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AIM and Euronext Growth Rule 26

Country of Incorporation and Main Country of Operation

Draper Esprit plc is a company incorporated in England and Wales with registered number 9799594 and its main country of operation is the UK. The rights of shareholders in an England and Wales incorporated company may be different from the rights of shareholders in an Irish incorporated company.

Business Description

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Draper Esprit is one of the leading venture capitalist investors involved in the creation, funding and development of high-growth technology businesses with an emphasis on digital technologies in the UK, the Republic of Ireland and the rest of Europe.

Corporate Governance

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The Directors share the view that sound governance is fundamental to the successful growth of the business. The Company is required to declare which recognised corporate governance code it has adopted and state how that code has been applied. We continue to apply the principles of the Quoted Companies Alliance Corporate Governance Code for small and mid-sized companies, an updated version of which was published in April 2018 (the "QCA Code"), and our Chair's Governance Statement issued in compliance with AIM Rule 26 explaining our application of the QCA Code can be viewed here.

The Directors are responsible for the determination of the Group’s investment policy and setting the strategic aims and objectives of the Group, and have overall responsibility for the Group’s activities including the review of investment activity and performance. The Board will meet at least four times per annum (and on an ad-hoc basis when necessary between the scheduled meetings), the Audit, Risk and Valuations Committee will meet at least three times per annum, and the Remuneration and Nomination Committee will meet at least two times per annum.

On the 4 November 2019, the Group announced the expansion of the management team. Martin Davis was appointed as Chief Executive Officer.

The Directors are as follows:

Board Members

Karen Slatford (Non-Executive Chair)

Karen is non-executive Chair of Draper Esprit plc. She is also a non-executive director of AIM-quoted Accesso Technology Group plc and Softcat plc, a FTSE 250 IT infrastructure provider, and senior independent non-executive director of LSE and NYSE listed Micro Focus. Karen began her career at ICL before spending 20 years at Hewlett-Packard Company, where in 2000 she became Vice President and General Manager Worldwide Sales & Marketing for the Business Customer Organisation, responsible for sales of all Hewlett Packard products, services and software to business customers globally. Karen holds a BA Honours degree in European Studies from Bath University and a Diploma in Marketing.

Martin Michael Arthur Davis (Chief Executive Officer)

Martin was appointed as CEO of Draper Esprit in November 2019. He has more than 20 years of experience in financial services and joined Draper Esprit from Aegon Asset Management where he was the Head of Europe, Aegon Asset Management & CEO Kames Capital. Prior to Aegon Asset Management, Martin served as CEO at Cofunds, spent 8 years at Zurich Insurance Group, and was also CEO of Zurich’s joint venture, Openwork, the largest network of financial advice firms in the UK. Prior to this, Martin held senior management roles at Misys, Corillian, and Reuters. Martin also served for 11 years in the British Army. Martin has an MBA from London City Business School (CASS) and Diplomas from the Institute of Marketing and the Market Research Society.

Stuart Malcolm Chapman (Chief Portfolio Officer)

Prior to establishing the Group with co-founder Simon Cook in 2006, Stuart was a Director of 3i Ventures in London. Having joined 3i in 1992, he has over 25 years’ venture capital experience in Europe and the US. He was a founding partner of 3i US, based in Menlo Park, CA from 1999 until 2003. Stuart was responsible for Esprit’s investments in Lagan Technology (sold to Verint), Redkite (sold to Nice) and Kiadis (IPO). Stuart serves as a director with Netronome, DisplayData, Resolver, Realeyes, Crate and Conversocial; and as observer with Graphcore. Prior to 3i, Stuart was involved in software and systems implementations for Midland Bank. He is a graduate of Loughborough University and currently serves on the Strategic Advisory Board for the Loughborough School of Business and Economics.

