Interim Results

05 November 2018 

Draper Esprit plc

("Draper Esprit" or "the Company")

INTERIM RESULTS FOR THE six months ENDED 30 september 2018

Draper Esprit (AIM: GROW, ESM: GRW), a leading venture capital firm investing in high-growth digital technology businesses, today announces its interim results for the six months ended 30 September 2018.

Financial highlights

·      Gross Primary Portfolio value increased by 45% to £354.0 million (31 March 2018: £243.5 million).

·      20% fair value increase of £47.7 million during the six-month period driven by a strong performance in the core portfolio.

·      Net Assets excluding goodwill of £440.3 million (31 March 2018: £290.9 million), with hard NAV per share of 444 pence (31 March 2018: 402 pence).

·      Additional capital raised of £115.0 million in plc (£111.5 million net) with £103.8 million cash on balance sheet at period end.

Operational highlights

·      £65.0 million deployed by plc with a further £10.6 million from EIS/VCT funds.

·      The Group has invested in 11 new companies (including 5 new portfolio company investments over £1.5 million via the Earlybird partnership) and 6 existing companies.

·      Core portfolio holdings have increased in value by 33% to £235.1 million (31 March 2018: £176.6 million) and represent approximately 70% of the Gross Portfolio Value.

·      Strategic partnership with Earlybird Digital West to share dealflow, investment resources and expertise.

Post-period end

·      Market position and dealflow continues to build with 4 new investments expected to complete in the near-term, where we will deploy over £20.0 million in aggregate from the Company (over £30.0 million from the Group including £9.5 million from co-investment funds) along with ongoing discussions for potential realisations.

·      Secondary portfolio acquisition to acquire the DFJ Europe X fund for £25.9 million ($33.7 million) to increase stakes in existing core portfolio companies with an estimated NAV increase of 9 pence per share.

Simon Cook, CEO Draper Esprit commented:

"In the six-month period ended 30 September 2018, the Company continued to successfully execute the strategy of providing early and growth-stage technology companies with the capital, network, and support they need to pursue their global growth plans. We remain on course to exceed our stated objective of a portfolio return of 20% per annum for the full year, with a 20% fair value increase delivered in the six months period ended 30 September 2018."

"The ongoing and rapid advances in key technology subsectors such as artificial intelligence, blockchain, digital healthcare and fintech continue to shape our investment strategy and, having invested as a group £75.6 million, including £10.6 million from co-investment funds, during the six-month period, with over £45.0 million to close in the near-term by the Company (and a further £9.5 million from co-investment vehicles), Draper Esprit remains one of the most active VCs in Europe." 

"We have entered the second half of the current financial year with a healthy pipeline of both potential investments and realisations. Longer term, the strategically significant developments of the first half mean that we are well placed to continue to find and back the most exciting private European technology companies with the potential to become global leaders, while simultaneously providing our investors with access to these high-growth opportunities through a well-constructed portfolio."

ENQUIRIES

NOTES TO EDITORS

Draper Esprit is one of the most active venture capital firms in Europe, helping to build and invest in disruptive, high growth technology companies. We believe the best entrepreneurs in Europe are capable of building the global businesses of the future, by partnering with the global Draper Venture Network with VC funds in 22 countries. We fuel their growth with long- term capital, access to international networks and decades of experience building businesses.  Draper Esprit's portfolio includes global technology leaders such as Trustpilot, Ledger, Perkbox, Revolut, and Graphcore.  Recent successful exits include Grapeshot, Clavis Insight, Tails.com, and Movidius. Visit www.draperesprit.com

CHIEF EXECUTIVE'S REVIEW

Overview

In the six-month period ended 30 September 2018, the Company continued to successfully execute the strategy of providing early and growth-stage technology companies with the capital, network, and support they need to pursue their global growth plans.

In a busy period of corporate activity, we successfully raised gross proceeds of £115.0 million in May via a placing and subscription, welcoming a range of new, high-quality investors to our shareholder register, while also raising a further £21.0 million from across Draper Esprit's EIS, VCT and secondary funds.

