Source - RNS
RNS Number : 0889K
Draper Esprit PLC
16 September 2016
 

For immediate release: 16 September 2016

DRAPER ESPRIT PLC

("DRAPER ESPRIT")

FINAL RESULTS FOR ESPRIT CAPITAL PARTNERS LLP

FORMERLY KNOWN AS DRAPER ESPRIT LLP

FOR THE YEAR ENDED 31 MARCH 2016

Draper Esprit (AIM: GROW, ESM: GRW), one of the leading venture capital investors involved in the creation, funding and development of high-growth digital technology businesses in the UK, the Republic of Ireland and Europe, today publishes historical financial information in respect of Esprit Capital Partners LLP ("ECP") (formerly known as Draper Esprit LLP) for the year ended 31 March 2016.  ECP was acquired by Draper Esprit at the time of its Initial Public Offering in June 2016 ("IPO"), along with the Initial Portfolio. 

The admission document published at the time of the IPO contained audited historical financial information on ECP for the three years ended 31 March 2015 and unaudited financial information for the six months ended 30 September 2015.  The audited historical financial performance in respect of ECP for the year ended 31 March 2016 is now being released in accordance with the rules of AIM and ESM. However, as explained in the Admission Document, the historical financial performance of ECP is of limited relevance to the performance of Draper Esprit going forward.

As set out in the Admission Document, the net asset value ("NAV") of the Initial Portfolio as at 31 December 2015 was £74.8 million. The unaudited NAV of the Initial Portfolio as at 31 March 2016 was £76.8 million.

On 6 September 2016 Draper Esprit announced that Intel, a Santa Clara based global technology company (NASDAQ: INTC), had made a conditional offer for portfolio Company Movidius Ltd ("Movidius"), which will result in an estimated total cash return of approximately £27 million for Draper Esprit before provision for accrued tax and carried interest payments.

The Group had an unaudited pro-forma Net Asset Value ("NAV") including goodwill at admission of £128.7 million with the disclosed audited NAV of the holding in Movidius of £7.5m as at 31 December 2015.

The sale is expected to complete before the end of 2016 and is estimated to increase the Group's total NAV by approximately 21%, when compared to the pro-forma NAV (excluding goodwill and cash) reported at the time of the Group's admission to AIM / ESM in June 2016. The Group intends to invest the proceeds of the transaction in line with its existing investment policy.

The acquisition of ECP occurred after 31 March 2016 and consolidated results for Draper Esprit are not presented at this date. Consolidated results for Draper Esprit for the 6 months ended 30 September 2016 will be published in due course, including the NAV as at 30 September 2016.

Simon Cook, CEO Draper Esprit commented:

"Since the IPO, we have continued to experience strong deal-flow and have invested £3.1 million to acquire a stake in Stockholm-based digital health company Lifesum (www.lifesum.com), alongside Nokia Growth Partners, and existing investors Bauer Media and VC SparkLabs Global Ventures.  Lifesum, launched in 2013, has created one of Europe's fastest growing health apps with over 15 million users.

"We were also extremely pleased to have announced the sale of Movidius to Intel.  This is a great example of our business model in action.  We were able to help an incredible management team with superior European technology to become a leading global platform.  Movidius' technology is enabling the next generation of computing devices with vision interfaces and the sale will allow the business to take full advantage of Intel's global leadership and strong market position and the obvious market benefits this will bring."

"Our motivation for listing our business model was twofold. Firstly, we wanted to be able to invest for longer in our emerging companies and to be able to build bigger stakes as companies remained private for longer periods, capturing more value for shareholders. Secondly, we wanted to further democratise funding for entrepreneurs.  We believe strongly in the investment opportunities in Europe and despite the doom-mongers' predictions, little has changed for us post the Brexit vote. If anything the macro environment is now even more attractive for our permanent capital model."

"We look forward to presenting a more meaningful update in our first trading update, which is planned for early October."

 

*-ends-*

Enquiries

Draper Esprit plc

Simon Cook (Chief Executive Officer)

Brian Caulfield (Managing Partner)

+44 (0)20 7931 8800

Numis Securities

Nominated Adviser & Joint Broker

Alex Ham

Garri Jones

Richard Thomas

Paul Gillam

+44 (0)20 7260 1000

Goodbody Stockbrokers

ESM Adviser & Joint Broker

Don Harrington

Linda Hickey

Dearbhla Gallagher

+353 1 667 0420

Belvedere Communications (PR)

John West

Kim van Beeck

+44 (0)20 3567 0510

 

 

 

 

 

 

 

 

 

FINANCIAL STATEMENTS 

Esprit Capital Partners LLP

Formerly known as Draper Esprit LLP

 

For the year ended 31 March 2016

Registered number OC318087

Information

Designated Members

S C Cook (resigned 15 June 2016)

S M Chapman (resigned 15 June 2016)

G Redman (resigned 15 June 2016)

Draper Esprit plc (appointed 15 June 2016

Draper Esprit Nominee Limited (appointed 15 June 2016)

LLP Registered Number

OC318087

Registered Office

c/o Draper Esprit plc, 1010 Cambourne Business Park, Cambridge, CB23 6DP

Independent Auditor

Grant Thornton UK LLP, 30 Finsbury Square, London, EC2P 2YU

 

Members' Report

for the year ended 31 March 2016

 

The members present their annual report together with audited financial statements of Esprit Capital Partners LLP (formerly Draper Esprit LLP) for the year ended 31 March 2016.

Principal Activities

The principal activity of the Group is the provision of investment management services and consultancy.

Designated Members

S C Cook, S M Chapman and G Redman were designated members of the LLP throughout the period.

Members' Capital and Interests

Each member's subscription to the capital of the LLP determines their share of the profit and is non-refundable. Detail of changes in members' capital in the year ended 31 March 2016 are set out in the financial statements.

Members are remunerated from profits of the LLP and are required to make their own provision for pensions. Profits are allocated and divided between members after finalisation of the financial statements. Members draw a proportion of their profit shares monthly during the year in which it is made, with the balance of profit being distributed after the year end, subject to the cash requirements of the business.

Business Review

The LLP was incorporated on 1 March 2006 and was authorised by the FCA on 27 June 2006 to perform certain regulated activities. Encore Ventures LLP, a controlled subsidiary of Esprit Capital Partners LLP, was incorporated on 31 July 2009 and was authorised by the FCA on 9 March 2010 to perform regulated activities.

During the year there was a restructuring of the investment in Encore Ventures LLP, whereby the LLP transferred c. 30% of its interest to the two individual members of Encore Ventures LLP at cost (£3,000).

The consolidated income statement shows a profit for the year, after members' remuneration charged as an expense of £361,000 (2015: loss of £168,000, 2014: loss of £104,000). The Group maintains sufficient capital and the members consider the result for the period to be satisfactory.

On 15th June 2016 the LLP and Group were acquired by Draper Esprit plc as part of an AIM listing which also included acquisition of the Esprit Capital III LP fund which Esprit Capital Partners manages.

Members' Responsibilities Statement

The members are responsible for preparing the financial statements in accordance with applicable law and accounting standards.

The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (the 2008 Regulations) require the members to prepare financial statements for each financial year.  Under the law the members have elected to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs).  The financial statements are required by law to give a true and fair view of the state of affairs of the Group and LLP and of the profit or loss of the Group for that period. In preparing these financial statements, the members are required to:

·      Select suitable accounting policies and then apply them consistently;

·      Make judgements and accounting estimates that are reasonable and prudent;

·      State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained within the financial statements;

·      Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business.

The members are responsible for keeping adequate accounting records that are sufficient to show and explain the LLP and the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure the financial statements comply with the 2008 Regulations. They are also responsible for safeguarding assets of the LLP and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The members confirm that:

·      so far as each member is aware, there is no relevant audit information of which the LLP's auditor is unaware;

·      the members have taken all the steps they ought to have taken as members in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

The members are responsible for the maintenance and integrity of the corporate and financial information included on the LLP's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Auditor

Grant Thornton UK LLP, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with section 487(2) of the Companies Act 2006 as modified by the Limited Liability Partnerships Regulations 2008, unless the partnership received notice under section 488(1) of the Companies Act 2006 as modified by the Limited Liabilities Partnership regulations 2008.

