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AIM and ESM 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 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 Board has decided to apply the QCA Corporate Governance Code, and our Chairman'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 Company’s investment policy and strategy and have overall responsibility for the Company’s activities including the review of investment activity and performance. The Directors will meet at least ten times per annum, and the Audit Committee of the Company will meet at least three times per annum.

The Directors are as follows:

Board Members

Karen Slatford (Non-executive Chair)

Between 1983 and 2001 Karen was at Hewlett Packard, where in 2000 she became Vice President and General Manager Worldwide Sales & Marketing for the Business Customer Organisation. Karen is currently Chair of The Foundry, a leading special effects software company, Senior Independent Director of Micro Focus and Accesso Technology Group and a Non-Executive Director of Alfa Financial Software. Karen holds a BA Honours degree in European Studies from Bath University and a Diploma in Marketing.

Simon Christopher Cook (Chief executive officer)

Simon has been active in the UK venture capital industry since 1995. Previously, Simon was a Partner with Elderstreet Investments and a Director at 3i in Cambridge. In 2006, he led the spin-out of Cazenove Private Equity and acquisition of Prelude Ventures and he negotiated the Group’s partnership with the Draper Venture Network. Simon has been involved with a number of successful technology start-ups including Cambridge Silicon Radio (IPO), Virata (IPO), Horizon Discovery (IPO), nCipher (IPO), Lovefilm (sale to Amazon), Zeus (sale to Riverbed) and KVS (sale to Veritas). Simon currently sits on the Boards of Graze, Lyst, Sportpursuit, Crowdcube (as an observer) and Trustpilot. Prior to venture capital, Simon worked as a strategy and IT consultant at KPMG, where he established the Digital Media strategy consulting practice, and as a computer games developer including running his own development company started at age 19. Simon is a graduate of University of Manchester Institute of Science and Technology (UMIST) with a BSc in Computation. Simon is a former member of the EVCA Venture Platform group and was voted VC personality of the year 2008.

Stuart Malcolm Chapman (Chief operating officer)

Prior to joining the Group, Stuart was a Partner with 3i Ventures in London. He was also a founding Partner of 3i US, based in Menlo Park, CA from 1999 until 2003. Stuart had 13 years of venture capital experience with 3i in Europe and the US. While he was in the US, Stuart was responsible for 3i’s investments in Still Secure, CollegeNet, Appshop and Digital 5. Following his return from the US in October 2003 he was responsible for 3i’s investments in The Cloud (sale to Sky), Searchspace and Magic 4 (sale to Openwave). Stuart was responsible for Esprit’s investments in Lagan Technology and currently manages Strikead and M-Files. Stuart is a member of the British Venture Capital Association Venture Committee. Prior to 3i, Stuart was involved in software and systems implementations for Midland Bank. He is a graduate of Loughborough University.

Grahame David Cook (Non-executive director)

Grahame Cook is an experienced FTSE and AIM Non-Executive, with extensive experience as an Audit Committee Chairman. With a background in banking, where he has specialised in the life sciences, pharma and biotech sectors, Grahame 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 and worked within audit and corporate investigations. Subsequent positions include at UBS, where he was a member of the global investment banking management committee and global head of equity advisory, and at WestLB Panmure, where he was joint Chief Executive Officer. Grahame currently sits on a number of Boards, chairing four, including Sinclair Pharma plc and Morphogenesis Inc.

Richard Fowler Pelly (Non-executive director)

Richard is a specialist in the financing of SMEs and is a Non-Executive Director of The Strategic Banking Corporation of Ireland and MicroBank Spain as well as the Social Investment Business in the UK. Up until April 2014, he was the Chief Executive of the European Investment Fund ("EIF"). Before joining the EIF in April 2008, he was Managing Director of structured asset finance at Lloyds TSB Bank in London from 2005-2007. From 1998-2005, he worked for GE Capital, first as Chairman and CEO of Budapest Bank in Hungary and then as CEO of GE UK Business Finance. Prior to GE, Richard worked for Barclays Bank in various functions in the UK and in France from 1977-1997. Richard holds an honours degree in psychology from Durham University and obtained an MBA with distinction from INSEAD Fontainbleau. 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 Chairman, is responsible for leading an effective Board, upholding high standards of corporate governance throughout the Group, partcularly at Board level, and ensuring appropriate strategic focus and direction.

