares Preference shares	E
Bright Computing Holding B.V.	Kingsfordweg 151, 1043 GR Amsterdam, the Netherlands	Ordinary shares Preference shares	E
RavenPack Holding AG	Churerstrasse 135, CH-8808 Pfäffikon, Switzerland	Ordinary shares Preference shares	D
Earlybird GmbH & Co. Beteiligungs-KG IV	c/o Earlybird Venture Capital, Maximilianstr. 14, 80539, München	Partnership interest	27%
Earlybird DWES Fund VI GmbH & Co. KG	c/o Earlybird Venture Capital, Maximilianstr. 14,    80539, München	Partnership interest	56.5%
Earlybird Special Opportunities LP	c/o Earlybird Venture Capitarl, Maximilianstr. 14,  80539, München	Partnership interest	34.8%

 

* Fully diluted interest categorised as follows: Cat A: 0-5%, Cat B: 6-10%, Cat C: 11-15%, Cat D: 16-25%, Cat E: >25%.

Details of the fair value of the 17 core companies are detailed as part of the Gross Portfolio Value table on page 59 of the Annual Report.

The latest publicly available accounts for the related undertakings above reflect the following net asset and profit or loss positions. These relate to historic periods:

-       SportPursuit Limited: Net assets as at 30 November 2019 of £1.1 million and loss for the 11 month period ending 30 November 2019 of £0.6 million.

-       Bright Computing Holding B.V.: Net liabilities as at 31 December 2018 of US$6.9 million and a loss for the year ending 31 December 2018 of US$4.3 million.

 

16. Financial assets held at fair value through profit and loss

The Group holds investments through investment vehicles it manages. The investments are predominantly in unlisted securities and are carried at fair value through the profit and loss. The Group's valuation policies are set out in Note 4(a) and Note 28. The table below sets out the movement in the balance sheet value of investments from the start to the end of the year, showing investments made, cash receipts and fair value movements.

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
As at 1 April	657,333	562,061
Investments made in the year	127,976	89,935
Loans repaid from underlying investment vehicles	(206,341)	(39,533)
Loans made to underlying investment vehicles	11,813	4,115
Unrealised gains on the revaluation of investments	276,307	40,755
As at 31 March	867,088	657,333

 

 

17. Property, plant and equipment

Year ended 31 March 2021	Right of use assets £'000s	Leasehold improvements £'000s	Computer equipment £'000s	Total £'000s
Cost
Cost carried forward as at 1 April 2020	1,614	680	72	2,366
Additions during the year	-	88	55	143
Disposals during the year	-	-	(8)	(8)
Cost as at 31 March 2021	1,614	768	119	2,501
Accumulated depreciation
Depreciation carried forward as at 1 April 2020	(306)	(261)	(39)	(606)
Charge for the year	(348)	(163)	(22)	(533)
Disposals during the year	-	-	6	6
Accumulated depreciation as at 31 March 2021	(654)	(424)	(55)	(1,133)
Net book value:
As at 31 March 2021	960	344	64	1,368
As at 31 March 2020	1,308	419	33	1,760

 

Year ended 31 March 2020	Right of use assets £'000s	Leasehold improvements £'000s	Computer equipment £'000s	Total £'000s
Cost
Cost carried forward as at 1 April 20191	835	327	57	1,219
Additions during the year	779	353	15	1,147
Cost as at 31 March 2020	1,614	680	72	2,366
Accumulated depreciation
Depreciation carried forward as at 1 April 2019	-	(147)	(28)	(175)
Charge for the year	(306)	(114)	(11)	(431)
Accumulated depreciation as at 31 March 2020	(306)	(261)	(39)	(606)
Net book value:
As at 31 March 2020	1,308	419	33	1,760
As at 31 March 2019	-	180	29	209

 

For further information on right-of-use assets, please see the leases note - Note 20i.

1 1 April 2019 figure includes adjustment for IFRS 16 conversion under right of use assets - please see Note 20 for further details.

18. Acquisition of subsidiaries

Elderstreet

On 9 February 2021, Draper Esprit Plc acquired the remaining 69.23% of the issued share capital in Elderstreet Holdings Limited, the holding company of Elderstreet Investments Limited (manager of Draper Esprit VCT Plc). Elderstreet Holdings Limited was held as an Investment in Associate on the Consolidated Statement of Financial Position as at 31 March 2020. Total consideration for the remaining issued share capital not previously held was £792,148 (with an amount withheld for tax on share options). This transaction is accounted for under IFRS 3 as a business combination achieved in stages (or "step acquisition") as this transaction resulted in Draper Esprit Plc obtaining control over Elderstreet Holdings Limited and Elderstreet Investments Limited (as its 100% owned subsidiary). As the Group own 100% of Elderstreet Holdings Limited following the acquisition, no non-controlling interest will be recognised.