As part of our broader growth strategy, the Group announced in July that it had entered into a Strategic Partnership Agreement with the Earlybird Digital West group, a German-based investor in early-stage technology businesses across Europe. This has already begun to bear fruit, since the commencement of the strategic partnership, we have made 5 new European portfolio company investments over £1.5 million via the Earlybird partnership.

The past six months have been characterised by an active period of investment, which saw us invest £65.0 million across 17 transactions (11 new, including 5 via the Earlybird partnership, and 6 existing) and a further £10.6 million from co-investment funds, EIS and VCT. We have continued to invest in a variety of exciting, new companies and to increase stakes in the most promising companies in our existing portfolio.

Driven by strict portfolio selection criteria and a disciplined approach, we added two companies to our core portfolio in the period. This was achieved alongside the ongoing and sustainable expansion of Draper Esprit's fund of fund strategy with further commitments to a number of Europe's top seed funds.

Our key financial objective remains the delivery of significant returns to shareholders over the longer term by growing our NAV. We remain on course to exceed our stated objective of a portfolio return of 20% per annum for the full year, with a 20% fair value increase delivered in the six months period to 30 September 2018.

The ongoing and rapid advances in key technology subsectors such as blockchain, digital healthcare, artificial intelligence, and fintech continue to shape our investment strategy and, with an annual deployment rate of over £60.0 million a year from the Company balance sheet matched by £40.0 million of EIS and VCT co-investment, Draper Esprit remains one of the most active VCs in Europe. 

Notable new investments and their markets

Since partnering with Earlybird Digital West, we now have a combined investment team of 40 and are able to leverage our experience and skill to identify the companies whose ideas and vision will disrupt the markets in which they operate. We actively screen thousands of companies each year from across Europe, meeting with over 1,000 firms who we think have the ability to be global leaders in their chosen fields.

During the period, we invested £65.0 million by Plc and a further £10.6 million from our EIS/ VCT funds. These included;

·      In April, we led the Series B funding with a £9.9 million investment in Aircall, a leading provider of cloud-based call centre software bringing the total funds raised by Aircall to $40.5 million to date, with the proceeds from the round being used to accelerate the buildout of Aircall's cloud-based phone system.

·      In May, we invested £7.4 million in the latest Series C funding round for Revolut, the London headquartered fintech company, taking their total funds raised to $340.0 million since their launch in 2015, making them one of the fastest growing tech companies in Europe. With over 250,000 daily active users and, a target of 100.0 million customers in the next five years, the business is at the forefront of app-only digital banking. 

·      In May, we invested £3.7 million in Finnish microsatellite manufacturer ICEYE, as part of a $34.0 million Series B funding round. The business will use the new capital to expand its custom analytics services for its growing customer base, further developing its satellite technology with the goal of deploying the largest Synthetic Aperture Radar constellation by the end of 2019.

·      In July, we invested £2.3 million with a further £4.1 million invested from EIS funds in Endomagnetics as part of $10.0 million Series C funding round led by plc. Endomagnetics, is a Cambridge-based surgical guidance company pioneering magnetic sensing equipment that successfully targets and removes cancer.  As a result of this investment round, the business is now focused on rapidly expanding its commercial activity in all markets, accelerating its planned product development.

·      In August, we led a series A funding round in Roomex, an ambitious global travel software business headquartered in Dublin that saw the business raise €8.0 million. The Company invested £3.0 million with a further £0.6 million invested from our VCT and EIS co-investment vehicles. Having more than doubled the size of its workforce in the past 18 months, the funding will be used to continue to develop the firm's market-leading booking platform while driving expansion into new markets.

·      In August, we led a £7.5m Series A funding round in Apperio, the UK-based legal tech start-up providing in-house legal teams complete visibility of their legal spend. The Company invested £1.5 million with a further £0.5 million invested from EIS funds and the investment will be used to grow their sales and customer success teams, and expand into a new office in Holborn, London, the heart of London's legal district.

Alongside Earlybird, we invested £25.0 million, including the following:

·      We invested £2.3 million in Berlin-based CrossLend, the digital marketplace for loans, as part of a larger €14.0 million round. CrossLend's business model aims to remove hurdles to a European Capital Markets Union. The Berlin-based business plans to establish a European Debt Exchange enabled by their recent partnership with solarisBANK and ABN AMRO.

