May 24, 2024

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Half-year report London Stock Exchange:DEVC

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Draper Esprit VCT plc
LEI: 2138003I9Q1QPDSQ9Z97
Half-Yearly Report for the six months ended 30 September 2020

Recent performance summary

  30 Sept
30 Sept
31 Mar
  Pence Pence Pence
Net Asset Value (“NAV”) per Share 49.9 57.1 46.0
Cumulative distributions paid per Share 105.0 102.0 105.0
Total Return per Share 154.9 159.1 151.0

Since my statement with the last annual report, published in July, we have seen some progress in the battle against the coronavirus with the end of the first lockdown but then a setback with the second wave and, more recently, positive news in respect of vaccines which now suggests there is some light at the end of the tunnel.  The pandemic has been disruptive for all businesses, but I believe the Company’s portfolio has generally weathered the storm well and many businesses have been able to adapt to the new conditions.

Unsurprisingly new investment activity fell to a reduced level in the early stages of the pandemic however, this has now recovered, and the Manager made good progress in continuing to deploy the Company’s funds later in the period.

Net Asset Value, results and dividends

At 30 September 2020, the Company’s Net Asset Value (“NAV”) per share stood at 49.9p, an increase of 3.9p or 8.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} since 31 March 2020.

The profit on ordinary activities after taxation for the period was £5.7 million (2019: £228,000), comprising a revenue loss of £222,000 (2019: revenue return of £134,000) and a capital profit of £5.9 million (2019: £94,000).

An interim dividend of 1.0p per Share will be paid on 26 March 2021, to Shareholders on the register as at 5 March 2021.

Venture capital investments
Investment activity and valuation
During the period, the Company made two new and three follow-on investments, totalling £5.4 million.

The Company invested £2.4 million in Thought Machine Group Limited, a fintech company which has developed cloud native banking technology with its core banking system, Vault.

£1.1 million was also invested in Ravelin Technology Limited, a cloud-based fraud detection and prevention platform that helps companies stop online payment fraud.

Further investments were made into three existing portfolio businesses: Back Office Technology (£720,000), Evonetix (£692,000) and Roomex (£465,000).

At the period end, the Company held a portfolio of 39 venture capital investments, valued at £37.7 million.

The Board has reviewed the valuations of the unquoted investments as at 30 September 2020 and made a number of adjustments to the carrying values. This has resulted in a net valuation uplift of £6.2 million for the period across the portfolio.


The Company launched an offer for subscription in October 2019 which closed on 31 August 2020, having raised £13.5 million.

The Board is giving consideration to further fundraising plans.

Share buybacks

The Company continues to operate a policy of buying in its shares that become available in the market, at approximately a 5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} discount to the latest published NAV, subject to regulatory and liquidity constraints.

In line with this policy, during the period the Company purchased 388,328 shares for cancellation an average price of 42.9p per share.

Any Shareholders considering selling their shares will need to use a stockbroker and may wish to contact Panmure Gordon (UK) Limited, who acts as the Company’s corporate broker and can provide details on closed periods when the Company is unable to buy shares.

Board Composition
As previously announced, Barry Dean retired from the Board and did not stand for re-election as a non-executive director at the AGM, which took place in September. We thank Barry for his significant contribution during the period that he served on the Board.

The Board now comprises four non-executive directors. The Directors are reviewing the Board structure and may make further adjustments in due course.

A substantial part of the Company’s portfolio is now invested in businesses introduced under the co-investment arrangements with Draper Esprit plc. It is still too early to expect major successful exits from these investments, but progress is generally satisfactory to date. Although many of these businesses are reasonably immature, many operate in sectors that have not been heavily impacted by the pandemic and should be well positioned to flourish as the world starts slowly to return to more normal conditions.

Over the remainder of the financial year, with dealflow reported to be strengthening, we expect to see a reasonable level of further funds deployed.

I look forward to updating Shareholders in the next Annual Report, which will be issued in July 2021.

