Annual Report and Accounts for the Year Ended 31 March 2021
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Venture Capital Reinvented Draper Esprit Plc Annual report and accounts Year ended 31 March 2021 Registration number 09799594 DRAPER ESPRIT ANNUAL REPORT 2021 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIALS OVERVIEW 08 Performance highlights 09 Chair’s introduction 10 CEO’s statement STRATEGIC REPORT 14 Market context 18 Our value chain We are Draper Esprit. 28 Case study: Investing in the future 30 Case study: Trustpilot 32 Case study: Deeptech 34 Our portfolio 36 Our strategy We make more possible. 38 Activities in the year 40 What’s in a share? 41 Portfolio review We invest across the UK and Europe in private high- 46 Core company updates growth technology companies with global ambitions. 55 Covid-19 response 56 Financial review We do this because we believe the future is being 60 Sustainability at Draper Esprit built, today, by Europe’s best entrepreneurs. 71 Section 172 Statement 76 Risk Management 77 Principal risks GOVERNANCE 90 Board of Directors 92 Chair’s report 101 Audit, Risk and Valuations Committee Report 104 Remuneration and Nomination Committee Report 106 Annual Report on Remuneration 112 Directors’ Report 115 Statement of Directors’ responsibilities in respect of the financial statements FINANCIALS 118 Independent Auditors’ Report 124 Consolidated Statement of Comprehensive Income 125 Consolidated Statement of Financial Position PAGE 20 SHOWCASES THE 126 Consolidated Statement of Cash Flows AREAS OF TECH WE INVEST 127 Consolidated Statement of Changes in Equity IN, AND WHY 128 Notes to the Consolidated Financial Statements 159 Company Statements of Financial Position PLEASE SEE PAGES 34-35 FOR OUR PORTFOLIO 160 Company Statement of Changes in Equity 161 Notes to the Company Financial Statements 169 Directors, Secretary and Advisers 170 Glossary C 01 DRAPER ESPRIT ANNUAL REPORT 2021 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIALS We think We fuel supporting the growth. best entrepreneurs We work with companies that have proven their model and are ready to scale, fast. goes beyond investing capital. We offer support and guidance as our portfolio £128m companies grow. We actively manage our Cash invested in next investments and put decades of valuable generation companies during the year experience to good use. PLEASE SEE PAGE 22 FOR OUR INVESTMENT CRITERIA. We combine a wealth of wisdom and experience with youthful energy and ideas to provide support and guidance for our portfolio companies. TURN TO PAGE 25 TO SEE HOW WE SUPPORT COMPANIES FOR GROWTH. 02 03 DRAPER ESPRIT ANNUAL REPORT 2021 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIALS We are different. We have Our public listing and multifund model reinvented allows us to provide entrepreneurs with backing across their company’s life cycle, fuelling the best businesses for longer. venture Entrepreneurs backed by multiple capital capital. sources on their growth journey. Now any investor can back PLEASE SEE PAGE 24 FOR OUR POOLS OF CAPITAL. Europe’s fastest growing tech companies. 71 Ambitious private technology companies in our portfolio* PLEASE SEE PAGES 14-17 TO DISCOVER THE MARKET TRENDS WHICH ARE DRIVING US FORWARD. * Number of companies includes direct portfolio companies and those via our partnership with Earlybird over the threshold of £1m of value to Draper Esprit. 04 05 DRAPER ESPRIT ANNUAL REPORT 2021 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIALS We create value. Entrepreneurs: We provide a more flexible For entrepreneurs and for our approach to funding, to back investors. Draper Esprit investment the best teams for longer. helps make more possible. £206m Cash proceeds from exits this year, We are the venture over £300m realised since IPO. growth house that unlocks potential for PLEASE SEE PAGES 32-33 FOR HOW WE CREATE VALUE both entrepreneurs FROM OUR LONG-TERM INVESTMENTS and investors. PLEASE SEE PAGES 30-31 FOR THE VALUE OF OUR ACTIVE MANAGEMENT AND INVESTOR EXPERIENCE Investors: We give investors access to the fastest growing private technology companies. 06 07 DRAPER ESPRIT ANNUAL REPORT 2021 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIALS Performance highlights Chair’s introduction £984m 743p £1,033m £161m Gross Portfolio Value NAV per share Net Assets available Plc cash, as (31 March 2020: £703m) (31 March 2020: 555p) (31 March 2020: £660m) well as £43m available from EIS/VCT funds (31 March 2020: £34m, “ with c.