Benjamin David Wilkinson (Chief Financial Officer)

Ben was appointed to the Board on 4 June 2019, having joined the Group as CFO in 2016. In addition to his responsibilities for the Group’s finance and investor relations functions, Ben serves as a member of the Investment Committee. Ben has led on recent equity and debt raises totalling over £350.0 million. Ben is an experienced leader of public company finance teams having previously served for 5 years as CFO of AIM-listed President Energy PLC where he was responsible for all financial aspects of the group. During his time at President, Ben was a key part of the Board that undertook investments into Argentina and Paraguay and raised US$175 million across several equity issuances with shareholders such as IFC/World Bank and significant UK institutional investors. Ben is a Chartered Accountant, FCA, with a background in M&A investment banking from ABN Amro/RBS where he was involved with multiple cross border transactions and corporate financings, both debt and equity. Ben is a graduate of Royal Holloway, University of London with a BSc in Economics.

Grahame David Cook (Non-Executive Director)

Grahame Cook is an experienced FTSE and AIM non-executive director, with extensive experience as an audit committee chairman. Grahame’s background is in banking, where he specialised in healthcare. He has over 20 years’ experience of M&A, equity capital markets, and investor relations. Grahame started his career at Arthur Andersen, where he qualified as a chartered accountant. He was a Director of Corporate Finance at BZW, and then joined UBS as a member of the global investment banking management committee and global head of equity advisory. He then became joint chief executive officer at WestLB Panmure where he built a pan European Tech team and ran a €100m technology fund. Grahame now sits on a number of boards, including Horizon Discovery Plc, a genomics company and Attraqt plc, an AI SaaS company. Grahame holds a Double First Class Honours degree from the University of Oxford.

Richard Fowler Pelly (Non-Executive Director)

Richard is a non-executive director and advisor in the area of micro, small and medium-sized businesses. Up until April 2014, Richard was the chief executive of the European Investment Fund (‘‘EIF’’), Europe’s largest investor in venture capital funds. Before joining EIF in April 2008, Richard was managing director of structured asset finance at Lloyds TSB Bank in London from 2005 to 2007. From 1998 to 2005, he worked for GE Capital, first as chairman and CEO of Budapest Bank in Hungary and then as CEO of UK Business Finance within GE Commercial Finance. Prior to his career at GE, Richard worked for Barclays Bank in various functions in the UK and in France from 1977 to 1997. Richard holds an honours degree in Psychology from Durham University and an MBA with distinction from INSEAD Fontainebleau. In 2003, he was awarded an OBE in the Queen’s Honours List for Services to the Community in Hungary

Roles and responsibilities of the chair, chief executive and any other directors who have specific individual responsibilities or remits

Karen Slatford, as Chair, is responsible for leading an effective Board, upholding high standards of corporate governance throughout the Group, particularly at Board level, and ensuring appropriate strategic focus and direction. Karen Slatford is also Chair of the Remuneration & Nomination Committee.

The Chief Executive Officer (Martin Davis) has overall responsibility for proposing the strategic focus to the Board, delivery of the business model and strategy and the day to day management of the Group's business.

Grahame Cook and Richard Pelly are both independent Non-Executive Directors and Grahame is also Chair of the Audit, Risk and Valuations Committee. They are available to engage with shareholders should they have a concern that is not resolved through the normal channels.

Stuart Chapman is the Chief Portfolio Officer and Compliance Officer and ensures that the Board is properly briefed on the operating performance of the business, including in respect of the investment portfolio. Stuart is supported in respect of HR matters, risk and compliance by the HR Manager and Legal Counsel respectively.

Ben Wilkinson is the Chief Financial Officer and is responsible for the Group's finance and investor relations functions.

Matters reserved for the Board

The Schedule of Matters Reserved for the Board of the Company sets down those powers reserved for the full Board of the Company and which are not delegated to the Company's Executive Directors. The list contains some matters which the Board cannot, as a matter of law, delegate. In accordance with the Company’s articles of association the Board may, however, appoint committees as it thinks fit to exercise certain of its powers.

Specific areas of delegation are set out in terms of reference for the Audit, Risk and Valuations Committee and Remuneration & Nomination Committee.