The assets and liabilities recognised as a result of the acquisition are as follows:

Recognised amounts of identifiable net assets:	£'000s
Intangible assets	328^
Cash and cash equivalents	94
Trade and other receivables	87
Net identifiable assets acquired	509
Add: goodwill	635
Add: Deferred tax on intangible asset	62
Net assets acquired	1,206

 

^ Previously unrecognised intangible asset relating to the anticipated profit from the participation in Elderstreet Investments Limited.

Goodwill represents the investment team's ability to drive value creation by generating deal flow and fundraising, leveraging their networks and years of experience and expertise to work closely with investee companies to create value and thereby maximise returns for the Group.

The outflow of cash to acquire the subsidiary, net of cash acquired was £0.6 million. The acquisition date fair value of the equity interest in the acquiree held by the acquirer immediately before the acquisition was £0.4 million. A gain of £0.1 million was recognised as a result of remeasuring to fair value the equity interest in the subsidiary held by the Group before the business combination, which has been recognised in other income in the consolidated statement of comprehensive income.

The fair value of acquired trade receivables is Nil.

Revenue contributed and net profit of the acquired business to the Group between 9 February 2021 and 31 March 2021 was immaterial. If the acquisition had taken place on 1 April 2020, consolidated pro-forma revenue and profit for the year ended 31 March 2021 would have been £277.5 million and £267.2 million respectively. These amounts have been calculated using the subsidiary's results and adjusting them for:

•     Differences in accounting policies between the group and subsidiary; and

•     The additional depreciation and amortisation that would have been charged, if the fair value adjustments to intangible assets had applied from 1 April 2020.

Immaterial acquisition-related costs not directly attributable to the issue of shares are included in administrative expenses in the consolidated statement of comprehensive income and in operating cash flows in the statement of cash flows.

Encore Ventures LLP

During the year ending 31 March 2020, the Group acquired the remaining economic and beneficial membership interest in Encore Ventures LLP on 10 March 2020. Prior to this, the Group held a membership interest of 71%. This resulted in a change in ownership interest which did not result in a loss of control and has been accounted for in accordance with IFRS 10.

Consideration for the remaining interest in Encore Ventures was cash to the amount of £4.0 million. Pursuant to the Acquisition Agreement relating to the sale and purchase of certain membership interests in Encore Ventures LLP as well as the associated Subscription Agreements also dated 10 March 2020, Draper Esprit Plc issued 796,812 1p ordinary shares immediately subscribed to by those partners selling their interest in Encore Ventures LLP. The fair value of the equity shares issued was based on the market value of Draper Esprit Plc's traded shares on the 10 March 2020 and amounted to £4.0 million.

As a result of this transaction, the balance of the non-controlling interest reported in the consolidated statement of financial position as at 31 March 2020 is nil. The profit attributable to non-controlling interest for the period to 10 March 2020 is £0.7 million and is reflected in the consolidated statement of comprehensive income for the year ended 31 March 2020.

19. Trade and other receivables

	31 March 2021 £'000s	31 March 2020 £'000s
Trade receivables	2,535	2,669
Other receivables and prepayments	1,165	1,358
Loans made to related investment vehicles (Note 30)	-	3,692
Total	3,700	7,719

 

The ageing of trade receivables at reporting date is as follows:

	31 March 2021 £'000s	31 March 2020 £'000s
Not past due	710	242
Past due 1-30 days	786	45
Past due 31-60 days	761	34
More than 60 days	278	2,348
Total	2,535	2,669

 

The maximum exposure to credit risk of the receivables at the reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any collateral as security.

20. Financial liabilities

	31 March 2021 £'000s	31 March 2020 £'000s
Current
Leases	(345)	(358)
Loans and borrowings	-	-
Total current financial liabilities	(345)	(358)
Non-current
Leases	(669)	(975)
Loans and borrowings	393	(44,636)
Total non-current financial liabilities	(276)	(45,611)
Total Financial liabilities	(621)	(45,969)

 

20(i). Leases

This Note provides information for leases where the Group is a lessee. The Group is not a lessor.

Real Estate Leases

The Group leases office buildings in London for use by its staff. The Group also has an office in Dublin and had an office in Cambridge until Q3 FY21, however these contracts are classified as service contracts and not leases. Information about leases for which the Group is a lessee is presented below.

The Group leases IT equipment such as printers for use by staff. The Group has elected to apply the recognition exemption for leases of low value to these leases.

(i) Amounts recognised on consolidated statement of financial position

20. Financial liabilities

Right-of-use assets

	31 March 2021 £'000s	31 March 2020 £'000s
Property	960	1,308
Total right-of-use assets	960	1,308

 

 

Lease liabilities

	31 March 2021 £'000s	31 March 2020 £'000s
Current	345	358
Non-current	669	975
Total lease liabilities	1,014	1,333

 

Additions to the right-of-use assets during the year ending 31 March 2021 was Nil (year ending 31 March 2020: £0.8 million).