This report was approved by the members on 14 September 2016 and signed on their behalf by:

 

G Redman

for and on behalf of Draper Esprit plc, Designated Member

 

Independent auditor's report to the members of Esprit Capital Partners LLP

We have audited the financial statements of Esprit Capital Partners LLP for the year ended 31 March 2016 which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Esprit Capital Partners LLP Statement of Financial Position, Consolidated Statement of Cash Flows, Esprit Capital Partners LLP Statement of Cash Flows, Consolidated Statement of Changes in Members' Equity, Esprit Capital Partners LLP Statement of Changes in Members' Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006, as applied to limited liability partnerships by the Limited Liability Partnership (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.  Our audit work has been undertaken so that we might state to the members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the partnership and the members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of members and auditor

As explained more fully in the Members' Responsibilities Statement, the members are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion the financial statements:

·    give a true and fair view of the state of the Group's and of the parent limited liability partnership's affairs as at 31 March 2016 and of its profit for the year then ended;

 

·    have been properly prepared in accordance with IFRSs as adopted by the European Union; and

 

·    have been prepared in accordance with the requirements of the Companies Act 2006 as applied to limited liability partnerships by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 as applied to limited liability partnerships requires us to report to you if, in our opinion:

·   adequate accounting records have not been kept by the parent limited liability partnership, or

·   returns adequate for our audit have not been received from branches not visited by us; or

·   the financial statements are not in agreement with the accounting records and returns; or

·   we have not received all the information and explanations we require for our audit.

 

 

William Pointon

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

London

14 September 2016

 

Consolidated income statement for the years ended 31 March 2016, 2015 and 2014

 

 

2016

2015

2014

 

Note

£'000s

£'000s

£'000s

Revenue

5

2,466

2,796

3,174

Staff costs and members' remuneration

7

(1,499)

(1,660)

(2,234)

Depreciation and amortisation

10

(3)

(6)

(8)

Other operating charges

6

(708)

(962)

(984)

Fund raising costs

 

(172)

(242)

(13)

Revaluation of investments held at FVTPL

19

247

(71)

(29)

Operating profit/(loss)

 

331

(145)

(94)

 

 

 

 

 

Finance income/(expense)

 

30

(23)

(10)

Profit/(Loss) on ordinary activities before tax

 

361

(168)

(104)

 

 

 

 

 

Tax expense in corporate subsidiaries

8

-

-

-

Profit/(Loss) for the financial year before members' profit shares

 

361

(168)

(104)

 

 

 

 

 

Profit for the year attributable to non-controlling interests

 

193

242

165

Profit/(Loss) available for discretionary division among members

 

168

(410)

(269)

 

Consolidated statement of comprehensive income for the years ended 31 March 2016, 2015 and 2014

 

 

2016

2015

2014

 

 

£'000s

£'000s

£'000s

Profit/(Loss) available for discretionary division among members

 

361

(168)

(104)

 

 

 

 

 

Other Comprehensive Income

 

 

 

 

Items that will be reclassified subsequently to profit and loss:

 

 

 

 

  Foreign exchange differences on consolidation

 

42

(91)

31

Total comprehensive income for the financial year, net of tax

 

403

(259)

(73)

 

 

 

 

 

Total comprehensive income for the financial year attributable to:

 

 

 

 

  Members

 

210

(501)

(238)

  Non-controlling interests

 

193

242

165

 

 

 

 

 

Total comprehensive income for the financial year

 

403

(259)

(73)

 

The notes below form part of these financial statements.

 

Consolidated statement of financial position as at 31 March 2016, 2015, 2014 and 1 April 2013

 

 

2016

2015

2014

2013

 

Note

£'000s

£'000s

£'000s

£'000s

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

10

4

5

11

12

Investments

12

2,631

2,341

2,427

2,268

Total non-current assets

 

2,635

2,346

2,438

2,280

 

 

 

 

 

 

Current assets

 

 

 

 

 

Trade and other receivables

13

535

813

868

794

Cash and cash equivalents

14

750

521

1,393

2,521

Total current assets

 

1,285

1,334

2,261

3,315

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

15

955

904

1,079

1,226

Members Capital (refundable)

 

-

10

10

10

Total current liabilities

 

955

914

1,089

1,236

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

955

914

1,089

1,236

Net assets

 

2,965

2,766

3,610

4,359

 

 

 

 

 

 

Equity

 

 

 

 

 

Members' reserves

 

2,838

2,673

3,426

4,210

Non-controlling interests

 

(8)

-

-

-

Currency translation differences on group undertakings

 

51

9

100

69

Members' capital (non-refundable)

 

84

84

84

80

Total equity

 

2,965

2,766

3,610

4,359

 

 

 

 

 

 

Members' interests

 

 

 

 

 

Members' capital

 

84

84

84

80

Members' reserves

 

2,838

2,673

3,426

4,210

Amounts due (from) members (included in trade and other receivables)

 

-

(16)

(16)

(12)

Total members' interests

17

2,922

2,741

3,494

4,278

 

 

 

 

 

 

 

The financial statements were approved and authorised for issue by the Members and were signed for and on their behalf on 14 September 2016.

 

 

 

 

G Redman

for and on behalf of Draper Esprit plc, Designated Member

 

The notes below form part of these financial statements.

 

Esprit Capital Partners LLP statement of financial position as at 31 March 2016, 2015, 2014 and 1 April 2013

 

 

2016

2015

2014

2013

 

Note

£'000s

£'000s

£'000s

£'000s

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

10

4

5

11

12

Investments

 

7

10

10

10

Total non-current assets

 

11

15

21

22

 

 

 

 

 

 

Current assets

 

 

 

 

 

Trade and other receivables

13

958

669

1,013

949

Cash and cash equivalents

14

374

91

140

91

Total current assets

 

1,332

760

1,153

1,040

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

15

590

739

719

457

Members Capital (refundable)

 

-

10

10

10

Total current liabilities

 

590

749

729

467

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

590

749

729

467

Net assets/(liabilities)

 

753

26

445

595

 

 

 

 

 

 

Equity

 

 

 

 

 

Members' reserves

 

669

(58)

361

515

Members' capital (non-refundable)

 

84

84

84

80

Total equity

 

753

26

445

595

 

 

 

 

 

 

Members' interests

 

 

 

 

 

Members' capital

 

84

84

84

80

Members' reserves

 

669

(58)

361

515

Amounts due (from) members (included in trade and other receivables)

 

-

(16)

(16)

(16)

Total members' interests

17

753

10

429

579

 

 

 

 

 

 

 

The financial statements were approved and authorised for issue by the Members and were signed for and on their behalf on 14 September 2016.

 

 

G Redman

for and on behalf of Draper Esprit plc, Designated Member

 

The notes below form part of these financial statements.

 

Consolidated statement of cash flows for the years ended 31 March 2016, 2015 and 2014

 

 

2016

2015

2014

 

Note

£'000s

£'000s

£'000s

Cash flows from operating activities

 

 

 

 

Profit/(loss) for the financial year available for discretionary division amongst members

 

361

(168)

(104)

 

 

 

 

 

Adjustments to reconcile profit/(loss) to net cash flows generated by/(used in) operating activities

 

 

 

 

  Revaluation of investments at FVTPL

 

(247)

71

29

  Finance (income)/expense

 

(30)

23

10

  Depreciation and amortisation

10

3

6

8

  Decrease/(increase) in trade and other receivables

 

61

255

(74)

  Increase/(decrease) in trade and other payables

 

(49)

(175)

(137)

  Net cash generated by/(used in) operating activities

 

99

12

(268)

 

 

 

 

 

Tax paid by corporate subsidiaries

 

-

-

-

  Net cash inflow/(outflow) from operating activities

 

99

12

(268)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

  Payments from/(to) members

 

190

(543)

(515)

  Payments to non-controlling interests

 

(204)

(242)

(165)

  Interest received/(paid)

 

30

(23)

(10)

  Capital contributions by members

17

16

-

4

  Net cash inflow/(outflow) from financing activities

 

32

(808)

(686)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

  Purchase of property, plant and equipment

10

(2)

-

(7)

  Purchase of investments

19

(532)

(353)

(179)

  Proceeds from sale of investments

 

592

354

-

  Net cash inflow/(outflow) from investing activities

 

58

1

(186)

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

189

(795)

(1,140)

 

 

 

 

 

Cash and cash equivalents at beginning of year

14

521

1,393

2,521

Impact of foreign exchange revaluation

 

40

(77)

12

Cash and cash equivalents at end of year

 

750

521

1,393

 

The notes below form part of these financial statements.