The following list is a summary of matters that require approval of the Board:

  • The Group's strategic aims, objectives and investment strategy;
  • The approval of any single investment by the Company that is greater than £10.0 million or 10% of market capitalisation;
  • The approval of any investment decision where a conflict of interest exists;
  • Structure and capital of the Group;
  • Financial reporting, financial controls and dividend policy and approving annual budgets;
  • Internal control and risk management (including the Group's appetite for risk);
  • The approval of significant contracts and expenditure; and
  • Appointments to the Board and its Committees.

Please see schedule of matters reserved for the Board of Directors here.

Committees (Audit, Remuneration & Nomination)

The Board has established an Audit, Risk and Valuations Committee and a Remuneration & Nomination Committee, with formally delegated duties and responsibilities as described below.

Audit, Risk and Valuations Committee

The Audit, Risk and Valuations Committee is responsible for ensuring the financial performance of the Group is properly reported on and monitored. Its role includes monitoring the integrity of the Group’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Company’s internal control and risk management systems, reviewing the valuations process, approving valuations of assets under management, and overseeing the relationship with the external auditors (including advising on their appointment, agreeing the scope of the audit and reviewing the audit findings). The Audit, Risk and Valuations Committee monitors the need for an internal audit function and is also responsible for establishing, monitoring and reviewing procedures and controls for ensuring compliance with the AIM Rules and Euronext Growth Rules.

The Audit, Risk and Valuations Committee is responsible for monitoring the relationship with the external auditor, PwC, in order to ensure that the auditor’s independence and objectivity are maintained. As part of this responsibility, the Audit, Risk and Valuations Committee reviews the provision of non-audit services by the external auditor and the Audit, Risk and Valuations Committee Chair is consulted by management prior to the external auditor being engaged to provide any such non-audit services

The Audit, Risk and Valuations Committee is chaired by Grahame Cook and its members are Karen Slatford and Richard Pelly, all of whom are independent Non-Executive Directors. The Board is satisfied that Grahame Cook, who is a qualified Chartered Accountant and an experienced Non- Executive Director and audit committee chair, has recent and relevant financial experience to discharge his duties.

The Audit, Risk and Valuations Committee meets at least three times a year at appropriate times in the reporting and audit cycle and otherwise as required. The Audit, Risk and Valuations Committee also meets frequently with the Company’s external auditors.

Please see Terms of Reference of the Audit, Risk and Valuations Committee here.

Remuneration & Nomination Committee

The Remuneration & Nomination Committee is responsible for determining and agreeing with the Board the policy for the remuneration of the Chair and Executive Directors and, within the terms of the agreed policy, recommending the total remuneration packages of such persons including, where appropriate, bonuses, incentive payments, share options or awards. The remuneration of Non-Executive Directors is a matter for the Chair and the Executive Directors. No Director is involved in any decision as to his or her own remuneration. The Remuneration & Nomination Committee is also responsible for issuing awards of shares and options to purchase Ordinary Shares under the Company’s share incentive plans.

The Remuneration & Nomination Committee is responsible for identifying and nominating members of the Board, recommending Directors to be appointed to each committee of the Board and the chair of each such committee. The Remuneration & Nomination Committee also arranges the annual formal Board evaluation process.

The Remuneration & Nomination Committee is chaired by Karen Slatford and its members are Richard Pelly and Grahame Cook (all of whom are independent Non-Executive Directors). The Remuneration & Nomination Committee meets at least twice a year and otherwise as required.

Please see Terms of Reference of the Remuneration and Nomination Committee here.

Board evaluation

As described on page 64 of our Financial Year 2020 Annual Report, the Board conducted a formal performance evaluation process during the year ended 31 March 2020, building on previous Board evaluation which took place in February 2019. The process was carried out by way of detailed questionnaires completed by each member of the Board and covering topics such as the composition of the Board, the quality and timeliness of information provided, relationships between the Board, shareholders, employees and other stakeholders, and succession planning. The responses were collated by the Company Secretary, who presented a summary of the results to the Board for discussion at its meeting in March 2020.

The Board has agreed a number of specific actions to take forward during 2020 in order to improve its efficiency and effectiveness. These included improvements to the Board process, increasing the oversight of risk (principally through the Audit, Risk and Valuations Committee), and focus on the development and communication of corporate culture (to be led by the CEO).