(ii) Amounts recognised in the consolidated statement of profit or loss

The following amounts relate to leases:

Amounts recognised in the consolidated statement of comprehensive income

	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
Interest on lease liabilities	(84)	(94)
Depreciation charge for the period on right-of-use assets	(348)	(306)
Expenses relating to short-term leases	-	-
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	(4)	(5)

 

The total cash outflow for leases in the year ending 31 March 2021 was £0.4 million (year ending 31 March 2020 £0.3 million in respect of rental payments and a contribution of £0.2 million for a rent-free period on the 3rd floor of 20 Garrick Street - these appear net in the consolidated statement of cash flows).

20(ii). Loans and borrowings

In June 2019 the Company entered into a revolving credit facility agreement with Silicon Valley Bank and Investec (together the "Financiers") of £50.0 million over a three-year term to provide financial flexibility and to fund the future growth plans of investee companies. This was extended in June 2020 by £10.0 million to £60.0 million with a maturity of June 2023. See Note 33 for post year-end activity. The Company incurred initial costs of £0.5 million in the year ending 31 March 2020 and £0.3 million in the year ending 31 March 2021 in respect of the increase and extension of the facility in June 2020, which are both presented within loans and borrowings on the statement of financial position and are amortised over the life of the facility. Interest-related charges are reported in the consolidated statement of comprehensive income as finance costs (see Note 10). The bank loans are secured on agreed assets of the Group within the asset class of investments, updated as agreed with the Financiers from time to time, and are subject to customary financial and non-financial conditions with which the Group must comply.

The new facility agreement introduced financial and non-financial covenants.

a.   There must be a minimum of 10 core investments at all times (core investments are not defined in the same way as in this report as it is more broadly defined);

b.   The ratio of the NAV of all investments (as defined in the agreement) to original investment cost should not be less than 1.1:1.0 at any time; and

c.   The ratio of the NAV (as defined in the agreement) plus amounts in the collateral account to financial indebtedness (as defined in the agreement) should not be less than 10:1 at any time.

20. Financial liabilities

In addition, the borrowing base (as defined in the agreement) must exceed the facility amount.

As collateral for interest payments, an amount equal to the aggregate amount of interest costs due for the coming six months, all being equal, must always be held in an Interest Reserve Account. The balance of this at 31 March 2021 was £2.3 million (31 March 2020: £1.9 million) and is reflected on the consolidated statement of financial position as restricted cash.

The debt facility is repayable on maturity (June 2023 - see Note 33 for post year-end activity) but may become repayable earlier if certain conditions are not met.

As at 31 March 2021, the Company has drawn down Nil of the £60.0 million facility (31 March 2020: £45.0 million of the £50.0 million facility).

	31 March 2021 £'000s	31 March 2020 £'000s
Bank loan senior facility amount	60,000	50,000
Interest rate	BOE base rate + 6.75% / 7.50% floor	BOE base rate + 6.75% / 7.50% floor
Drawn at balance sheet date	-	45,000
Arrangement fees	(393)	(364)
Loan liability balance	(393)	44,636
Undrawn facilities at balance sheet date	60,000	5,000

 

21. Trade and other payables

	31 March 2021 £'000s	31 March 2020 £'000s
Trade payables	(557)	(739)
Other taxation and social security	(389)	(280)
Other payables	(200)	(164)
Accruals and deferred income	(8,499)	(3,855)
Total	(9,645)	(5,038)

 

All trade and other payables are short-term.

Included in accruals and deferred income is an amount relating to accrued tax expense of £0.3 million.

22. Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19% (2020: 19%). The movement on the deferred tax account is shown below:

	31 March 2021 £'000s	31 March 2020 £'000s
Arising on business combination	(114)	(75)
Arising on co-invest and carried interest	(520)	(414)
Other timing differences	272	(122)
As at 31 March	(362)	(611)

 

Deferred tax arising on business combination is subject to amortisation within the consolidated statement of comprehensive income.

 

23. Share capital and share premium

Ordinary share capital

31 March 2021 - Allotted and fully paid	Number	Pence	£'000s
At the beginning of the year	118,918,124	1	1,189
Issue of share capital during the year1	359,131	1	4
Issue of share capital during the year2	19,819,820	1	198
As at the end of the year	139,097,075	1	1,391

 

1.   Between August 2020 and March 2021, 359,131 new 1p ordinary shares were issued in association with share options being exercised.

2.   In October 2020, the company secured commitments to raise gross proceeds of £110.0 million at a placing price of 555 pence per share by way of a conditional placing of 19,819,820 new ordinary shares.