 

Esprit Capital Partners LLP statement of cash flows for the years ended 31 March 2016, 2015 and 2014

 

 

2016

2015

2014

 

Note

£'000s

£'000s

£'000s

Cash flows from operating activities

 

 

 

 

Profit/(loss) for the financial year available for discretionary division amongst members

 

727

(419)

(154)

 

 

 

 

 

Adjustments to reconcile profit/(loss) to net cash flows generated by/(used in) operating activities

 

 

 

 

  Finance (income)/expense

 

(7)

-

-

  Depreciation and amortisation

10

3

6

8

  Decrease/(increase) in trade and other receivables

 

(305)

344

(64)

  Increase/(decrease) in trade and other payables

 

(149)

20

262

  Net cash generated by/(used in) operating activities

 

269

(49)

52

 

 

 

 

 

Tax paid by corporate subsidiaries

 

-

-

-

  Net cash inflow/(outflow) from operating activities

 

269

(49)

52

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

  Payments from/(to) members

 

-

-

-

  Capital contributions by members

17

16

-

4

  Net cash inflow/(outflow) from financing activities

 

16

-

4

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

  Purchase of property, plant and equipment

10

(2)

-

(7)

  Net cash inflow/(outflow) from investing activities

 

(2)

-

(7)

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

283

(49)

49

 

 

 

 

 

Cash and cash equivalents at beginning of year

14

91

140

91

Cash and cash equivalents at end of year

 

374

91

140

 

The notes below form part of these financial statements.

 

Consolidated statement of changes in members' equity for the years ended 31 March 2014, 2015 and 2016

 

Members capital classified as equity

Members other interests

 

Foreign exchange reserve

Amount attributable to owners of parent

Non-controlling interests

Total

 

 

 

 

 

 

 

 

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

Balance at 31 March 2013

80

4,210

69

4,359

-

4,359

 

 

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

(269)

-

(269)

165

(104)

Other comprehensive income

-

-

31

31

-

31

Total comprehensive income

-

(269)

31

(238)

165

(73)

Amounts withdrawn by members

-

(515)

-

(515)

-

(515)

Capital introduced by members

4

-

-

4

-

4

Transactions with non-controlling interests

-

-

-

-

(165)

(165)

 

 

 

 

 

 

 

Balance at 31 March 2014

84

3,426

100

3,610

-

3,610

 

 

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

(410)

-

(410)

242

(168)

Other comprehensive income

-

-

(91)

(91)

-

(91)

Total comprehensive income

-

(410)

(91)

(501)

242

(259)

Amounts withdrawn by members

-

(343)

-

(343)

-

(343)

Transactions with non-controlling interests

-

-

-

-

(242)

(242)

 

 

 

 

 

 

 

Balance at 31 March 2015

84

2,673

9

2,766

-

2,766

 

 

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

168

-

168

193

361

Other comprehensive income

-

-

42

42

-

42

Total comprehensive income

-

168

42

210

193

403

Amounts withdrawn by members

-

-

-

 

-

-

Transactions with non-controlling interests

-

(3)

-

(3)

(201)

(204)

 

 

 

 

 

 

 

Balance at 31 March 2016

84

2,838

51

2,973

(8)

2,965

 

The notes below form part of these financial statements.

 

Esprit Capital Partners LLP statement of changes in members' equity for the years ended 31 March 2014, 2015 and 2016

 

Members' other interests

Members Capital

Total

 

 

 

 

 

£'000s

£'000s

£'000s

Balance at 31 March 2013

515

80

595

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

(154)

-

(154)

Capital introduced

-

4

4

 

 

 

 

Balance at 31 March 2014

361

84

445

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

(419)

-

(419)

 

 

 

 

Balance at 31 March 2015

(58)

84

26

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

727

-

727

 

 

 

 

Balance at 31 March 2016

669

84

753

 

The notes below form part of these financial statements.

 

Notes to the financial statements for the years ended 31 March 2016, 2015 and 2014

1. General information

 

Esprit Capital Partners LLP is engaged in investment management activities. Esprit Capital Partners LLP's registered address is 1010 Cambourne Business Park, Cambourne, Cambridge, CB23 6DP.

 

Information on the Group's structure is given in note 11. Information on other related party relationships of the Group is provided in note 21.

 

Going Concern

The Partners have assessed the current financial position of Esprit Capital Partners LLP, along with future cash flow requirements to determine if the LLP has the financial resources to continue as a going concern for the foreseeable future. The conclusion of this assessment is that it is appropriate that the Group be considered a going concern.  For this reason, the Partners continue to adopt the going concern basis in preparing the Financial Statements.

 

Basis of preparation

The Financial Statements of Esprit Capital Partners LLP for the year ended 31 March 2016 have been prepared by the Members of Esprit Capital Partners LLP.

 

The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and IFRIC interpretations as adopted by the European Union. The Financial Statements have also been prepared under the historical cost convention, except for investments valued at 'fair value through profit or loss' (FVTPL).

 

For all periods up to and including the year ended 31 March 2015, the LLP has prepared its statutory accounts in accordance with UK GAAP. These Financial Statements, for the year ended 31 March 2016, are the first that the LLP has prepared in accordance with IFRS. The date of transition is 1 April 2013.

 

The preparation of Financial Statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the LLP's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed later in these accounting policies.

 

The Financial Statements are presented in sterling (£), rounded to the nearest thousand pounds.

 

 

2. Adoption of new and revised Standards

IFRS 1 First time adoption of IFRSs: sets out the provisions for first time adoption of International Financial Reporting Standards. The impact of the adoption on Members' equity in the opening and closing balances sheets of the Group, dated 1 April 2013 and 31 March 2015 are as follows:

 

1 April 2013

 

UK GAAP

 

IFRS

 

 

2013

Impact

2013

 

 

£'000s

£'000s

£'000s

Assets and Liabilities

 

 

 

 

Total non-current assets

a,b

374

1,906

2,280

Total current assets

 

3,315

-

3,315

Total current liabilities

c

(1,212)

(24)

(1,236)

  Net assets

 

2,477

1,882

4,359

 

 

 

 

 

Equity

 

 

 

 

Members' reserves

 

2,397

1,882

4,279

Members' capital (non-refundable)

 

80

-

80

  Total equity

 

2,477

1,882

4,359

 

a - Inclusion of Esprit Capital III GP LP on consolidation; +£1,824,000 investments

b - Revaluation of investment in DFJ Esprit II Founder LP as FVTPL; +£82,000 investments

c - Holiday pay accrual; +(£24,000) accruals

 

31 March 2014

 

UK GAAP

 

IFRS

 

 

2014

Impact

2014

 

 

£'000s

£'000s

£'000s

Assets and Liabilities

 

 

 

 

Total non-current assets

a,b

439

1,999

2,438

Total current assets

c

1,609

652

2,261

Total current liabilities

d,e

(648)

(441)

(1,089)

  Net assets

 

1,400

2,210

3,610

 

 

 

 

 

Equity

 

 

 

 

Members' reserves

 

1,316

2,210

3,526

Members' capital (non-refundable)

 

84

-

84

  Total equity

 

2,400

2,210

3,610

 

a - Inclusion of Esprit Capital III GP LP on consolidation; +£1,918,000 Investments, +£652k cash, +(£413k) deferred income

b - Revaluation of investment in DFJ Esprit II Founder LP as FVTPL; +£81,000 investments

c -  Inclusion of Esprit Capital III GP LP on consolidation; +£652k cash,

d -  Inclusion of Esprit Capital III GP LP on consolidation; +(£413k) deferred income

e - Holiday pay accrual; +(£28,000) accruals

Inclusion of Esprit Capital III GP LP on consolidation decreased the revaluation of investments held at FVTPL by £146k for the year ended 31 March 2014, decreasing profit for the year by the same amount.