It is intended that Board performance evaluations continue to take place on an annual basis going forwards.

Committee evaluation

Committee evaluation was also conducted by way of questionnaires, with the questions asked including the extent to which the Board's Committees are properly constituted and received appropriate information in order to discharge their duties, whether each of the Committees had performed their role and responsibilities, as detailed in their Terms of Reference and the reporting of the Committee activities to the Board.

We intend to carry out regular Committee evaluation processes in future.

City Code on Takeovers and Mergers – Mandatory Bid

The City Code on Takeovers and Mergers (“the Takeover Code”) applies to the Company. Under Rule 9 of the Takeover Code, if a person acquires an interest in Ordinary Shares which, when taken together with Ordinary Shares already held by them or persons acting in concert with them, carry 30 per cent. or more of the voting rights in the Company; or a person who, together with persons acting in concert with them, is interested in not less than 30 per cent. and not more than 50 per cent. of the voting rights in the Company acquires additional interests in Ordinary Shares which increase the percentage of Ordinary Shares carrying voting rights in which that person is interested, the acquirer and, depending on the circumstances, its concert parties, would be required (except with the consent of the Takeover Panel) to make a cash offer for the outstanding Ordinary Shares at a price not less than the highest price paid for any interests in the Ordinary Shares by the acquirer or its concert parties during the previous twelve months.

Relations with shareholders

Regular communication with institutional shareholders is maintained through individual meetings with the Executive Directors, particularly following the publication of interim and full-year results. During the year, the Chair also wrote to the Company’s largest investors, and attended meetings with significant shareholders. The Board also encourages shareholders to attend and vote at the Company’s General Meetings, at which the Board is also in attendance and available for shareholder questions. Investor relations are a standing item on the Board’s agenda, and the executive team routinely updates the Board as to outcomes of their meetings with shareholders and potential investors. These initiatives help us to understand shareholders’ views and to address their concerns.

This website contains general information about the Company, its Group, the management team and the Group's investments. Details of recent announcements and all information required to be maintained under AIM Rule 26 can be found at the following location.

Shareholders also have an opportunity to raise questions with the Board at the Group's Annual General Meeting, noting that due to COVID-19 restrictions prohibiting public gatherings, the Board has determined that the 2020 AGM will be held as a closed meeting, and therefore members will not be permitted to attend in person.

Investor relations - contact us

info@draperesprit.com

Relations with stakeholders

Due to the Company’s relatively small employee base, the Directors are able to engage directly with employees, and the Non-Executive Directors have an open invitation to attend the Company’s weekly Investment Committee meetings.

The Company’s other key stakeholders are our investee companies, with which we have regular contact, in particular where we have a seat as a director or Board observer of that company. We host an annual Portfolio day for our investee companies, to which our Directors, shareholders and key advisers are also invited. This forms part of a wider events programme targeted towards our investee companies and early stage companies. For our portfolio companies, we participate in an annual CEO conference in Silicon Valley via the Draper Venture Network to connect them to corporates, partners and investors globally. For the wider community, we regularly hold thematic events across the regions and sectors we focus on. In addition to enabling our investee companies and wider partners to meet each other and gain valuable insight, these events also give us regular opportunities to engage with these communities and thereby strengthen our relationships with them. For more information on our stakeholder considerations please see our section 172 Companies Act 2006 disclosures found on pages 48 to 51 of the Financial Year 2020 Annual Report.

Shareholder Information

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No of shares in issue

As at 22 July 2020, Draper Esprit had 118,918,124 ordinary shares of one pence each in the capital of the Company (“Ordinary Shares”) in issue. No Ordinary Shares are held in treasury. In so far as the Company is aware, the percentage of Ordinary Shares not in public hands was c.14%.

Significant shareholdings

Name Ordinary shares Percent
Ireland Strategic Investment Fund 14,004,502 11.78
Jupiter Fund Management Plc 10,470,050 8.80
Baillie Gifford 7,622,483 6.41
T Rowe Price Global Investments 7,562,247 6.36
British Business Bank 7,142,857 6.01
Canaccord Genuity Wealth Management (Hargreave Hale) 6,927,236 5.83
Cazenove Capital (Schroders) 6,752,434 5.68
Armor Advisors 6,165,514 5.18
Brunei Investment Agency 4,761,904 4.00
Blackrock 4,426,551 3.72

Shareholder information as at 22 July 2020.