31 March 2020 - Allotted and fully paid	Number	Pence	£'000s
At the beginning of the year	117,925,470	1	1,179
Issue of share capital during the year1	195,842	1	2
Issue of share capital during the year2	796,812	1	8
As at the end of the year	118,918,124	1	1,189

 

1.   Between 24 December 2019 and 21 February 2020, 195,842 new 1p ordinary shares were issued in association with share options being exercised.

2.   On 10 March 2020, as part of the acquisition agreement relating to the remaining interest in Encore Ventures LLP (see Note 18) it was agreed that the Company would issue 796,812 new ordinary shares at 502p.

Share premium

Allotted and fully paid	Year ended 31 March 2021 £'000s	Year ended 31 March 2020 £'000s
At the beginning of the year	400,726	395,783
Premium arising on the issue of ordinary shares^	111,073	4,983
Equity issuance costs	(3,520)	(40)
As at the end of the year	508,279	400,726

 

^ The movement on share premium during the year ending 31 March 2021 has arisen as a result of 359,131 ordinary shares issued in association with share options being exercised during the year and the issue of 19,819,820 ordinary shares issued by way of a conditional placing in October 2020.

  
The movement on share premium during the year ending 31 March 2020 has arisen as a result of 195,842 ordinary shares issued in association with share options being exercised during the year, and the issue of 796,812 shares of ordinary shares at 502 pence in association with the transaction to purchase the additional interest in Encore Ventures LLP (see Note 18).

24. Own shares and other reserves

(i) Own shares reserve

Own shares

	Number of shares 000's	£'000s
Opening balance as at 1 April 2020	-	-
Acquisition of shares by the Trust	(350)	(2,267)
Disposal or transfer of shares by the Trust	235	1,936
Balance as at 31 March 2021	(115)	(331)

 

Own shares are shares in Draper Esprit Plc that are held by Draper Esprit Employee Benefit Trust ("Trust") for the purposes of issuing shares under the Draper Esprit Plc 2016 Company Share Options Plan and Long-Term Incentive Plan (see Note 13 for further details). Shares issued to employees are recognised on a weighted average cost basis. The Trust holds under 0.1% of issued share capital at 31 March 2021.

24. Own shares and other reserves

 (ii) Other reserves

The following table shows a breakdown of the "other reserves" line in the consolidated statement of financial position and the movements in those reserves during the year. A description of the nature and purpose of each reserve is provided below this table.

	Merger relief reserve (£'000s)	Share-based payments reserve resulting from company share option scheme (£'000s)	Share-based payments reserve resulting from acquisition of subsidiary (£'000s)	Total other reserves (£'000s)
Brought forward as at 1 April 2020	13,097	2,339	10,823	26,259
Share based payments (Note 13)	-	760	-	760
Share based payment - exercised during the year (Note 13)	-	(761)	-	(761)
Balance as at 31 March 2021	13,097	2,338	10,823	26,258

 

	Merger relief reserve (£'000s)	Share-based payments reserve resulting from company share option scheme (£'000s)	Share-based payments reserve resulting from acquisition of subsidiary (£'000s)	Total other reserves (£'000s)
Brought forward as at 1 April 2019	13,097	1,713	10,823	25,633
Share based payments (Note 13)	-	990	-	990
Share based payment - exercised during the year (Note 13)	-	(364)	-	(364)
Balance as at 31 March 2020	13,097	2,339	10,823	26,259

 

Merger relief reserve

In accordance with the Companies Act 2006, a Merger Relief Reserve of £13.1 million (net of the cost of share capital issued of £80k) was created on the issue of 4,392,332 ordinary shares for 300 pence each in Draper Esprit Plc as consideration for the acquisition of 100% of the capital interests in Esprit Capital Partners LLP on 15 June 2016.

Share-based payment reserve

Where the Group engages in equity-settled share-based payment transactions, the fair value at the date of grant is recognised as an expense over the vesting period of the options. The corresponding credit is recognised in the share-based payment reserve. Please see Note 13 for further details on how the fair value at the date of grant is recognised.

25. Retirement benefits

The Draper Esprit Group makes contributions to personal pension schemes set up to benefit its employees. The Group has no interest in the assets of these schemes and there are no liabilities arising from them beyond the agreed monthly contribution for each employee or member that is included in employment costs in the profit and loss account as appropriate.

26. Financial assets and liabilities

The description of each category of financial asset and financial liability and the related accounting policies are shown below. The carrying amounts of financial assets and financial liabilities in each category are as follows:

	Designated FVTPL £'000s	Amortised cost £'000s	Total £'000s
31 March 2021
Financial assets	867,088	-	867,088
Long-term financial assets	867,088	-	867,088
Trade and other receivables (excluding prepayments)	-	3,040	3,040
Loans to related investment vehicles	-	-	-
Cash and cash equivalents	-	158,417	158,417
Restricted cash	-	2,260	2,260
Short-term financial assets	-	163,717	163,717
Total financial assets	867,088	163,717	1,030,805
Financial liabilities
Loans and borrowings^	-	393	393
Lease liabilities	-	(669)	(669)
Long-term financial liabilities	-	(276)	(276)
Trade and other payables (excluding deferred income)	-	(8,517)	(8,517)
Loans and borrowings	-	-	-
Lease liabilities	-	(345)	(345)
Short-term financial liabilities	-	(8,862)	(8,862)
Total financial liabilities	-	(9,138)	(9,138)

 

^ Initial costs incurred on setting up the revolving credit facility. As there are no amounts drawn down at year-end, these are presented as a debit within long-term financial liabilities. For further details, see Note 20(ii).