David Brock

The co-investment arrangements with Draper Esprit plc, to share deal flow, management experience and investment opportunities, continues to be positive from both an investment and a fundraising perspective. We now define the Company as having two portfolios; a new technology portfolio invested alongside other Draper Esprit funds and a legacy portfolio assembled before the Draper Esprit arrangement.

At the period end, the Draper technology portfolio as a percentage of total net assets accounted for 41{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, the legacy portfolio 27{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, and cash 32{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}.

Since the March year end, two new investments have been completed in the fin-tech sector totalling £3.5 million.

One is Thought Machine Group Ltd. Founded in 2014 by a former Google engineer. The company has built, Vault, a modern cloud native core system for banks constrained by legacy systems. Over the last months, the company has scaled up international hiring, adding 100 employees in the first two quarters of 2020. This Draper Esprit led round was joined by Lloyds Banking Group, IQ Capital, Backed and Playfair Capital. Together with a further subsequent round led by Eurazeo Growth this brings the total funds raised to $125 million.

The other is Ravelin Technology Ltd, a vendor of fraud detection software. Founded in 2018 Ravelin has pioneered the use of machine learning and graph network technologies to help online businesses accept more payments with confidence. It has marquee clients in each sector globally and has helped businesses to accept over 1.2 billion transactions; secure over 230 million active user accounts; and use machine learning to block 4 million fraudulent accounts which attempted to place 14.7 million orders worth $53 billion.

Since the September period end we have signed commitments to an additional two new investments totalling £1.2 million and are awaiting HMRC advance assurance to complete.

Four further follow-ons have been made into the Draper Esprit portfolio totalling £3.4 million, one post the September period end. Two follow-ons were investments led by third party investors into Evonetix and Back Office Technology.

Back Office Technology (trading as Form 3) is a cloud native fintech payments processor. This £29 million strategic investment round included new investors Lloyds Banking Group, Nationwide Building Society, and venture capital firm, 83 North.

Evonetix which is developing DNA gene synthesis technology, raised a further round led by US venture investors, Foresite Capital. The new funding will be used to accelerate internal technology development, including the integration of Evonetix’s technology to enable the synthesis of DNA on a chip.

Details of these additions can be found below.

Within the legacy portfolio, four companies make up 94{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the carrying value at 30 September 2020. Two of these, Access Intelligence plc and Fulcrum Utilities Group, are quoted on AIM and have risen in value by 56{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} since 30 March and now total £6.6m (12{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of NAV). The valuation of the two private companies, Fords and Lyalvale, remain unchanged. No further investment was made into the legacy portfolio.

As Managers of the VCT, we were confident of the upward trend in the portfolio valuations until the advent of the Covid crisis which resulted in a marked decrease in portfolio valuations at the year end. We are pleased to report an overall recovery in these valuations despite some mixed results in trading across our portfolio companies.

As a result, the Company recorded a 3.9p increase in the Total Return (net asset value including cumulative dividends), from 31 March 2020 from 151.0p to 154.9p, an increase of 8.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}.

The Draper Esprit investments continue to offer some exciting prospects for the future. The pace at which new technologies are disrupting, shaping and improving the world around us shows no signs of relenting with developments around machine learning, artificial intelligence, mobility, and blockchain opening up exciting new possibilities across our areas of focus in enterprise, digital health, hardware and deeptech, and consumer technology.

In summary the Manager continues to believe that despite the setbacks of the Covid pandemic and the uncertainty of Brexit, investing into technology retains the attributes of good potential for future value growth.