Dealing Codes

The dealing codes for the Ordinary Shares are as follows:

Name Code
ISIN GB00BY7QYJ50
SEDOL (AIM) BY7QYJ5
SEDOL (ESM) BYZY4T1
Ticker (AIM) GROW
Ticker (ESM) GRW

Details of Exchanges Draper Esprit plc Shares are Traded on

All of the Ordinary Shares of Draper Esprit plc are quoted on the AIM, the market of that name operated by the London Stock Exchange and the Euronext Growth market of Euronext Dublin.

Investment Policy

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Investing Objective and Investment Policy

The investment objective of the Group is to responsibly and sustainably generate capital growth for Shareholders by the creation, funding, incubation and development of high-growth technology businesses.

The Group intends to meet its investment objective by: (i) providing early stage businesses with initial smaller rounds of seed and series A primary investments and co-investments; (ii) making larger series B+ and later series C+ primary investments and co-investments for scaling technology companies; and (iii) undertaking secondary transactions.

The Group will seek exposure to early stage companies which combine technology and service provision, are able to generate strong margins through significant intellectual property or strong barriers to entry and are scalable. The Group will primarily seek exposure to developing companies in, but not limited to, the following sectors of the digital economy: Enterprise, Digital Health & Wellness, Hardware and Consumer Technology.

The Group is committed to a policy of responsible investment that includes due consideration of Environmental, Social and Governance (ESG) factors through the lifecycle of our investments, from pre-screening to exit in alignment with the UN Sustainable Development Goals (UN SGDs) and the UN Principles for Responsible Investment (PRI) (to which Draper Esprit became a signatory in 2019). We aim to use our platform in venture capital to encourage and promote our values and ESG considerations in developing best-in class technology companies and achieving strong returns for our investors

Form of investment

Investments are expected to be mainly in the form of equity, although investments may be by way of debt, convertible securities or investments in specific projects. In the case of equity investments, the Directors intend to take positions (with suitable minority protection rights where appropriate), primarily in unquoted companies. Draper Esprit (acting through the relevant Group entity) is an active investor, often taking a board position on the investee company.

Given the time frame to fully maximise the value of an investment, the Board expects that investments will be held for the medium to long term, although short term disposals of assets are also considered where the return on investment is commercially and/or circumstantially compelling and in line with the Group's investment strategy. The Directors intend to re-invest the proceeds of disposals in accordance with the Group’s investing policy unless, at the relevant time, the Directors believe that there are no suitable investment opportunities, in which case the Directors will consider returning the proceeds to shareholders in a tax efficient manner.

Borrowing

On 28 May 2019, the Board approved a credit agreement for a £50.0 million facility with Silicon Valley Bank and Investec to fund the future growth plans of portfolio companies. In June 2020, the term was extended by 1 year to 2023 and increased its size by £10.0 million to £60.0 million in line with the growing portfolio.

The Company will seek to maintain a conservative level of gearing and limit its borrowings to a maximum of 25 percent of the Group's net asset value.

Treasury

Cash held by the Group pending investment, reinvestment or distribution is managed by the Group in accordance with the Group’s treasury policy and placed in bank deposits with major global financial institutions, in order to protect the capital value of the Group’s cash assets. Investments are held by subsidiaries incorporated for the purpose of holding investments.

Esprit Capital Partners LLP and Encore Venture LLP (both of which are FCA-regulated Alternative Investment Fund Managers and wholly owned subsidiaries of the Company) manage the historic Esprit Funds and Encore Funds in accordance with each of their respective investment objective and policy. The investment objective and policy applicable to the historic Esprit Funds and Encore Funds is distinct from the investment objective and investment policy of the Group.

Restrictions (lock-in agreements, transfer of shares, etc)

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There are no lock-in arrangements in force or other restrictions on the transfer of Ordinary Shares.