	Designated FVTPL £'000s	Amortised cost £'000s	Total £'000s
31 March 2020
Financial assets	657,333	-	657,333
Long-term financial assets	657,333	-	657,333
Trade and other receivables	-	4,027	4,027
Loans to related investment vehicles	-	3,692	3,692
Cash and cash equivalents	-	32,255	32,255
Restricted cash	-	1,883	1,883
Short-term financial assets	-	41,857	41,857
Total financial assets	657,333	41,857	699,190
Financial liabilities
Loans and borrowings	-	(44,636)	(44,636)
Lease liabilities	-	(975)	(975)
Long-term financial liabilities	-	(45,611)	(45,611)
Trade and other payables	-	(5,038)	(5,038)
Loans and borrowings	-	-	-
Lease liabilities	-	(358)	(358)
Short-term financial liabilities	-	(5,396)	(5,396)
Total financial liabilities	-	(51,007)	(51,007)

 

27. Fair value measurements

This section should be read with reference to Note 4(a) and Note 16. The Group classifies financial instruments measured at FVTPL according to the following fair value hierarchy:

a.   Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

b.   Level 2: inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

c.   Level 3: inputs are unobservable inputs for the asset or liability.

The investments are held through the investment companies as set out in Note 3(b) at their respective net asset values and as such are noted to be all Level 3 for FY20 and FY21. However, for the purposes of the disclosures below, these are made on a look basis and are also based on the Gross Portfolio Value. For details of the Gross Portfolio Value and its reconciliation to the investment balance in the financial statements, please refer to page 59 of the Annual Report.

During the year ending 31 March 2021, there was a transfer of £85.5 million of investments held at FVTPL into a Level 1 classification. All other investments held at FVTPL are classified as Level 3 in the fair value hierarchy - see movements in Level 3 items in the table below. There were no transfers between level 1, 2 and 3 during the year ending 31 March 2020.

Movements in Level 3 items	Level 3 £'m
Opening balance at 1 April 2020	701.1
Investments	128.0
Gains	357.8
Realisations	(205.7)
Closing balance 31 March 2021	981.2
Transfer to Level 1	(85.5)
Closing balance 31 March 2021	895.7

 

Significant unobservable inputs for Level 3 valuations

The fair value of unlisted securities is established with reference to the International Private Equity and Venture Capital Valuation Guidelines ("IPEV Guidelines"). In line with the IPEV Guidelines, the Group may base valuations on earnings or revenues where applicable, market comparables, last round price in the investee companies, or on net asset values. An assessment will be made at each measurement date as to the most appropriate valuation methodology, including that for investee companies owned by third-party funds that Draper Esprit Plc invests in and which are valued on a look-through basis. As at 31 March 2021:

·      Financial instruments measured using last round price valuation methodology were £450.5 million (31 March 2020: £231.7 million), of which £160.6 million was held through fund of funds investments.

·      Financial instruments measured using revenue-multiple valuation methodology were £326.6 million (31 March 2020: £401.3 million) of which £23.8 million was held through fund of funds investments.

·      Financial instruments measured at amounts reported by the general partner of the underlying fund were £118.6 million (31 March 2020: £68.1 million).

See Note 4(a) where valuation policies are discussed in more detail.

Financial instruments, measured at fair value, categorised as Level 3 within the fair value hierarchy can be split into 3 main valuation techniques. Valuation techniques can be categorised as based on last round price, revenue-multiple or at NAV of the underlying fund (adjusted where relevant).

Each portfolio company will be subject to individual assessment. Where the Group invests in fund of fund investments, the value of the portfolio will be reported by the fund to the Group. The Group will ensure that the valuations comply with the Group policy and that they are calibrated with any cash and known valuations movements where reporting periods do not align.

The valuation multiple is the main assumption applied to valuation based on a revenue-multiple methodology. The multiple is derived from comparable listed companies or relevant market transaction multiples. Companies in the same industry and geography, and, where possible, with a similar business model and profile are selected and then adjusted for factors including liquidity risk, growth potential and relative performance. They are also adjusted to represent our longer-term view of performance through the cycle or our existing assumption. The portfolio we have is diversified across sectors and geographies and the companies which have valuations based on revenue-multiples have a range of multiples of between 0.6x - 9.1x (31 March 2020: 0.9x - 12.7x) and a weighted average multiple of 4.8x (31 March 2020: 5.1x).