 

31 March 2015

 

UK GAAP

 

IFRS

 

 

2015

Impact

2015

 

 

£'000s

£'000s

£'000s

Assets and Liabilities

 

 

 

 

Total non-current assets

a,b

254

2,092

2,346

Total current assets

c

1,409

(75)

1,334

Total current liabilities

d,e

(734)

(180)

(914)

  Net assets

 

929

1,837

2,766

 

 

 

 

 

Equity

 

 

 

 

Members' reserves

 

845

1,837

2,682

Members' capital (non-refundable)

 

84

-

84

  Total equity

 

929

1,837

2,766

 

a - Inclusion of Esprit Capital III GP LP on consolidation; +£2,015,000 investments

b - Revaluation of investment in DFJ Esprit II Founder LP as FVTPL; +£77,000 investments

c - Inclusion of Esprit Capital III GP LP in consolidation; +(£75,000) other debtors

d -  Inclusion of Esprit Capital III GP LP in consolidation; +(£164,000) deferred income

e - Holiday pay accrual; +(£16,000) accruals

 

The impact of the adoption of IFRS on the Group profit or loss for the year ended 31 March 2015 is as follows:

Year ended 31 March 2015

 

UK GAAP

 

IFRS

 

 

2015

Impact

2015

 

 

£'000s

£'000s

£'000s

 

 

 

 

 

Revenue

a

2,664

132

2,796

Staff costs and Members' remuneration

b

(1,646)

(16)

(1,660)

Depreciation & amortisation

 

(6)

-

(6)

Other operating charges

 

(962)

-

(962)

Fund raising costs

 

(242)

-

(242)

Revaluation of investments held at FVTPL

c, d

-

(71)

(71)

Operating profit/(loss)

 

(190)

45

(145)

Finance expense

 

(23)

-

(23)

(Loss) on ordinary activities before tax

 

(213)

45

(168)

 

a - Inclusion of Esprit Capital III GP LP on consolidation; +£132,000

b - Holiday pay accrual; +(£16,000)

c - Revaluation of investment in DFJ Esprit II Founder LP as FVTPL; +£77,000

d - Revaluation of investment in Esprit Capital III GP LP as FVTPL; +(£148,000)

 

Inclusion of Esprit Capital III GP LP on consolidation constitutes a prior period error under IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ('IAS 8') as the Group's control over the entity existed prior to the transition date.

 

Distribution of profits to Members in the year ended 31 March 2013 have since been deemed an automatic allocation and therefore do not constitute amounts due from Members. As such, trade and other receivables and Members' reserves have been restated by +(£511,000), constituting a further correction of a prior period error under IAS 8.

 

The accounting policies applicable under the Parent LLP's previous accounting framework are not materially different to IFRS and have not impacted on equity or profit or loss.

 

New standards, interpretations and amendments not yet effective

The following new standards, which have not been applied in these Financial Statements, will or may have an effect on the Group's future financial statements:

 

IFRS 9 Financial Instruments: IFRS 9 will eventually replace IAS 39 in its entirety. The process has been divided into three main components, being classification and measurement; impairment; and hedge accounting. The Group provisionally assesses the potential effect to be immaterial given the majority of its financial assets will continue to be held at FVTPL. IFRS 9 is expected to be implemented in 2018 (not yet adopted by the EU).

 

IFRS 15 Revenue from contracts with customers: IFRS 15 establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. It is effective for periods beginning on or after 1 January 2018, (not yet adopted by the EU) and will supersede IAS 18 Revenue. The potential impact on Group's future financial statements has not yet been assessed.

 

The potential impact of other new standards, interpretations and amendments that are not yet effective has not yet been assessed.

 

3.         Significant accounting policies

The significant accounting policies disclosed below are those observed in the years ending 31 March 2016, 2015 and 2014.  

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales related taxes. All revenue from services is generated within the United Kingdom and is stated exclusive of value added tax. Revenue from services comprises:

 

a.         Fund management services

Fund management fees are either earned at a fixed annual rate or are set at a fixed percentage of funds under management, measured either by commitments or invested cost, depending on the investment stage of the fund being managed. Revenues are recognised as the related services are provided.

 

b.         Arrangement fees

Occasionally Esprit Capital Partners may charge a fee as part of arranging an investment from one of the Funds it manages into a portfolio company. Such fees are charged at a rate determined on a case-by-case basis and are recognised and payable upon successful completion of the investment.

 

c.         Portfolio directors' fees

Portfolio directors' fees are charged to an investee company and payable to Esprit Capital Partners as the fund manager. Esprit Capital Partners only charges directors' fees on a limited number of the investee companies. Fees are recognised as the related services are provided.

 

d.         Deferred income

The Fund management fees are typically billed either quarterly or half-yearly in advance. Where fees have been billed for an advance period the amounts are credited to deferred income, and then subsequently released through the profit and loss account across the period the fees relate to.

 

Leases

All leases are classified as operating leases. Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease, except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

 

Retirement benefit costs

The Group helps arrange private defined contribution pension provision for its employees and members and makes a fixed monthly contribution as a percentage of agreed remuneration into each individuals' personal scheme. Payments to the schemes are recognised as an expense in the period when they are due. The Group does not provide a pension scheme itself.

 

Operating Expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or as incurred.

 

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax in the corporate subsidiaries of Esprit Capital Partners LLP. Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

 

Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method.

 

Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Group's forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.

 

Deferred tax liabilities are generally recognised in full, although IAS 12 'Income Taxes' specifies limited exemptions. As a result of these exemptions the Group does not recognise deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries.

 

Property, Plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following basis:

 

Leasehold improvements - over the term of the lease

Fixtures and equipment - 33%

Computer equipment - 33%

 

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

 

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated using the rates of exchange at the reporting date and the gains and losses on translation are included in the income statement.

 

The individual financial statements of the Group's subsidiary undertakings are presented in their functional currency. For the purpose of these consolidated financial statements, the results and financial position of each subsidiary undertaking are expressed in pounds sterling, which is the functional currency of the LLP and the presentation currency for these consolidated financial statements.

 

The assets and liabilities of the Group's undertakings whose functional currency is not pounds sterling are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period.

 

Exchange differences are charged or credited to other comprehensive income and recognised in the currency translation reserve within equity.

 

Members' remuneration and interests 

Members' rights to participate in the profits or losses, or assets of an LLP are analysed between those that give rise to, from the LLP's perspective, either a financial liability or equity. Members' different participation rights are analysed separately into liability and equity elements.

 

·  Members' remuneration

 

Amounts becoming due to members in respect of participation rights in the profits of the LLP for an accounting period that gives rise to liabilities are presented as an expense within the profit and loss account (within the heading Members' remuneration).

 

·  Members' interests

 

Members' capital is accounted for either as equity or a liability depending upon its nature. Where the LLP has a contractual obligation to deliver cash or another financial asset to the member, the capital is treated as debt. Where the LLP has an unconditional right to avoid delivering cash or other financial assets to a member in respect of such amount (i.e. repayments of the members' capital is discretionary), it is treated as equity. 

 

Segmental reporting

The Group considers that it only has a single operating segment, investment management.

 

Basis of consolidation

The Group financial statements consolidate those of the parent entity and all of its subsidiaries as of 31 March 2016. Other than those listed below all of the Groups' subsidiaries have a reporting date of 31 March.

 

Esprit Capital Holdings Limited - 30 June

Esprit Nominees Limited - 30 June

Esprit Capital I GP Limited - 31 December

DFJ Esprit II GP Limited - 31 December

Esprit Capital III Founder GP Limited - 31 December

Esprit Capital III GP LP - 31 December

Encore I GP Limited - 31 December

Encore I Founder GP Limited - 31 December

 

Esprit Capital I (CIP) Limited - 31 December [Dormant]

Esprit Capital III MLP LLP - 31 December [Dormant]

Esprit Capital III GP Limited - 31 December [Dormant]

 

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

 

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

 

The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests or contractual arrangements. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at inception and the non-controlling members' share of changes in equity since.

 

Business combinations

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

 

Financial instruments

Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

 

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

 

Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned and are initially measured at fair value, plus transaction costs, except for those financial assets classified at fair value through profit or loss, which are initially measured at fair value.

 

Financial assets are classified by Esprit Capital Partners into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL) and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

 

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

 

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

 

Financial assets at FVTPL

A financial asset may be designated as at FVTPL upon initial recognition if:

 

(a) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

 

(b) the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

 

(c) it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

 

The Group consider that the co-investment interests it holds in Esprit Capital III Founder LP and DFJ Esprit II Founder LP are appropriately designated as at FVTPL as they meet criteria (b) above.

 

Assets within this category are measured at fair value with gains or losses recognised in profit or loss.

 

Fair value measurement

Management uses valuation techniques to determine the fair value of financial assets. This involves developing estimates and assumptions consistent with how market participants would price the assets. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values, being the product of judgements, estimates and assumptions made by management, may vary from actual values (see note 20).

 

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

 

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

 

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

 

Financial liabilities

Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument, and are derecognised when the contractual provisions are extinguished, discharged, cancelled or expire. Financial liabilities are initially measured at fair value, plus transaction costs.

 

Financial liabilities are measured subsequently at amortised cost using the effective interest

method. All interest-related charges are included within finance costs or finance income.

 

4.         Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in note 3, the board of Esprit Capital Partners are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

Critical judgements in applying the Group's accounting policies

The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the board of Esprit Capital Partners have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in financial information.