The Chief Executive Officer (Simon Cook) 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, both independent Non-Executive Directors, chair the Audit Committee and the Remuneration & Nomination Committee respectively. 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 Operating Officer, and ensures that the Board is properly briefed on the operating performance of the business including in respect of the investment portfolio, HR matters, risk and compliance.

Ben Wilkinson is the Company's Chief Financial Officer. Ben is not a Board Director, but attends Board meetings to report on matters including the financial performance of the business and investor relations.

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. 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 Committee and Remuneration & Nomination Committee.

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

- Matters relating to management structure and appointments;

- Any strategic or policy considerations;

- Certain transactions including acquisitions and disposals and transactions not in the ordinary course of business;

- Finance matters including the final approval of annual and interim accounts and accounting policies;

- Certain legal, administrative, pension and other benefits related matters; and

- Approval of investments over £10m.

Committees (Audit, Remuneration, Nominations)

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

Audit Committee

The Audit Committee is responsible for monitoring the integrity of the Company’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Company’s internal control and risk management systems 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 Committee monitors the need for an internal audit function.

The Audit Committee is chaired by Grahame Cook and its members are Karen Slatford and Richard Pelly. The Audit Committee meets at least three times a year at appropriate times in the reporting and audit cycle and otherwise as required. The Audit Committee also meets frequently with the Company’s external auditors.

Remuneration & Nomination Committee

The Remuneration & Nomination Committee is responsible for determining and agreeing with the Board the framework for the remuneration of Executive Directors and other designated senior executives and, within the terms of the agreed framework, determining the total individual remuneration packages of such persons including, where appropriate, bonuses, incentive payments, share options or other long term incentive plans. The remuneration of Non-Executive Directors is a matter for the Chairman 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 proposed share incentive plans.

The Remuneration & Nomination Committee is also 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 Nominations Committee will also arrange for evaluation of the Board.

The Remuneration & Nomination Committee is chaired by Richard Pelly and its members are Karen Slatford and Grahame Cook. The Remuneration & Nomination Committee meets at least twice a year and otherwise as required.

Board evaluation

As described on page 38 of our 2018 Annual Report, we conducted our first formal Board performance evaluation during the year. The process was carried out by way of tailored questionnaires completed by each member of the Board and Committees. We intend to carry out regular Board evaluation processes in future.

The questions covered a variety of topics including the composition of the Board, the quality and timeliness of information provided to the Board, succession planning, and shareholder engagement. Responses were collated by the Chairman and fed back to the Board at its meeting in March 2018 in order for the Board to have an open follow-up discussion about the results. The Chairman reported back to the Board that, in general, the responses found the Board to be operating effectively. Actions have been agreed to improve the following areas highlighted through the evaluation process:

- Shareholder engagement and, in particular, engagement between Non-Executive Directors and shareholders;

- The Company's approach to succession planning;

- Corporate Governance requirements including the requirement to publish a comply or explain statement against a recognised corporate governance code; and

- Development of Board meeting papers.

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 him or persons acting in concert with him, carry 30 per cent. or more of the voting rights in the Company; or a person who, together with persons acting in concert with him, 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 per cent. age 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 insitutional shareholders is maintained through individual meetings with the Executive Directors and CFO, particularly following the publication of interim and full-year results. Investor relations is 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.

This website contains general information about the Company, 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 have an opportunity to raise questions with the Board at the Group's Annual General Meeting.

Investor relations - contact us

info@draperesprit.com

Shareholder Information

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No of shares in issue

As at 12 September 2018, Draper Esprit had 99,057,545 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.40%.

Significant shareholdings

Name Ordinary shares Percent
Invesco Asset Management 22,748,677 23.0
Ireland Strategic Investment Fund 14,004,502 14.1
British Patient Capital Limited 7,142,857 7.2
Canaccord Genuity Wealth Management 5,611,896 5.7
Old Mutual Global Investors 5,310,050 5.4
Blackrock 4,933,208 5.0
Brunei Investment Agency 4,761,904 4.8
Baillie Gifford 4,407,440 4.4
China Huarong International Holdings 3,333,333 3.4

Shareholder information as at 12 September 2018.