·      We invested £2.7 million in UK-based Fraugster, the antifraud solution for e-commerce businesses as part of a €4.7 million round. The company leverages artificial intelligence to eliminate payment fraud. Unlike rival products, Fraugster learns from each transaction in real-time and can foresee attacks before they happen.

·      We have invested £1.6 million in the Switzerland-based Shapeshift, the cryptocurrency exchange which offers global trading of a variety of digital assets via web and mobile platforms, as part of a $10.4 million round. The company supports dozens of blockchain tokens including Bitcoin, Ethereum, Monero, Zcash and Dash.

·      We invested £1.9 million in Targomo, a provider of real-time geospatial mobility analytics as part of a €4.3 million round. Targomo's technology takes location intelligence to a new level using algorithms to understand problems such as route planning, property valuation, and site analyses. The product enables users to visualise results with clear maps and diagrams.

·      We invested £2.3 million in Medidate, Germany's first virtual clinic provider, the leading platform for premium lifestyle surgeries. The unique concept entails a broad regional network of partner clinics and own locations of the highest standards while at the same time focusing on a superior patient journey and customer experience.

In addition, an aggregate of £7.1 million was invested in the following companies via our partnership with Earlybird; Allthings, Bitwala, Everoad Movinga, Crossengage, Xain, Inkitt, Service Partner ONE, Tradico, and Lexoo. 

Follow-on and secondary investments

As our business grows, so does our ability to increase our stakes in existing portfolio companies, doubling down on those companies who have demonstrated their credentials as disruptive European firms with global growth ambitions. 

During this period, we invested £9.8 million in follow-on investments, including increasing our holdings in Ravenpack (£3.4 million), a big data analytics platform for hedge funds, banks and asset managers, Perkbox (£3.7 million), the digital employee engagement platform and a core portfolio holding, and Verve (£1.3 million), the advocacy platform for live events.

Earlybird Digital West agreement

As announced in July, our strategic partnership with Earlybird Digital West will see Draper Esprit share dealflow, investment resources and expertise to co‐invest together in high growth European technology companies.

With a team of 23 investment professionals, Earlybird has invested in leading technology companies such as N26, Smava, UI Path, and Peak Games.

The Strategic Partnership Agreement creates one of the most active venture capital partnerships in Europe. Together, Draper Esprit and Earlybird have the equivalent of a €1.0 billion+ fund, with the capability to deploy up to €200.0 million a year in 15-20 Seed, Series A, B and C stage technology companies.

As part of this strategic partnership, Draper Esprit has now invested £25.0 million alongside Earlybird Fund VI in 15 promising companies which sit as a part of our emerging portfolio. We are committed to invest a further c.€17.0 million (£15.0 million) per annum over the next four years, with a total commitment of approximately £76.0 million into the fund. As a 50% LP we have shown the individual investments on a direct basis above.

Disposals

In April 2018, we announced the sale of our portfolio company Tails.com, the direct-to-consumer, tailor-made dog nutrition business to Purina Petcare, a subsidiary of Nestlé SA. The transaction was executed at a valuation supportive of NAV as at 31 March 2018 and represents an attractive return for Draper Esprit.

The Group's high-quality portfolio of companies is regularly the subject of inbound interest from potential trade and private equity buyers with ongoing discussions regarding potential realisations.

Seed funds

The expansion of our fund of fund strategy serves to consolidate our existing relationships with the best Seed funds in Europe and fuels the ecosystem of future primary investment opportunities. During the period further commitments were made to a number of Europe's top seed funds including IQ Capital (Cambridge, UK), Seaya Ventures (Spain), Stride Capital (UK), and Five Seasons Ventures (France).

Since 1 April 2018 the Group has invested £1.7 million and made further commitments to 10 new fund of funds vehicles taking the total committed to date to over £25.0 million across 14 funds, increasing our opportunity to source the best deals from across Europe and providing us with the oversight and access to seed stage companies who are in growth mode. Such commitments will be drawn down over a five-year period.