 

Control assessment

The Group has a number of entities within its corporate structure and consideration has been made of which should be consolidated in accordance with IFRS 10. The Group consolidates all entities within this Financial Statements where it has control over the following: power over the investee to significantly direct relevant activities; exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor's returns. A summary of the conclusions from the Member's consideration of control and the relevant judgements and rationale are presented below.

 

Encore Ventures LLP At 31 March 2016 the Group held 71.2% of the capital in Encore Ventures LLP (100% at 31 March 2015 and 2014), which entitled it to control the relevant activities of the LLP with no restriction arising from any contractual rights. The minority members in Encore Ventures LLP have an entitlement to proportionate shares in the returns of the LLP, and as such the Group is fully exposed to variable returns arising from it. Consequently, the Members consider Encore Ventures LLP to be controlled by the Group.

 

General Partners Where the Group holds 100% of the (share) capital of each of the General Partners and there are no contractual rights in place that limit the Group's power over the relevant activities of the entity or its exposure to variable returns arising from its ownership, the General Partners are considered to be controlled.

 

Administrative companies The Group holds 100% of the share capital of various entities that form part of the Group's administrative structure. There are no contractual rights in place that restrict exposure to variable returns arising from ownership, or that limit the Group's power over the relevant activities of the entities or its ability to exercise that power.  These entities are therefore considered to be controlled by the Group.

 

Limited Partnerships (co-investment) The limited partnerships that the Group's General Partners are members of are not considered to be controlled. The agreements in place within the partnerships, and the level of capital held within them, means that the Group has no significant influence over the relevant activities of the Limited Partnerships and there are significant restrictions on the allocation of returns arising from them so they are treated as investments at FVTPL.

 

Name of undertaking

Location

Principal activity

Consolidated

Encore Ventures LLP

UK

Investment management

Yes

Esprit Capital I GP Limited

UK

General Partner

Yes

DFJ Esprit II GP Limited

Cayman

General Partner

Yes

Esprit Capital III Founder GP Limited

UK

General Partner

Yes

Esprit Capital III GP LP

UK

General Partner

Yes

Encore I GP Limited

Cayman

General Partner

Yes

Encore I Founder GP Limited

Cayman

General Partner

Yes

Encore I GP LP

Cayman

General Partner

No

Esprit Capital Management Limited

UK

Admin company

Yes

Esprit Capital Holdings Limited

UK

Admin company (dormant)

Yes

Esprit Nominees Limited

UK

Admin company (dormant)

Yes

Esprit Capital I CIP Limited

UK

Admin company (dormant)

Yes

Esprit Capital III MLP LLP

UK

Admin company (dormant)

Yes

DFJ Esprit II Founder LP

Cayman

Co-investment limited partnership

No

DFJ Esprit II Founder 2 LP

Cayman

Co-investment limited partnership

No

Encore I Founder LP

Cayman

Co-investment limited partnership

No

Encore I Founder 2014 LP

Cayman

Co-investment limited partnership

No

Encore I Founder 2014-A LP

Cayman

Co-investment limited partnership

No

Esprit Capital III Founder LP

UK

Co-investment limited partnership

No

 

Limited partnership funds - Group entities act as the general partner and investment manager to the following limited partnerships:

 

Esprit Capital I Fund No.1 Limited Partnership

Esprit Capital I Fund No.2 Limited Partnership

DFJ Esprit II LP

Esprit Capital III LP

DFJ Esprit Capital III(i) LP

DFJ Esprit Capital III(i)-A LP

 

The Group receives a fixed rate compensation for its role as investment manager to these limited partnerships. The board of Esprit Capital Partners consider that these amounts are, in substance and form, "normal market rate" compensation for its role as investment manager, and the Group is not, therefore exposed to variable returns arising from the Limited Partnerships. The Group has no voting rights within the limited partnership funds, and it has no influence over the relevant activities of the funds being restricted to matters solely relevant to its role as investment manager. Consequently, the Group does not consider that it controls the funds and they are not included in the consolidation.

 

Key sources of estimation uncertainty

The key assumption concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

Valuation of unquoted equity investments

The judgements required to determine the appropriate valuation methodology of unquoted equity investments means there is a risk of material adjustment to the carrying amounts of assets and liabilities used to determine the carrying value of investments held within the Group. These judgements include a decision whether or not to impair or uplift investment valuations. See note 20 for detailed information regarding the fair value of investments.

 

5.         Revenue 

Revenue is derived solely within the United Kingdom, from continuing operations for all periods. An analysis of the Group's revenue is as follows:

 

2016

 

2015

 

2014

 

 

£'000s

 

£'000s

 

£'000s

 

Management Fees

 

 

 

 

 

 

  Primary Fund - Esprit Capital III LP

1,103

44%

1,235

44%

1,687

53%

  Primary Fund - Esprit Capital I Fund LP

91

 

105

 

378

12%

  Secondary Fund - DFJ Esprit II LP

100

 

421

15%

495

16%

  Secondary Fund - DFJ Esprit IIIi LP

300

12%

475

17%

433

14%

  EIS Funds

549

 

333

 

186

 

Portfolio Directors' Fees

123

 

98

 

16

 

Other

200

 

129

 

(21)

 

Total

2,466

 

2,796

 

3,174

 

 

Where revenue from a single customer exceeds 10% during a year the percentage is shown in the above table, the funds listed above are those single customers.

 

6.         Profit for the year 

The profit for the year has been arrived at after charging:

 

2016

2015

2014

 

£'000s

£'000s

£'000s

Depreciation

3

6

8

Operating lease rentals - plant and equipment

3

3

3

Operating lease rentals - property

84

184

231

Auditors' remuneration - Parent LLP

19

15

15

Auditors' remuneration - subsidiary undertakings

38

33

23

Auditors' remuneration - taxation compliance services

43

58

35

 

7.         Staff costs

The average monthly number of employees, including salaried members, during the year was 6, (2014: 5, 2013: 5).

Items included in staff costs

2016

2015

2014

 

£'000s

£'000s

£'000s

Members remuneration charged as an expense

1,005

922

1,784

Salaries

439

671

406

Social security costs

40

52

23

Pension costs in respect of defined contribution schemes

15

15

21

 

1,499

1,660

2,234

 

8.         Tax expense in corporate subsidiaries

Certain companies consolidated in these financial statements are subject to corporate taxes based on their profits for the financial year. Income tax payable on the profits of the LLP and other LLPs consolidated within the Group is solely the personal liability of the individual members of those LLPs and consequently is not dealt with in these financial statements.

 

The charge to tax, which arises in the corporate subsidiaries included within these financial statements, is:

 

2016

2015

2014

 

£'000s

£'000s

£'000s

Current tax on income of subsidiaries for the year

-

-

-

Tax expense in corporate subsidiaries

-

-

-

 

The following table reconciles the tax expense at the standard rate to the actual tax expense:

 

2016

2015

2014

 

£'000s

£'000s

£'000s

Profit/(Loss) on ordinary activities before tax

361

(168)

(104)

Less profit/(loss) arising in LLPs/LPs

617

(130)

(29)

Profit/(loss) on ordinary activities of Group companies before tax

(256)

(38)

(75)

Tax expense at UK standard rate of 20% (2015: 21.5%, 2014: 22%)

(51)

(8)

(16)

Expenses not deductible for tax purposes

-

24

-

Unrealised revaluation of investments

(26)

(16)

18

Other tax adjustments

77

-

(2)

Total tax (credit)/charge for the year

-

-

-

 

9.         Members' profit shares

 

2016

2015

2014

Average number of members

4

6

9

 

 

 

 

 

£'000s

£'000s

£'000s

Average members' remuneration (charged as an expense)

237

154

198

Remuneration attributable to highest paid member

364

344

269

 

The members consider that Simon Cook, Stuart Chapman and Graham Redman were key management personnel during the year. The remuneration attributable to the key personnel during the year was £732,000 (2015: £696,000; 2014: £887,000)

 

10.        Property plant and equipment

Group and Esprit Capital Partners LLP

Leasehold

Improvements

Fixtures and Equipment

Computer Equipment

Total

 

£'000s

£'000s

£'000s

£'000s

Cost

 

 

 

 

At 1/4/2013

81

25

78

184

Additions

-

-

7

7

Disposals

-

-

(10)

(10)

 

 

 

 

 

At 31/3/2014

81

25

75

181

 

 

 

 

 

At 31/3/2015

81

25

75

181

Additions

-

-

2

2

 

 

 

 

 

At 31/3/2016

81

25

77

183

 

 

 

 

 

Aggregate depreciation

 

 

 

 

At 1/4/2013

81

25

66

172

Charge for the year

-

-

8

8

On Disposals

-

-

(10)

(10)

 

 

 

 

 

At 31/3/2014

81

25

64

170

Charge for the year

-

-

6

6

 

 

 

 

 

At 31/3/2015

81

25

70

176

Charge for the year

-

-

3

3

 

 

 

 

 

At 31/3/2016

81

25

73

179

 

 

 

 

 

 

 

 

 

 

Net Book Value

 

 

 

 

At 1/4/2013

-

-

12

12

At 31/3/2014

-

-

11

11

At 31/3/2015

-

-

5

5

At 31/3/2016

-

-

4

4

 

11.        Subsidiaries

The Group consists of the parent entity, Esprit Capital Partners LLP, incorporated in England and Wales, and a number of subsidiaries held directly and indirectly by Esprit Capital Partners. Investments in subsidiaries are measured at cost less impairment. The financial statements consolidate the results and financial position of the Group, including all subsidiary undertakings. The active subsidiary undertakings are listed below.