Advisors

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Company Secretary

Prism CoSec Limited, Elder House St Georges Business Park 207 Brookands Road Weybridge Surrey KT13 0TS United Kingdom

Nominated Adviser and Joint Broker

Numis Securities Limited 10 Paternoster Row London EC2M 7LT United Kingdom

Euronext Growth Adviser and Joint Broker

Goodbody Stockbrokers UC, Ballsbridge Park Ballsbridge Dublin 4 Ireland

Legal Advisers to the Company (as to English law)

Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU United Kingdom

Reporting Accountants and Auditors

PricewaterhouseCoopers LLP, 7 More London Riverside, London, SE1 2RT, United Kingdom

Registrar

Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA United Kingdom

Legal Advisers to the Company (as to Irish law)

Maples and Calder LLP, 75 St. Stephen’s Green Dublin 2 Ireland

Financial Public Relations

Powerscourt Limited, 1 Tudor Street London EC4Y 0AH United Kingdom

Constitutional Documents

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DISCLAIMER & RISK WARNING – IMPORTANT

The terms and conditions set out below apply to your use of this section of the Draper Esprit website.

Please read this important information before confirming that you understand the information contained by clicking on the acceptance button at the foot of this window.

The information on this website is intended to be used for reference purposes only by persons in the UK. Viewing the materials you seek to access may not be lawful in certain jurisdictions outside of the UK. In other jurisdictions, only certain categories of person may be allowed to view such materials. Any person who wishes to view these materials must first satisfy themselves that they are not subject to any local requirements that prohibit or restrict them from doing so.

This website provides general information about Draper Esprit plc and its group of companies. The information contained in this website, including any material you may hereafter access, does not constitute an offer of securities for sale in the United States, Canada, Japan or any other jurisdiction. Securities may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended, or an exemption from registration. For US regulatory reasons, US Residents are not to enter this part of the website.

Draper Esprit plc is not offering any securities or services in the United States or to US residents through any Draper Esprit website. A "US Resident" includes any US person, as well as (i) any natural person who is only temporarily residing outside the United States, (ii) any account of a US person over which a non-US fiduciary has investment discretion or any entity, which, in either case, is being used to circumvent the registration requirements of the US Investment Company Act of 1940, and (iii) any employee benefit or pension plan that does not have as its participants or beneficiaries persons substantially all of whom are not US persons. In addition, for these purposes, if an entity either has been formed or is operated for the purpose of investing in a particular security or obtaining a particular service, or facilitates individual investment decisions, none of the beneficiaries or other interest holders of such entity may be US Residents. Terms used in this paragraph (including the term "US person") have the meanings given to them in Regulation S under the US Securities Act of 1933.

No public offering or sale of securities in the United States, Canada or Japan is contemplated. The information contained in this website, including any material you may hereafter access, is not to be provided by you to any other person, in electronic form or otherwise, and is not to be accessed, published, copied, forwarded or otherwise disseminated in or into the United States, Canada or Japan.

If you are not permitted to view materials on this webpage or are in any doubt as to whether you are permitted to view these materials, please exit this webpage.

Draper Esprit plc is managed by Esprit Capital Partners LLP. No warranty is made by Draper Esprit plc or by Esprit Capital Partners LLP as to the accuracy or completeness of any information on this website. Any price information or indications of past performance on this website are for information purposes only, are subject to change without notice and can in no way be construed as a guarantee of future performance. There can be no guarantee that any investment objectives will be achieved

It should be remembered that the price of shares in Draper Esprit plc and the income from them can go down as well as up and there is a significant risk of losing capital. We strongly encourage private investors to seek professional financial advice, before reviewing any of our literature.

Investment in smaller companies which are unquoted involves a higher degree of risk than investment in larger companies. Furthermore, the market for shares in smaller companies is typically less liquid than that for shares in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such shares. The spread between the bid and offer price of shares may be wide and therefore the price used for valuation may not be achievable. Any change of governmental, economic, political, monetary or fiscal policy could materially affect the operation of a company or investment fund and/or its ability to achieve or maintain its tax status.