Outlook

In the six-month period ended 30 September 2018, the Company continued to successfully execute the strategy of providing early and growth-stage technology companies with the capital, network and support they need to pursue their global growth plans. Backing European technology start-ups who we believe have the potential to become global leaders in their respective sectors and markets, while simultaneously providing our investors with access to these high growth technology companies, remain the central principles that underpins our business.

We continue to see a strong pipeline of potential investments and maintain significant cash reserves. Our disciplined approach to pricing, deployment and valuation of our current portfolio remains central to our strategy and allows us to continue to look for companies with strong IP, networks, and competitive advantages. We believe that the European technology market continues to show growth and that the lack of scale-up capital available is an important gap to close as companies look to compete globally.  

From Draper Esprit's perspective, we have entered the second half of the financial year with good momentum. Post-period, we have completed the secondary portfolio acquisition to acquire the DFJ Europe X fund for £25.9 million ($33.7 million) to increase stakes in existing core portfolio companies, including Trustpilot, Graze, Sports Pursuit, M-Files, and Lyst. In addition, there are four new investments expected to complete in the near-term, which will commit over £20.0 million in aggregate from the Company (over £30.0 million from the Group including £9.5 million from co-investment funds), and ongoing discussions for potential realisations. Our model continues to work and with Net Asset Value continuing to grow substantially, we remain on target to hit our portfolio return of 20% per annum.

Nevertheless, we are mindful of the prevailing market backdrop and are committed to maintaining a prudent approach to new opportunities, only partnering with those businesses that fulfil our strict investment criteria. Equally, the uncertainty around Brexit is something we are mindful of and the ability for UK-based companies to access the best and brightest talent from around the world remains critical. However, being dual listed in both London and Ireland provides us with continued flexibility to access Europe in a post Brexit environment.

Longer-term, the strategically significant developments of the first half of the current financial year that saw us raise additional funds and partner with Earlybird Digital West, enables us to continue finding the most promising technology companies from across the continent. Meanwhile, our low net cost base and access to off balance sheet capital through our co-investment vehicles, EIS and VCT funds, puts the plc in a strong position regardless of capital market conditions. Our model of adding accretive secondary portfolio acquisitions to the portfolio also enables us to access the best companies and generate value through economic cycles.

We are in a good position and our model of offering investors access to investments in high-growth private technology businesses, continues to bear fruit.

Simon Cook

CEO

PORTFOLIO REVIEW

A period of enhanced deployment and strong growth in the core portfolio has driven an increase in the Gross Primary Portfolio. The gross value of the Company's investment holdings before deductions for carry and any deferred tax, increased by £110.5 million to £354.0 million (£243.5 million at 31 March 2018). The 45% uplift reflects a 20% increase in the fair value of the portfolio and further investments of £65.0 million. The fair value increase of £47.7 million is driven by a strong performance in the core portfolio which has grown in fair value by 33% particularly through valuation uplifts in Trustpilot (£15.2 million), Graphcore (£14.3 million), Lyst (£5.2 million) and Ravenpack (£4.5 million). Continued high average revenue growth across the core portfolio underpins these uplifts with commercial milestones being achieved in the key movers. Positive currency movements in the period have contributed £10.1 million to the fair value gains. A period of increased deployment has seen follow on investments in Perkbox, Ravenpack and Verve, and new investments in Aircall, Iceye, Endomagnetics, Apperio and Roomex.

At the period end the current portfolio held by the Group consists of significant minority interests in 36 companies (and an additional 15 held via Earlybird) (31 March 2018: 31 companies).    

The core portfolio companies reflect those investments with a fair value above £9.0 million, in the period both Aircall and Ravenpack have moved into core holdings to bring the number of core holdings, which account for approximately 70% of the total portfolio value, to twelve. The remaining value is spread across 39 emerging investments which have the potential to grow into the core holdings of the future.