Name of subsidiary undertaking

Principal activity

Holding

Country

Esprit Capital Holdings Limited

Intermediate holding company

100%

UK

Esprit Capital Management Limited

Administrative services

100%

UK

Esprit Nominees Limited

Nominee

100%

UK

Esprit Capital I GP Limited

Fund General Partner

100%

UK

DFJ Esprit II GP Limited

Fund General Partner

100%

Cayman

Esprit Capital III Founder GP Limited

Fund General Partner

100%

UK

Esprit Capital III GP LP

Co-investment vehicle

100%

UK

Encore I GP Limited

Fund General Partner

100%

Cayman

Encore I Founder GP Limited

Fund General Partner

100%

Cayman

Encore Ventures LLP

Investment management

71%

UK

Esprit Capital I CIP Limited

Dormant

100%

UK

Esprit Capital III MLP LLP

Dormant

100%

UK

Esprit Capital III GP Limited

Dormant

100%

UK

 

 

Encore Ventures LLP

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Non-current assets

-

-

-

-

Current assets

317

286

378

463

Total assets

317

286

378

463

 

 

 

 

 

Non-current liabilities

-

-

-

-

Current liabilities

148

156

91

166

Total liabilities

148

156

91

166

 

 

 

 

 

Equity attributable to members of the parent

177

130

287

297

 

 

 

 

 

Non-controlling interests

(8)

-

-

-

 

 

 

 

 

 

Encore Ventures LLP

2016

2015

2014

 

£'000s

£'000s

£'000s

Revenue

532

333

186

 

 

 

 

Profit/(Loss) for the year attributable to members of the parent

29

(242)

(175)

Profit/(Loss) for the year attributable to non-controlling interests

193

242

165

Profit/(Loss) for the year

232

-

(10)

 

 

 

 

Other comprehensive income/(loss) for the year (all attributable to members of the parent)

-

-

-

 

 

 

 

Total comprehensive income for the year attributable to members of the parent

29

(242)

(175)

Total comprehensive income for the year attributable to non-controlling interests

193

242

165

Total comprehensive income for the year.

232

-

(10)

 

 

 

 

 

12.        Investments

The Group holds investments through co-investment vehicles of two of the Funds it manages, DFJ Esprit II LP and Esprit Capital III LP.   The investments are predominantly unlisted securities and are carried at Fair Value Through Profit or Loss. The means of valuation of these investments is set out in note 20.

 

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Interest in DFJ Esprit II Founder LP

259

327

371

445

Interest in Esprit Capital III Founder LP

1,641

2,014

1,918

1,823

Other

731

-

138

-

Total

2,631

2,341

2,427

2,268

 

On 13 July 2015 the Group acquired a 50% stake of the carried interest of DFJ Esprit II LP, through DFJ Esprit II Founder 2 LP. At 31 March 2016 the fair value of the interest assigned, calculated in accordance with the policies applied with the Group's financial statements, was £436,000.

 

On 13 July 2015 the Group acquired a 4.5% interest in the carried interest of DFJ Esprit IIIi LP, through Encore I Founder LP and Encore I Founder 2014 LP. At 31 March 2016 the fair value of the interest assigned, calculated in accordance with the policies applied with the Group's financial statements was £295,000.

 

 

13.        Trade and other receivables due within one year

Group

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Trade receivables

171

472

424

496

Other receivables and prepayments

364

125

428

286

Member's loan

-

200

-

-

Amounts due from members

-

16

16

12

 

535

813

868

794

 

Esprit Capital Partners LLP

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Trade receivables

116

 255

688

272

Amounts owed by group undertakings

535

281

73

186

Other receivables and prepayments

307

101

234

476

Amounts due from members

-

16

16

16

 

958

669

1,013

949

 

All amounts are short term. The net carrying value of all financial assets is considered a reasonable approximation of fair value.  Ageing analysis of unimpaired trade receivables:

Group

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Current

160

361

407

456

30 days

11

-

-

-

60 days

-

102

7

11

90 days+

-

9

10

29

 

171

472

424

496

 

There are no balances deemed past due but not impaired (2015: £nil, 2014: £nil, 2013: £nil).

 

14.        Cash and cash equivalents

Cash and cash equivalents comprise:

Group

2016

2015

2014

2013

Cash at bank and in hand

£'000s

£'000s

£'000s

£'000s

Sterling (£)

749

520

699

2,433

US dollar ($)

-

-

1

1

Euro (€)

1

1

693

87

 

750

521

1,393

2,521

 

Esprit Capital Partners LLP

2016

2015

2014

2013

Cash at bank and in hand

£'000s

£'000s

£'000s

£'000s

Sterling (£)

374

91

140

91

US dollar ($)

-

-

-

-

Euro (€)

-

-

-

-

 

374

91

140

91

 

 

 

 

 

15.        Trade and other payables due within one year

Group

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Trade payables

154

99

247

180

Other taxation and social security

16

14

7

14

Other payables

225

112

53

39

Accruals and deferred income

560

679

772

993

 

955

904

1,079

1,226

 

Esprit Capital Partners LLP

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Trade payables

142

53

217

116

Amounts owed to group undertakings

4

126

239

21

Other taxation and social security

9

9

-

-

Other payables

4

3

3

8

Accruals and deferred income

431

548

260

312

 

590

739

719

457

 

All amounts are short term. The net carrying value of all financial liabilities is considered a reasonable approximation of fair value.

 

16.        Operating leases as a lessee
The Group leases an office building under an operating lease. The future minimum lease payments are as follows:

 

Within 1 year

1-5 years

After 5 years

Total

 

£'000s

£'000s

£'000s

£'000s

31 March 2016

-

-

-

-

31 March 2015

-

-

-

-

31 March 2014

192

768

-

960

 

 

 

 

 

 

Following renegotiation of the building lease for 14 Buckingham Gate in 2015, the termination date was brought forward to July 2016 and no further lease payments are payable.

 

17.        Members' interests

 

Members capital classified as equity

Members other interests

Amounts due from members

Amount attributable to members

Non-controlling interests

Total

 

 

 

 

 

 

 

 

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

Balance at 31 March 2013

80

4,210

(12)

4,278

-

4,278

 

 

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

(269)

-

(269)

165

(104)

Amounts withdrawn by members

-

(515)

-

(515)

-

(515)

Capital introduced by members

4

-

(4)

-

-

-

Transactions with non-controlling interests

-

-

-

-

(165)

(165)

 

 

 

 

 

 

 

Balance at 31 March 2014

84

3,426

(16)

3,494

-

3,494

 

 

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

(410)

-

(410)

242

(168)

Amounts withdrawn by members

-

(343)

-

(343)

-

(343)

Transactions with non-controlling interests

-

-

-

-

(242)

(242)

 

 

 

 

 

 

 

Balance at 31 March 2015

84

2,673

(16)

2,741

-

2,741

 

 

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

168

-

168

193

361

Transactions with members

-

-

16

16

-

16

Transactions with non-controlling interests

-

(3)

-

(3)

(201)

(204)

 

 

 

 

 

 

 

Balance at 31 March 2016

84

2,838

-

2,922

(8)

2,914

 

Esprit Capital Partners LLP

Members capital classified as equity

Members other interests

Amounts due

from members

Amount attributable to members

 

£'000s

£'000s

£'000s

£'000s

Balance at 31 March 2013

80

515

(16)

579

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

(154)

-

(154)

Transactions with members

4

-

-

4

Balance at 31 March 2014

84

361

(16)

429

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

(419)

-

(419)

Transactions with members

-

-

-

-

Balance at 31 March 2015

84

(58)

(16)

10

 

 

 

 

 

Profit/(Loss) for the year available for discretionary division between members

-

727

-

727

Transactions with members

-

-

16

16

Balance at 31 March 2016

84

669

-

753

 

18.        Retirement benefits

The Group makes contributions to personal pension schemes set up to benefit its employees and members. The Group has no interest in the assets of these schemes and there are no liabilities arising from them beyond the agreed monthly contribution for each employee or member that is included in employment costs or members' remuneration in the income statement as appropriate.
 