27. Fair value measurements

If the multiple used to value each unquoted investment valued on a revenue-multiple basis as at 31 March 2021 were to decrease by 10%, the investment portfolio would decrease by £32.6 million (31 March 2020: £40.1 million). If the multiple were to increase by 10%, the investment portfolio would increase by £32.6 million (31 March 2020: £40.1 million).

 

If the multiple used to value each unquoted investment valued on a revenue-multiple basis as at 31 March 2021 were to decrease by 15%, the investment portfolio would decrease by £48.9 million (31 March 2020: £60.2 million). If the multiple were to increase by 15%, the investment portfolio would increase by £48.9 million (31 March 2020: £60.2 million).

 

28. Financial instruments risk

Financial risk management

Financial risks are usually grouped by risk type: market, liquidity and credit risk. These risks are discussed in turn below.

Market risk - Foreign currency

A significant portion of the Group's investments and cash deposits are denominated in a currency other than Pound Sterling. The principal currency exposure risk is due to changes in the exchange rate between GBP and USD/EUR. Presented below is an analysis of the theoretical impact of 10% volatility in the exchange rate on shareholder equity.

Theoretical impact of a change in the exchange rate of +/-10% between GBP and USD/EUR would be as follows:

Foreign currency exposures - Investments	31 March 2021 £'000s	31 March 2020 £'000s
Investments denominated in USD	477,771	338,885
10% decrease in GBP	530,833	376,539
10% increase in GBP	434,357	308,077
Investments denominated in EUR	286,550	218,682
10% decrease in GBP	318,374	242,980
10% increase in GBP	260,512	198,802

 

Certain cash deposits held by the Group are denominated in Euros and US Dollars. The theoretical impact of a change in the exchange rate of +/-10% between GBP and USD/EUR would be as follows:

Foreign currency exposures - Cash	31 March 2021 £'000s	31 March 2020 £'000s
Cash denominated in EUR	40,565	6,976
10% decrease in EUR:GBP	36,508	6,278
10% increase in EUR:GBP	44,621	7,673
Cash denominated in USD	26,253	3,627
10% decrease in USD:GBP	23,627	3,264
10% increase in USD:GBP	28,878	3,990

 

The combined theoretical impact on shareholders' equity of the changes to revenues, investments and cash and cash equivalents of a change in the exchange rate of +/-10% between GBP and USD/EUR would be as follows:

Foreign currency exposures - equity	31 March 2021 £'000s	31 March 2020 £'000s
Shareholders' Equity	1,033,141	659,618
10% decrease in EUR:GBP/USD:GBP	929,827	593,656
10% increase in EUR:GBP/USD:GBP	1,136,455	725,580

 

Market risk - Price risk

Market price risk arises from the uncertainty about the future prices of financial instruments held in accordance with the Group's investment objectives. It represents the potential loss that the Group might suffer through holding market positions in the face of market movements, which have been heightened due to Covid-19.

 

28. Financial instruments risk

The Group is exposed to equity price risk in respect of equity rights and investments held by the Group and classified on the balance sheet as financial assets at FVTPL (Note 27). These equity rights are held in unquoted high growth technology companies and are valued by reference to revenue or earnings multiples of quoted comparable companies, last round price, or NAV of underlying fund - as discussed more fully in Note 4(a). These valuations are subject to market movements.

The Group seeks to manage this risk by routinely monitoring the performance of these investments, employing stringent investment appraisal processes.

Theoretical impact of a fluctuation of +/-10% would have the following impact:

£'m	Revenue- multiple	NAV of underlying fund	Last round price
As at 31 March 2021	32.6	11.8	45.1
As at 31 March 2020	40.1	6.8	23.2

 

We further flexed by 15% given the volatility resulting from the Covid-19 pandemic. Theoretical impact of a fluctuation of +/- 15% would have the following impact:

£'m	Revenue- multiple	NAV of underlying fund	Last round price
As at 31 March 2021	48.9	17.8	67.6
As at 31 March 2020	60.2	10.2	34.7

 

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. The utilisation of the loan facility and requirement for utilisation requests is monitored as part of this process.

All trade payable amounts are short-term.

Lease liabilities fall due over the term of the lease - see Note 20i for further details. The debt facility has a term of three years - for further details, see Note 20ii. All other Group payable balances at balance sheet date and prior periods fall due for payment within one year.