£50m from The Company’s scale, its sustained track record EIS/VCT funds) of delivering growth even through times as uncertain as this year, and the impressive 51% £206m £128m maturity of many of the businesses in the core Gross Portfolio Value Cash Realisations invested, and a portfolio reflect the firm belief that the listed fair value growth (year to 31 March 2020: further £34m from VC model is good for both shareholders and the £40m) (year to 31 March 2020: EIS/VCT funds companies we invest in.” 10%) (year to 31 March 2020: £90m from Plc and £38m Karen Slatford from EIS/VCT funds). Chair Financial Year 2021 has been unprecedented on a global basis FY2021 represents Martin Davis’ first full year as CEO; a year of for society, for all businesses and for the technology sector. The outstanding performance but also a year in which Martin has challenges of Brexit and the uncertainties of the US election seem been laying the foundations for further sustainable growth. £267m <1% £107m insignificant compared with the global Coronavirus pandemic. During the year we have fully integrated the EIS fund, Encore Profit after tax Operating costs (net Net funds raised Ventures, and the VCT fund, Elderstreet Investments. We are Looking back over the last 12 months, I don’t think anyone would (year to 31 March 2020: pleased to welcome both teams and to be able to work and of fee income) as a during the year have predicted the pandemic’s longevity and far-reaching £40m) co-invest more seamlessly together. percentage of NAV impact nor the role technology has played in driving digital transformation, creating new opportunities, sustaining the Among many other activities, Ben Wilkinson has sponsored Some of the measures above are Alternative Performance Measures ('APMs') – see Note 29 for further details. economy and supporting people through successive lockdowns. the Company’s increasing focus on sustainability, which is also becoming an even more critical part of what Draper Esprit offers I am delighted by the way the team at Draper Esprit managed to companies and investors. We are committed to contributing through these challenging times, accelerating the investment towards a future that is sustainable, fair, and accessible. cadence, supporting our portfolio and continuing to improve and Operational highlights strengthen our approach to making investments. At times like In line with the growth and maturity of the business, our intention • Significant cash proceeds of £206m received during the year these, small gestures and tokens of support for our community is to move our listing to the Premium Segment of the Official Post year-end make a big difference as well as the determination to continue in List and to trading on the London Stock Exchange's Main Market from realisations (full and partial) and escrows, which were • Increased and extended our revolving credit facility with SVB “business as usual” mode as much as possible. I was delighted to as well as to the secondary listing segment of the Official List predominantly generated by the exits from Peak Games, and Investec by an additional one year from £60m to £65m. receive a comforting bar of chocolate by post from Draper Esprit of Euronext Dublin and to trading on the regulated market of TransferWise and Decibel, and the partial disposals of (thank you, Stuart) early on in the first lockdown and even more Euronext Dublin. • Invested a further £48m post year-end to 11 June 2021, Trustpilot and UiPath. thrilled to see our annual Investor Day go ahead in early 2021, including investments into Manna, FintechOS, Cervest, The Board believes the Company has grown and matured since using the digital events platform provided by one of our portfolio • Invested £128m in the year, increasing the investment IPO and that the Main Market is the most appropriate platform Ledger, and Lyst. companies, Hopin. cadence in H2 with £96m of investments made. for the Company's future development. It is hoped that this will • Refreshed fund of funds programme, with the approval • Invested into 9 new companies (as well as 3 new via Earlybird) The team has made a number of investments in exciting new further raise Draper Esprit's profile, as well as potentially increase by the Board and Investment Committee of an additional and 18 existing companies (as well as 3 via Earlybird)*. companies including Cazoo, Ravelin, PrimaryBid, CoachHub, liquidity and enable its shares to be acquired by a wider group of £75.0 million investment budget. Commitments deployed Riverlane, Focal Point, and Agora and supported some of our investors. • Committed to 15 new seed funds via our seed fund of funds over 5 years. other portfolio companies such as Peak Games, Trustpilot, In preparation for a Main Market listing, we are looking for programme, bringing the overall seed fund of funds portfolio Decibel, and UiPath through major financial milestones. In terms • In line with the growth and maturity of the business, our additional Non-Executive Board Members to strengthen our team to 35 funds. of business performance, we have had an exceptional year with intention is to move our listing to the Premium Segment and bring more diversity of thought and experience to the Board. a 51% increase in Gross Portfolio fair value. While the technology • Acquisition in February 2021 of the shares not previously of the Official List and to trading on the London Stock market remains buoyant, we continue to search for high quality It is almost exactly five years since Draper Esprit listed on AIM.