19.        Financial assets and liabilities

The description of each category of financial asset and financial liability and the related accounting policies are shown below. The carrying amounts of financial assets and financial liabilities held by the Group in each category are as follows:

 

1 April 2013

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in unlisted securities (co-investments)

2,268

-

2,268

   Long term financial assets

2,268

-

2,268

 

 

 

 

Trade and other receivables

-

508

508

Cash and cash equivalents

-

2,521

2,521

  Short term financial assets

-

3,029

3,029

 

 

 

 

  Total financial assets

2,268

3,029

5,297

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

-

542

542

  Total financial liabilities

-

542

542

 

31 March 2014

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in unlisted securities (co-investments)

2,427

-

2,427

   Long term financial assets

2,427

-

2,427

 

 

 

 

Trade and other receivables

-

440

440

Cash and cash equivalents

-

1,393

1,393

  Short term financial assets

-

1,833

1,833

 

 

 

 

  Total financial assets

2,427

1,833

4,260

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

-

570

570

  Total financial liabilities

-

570

570

 

31 March 2015

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in unlisted securities (co-investments)

2,341

-

2,341

   Long term financial assets

2,341

-

2,341

 

 

 

 

Trade and other receivables

-

688

688

Cash and cash equivalents

-

521

521

  Short term financial assets

-

1,209

1,209

 

 

 

 

  Total financial assets

2,341

1,209

3,550

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

-

415

415

  Total financial liabilities

-

415

415

 

31 March 2016

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in unlisted securities (co-investments)

2,631

-

2,631

   Long term financial assets

2,631

-

2,631

 

 

 

 

Trade and other receivables

 

438

438

Cash and cash equivalents

 

750

750

  Short term financial assets

-

1,188

1,188

 

 

 

 

  Total financial assets

2,631

1,188

3,819

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

-

736

736

  Total financial liabilities

-

736

736

 

Financial assets designated at FVTPL:

Investments in unlisted securities (co-investments)

2016

2015

2014

 

£'000s

£'000s

£'000s

 

 

 

 

Fair Value at 1 April

2,341

2,427

2,268

  Additions at cost

632

353

179

  Return of funds

(592)

(354)

-

  Revaluation

247

(71)

(29)

 

 

 

 

  Foreign exchange revaluation on consolidation

3

(14)

9

Fair Value at 31 March

2,631

2,341

2,427

 

The carrying amounts of financial assets and financial liabilities held by Esprit Capital Partners LLP in each category are as follows:

 

1 April 2013

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in subsidiaries

-

10

10

   Long term financial assets

-

10

10

 

 

 

 

Trade and other receivables

 

846

846

Cash and cash equivalents

 

91

91

  Short term financial assets

 

937

937

 

 

 

 

  Total financial assets

 

947

947

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

 

457

457

  Total financial liabilities

 

457

457

 

31 March 2014

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in subsidiaries

-

10

10

   Long term financial assets

-

10

10

 

 

 

 

Trade and other receivables

-

872

872

Cash and cash equivalents

-

140

140

  Short term financial assets

-

1,012

1,012

 

 

 

 

  Total financial assets

-

1,022

1,022

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

-

700

700

  Total financial liabilities

-

700

700

 

31 March 2015

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in subsidiaries

-

10

10

   Long term financial assets

-

10

10

 

 

 

 

Trade and other receivables

-

578

578

Cash and cash equivalents

-

91

91

  Short term financial assets

-

669

669

 

 

 

 

  Total financial assets

-

679

679

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

-

433

433

  Total financial liabilities

-

433

433

 

31 March 2016

Designated FVTPL

Amortised cost

Total

 

£'000s

£'000s

£'000s

Financial Assets

 

 

 

Investments in subsidiaries

-

7

7

   Long term financial assets

-

7

7

 

 

 

 

Trade and other receivables

-

871

871

Cash and cash equivalents

-

374

374

  Short term financial assets

-

1,245

1,245

 

 

 

 

  Total financial assets

-

1,252

1,252

 

 

 

 

Financial Liabilities

 

 

 

Trade and other payables

-

317

317

  Total financial liabilities

-

317

317

 

20.        Fair value measurements

The co-investment interests held by the Group are held at FVTPL based on the underlying values of the co-investments in (Esprit Capital III Founder LP and DFJ Esprit II LP) in which the Group indirectly participates. The interests held yield a preferred return (a "hurdle") calculated against the cash invested, and subject to the underlying fund values being sufficient to meet or exceed the hurdle. 

 

The Funds, Esprit Capital III Founder LP and DFJ Esprit II LP, invest in a number of early stage and growth companies, predominantly through unlisted securities. In the accounts of the Funds these investments are carried at fair value calculated as detailed below.

 

Unquoted investments are initially recognised at cost, including fees and transaction costs. Thereafter, investments are re-valued in accordance with the International Private Equity Valuation Guidelines ("IPEV") published by the European Venture Capital Association in December 2012. In line with the IPEV, the Manager may base valuations on earnings or revenues where applicable, market comparables, price of recent investments in the investee companies, or on net asset values inter alia.

Where the investment being valued was itself made recently, its cost will generally provide a good indication of fair value unless there is objective evidence that the investment has since been impaired, such as observable data suggesting a deterioration of the financial, technical, or commercial performance of the underlying business.

 

Where there has been any recent investment by third parties, the price of that investment will provide a basis of the valuation. The length of period for which it remains appropriate to use the price of recent investment depends on the specific circumstances of the investment, and the Group will consider whether the basis remains appropriate each time valuations are reviewed.

 

If the 'price of recent investment' methodology is no longer considered appropriate, the Group then considers alternative methodologies in the IPEV guidelines, being principally price-revenue or price-earnings multiples, depending upon the stage of the asset, requiring management to make assumptions over the timing and nature of future revenues and earnings when calculating fair value.

 

Where a fair value cannot be estimated reliably, the investment is reported at the carrying value at the previous reporting date unless there is evidence that the investment has since been impaired.

 

In all cases, valuations are based on the judgement of the Group after consideration of the above and upon available information believed to be reliable, which may be affected by conditions in the financial markets.

 

Due to the inherent uncertainty of the investment valuations, the estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. Due to this uncertainty the Partnership may not be able to sell its investments at the carrying value in these financial statements when it desires to do so or to realise what it perceives to be fair value in the event of a sale.

 

Subsequent to their initial recognition, measurements of fair values of financial instruments are grouped into Levels 1 to 3 based on the degree to which the fair value is based on observable inputs.

 

·      Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

·      Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

·      Level 3 inputs are unobservable inputs for the asset or liability.

 

The investments held by the Group are valued on the basis of the non-public reported financial performance of the underlying funds which themselves are valued principally using Level 3 inputs. As a consequence the values of investments held within the Group at 31 March 2016, 31 March 2015 and 31 March 2014 are considered to be entirely based on Level 3 inputs and there were no transfers between Levels 1, 2 and 3 during these years.

 

Significant unobservable inputs for Level 3 Valuations

The Group's unlisted investments are all classified as Level 3 investments. The fair values of the unlisted investments have been determined principally through reference to externally generated data such as investment round share prices, although a significant proportion are valued using an internally generated revenue multiple. A quantitative sensitivity analysis of the impact that changes to the weighted average revenue multiple would have on the value of investments held by the Group is shown below:

 

 

Sensitivity analysis - revenue multiple

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Value of Level 3 investments

2,631

2,340

2,288

2,266

Value sensitive to change in revenue multiple

462

204

149

141

Weighted average revenue multiple used

2.5x

3.0x

2.6x

3.1x

Sensitivity (+/-)

1x

1x

1x

1x

Effect on fair value (+/-)

159

68

57

46

 

Financial instruments risk

Financial risk managemen

Financial risks are usually grouped by risk type: market, liquidity and credit risk. These risks are discussed in turn below.