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 Alternative Investment Market (AIM) of the London Stock Exchange and the Enterprise Securities Market (ESM) of the Irish Stock Exchange

Investment Policy

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Investing Objective and Investment Policy

The investment objective of the Group is to 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, are scalable and require relatively modest investment. The Group will primarily seek exposure to developing companies in, but not limited to, the following sectors of the digital economy: Consumer Technology, Enterprise Technology, Hardware and Healthcare.

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 cannot be ruled out in exceptional or opportunistic circumstances. 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

Draper Esprit does not currently intend to utilise gearing. However, Draper Esprit may, in the future, use gearing if it believes it will enhance Shareholder returns over the longer term. If, in the future, Draper Esprit does decide to introduce gearing it would seek to maintain a conservative level of gearing and would intend to limit Draper Esprit’s borrowings to a maximum of 25 per cent. of Draper Esprit’s net asset value at the time of investment.

Treasury

Cash held by the Group pending investment, reinvestment or distribution will be 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 expected to be held by the Company or a subsidiary to be incorporated for the purpose of holding an investment.

Esprit Capital, Encore Ventures and Draper Esprit Secondaries manage the Historic Esprit Funds, Encore Funds and Secondary Funds respectively in accordance with each of their respective investment objective and policy each of which, for the avoidance of doubt, is distinct from the investment objective and investment policy of the Group and the investment objective and investment policy of the other Historic Esprit Funds, Encore Funds and Secondary Funds.

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

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Simon Cook, Stuart Chapman, Brian Caulfield, Jonathan Freuchet, Graham Redman and Vishal Gulati hold, in aggregate, 6,500,000 Ordinary Shares at Admission. Each of Simon Cook, Stuart Chapman and Brian Caulfield have agreed that, if he becomes a bad leaver under the customary bad leaver provisions, a proportion of the Ordinary Shares held by him immediately following Admission will be bought back by the Company (or a nominee of the Company) for an aggregate consideration of £1.00 as follows: (i) where he becomes a ‘‘bad leaver’’ within one year of Admission, 50 per cent.; (ii) where he becomes a ‘‘bad leaver’’ following the first anniversary of Admission but prior to the second anniversary of Admission, 37.5 per cent.; (iii) where he becomes a ‘‘bad leaver’’ following the second anniversary of Admission but prior to the third anniversary of Admission, 25 per cent.; and (iv) where he becomes a ‘‘bad leaver’’ following the third anniversary of Admission but prior to the fourth anniversary of Admission, 12.5 per cent. Each of Jonathan Freuchet, Graham Redman and Vishal Gulati have also agreed that, if he becomes a bad leaver under the same customary bad leaver provisions, 1/24th of the Ordinary Shares held by him immediately following Admission will be bought back by the Company (or a nominee of the Company) for an aggregate consideration of £1.00 for each month he leaves prior to the second anniversary of Admission. Each of Simon Cook, Stuart Chapman, Brian Caulfield, Jonathan Freuchet, Graham Redman and Vishal Gulati has covenanted to Numis Securities Limited and the Company not to dispose of any of the Ordinary Shares held by him at Admission, (or subsequently acquired) for a period of two years from Admission except with the consent of Numis or in other limited circumstances. Each of Simon Cook, Stuart Chapman and Brian Caulfield have agreed not to dispose of 37.5 per cent., 25 per cent. and 12.5 per cent. of the Ordinary Shares held by each of them at Admission (on the same basis as described above) for the third, fourth and fifth years following Admission respectively.

There are no restrictions on the transfer of the Ordinary Shares.

Advisors

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Company Secretary

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

Nominated Adviser and Joint Broker

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

ESM Adviser and Joint Broker

Goodbody Stockbrokers 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

PWC UK 1 Embankment Place London WC2N 6RH

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 75 St. Stephen’s Green Dublin 2 Ireland

Financial Public Relations

MHP Communications 6 Agar Street London WC2N 4HN England

Constitutional Documents

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