Elderstreet Investments Limited


Investment Portfolio as at 30 September 2020 Cost Valuation Valuation
in period
{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of
by value
  £’000 £’000 £’000  
Top ten venture capital investments        
Access Intelligence plc* 2,586 5,980 2,238 10.9{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Fords Packaging Topco Limited 2,433 5,626 10.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Endomagnetics Limited 912 2,862 397 5.2{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Back Office Technology Limited 1,420 2,409 4.3{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Thought Machine Group Limited 2,400 2,400 4.3{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
IESO Digital Health Limited 1,900 2,061 161 3.7{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
StreetTeam Software Limited 2,504 1,917 1,776 3.4{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Evonetix Limited 1,485 1,882 7 3.4{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Freetrade Limited 600 1,500 240 2.7{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Lyalvale Express Limited 1,915 1,428 2.6{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
  18,155 28,063 4,819 50.6{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Other venture capital investments 20,775 9,611 1,352 17.3{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
  38,930 37,676 6,171 67.9{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Cash at bank and in hand   17,806   32.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Total investments   55,482   100.0{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}


Investment additions  
Venture capital investments £’000
Thought Machine Group Limited 2,400
Ravelin Technology Limited 1,133
Back Office Technology Limited 720
Evonetix Limited 693
Roomex UK Limited 465
Investment disposals Cost Value at
1 April
Proceeds Profit
vs cost
Realised (loss)/
  £’000 £’000  £’000  £’000  £’000
Venture capital investments          
Retention proceeds          
Pod Point Holdings Limited 22 22 22
  22 22 22

*Quoted on AIM
All venture capital investments are unquoted unless otherwise stated.

as at 30 September 2020

    30 Sept 2020   30 Sept 2019   31 Mar 2020
    £’000   £’000   £’000
Fixed assets            
Investments   37,676   31,913   26,095
Current assets            
Debtors   51   75   2,416
Cash at bank and in hand   17,806   14,036   8,422
    17,857   14,111   10,838
Creditors: amounts falling due within one year   (219)   (205)   (190)
Net current assets   17,638   13,906   10,648
Net assets   55,314   45,819   36,743
Capital and reserves            
Called up Share capital   5,544   4,015   3,997
Capital redemption reserve   652   615   633
Share premium account   18,321   6,387   6,388
Merger reserve   1,828   1,828   1,828
Special reserve   17,814   21,729   18,713
Capital reserve – unrealised   10,588   8,952   4,417
Capital reserve – realised   798   2,175   776
Revenue reserve   (231)   118   (9)
Equity Shareholders’ funds   55,314   45,819   36,743
Basic and diluted Net Asset Value per Share   49.9p   57.1p   46.0p

for the six months ended 30 September 2020

    Six months ended
30 Sept 2020
  Six months ended
30 Sept 2019
  Year ended
31 Mar 2020
    Revenue Capital Total   Revenue Capital Total   Total
  £’000 £’000 £’000   £’000 £’000 £’000   £’000
Income   48 48   411 411   585
Gains on investments                    
  Realised   22 22     120
  Unrealised   6,171 6,171   386 386   (5,746)
    48 6,193 6,241   411 386 797   (5,041)
Investment management fees (91) (276) (367)   (98) (292) (390)   (848)
Other expenses   (179) (179)   (179) (179)   (366)
Return on ordinary activities before taxation   (222) 5,917 5.695   134 94 228   (6,255)
Tax on total comprehensive income and ordinary activities      
Return attributable to equity Shareholders   (222) 5,917 5,695   134 94 228   (6,255)
Basic and diluted return per Share   (0.2p) 5.5p 5.3p   0.2p 0.1p 0.3p   (7.8p)

All Revenue and Capital items in the above statement are derived from continuing operations. The total column within the Income Statement represents the profit and loss account of the Company.

for the six months ended 30 September 2020

  Called up Share capital Capital redemption reserve Share premium Merger reserve Special reserve Capital reserve-unrealised Capital reserve-realised Revenue reserve Total
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 April 2019 3,436 599 1,828 22,545 8,403 2,174 (16) 38,969
Total comprehensive income (5,746) (516) 7 (6,255)
Transfer between reserves (3,281) 1,760 1,521
Transactions with owners                  
Issue of new Shares 595 6,388 6,983
Share issue costs (185) (185)
Purchase of own Shares (34) 34 (366) (366)
Dividends paid (2,403) (2,403)
At 31 March 2020 3,997 633 6,388 1,828 18,713 4,417 776 (9) 36,743
Total comprehensive income 6,171 (254) (222) 5,695
Transfer between reserves (276)   276
Transactions with owners                  
Issue of new Shares 1,566 11,933 13,499
Share issue costs (455) (455)
Purchase of own Shares (19) 19 (168) (168)
Dividends paid  
At 30 September 2020 5,544 652 18,321 1,828 17,814 10,588 798 (231) 55,314

