EDGE_G_4 12-59-34_Layout 1 - The Tax Shelter Report

10 Edge Performance VCT plc
Dear Investor,
LETTER FROM THE CHAIRMAN
Edge Performance VCT plc
Edge Performance has pioneered an approach which was designed to address the key issues which we believe have in
the past deterred some individuals from investing in VCTs, namely the ability to exit from the VCT once the investment
has been held for the minimum period required under VCT rules (currently five years), and the perceived level of risk of
the underlying investments.
Edge Performance seeks to allow investors to take advantage of VCT tax reliefs whilst combining:
• high targeted returns;
• downside risk protection; and
• liquidity.
Substantial tax benefits
Subscriptions to VCTs in the 2010/11 and the 2011/12 tax years can attract income tax relief at the rate of 30%.
Distributions of capital and dividends are tax-free for Qualifying Investors. This means that, for every £1 invested, the net
cost to VCT investors should be 70p. Set out below is a table illustrating the returns at four different levels of shareholders
proceeds.
Illustrative returns for each £1.00 invested
Shareholder Proceeds 100p 110p 130p* 150p
Less: net cost of investment
(assuming 30% income tax relief) (70p) (70p) (70p) (70p)
Tax-free cash profit 30p 40p 60p 80p
Tax-free profit (as a % of net cost of investment) +43% +57% +86% +114%
Net Return 1 (assuming 7p dividend per annum,
and the balance after 5 years) 7.76% 9.83% 13.48% 16.63%
Gross equivalent return (to a 50% taxpayer) 15.52% 19.66% 26.95% 33.26%
* targeted return
The above returns are set out for illustrative purposes only and no forecast or projection is implied or should be inferred.
1 The Net Return is the internal rate of return based on an investment of 100p deemed to be made on 5 April 2011 (the assumed date of the last allotment of Shares under
the Offer for the 2010/11 tax year), 30p income tax relief deemed to be received two months later on 5 June 2011 and either 100p, 110p, 130p or 150p of cash
returned to Shareholders, comprising dividends of 7p per annum on each of 1 November 2012, 1 November 2013, 1 November 2014 and 1 November 2015 and the
balance on 31 August 2016.
Edge Performance will continue to invest in the entertainment sector. The majority of the portfolio investments will include
loan finance which should provide additional capital protection. The key points of the investment strategy are:
• Attractive targeted cash returns
The Company has set a target return of 130p in cash for every 70p invested (assuming income tax relief at 30%,
equivalent to a return of 160p for every 100p invested).
• Risk reduction and capital protection
Edge Performance’s structure provides for investments to be blended with the intention that the investor’s risk is
minimised, underpinning the return of the investor’s effective cost of investment of 70p per Share (assuming income
tax relief at 30%).
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