The core portfolio, comprising: Graze, Trustpilot, M-Files, Ledger, Podpoint, Lyst, Sportpursuit, Perkbox, Graphcore, Ravenpack, Transferwise, and Aircall, represents a value of £235.1 million and exhibits an average turnover in excess of US$63.0 million, growing in aggregate over 40% annually from 2018 and projecting further growth in excess of 51% into 2019.

Core Portfolio Updates

Graphcore

During the period, Graphcore, the machine intelligence chip company, has made great progress. In May, the company stated publicly that they have shipped their C2 IPU (Intelligence Processing Unit) cards to early access customers. They also publicly demonstrated the C2 IPU-Accelerator cards at the International Conference for Machine Learning in Stockholm in July for the first time.

The team are also scaling significantly, with around 40 new hires across the business. Senior hires include John Walsh, who joined as Senior Vice President of Operations in April, and Sophie Fromont, who joined as Senior Vice President of People in September. In addition to their Bristol HQ and engineering centre in Oslo, Norway, they officially launched an office in Palo Alto in July.

Trustpilot

Trustpilot, the online review site, announced in October 2018 that it has reached 50 million reviews on its platform, consolidating its position as the leading online review platform for businesses and customers. In June, the company also launched a successful brand refresh, alongside plans for changes and upgrades to its platform after a year of research and collaboration with consumers. Trustpilot will now offer companies new features for customer engagement and has launched its "Find Reviewer" tool, which enables companies and reviewers to engage with each other more freely and directly.

The company has also now secured partnerships with leading ecommerce platforms, Magento (based in the US) and PrestaShop (based in Paris) alongside leading digital knowledge platform, Yext (based in the US). The partnerships will enable Trustpilot to expand its business further while improving user experience by providing them with more opportunity to gain insights.

Lyst

In May, Lyst, the global fashion search platform, raised a $60.0 million round of funding, led by LVMH. The latest round of funding was to fuel international expansion; the company has already launched new sites in French, German, Spanish and Italian. In 2017, Lyst provided enhanced search services to more than 70 million fashion shoppers. The company is now profitable and has seen revenues grow over 400% in the past three years since it raised its last funds.

Pod Point

During the period, Pod Point, the electric charge point supplier, announced new preferred supplier partnerships with Jaguar Land Rover, Nissan Norway and Mitsubishi, bringing their total automotive relationships to a total of ten. 

Significant client wins over the same period included construction company Kier Group, the Barking Riverside development, McDonalds UK, pub chain Fuller's, Chester Zoo, Interstate Hotels and Resorts, as well as Barnet and Waltham Forest councils.

Over the six-month period Pod Point continued to expand their team and now employ more than 170 people. They have also established a network assurance team to keep the network operating at optimal levels, thereby maximising client satisfaction and retention rates. These efforts are clearly paying off, with Pod Point recently voted one of the best networks in a Zap Map survey of almost 1,700 drivers.

Ledger

During the period, Ledger, the hardware security wallet for cryptocurrencies and blockchain applications, launched two new products: the Ledger Vault, a security solution for financial institutions and Ledger Live, the standalone companion computer app for Ledger devices. The company also made significant firmware improvements to both their hardware wallets, the Ledger Nano S, and the Ledger Blue, in order to continue augmenting the security of the wallets.

In May, the team also announced a joint-venture named Komainu with global investment bank, Nomura, and pioneer investment house, Global Advisors. Komainu was established to bring together the traditional and disruptive worlds of asset custody, paving the way for secure and compliant institutional investment in digital assets. It provides infrastructure and an operational framework to the wider investment management industry and enables investors to embed or implement a consistent set of best practice standards within their businesses.

Ledger has also diversified its strategy by partnering with Engie, the French multinational electric utility business, to develop the first blockchain hardware product which will secure data at the source of energy production.

M-Files

During the period, M-Files, the next-generation intelligent information management platform, announced it had signed a €27.0 million financing agreement with the European Investment Bank. The company will use the loan for international growth, partner channel expansion and accelerating R&D in Europe. M-Files plans to expand its offices in the UK, Germany, France, Australia and the US, as well as increase investment in its intelligent information management platform. The company has also launched its services in Denmark, announced a successful integration with Microsoft Dynamic NAV and has announced Apex Oil as a new customer. 