A transfer of £276,000 was made from the Special reserve to the Capital Reserve – realised in respect of capital expenses in the period.


for the six months ended 30 September 2020

  Six months ended
 30 Sept 2020
  Six months ended
30 Sept 2019
  Period ended
31 Mar 2020
  £’000   £’000   £’000
Cash flow from operating activities          
Return on ordinary activities before taxation 5,695   228   (6,255)
Gains on investments (6,193)   (386)   5,626
(Increase)/decrease in debtors 2,408   (10)   (2,403)
Increase/(decrease) in creditors (11)   13   16
Net cash outflow generated from operating activities 1,899    


Cash flow from investing activities          
Purchase of investments (5,411)   (2,850)   (5,208)
Sale of investments 22     2,165
Net cash outflow from investing activities (5,389)   (2,850)   (3,043)
Cash flows from financing activities          
Proceeds from Share issue 13,500   6,982   6,983
Share issue costs (498)   (203)   (165)
Purchase of own Shares (128)   (194)   (389)
Equity dividends paid   1   (2,403)
Net cash inflow from financing activities 12,874   6,586   4,026
Increase/(decrease) in cash 9,384   3,581   (2,033)
Net movement in cash          
Beginning of period 8,422   10,455   10,455
Net cash inflow/(outflow) 9,384   3,581   (2,033)
End of period 17,806   14,036   8,422



for the six months ended 30 September 2020

1.The unaudited Half-Yearly Report covers the six months to 30 September 2020 and has been prepared in accordance with the accounting policies set out in the statutory accounts for the period ended 31 March 2020, which were prepared in accordance with the Financial Reporting Standard 102 (“FRS 102”) and the Statement of Recommended Practice “Financial Statements of Investment Trust Companies” issued in October 2019 (“SORP”).

2.The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.

3.The comparative figures are in respect of the six months ended 30 September 2019 and the year ended 31 March 2020, respectively.

4.Basic and diluted return per Share

  30 Sept 2020   30 Sept 2019   31 Mar 2020
Return per Share based on:          
Net revenue gain for the period (£’000) (222)   134   7
Capital return per Share based on:          
Net capital gain for the period (£’000) 5,917   94   (6,262)
Weighted average number of Shares 106,544,017   80,116,839   80,113,600


      30 September 2020   31 March 2020
  Per Share   Revenue Capital Total   Total
  Pence   £’000 £’000 £’000   £’000
2021 Interim 1.0p   1,109 1,109  
Paid in the period              
2020 Final 1.5p   1,587 1,587    
2020 Interim 1.5p     1,199
2019 Final 1.5p     1,204
      1,587 1,587   2,403

6.Basic and diluted Net Asset Value per Share

  30 Sept 2020   30 Sept 2019   31 Mar 2020
Net asset value per Share based on:          
Net assets (£’000) 55,314   45,819   36,743
Number of Shares in issue at the period end 110,874,413   80,293,973   79,934,164
Net Asset Value per Share 49.9p   57.1p   46.0p

7.Called up Share capital

  30 Sept 2020   30 Sept 2019   31 Mar 2020
Ordinary Shares of 5p each          
Number of Shares in issue at the period end 110,874,413   80,293,973   79,934,164
Nominal value (£’000) 5,544   4,015   3,997

During the period the Company allotted 31,328,577 Ordinary Shares of 5p each (“Ordinary Shares”) under an Offer for Subscription that launched in October 2019, at an average price of 43.1p per Share. Gross proceeds received thereon were £13.5 million, with issue costs in respect of the Offer amounting to £455,000.           