 

Market risk - Foreign currency

A significant portion of the Group's revenue, investments and cash deposits are denominated in a currency other than sterling. The principal currency exposure risk is to changes in the exchange rate between EUR and GBP. Presented below is an analysis of the theoretical impact of 10% volatility in the exchange rate on Members equity.

 

The impact on revenues of a shift in exchange rates between EUR:GBP of +/- 10% would have had the following theoretical impact on profit/loss for the years ended 31 March.

Foreign currency exposures - Revenue

2016

2015

2014

 

£'000s

£'000s

£'000s

Profit/(Loss) for the financial year

361

(168)

(104)

Profit/(Loss) after 10% decrease in EUR:GBP

259

(194)

(257)

Profit/(Loss) after 10% increase in EUR:GBP

486

(70)

83

 

Impacts have been calculated based on revenues in the year of €1,310k, €1,547k and €1,576k for the years ended 31 March 2016, 2015 and 2014 respectively 

 

The investment held by the Group into Esprit Capital III Founder LP is denominated in Euros. The theoretical impact of a change in the exchange rate of +/-10% between EUR:GBP would be as follows: 

Foreign currency exposures - Investments

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Investments denominated in EUR

1,641

2,015

1,918

1,823

10% decrease in EUR:GBP

1,823

2,239

2,131

2,026

10% increase in EUR:GBP

1,492

1,832

1,743

1,658

 

Impacts have been calculated based on investment values at 31 March 2016, 2015 and 2014 of €2,077k, €2,754k, and €2,320k respectively.

 

Certain cash deposits held by the Group are denominated in Euros. The theoretical impact of a change in the exchange rate of +/-10% between EUR:GBP would be as follows: 

Foreign currency exposures - Cash

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Cash denominated in EUR

1

1

693

87

10% decrease in EUR:GBP

1

1

770

97

10% increase in EUR:GBP

1

1

630

79

 

Impacts have been calculated based on cash deposit balances at 31 March 2016, 2015, 2014 and 2013 of €1k, €1k, €1,114k and €103k respectively.

 

The combined theoretical impact on total equity of the changes to revenues, investments and cash and cash equivalents of a change in the exchange rate of +/-10% between EUR:GBP would be as follows

Foreign currency exposures - Equity

2016

2015

2014

2013

 

£'000s

£'000s

£'000s

£'000s

Total Equity

2,965

2,766

3,610

4,359

10% decrease in EUR:GBP

3,273

3,228

4,088

4,753

10% increase in EUR:GBP

2,709

2,517

3,220

4,037

 

Market risk - Price risk

The Group is exposed to equity price risks arising from the limited number of listed investments it holds within its co-investment holdings. Such investments are held for strategic rather than trading purposes as part of the underlying managed investment portfolios. The Group does not actively trade these investments.

 

Liquidity risk

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less held in readily accessible bank accounts. The carrying amount of these assets is approximately equal to their fair value. Responsibility for liquidity risk management rests with the board of Esprit Capital Partners LLP, which has established a framework for the management of the Group's funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows.

 

All Group payable balances at 31 March 2016, 2015 and 2014 fall due for payment within one year.

 

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss. The Group is exposed to this risk for various financial instruments, for example by granting receivables to customers, placing deposits, investment in unlisted securities through its co-investments. The Group's trade receivables are amounts due from the investment funds under management, or underlying portfolio companies. The Group's & LLP's maximum exposure to credit risk is limited to the carrying amount of financial assets at 31 March as summarised below:

 

Classes of financial assets, carrying amounts

2016

2015

2014

2013

Group

£'000s

£'000s

£'000s

£'000s

Investments in unlisted securities (co-investments)

2,631

2,341

2,427

2,268

Trade and other receivables

438

688

440

508

Cash at bank and cash equivalents

750

521

1,393

2,521

 

3,799

3,550

4,260

5,297

 

 

 

 

 

 

 

 

 

 

 

2016

2015

2014

2013

Esprit Capital Partners LLP

£'000s

£'000s

£'000s

£'000s

Investments in unlisted securities

7

10

10

10

Trade and other receivables

871

578

871

846

Cash at bank and cash equivalents

374

91

140

91

 

1,252

679

1,021

947

 

 

All of the Group's trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables within the LLP, relating to recovery of expenses from investee companies, were found to be impaired and an allowance for credit losses of £37,000 in year ended 31 March 2016 (2015: £3,000, 2014: £10,000) has been recorded accordingly within other expenses.

 

The Group's members consider that all of the above financial assets that are not impaired or past due for each of the 31 March reporting dates under review are of good credit quality. In respect of trade and other receivables the Group is not exposed to significant risk as the principal customers are the investment funds managed by the Group, and in these the Group has control of the banking as part of its management responsibilities.

 

Investments in unlisted securities are held within limited partnerships for which the Group acts as manager, and consequently the Group has responsibility itself for collecting and distributing cash associated with these investments.

 

The credit risk of amounts held on deposit is limited by the use of reputable banks with high quality external credit ratings and as such is considered negligible.

 

Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for members of the Esprit Capital Partners LLP and to maintain and to minimise the cost of capital.

 

21.        Related party transactions

The Group acts as manager to Esprit Capital I Fund LP and charges a management fee which amounted to £91,000 in the year (2015: £105,000, 2014: £378,000). This fee is included in revenue for the year.

 

The Group acts as manager to DFJ Esprit II LP and charges a management fee which amounted to £100,000 in the year (2015: £421,000, 2014: £495,000). This fee is included in revenue for the year.

 

The Group acts as manager to Esprit Capital III LP and charges a management fee which amounted to £1,103,000 in the year (2015: £1,235,000, 2014: £1,687,000). This fee is included in revenue for the year.

 

The Group acts as a manager to DFJ Esprit IIIi LP and charges a management fee which amounted to £300,000 (2015: £475,000, 2013: £433,000) in the year.

 

Esprit Capital Partners LLP may require that one of its members is appointed to the board of an investee company in a non-executive role. In such circumstances Esprit Capital Partners charges an administration fee to the investees for the provision of the director services. These fees which amounted to £123,000 (2015: £98,000, 2014: £16,000) have been included in the turnover for the year. Esprit Capital Partners does not exercise control or management through any of these non-executive positions

 

During the year ended 31 March 2015 the Group made a £200,000 uncollateralised loan to Simon Cook. The loan carried interest of 4%, which was considered to not differ materially from the market rate, and was repaid in full on 15 September 2015.

 

On 13 July 2015 the Board of the LLP declared a bonus payable to Simon Cook and Stuart Chapman as a consequence of them giving up their right to certain carried interest entitlements in support of the of the Group.  An amount of £400,000 was declared payable immediately with a further £100,000 paid in the year and £100,000 accrued. At 31 March 2016 the fair value of interests assigned, calculated in accordance with the policies applied within the Group's financial statements was £731,000.

 

On 30 September 2015 the Board of the LLP declared a further bonus payable to Simon Cook and Stuart Chapman as a consequence of them giving up their right to certain carried interest entitlements in support of the of the Group.  An amount of £150,000 was declared payable in relation to that transfer

 

22.        Ultimate controlling party

The members of Esprit Capital Partners LLP do not consider there to be a single ultimate controlling party of the Group during the period. On 15 June 2016, the Parent and Group were acquired by Draper Esprit plc following admission to AIM (see note 23).

 

23.        Post reporting date events

On 15 June 2016 the LLP and Group were acquired by Draper Esprit plc. All the existing members of the LLP transferred their capital to Draper Esprit plc on the date of acquisition and subsequently resigned from the LLP. Following admission to AIM the outstanding amounts payable to Simon Cook and Stuart Chapman (note 21) were settled.

 

On Admission and the completion of the Esprit Capital Acquisition, Simon Cook and Stuart Chapman assigned a portion of their personal entitlements in the carried interest in DFJ Esprit III(i) LP to the Group under an agreement entered in to after the balance sheet which is considered to be a derivative contract.  The value of that derivative contract is a capital contribution from members. The fair value of the DFJ Esprit IIIi LP interest assigned, calculated in accordance with the policies applied with the Group's financial statements was £656,000. A payment of £75,000 each was made in favour of Simon Cook and Stuart Chapman in recognition of the transfer. The members of the LLP also assigned a 61.5% interest in the gains of DFJE III FP LP for £nil consideration. The fair value of the DFJE III FP LP interest assigned, calculated in accordance with the policies applied with the Group's financial statements was £444,000.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCLFMBTMBIBBAF

Related Charts

Draper Esprit (GROW)

0.00p (0.00%)
delayed 18:15PM