As part of our seed fund of funds strategy, we make commitments to funds to be drawn down over the life of the fund. Projected drawdowns are monitored as part of the monitoring process above. For further details see Note 31.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss. The Group is exposed to this risk for various financial instruments; for example, by granting receivables to customers and placing deposits. The Group's trade receivables are amounts due from the investment funds under management, or underlying portfolio companies. The Group's maximum exposure to credit risk is limited to the carrying amount of trade receivables and cash at bank and in hand at 31 March, as summarised below:

Classes of financial assets impacted by credit risk, carrying amounts	31 March 2021 £'000s	31 March 2020 £'000s
Trade receivables	2,535	2,669
Loan to related investment vehicle	-	3,692
Cash at bank and in hand	158,417	32,255
Restricted cash	2,260	1,883
	163,212	40,499

 

The Directors consider that all the above financial assets, which are not impaired for each of the reporting dates under review, are of good credit quality. In respect of trade and other receivables, the Group is not exposed to significant risk as the principal customers are the investment funds managed by the Group, and in these the Group has control of the banking as part of its management responsibilities.

28. Financial instruments risk

Investments in unlisted securities are held within limited partnerships for which the Group acts as manager, and consequently the Group has responsibility itself for collecting and distributing cash associated with these investments. The credit risk of amounts held on deposit is limited by the use of reputable banks with high-quality external credit ratings and as such is considered negligible. Cash at 31 March 2021 is held with the following institutions: (1) Barclays Bank Plc; (2) Silicon Valley Bank Plc; and (3) Investec Bank Plc.

Capital management

The Group's objectives when managing capital are to:

a.   safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

b.   maintain an optimal capital structure.

The Group is funded through equity at the balance sheet date. The Group has a revolving credit facility in place, with no drawdowns at 31 March 2021 (31 March 2020: £45.0 million). Please refer to Note 20ii for further information on the revolving credit facility.

In order to maintain or adjust the capital structure, the Group may make distributions to shareholders, return capital to shareholders, issue new shares or sell assets to manage cash.

Interest rate risk

The Group's interest rate risk arises from borrowings on the £60.0 million loan facility with Silicon Valley Bank and Investec, which was entered into in June 2019 and increased and extended in June 2020. Prior to the period ending 30 September 2019, the Group did not have any borrowings. The Group's borrowings are denominated in GBP and are carried at amortised cost.

•     A drawdown totalling £35.0 million was rolled during the year (maximum drawn during the year of £45.0 million) at an interest rate of 7.5% - this was fully repaid by 31 March 2021 (all drawn amounts were repaid during the period). Future drawdowns may be subject to a different interest rate. The facility agreement has an interest rate calculated with reference to the Bank of England base rate (currently 0.10%) with a Margin of 6.75%. The agreement has an interest rate floor of 7.5%. As such, if the base rate increases, the interest charged on future drawdowns will increase.

If the Bank of England base rate had been 1.0% higher during the year to 31 March 2021 the difference to the consolidated statement of comprehensive income would have been an increase in finance costs of £0.1 million. If the Bank of England base rate had been 1.0% higher during the year to 31 March 2021 the difference to the consolidated statement of cash flows would have been an increase in expenditure of £0.1 million.

29. Alternative Performance Measures ("APM")

The Group has included the APMs listed below in this Annual Report as they highlight key value drivers for the Group and, as such, have been deemed by the Group's management to provide useful additional information to readers of the Annual Report. These measures are not defined by IFRS and should be considered in addition to IFRS measures.

Gross Portfolio Value

The Gross Portfolio Value ("GPV") is the gross fair value of the Group's investment holdings before deductions for the fair value of carry liabilities and any deferred tax. The Gross Portfolio Value is subject to deductions for the fair value of carry liabilities and deferred tax to generate the net investment value, which is reflected on the consolidated statement of financial position as financial assets held at FVTPL. Please see page 59 of the Annual Report for a reconciliation to the net investment balance. This table also shows the Gross to Net movement described above, which is 88% in the current year calculated as the net investment value divided by the Gross Portfolio Value. The table reflects a Gross fair value movement of £359.2, which is 51% as a percentage of the 31 March 2020 Gross Portfolio Value, which is described in the report as the Gross fair value increase.

NAV per share

The NAV per share is the Group's net assets attributable to shareholders divided by the number of shares at the relevant reporting date. See the calculation in Note 12.

30. Related party transactions

The Group has various related parties stemming from relationships with Limited Partnerships managed by the Group, its investment portfolio, its advisory arrangements (board seats) and its key management personnel. In addition, the Company has related parties in respect of its subsidiaries and other related entities in the form of management fees and expense recharges.

The Group may require that one of its members be appointed to the board of a portfolio company in a non-executive role. In certain cases, an administration fee is charged to the portfolio company for the provision of Director services. Fees of £44k have been invoiced during the current year (31 March 2020: £44k). At the year-end, there was a balance of £4k outstanding (31 March 2020: £6k).

30. Related party transactions

At times, expenses incurred relating to Director services can be recharged to portfolio companies - these are immaterial. Draper Esprit does not exercise control or management through any of these non-executive positions.