During the period, the Company purchased 388,328 Shares for cancellation for an aggregate consideration of £168,000, at an average price of 42.9p per Share (approximately equal to a 5.8{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} discount to the most recently published NAV at the time of purchase) and representing 0.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the Share capital in issue as at 1 April 2020.

The special reserve is available to the Company to enable the purchase of its own Shares in the market without affecting its ability to pay dividends and allows the Company to write back realised capital losses arising on disposals and impairments.

Distributable reserves are calculated as follows:

  30 Sept 2020 30 Sept 2019 31 Mar 2020
  £’000   £’000   £’000
 Special reserve 17,814   21,729   18,713
 Capital reserve – realised 798   2,175   776
 Revenue reserve (231)   118   (9)
 Merger reserve – distributable element 423   423   423
 Unrealised losses – net of unquoted gains 805   (524)   (3,545)
  19,609   23,921   16,358

In October 2018, the balances on the Share Premium account and the capital redemption reserve were cancelled and added to the special reserve, contributing an additional £26.2 million to distributable reserves. The VCT regulations place some restrictions on the use of these reserves during the first three to four years after the funds on which they arose were raised.

The fair value of investments is determined using the detailed accounting policy as set out in Note 1 of the Annual Report.

The Company has categorised its financial instruments using the fair value hierarchy as follows:

Level 1 -Reflects financial instruments quoted in an active market (fixed interest investments, and investments in shares quoted on either the Main or AIM Markets);
Level 2 -Reflects financial instruments that have prices that are observable either directly or indirectly; and
Level 3 -Reflects financial instruments that use valuation techniques that are not based on observable market data (unquoted equity investments and loan note investments).

  Six months ended 30 Sept 2020   Period ended 31 Mar 2020
  Level 1 Level 2 Level 3 Total   Level 1 Level 2 Level 3 Total
  £’000 £’000 £’000 £’000   £’000 £’000 £’000 £’000
AIM quoted shares 6,605 565 7,170   4,006 250 4,256
Loan notes 508 508   508 508
Unquoted shares 29,998 29,998   21,331 21,331
  6,605 565 30,506 37,676   4,006 250 21,839 26,095

10.Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is required in the Company’s half-yearly results to report on principal risks and uncertainties facing the Company over the remainder of the financial year.

The Board has concluded that the key risks facing the Company over the remainder of the financial period are as follows:

-investment risk associated with investing in small and immature businesses;
-liquidity risk arising from investing mainly in unquoted businesses; and
-failure to maintain approval as a VCT.

In all cases the Board is satisfied with the Company’s approach to these risks. As a VCT, the Company is forced to have significant exposure to relatively immature businesses. This risk is mitigated to some extent by holding a well-diversified portfolio.

With a reasonably illiquid venture capital investment portfolio, the Board ensures that it maintains an appropriate proportion of its assets in cash and liquid instruments.

The Company’s compliance with the VCT regulations is continually monitored by the Administration Manager, who regularly reports to the Board on the current position. The Company also retains Philip Hare and Associates LLP to provide regular reviews and advice in this area. The Board considers that this approach reduces the risk of a breach of the VCT regulations to a minimal level.

The Company has considerable financial resources at the period end and holds a diversified portfolio of investments. As a result, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.

The Directors have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

11.The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have been prepared in accordance with the “Statement: Half-Yearly Financial Reports” issued by the UK Accounting Standards Board as well as in accordance with FRS 104 Interim Financial Reporting and the half-yearly financial report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

b)DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last Annual Report that could do so.

12.The unaudited financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the period ended 31 March 2020 have been extracted from the financial statements for that period, which have been delivered to the Registrar of Companies; the Auditor’s report on those financial statements was unqualified.

13.Copies of the unaudited Half-Yearly Report will be sent to Shareholders shortly. Further copies can be obtained from the Company’s registered office or downloaded from and

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