RavenPack

During the period, Draper Esprit invested a further £3.4 million into the big data analytics platform, RavenPack, and the company now sits within our core portfolio. The company has recently closed deals with several large financial institutions, including Citi Bank. Meanwhile, they launched their new search tool, enabling users the ability to search across 20 years of news, social media and other textual content to generate insight for investing, trading, risk management and compliance. Combined with RavenPack's sentiment scoring and analytics, RavenPack can now empower their clients with a better understanding of events and how markets might react to them.

Perkbox

During the period, Perkbox, the employee engagement platform, has expanded their team with both several key hires (including ex Yahoo! Veteran, Paul Schulz as CTO), and has grown the size of its tech team from 32 to 65 employees in order to accelerate product development cycles. New clients to join the platform include Whole Foods, Jigsaw, Levi's, Twinings and Eurofins.

The company has also announced a number of new partners, including Boxx, a paid-for subscription service providing world class workouts, and Pensionbee, an online pension manager.

In September, Perkbox launched a new platform: Perkbox Insight, which measures the sentiment of people within the business. By providing employees with a structured feedback mechanism, Perkbox believes this will enable companies to solve problems before they escalate into larger issues.

Post period end, in October, the company also announced the opening of its office in Paris to enable companies in France to access their product.

Aircall

During the period, Aircall, the cloud-based call centre, raised $29.0 million from Draper Esprit, alongside Balderton Capital, NextWorld Capital, eFounders and NewFund. The proceeds will be used to accelerate the buildout of its cloud-based phone system, including seamless integrations into all the software tools used by modern businesses. Aircall will also dedicate portions of the funds to acquire top talent to supplement its growing teams in both the US and Europe.

Graze.com

During the period, Graze, the multichannel snack company, relaunched their snack brand to help consumers "reimagine the way they snack.". Graze teamed up with leading creative agency, Jones Knowles Richtie, to develop a brand which challenges the negative perception around snacking and drive additional healthier products to market. Graze are able to launch a new product from concept to shelves in just 48 hours, due to their tech-enabled factory and data-driven approach. Launched as a subscription service in 2007, and in UK retail in 2015, Graze is now stocked by Waitrose, WHSmith, Tesco, Sainsbury's, as well as thousands of stores across the US.

Sportspursuit

Sportspursuit, the UK-based sport-specific ecommerce site, partnered with Eurosport, the Discovery-owned sports broadcaster, to launch a platform for sports fans to purchase clothing, footwear, equipment and accessories. The Eurosports shop is now live in France, Germany and the UK via dedicated local-language microsites, there are already plans to extend this to Belgium, Monaco, Austria and Switzerland.

TransferWise

During the period, TransferWise, the international money transfer platform, became the first fintech company to hold a settlement account, allowing the company direct access to Bank of England's Real Time Gross Settlement. Through the settlement account, TransferWise became the first tech company to become a direct member of the Faster Payment Scheme. TransferWise also launched their European wide borderless debit card in April and in June, they announced a partnership with UK neobank, Monzo, and France's second largest bank, BCPE.

TransferWise continues to demonstrate strong growth. In September, the company also released their FY18 annual report, showing 75% revenue growth to £117.0 million and £6.2 million net profit after tax. They now have over 4 million customers,1300 employees, and transfer £3.0 billion a month for customers worldwide.

*                       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%

INTERIM FINANCIAL REVIEW

The six-month period ended 30 September 2018 has delivered an equity raise of £115.0 million gross to further strengthen the balance sheet, scale the Company and enhance the shareholder base. With a strong balance sheet, the Company has been able to provide further support to the private high growth technology companies to which it invests, to take advantage of opportunities to create value and increase the breadth of operations.

Investment in the period of £65.0 million has been above the £60.0 million per annum stated target and includes £25.0 million invested into Earlybird Digital West VI. The increased deployment reflects the high quality of investment opportunities the Company has seen during the period and the impact of scaling the business as the balance sheet grows.