During the year, £0.9 million (2020: £1.2 million) was invoiced from Draper Esprit Plc to Encore Ventures LLP for overheads, at year-end a balance of Nil (2020: £0.1 million) remained outstanding.

During the year, the Company invoiced Elderstreet, previously an associate and now a subsidiary, £0.1 million (year to 31 March 2020: £0.4 million), with a balance outstanding at year-end of £0.01 million (31 March 2020: £nil).

In the year ended 31 March 2020, the Company loaned £3.7 million to Esprit Capital Fund No 1 & No 2 LP. The loan was repaid during the year ending 31 March 2021 along with accrued interest of £0.4 million.

During the year, management fees of £9.2 million from related parties (the unconsolidated structured entities described below) are included in the consolidated statement of comprehensive income (31 March 2020: £8.4 million). Management fees of £3.0 million from the EIS funds are also included in the consolidated statement of comprehensive income (31 March 2020: £2.8 million).

During the year, employees of Draper Esprit Plc exercised share options - see Note 13 for further details.

During the prior year, the Group purchased the remaining interest in Encore Ventures LLP - see Note 18 for further details.

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, and are considered to be the Directors of the Company listed on pages 90-91 of the Annual Report.

	Year ended 31 Mar 2021 £'000s	Year ended 31 Mar 2020 £'000s
Wages and salaries	2,169	2,019
Short-term non-monetary benefits	13	9
Defined contribution pension costs	155	163
Share-based payment expense	977	466
Social security contributions and similar taxes	443	287
Carried interest paid	180	-
	3,937	2,944

 

The details of individual Directors' remuneration and pension benefits, as set out in the tables contained in the Remuneration and Nomination Committee Report on pages 104-111 of the Annual Report, form part of these consolidated financial statements.

Unconsolidated structured entities

The Group has exposure to a number of unconsolidated structured entities as a result of its venture capital investment activities.

The Group ultimately invests all funds via a number of limited partnerships and some via Draper Esprit Plc's wholly-owned subsidiary, Draper Esprit (Ireland) Limited. These are controlled by the Group and not consolidated, but they are held as investments at fair value through the profit and loss on the consolidated balance sheet in line with IFRS 10 (see Note 3b for further details and for the list of these investment companies and limited partnerships). The material assets and liabilities within these investment companies are the investments, which are held at FVTPL in the consolidated accounts. See further details in the table below.

Name of undertaking	Registered office	Activity	Holding	Country	Fair value 31 March 2021 £'m	Fair value 31 March 2020 £'m
Esprit Investments (1) (B) LP	20 Garrick Street, London, WC2E 9BT	Limited Partnership	100%	England	12.0	16.5
Esprit Investments (2) (B) LP	20 Garrick Street, London, WC2E 9BT	Limited Partnership	100%	England	157.6	61.6
Draper Esprit (Ireland) Limited	32 Molesworth Street, Dublin 2, Ireland	Investment company	100%	Ireland	670.6	553.3

 

Draper Esprit (Ireland) Limited invests via the following limited partnerships: Esprit Investments (1) LP, Esprit Investments (2) LP, Esprit Capital IV LP, Esprit Capital III LP.

The investments balance in the consolidated statement of financial position also includes investments held by consolidated entities.

The Group also co-invests or historically co-invested with a number of limited partnerships (See Note 3b for further details). The exposure to these entities is immaterial.

31. Capital commitments

The Group has made commitments to fund of funds investments as part of its investment activity. At 31 March 2021, the Group was committed to £67.2 million (translated at year-end rates) (31 March 2020: £39.1 million) in relation to investments in fund of funds vehicles, of which £25.5 million of this has been drawn at 31 March 2021 (31 March 2020: £13.3 million).

A Strategic Partnership Agreement was entered into with Earlybird in the year ending 31 March 2019 to share deal flow and resources to co-invest in high growth technology companies across Europe. The first stage of this partnership included a 50% commitment to EB VI of approximately £74.5 million (€87.5 million) to 2022, of which £68.2 million has been deployed to 31 March 2021 (to 31 March 2020: £56.4 million). Commitments have also been made to other Earlybird funds and total exposure to the Group is £287.0 million of investments (31 March 2020: £187.3 million) with undrawn commitments across all Earlybird entities of £26.5 million (translated at year-end exchange rates) (31 March 2020: £25.2 million).

32. Ultimate controlling party

The Directors of Draper Esprit Plc do not consider there to be a single ultimate controlling party of the Group.

33. Subsequent events

•     Increased and extended our revolving credit facility with SVB and Investec by an additional 1 year to £65m post year-end.

•     Invested a further £48m post year-end to 11 June 2021, including investments into Manna, FintechOS, Cervest, Ledger, and Lyst. 

•     Refreshed fund of funds programme, with the approval by the Board and Investment Committee of an additional £75.0 million investment budget.