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Draper Esprit plc
("Draper Esprit", "the Group" or the "Company")
Draper Esprit (LSE: GROW, Euronext Growth: GRW), a leading venture capital firm investing in and developing high growth digital technology businesses, today provides an update on the impact of the COVID-19 virus on the business and the measures the Group is taking.
In this rapidly evolving environment, we have been quick to take the necessary measures to safeguard our employees, our investments and the liquidity of the Company. More detail is provided below on the measures taken to date to protect our employees, support our portfolio companies and undertake the detailed reviews of the potential cash requirements of our investments across quarterly timeframes. We are remaining close to our portfolio companies to assimilate the available information as the specific market implications and the impacts of the global Governmental support become clearer. We remain well financed with cash resources to provide support where necessary.
Keeping our team safe
The Group's primary concern is ensuring the ongoing safety of its employees and their families. Management started to closely track events in China at the turn of the year when news of COVID-19 first emerged and moved quickly to put in place robust measures to protect staff via travel and face to face meeting restrictions, flexible working plans and remote working where possible. Our broader team includes the management of the portfolio companies who have also acted swiftly to protect their people.
We continue to follow all protocols and guidance being given by Public Health England and, given the nature of our business and our role in the technology sector, we believe that Draper Esprit is better placed than most to utilise technology in order to mitigate the impact of social distancing on our team's day to day operations.
Supporting our portfolio companies
We have increased our dialogue with our portfolio companies and continue to provide them with operational support and advice, particularly in relation to accessing various elements of the Government's financial assistance packages.
We are actively modelling the potential impact of COVID-19 on our portfolio and although we anticipate a period of trading slowdown we remain very positive about the long term areas of growth in the markets our companies address such as artificial intelligence, cloud computing for remote working and digital health. Many of our portfolio companies generate recurring revenues and the geographic diversity of our portfolio, combined with the broad cross section of areas in which they operate, means that we are not overly exposed to any individual market or sector.
We have conducted an initial review of the financial robustness of our portfolio in the current environment and we believe that businesses amounting to up to approximately 80% of Draper Esprit's NAV (including most of the core portfolio) have strong cash balance sheets and/or the ability to adjust costs to trade through a crisis lasting through 2020. Companies such as Graphcore, Revolut, N26, Ravenpack, UI Path, Thought Machine, M-Files and Aiven have collectively raised over $1.5 billion in the last year alone. We believe this will allow these companies to continue to grow further, develop their leading technology and prepare for the recovery. We are working in conjunction with our numerous other co-investors across the rest of the portfolio to provide support for the businesses that are facing difficulty.
Only a small number of our portfolio companies (approx. 7% of NAV) operate in industries which are more directly affected, such as travel, leisure and hospitality, and we will work closely with these companies to navigate this period of uncertainty.
A number of our portfolio companies are playing an increasingly important role in the provision of online healthcare services, communications systems and entertainment. These include:
· Push Doctor, the leading online medical consultation provider, is working with the NHS to deal with the rapid increase in demand for video GP services;
· Ieso Digital Health is offering increased services to patients requiring remote mental health support and therapy services;
· Companies such as Aircall (provider of cloud based phone system and call centre software), Conversocial (provider of social customer service software) and M-Files (intelligent information management platform) are seeing increased demand for their services as a result of a larger number of employees working from home;
· Kaptivo, which is also seeing increased demand from home workers and academics for its whiteboard camera system which turns whiteboards into smart, digital collaboration tools;
· Mobile technology company Peak Games is experiencing continued demand for its mobile games and apps.
Strong balance sheet
The Group reported a Gross Portfolio Value of £683 million as at 30 September 2019 and has a debt facility of £50 million, of which £45 million is currently drawn with £36 million undeployed. As such the Group has available cash resources of £36 million at the plc and £40 million within our EIS/VCT funds. The efforts of the Draper Esprit team are focused on helping our smaller emerging portfolio companies and we believe we have sufficient funds to support them. Our investments are supported by strong syndicates of investors and we will be working with our portfolio companies to access additional capital should that be required.
Martin Davis, Chief Executive Officer of Draper Esprit, commented:
"The ongoing spread of the COVID-19 virus is, first and foremost, a public health crisis but the impact on the economy and businesses will clearly also be very significant.
We have taken early steps to prudently manage our business and remain well financed. Many of our portfolio companies generate recurring revenues and the geographic diversity of our portfolio, combined with the broad cross section of areas in which they operate, means that we are not overly exposed to any individual market or sector and we remain very positive about the long term areas of growth in the markets our companies address such as artificial intelligence, cloud computing for remote working and digital health.
We are immensely proud to support a number of businesses who are providing their customers with vital products and services during this intensely challenging period and stand ready to support existing portfolio companies should they require additional financial support in the near term.
As an investor in high growth technology businesses we are acutely aware of the positive role that technology can play in helping the world to recover from this crisis and remain committed to playing a key role in funding and supporting Europe's brightest technology businesses."
Draper Esprit plc
Martin Davis (Chief Executive Officer)
Ben Wilkinson (Chief Financial Officer)
+44 (0)20 7931 8800
Nominated Adviser & Joint Broker
+44 (0)20 7260 1000
Goodbody Stockbrokers UC
Euronext Growth Adviser & Joint Broker
+44 (0) 20 3841 6202
+44 (0)20 7250 1446
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