The Gross Primary Portfolio of £354.0 million (£243.5 million at 31 March 2018) has increased as a consequence of the £65.0 million of investment and the fair value growth of £47.7 million in the portfolio. The Gross Primary Portfolio is subject to deductions for the fair value of the carry liabilities and deferred tax to generate the net investment value of £336.2 million (£231.9 million at 31 March 2018) which is reflected on the condensed consolidated interim statement of financial position as financial assets held at fair value through the profit or loss. The Gross Portfolio Value Table has been generated to reflect gross and net movement in value of the portfolio during the period.

The net fair value gain on investments of £41.5 million is reflected in the condensed consolidated interim statement of comprehensive income. A deferred tax provision of £2.5 million continues to be recognised in the period against the gains in the portfolio to reflect those portfolio companies where the Company owns less than 5% of the equity holding. This amount is netted against the investments in the condensed consolidated interim statement of financial position. Carry balances of £16.7 million are accrued to previous and current employees of the Group based on the current fair value at the period-end and deducted from the Gross Primary Portfolio.

Net assets have increased by 49.7% to £449.9 million (£300.5 million at 31 March 2018) in the period and net assets excluding goodwill have grown by 51% to £440.3 million (£290.9 million at 31 March 2018). The increase in the balance sheet assets reflects the positive portfolio performance, particularly in the core portfolio, and the equity raise undertaken in the period of £115.0 million (£111.5 million net of fees) from both existing and new institutional investors. 27,380,952 new shares were issued on 14 June 2018 to trading on AIM and ESM.

In the period, a change in the underlying accounting treatment of the Company's acquisition of Esprit Capital Partners LLP ("ECP") in June 2016 has led to a reduction in the goodwill carried on the balance sheet of £10.8 million. This is not indicative of an impairment to the goodwill or the inherent value of ECP but a change to present approximately half of the original consideration (8 million shares at 300p per share) as a contingent payment. The reduction in the goodwill is matched by a reduction in the merger reserve on the consolidated statements of financial position of £10.8 million and the consolidated statements of comprehensive income reflects an equivalent charge over the current and restated reporting periods. The prior period consolidated statements of financial position and consolidated statements of comprehensive income comparatives have been restated to reflect how the reduced goodwill would have impacted the accounts in those periods. There are no ongoing charges related to this accounting change.

During the period the Company entered into a Strategic Partnership Agreement to share dealflow and resources to co‐invest in high growth technology companies across Europe and have invested £25.0 million in the period of a total commitment to invest approximately £76.0 million over a four-year period to 2022. The Company has also acquired a minority stake in the Management Company of the Earlybird Fund VI for a total consideration of £0.6 million. The consideration has been satisfied by cash and the issue of 64,820 new ordinary shares of one pence each in the capital of the Company to the Earlybird Digital West partners.

Period-end cash balances of £103.8 million include the cash balance of £56.6 million at 31 March 2018, the subsequent equity raise of £111.5 million net of fees, investments in the period of £65.0 million in the portfolio and the operating costs of the business.

Investment income for the year comprises the £41.5 million of unrealised investment gains (gains are unrealised as they have not been disposed of at period end and are held within Draper Esprit (Ireland) Limited, which is accounted for as an investment company) and fee income of £2.5 million which is generated from management fees and director fees. At the year-end 31 March 2018 performance fees were recognised of £3.5 million, of which £1.0 million was attributable to the plc with the remainder reflected in non-controlling interests. Under the new IFRS 15 accounting standard there has been a change in the test for recognition and this revenue has not been recognised in the current period; it is anticipated that these balances will now be recognised at the point of cash realisation. General administrative costs of £3.3 million (£2.4 million at 30 September 2017), predominantly relate to employment, professional and office expenses, while investment and acquisition costs of £0.2 million (£0.4 million 30 September 2017) relate directly to portfolio investment costs.

Ben Wilkinson

CFO

Condensed consolidated interim statement of comprehensive income 

for the period ended 30 September 2018

*Certain amounts shown here do not correspond to the Annual Report for the year ended 31 March 2018 and the Interim Report for the period ended 30 September 2017 and reflect adjustments made, refer to Note 4(b) and Note 8.

The notes below are an integral part of these condensed consolidated interim financial statements.