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

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2 Edge Performance VCT plc CONTENTS Page Summary 3 Risk factors 8 Letter from the Chairman 10 Part 1 Information relating to the Company 12 Part 2 Information relating to the G Shares and the Offer 28 Part 3 Tax position of Investors and of Edge Performance VCT Plc 31 Part 4 Financial information relating to Edge Performance VCT Plc 34 Part 5 Additional information 40 Part 6 Definitions 55 Part 7 Terms and conditions of application 58 Application Procedure 62 Frequently Asked Questions 62 Application form 63 Directors and advisers 65
Edge Performance VCT plc 3 SUMMARY The VCT with an Edge Edge Performance seeks to allow investors to take advantage of VCT tax reliefs whilst combining: • high targeted returns; • downside risk protection; and • liquidity. Edge Performance allows investors access to the entertainment industry through a manager with specialist expertise, whilst minimising the risks often perceived as being associated with the sector. The first specialist VCT to target this sector, Edge Performance is now in its fifth year and has raised in excess of £77 million. Edge Performance is managed by Edge Investment Management, a leading specialist entertainment fund manager. “Here we are now, entertain us!” The state of the economy has remained very much at the forefront of public thought and debate in the last 12 months, as the UK emerged tentatively from recession. Whilst much uncertainty remains in the broader economy, data from the last year shows that, although consumers have been more careful with their money, especially where they perceive that cheaper or free alternatives can be found, they have continued to spend on quality entertainment. The live music sector, which cannot be reproduced or pirated because it is about the entire experience and not just the music, bucked the economic conditions and grew in 2009. West End theatre, with similar strengths, reported its seventh consecutive year of record figures for both attendance and revenue. Subscription TV, driven by exclusive sports, HD programming and most recently 3D programming, posted strong increases in revenue and subscriber bases. Broadband subscriptions, music streaming services and other content-driven businesses continued to increase sales, defying the prevailing economic wind. The current economic conditions favour investment in venture capital. From the investor’s perspective, current savings rates are typically below inflation but still subject to income tax, the top rate of which has been increased at the same time as pension reliefs are to be reduced, thereby eroding the value of capital and making a tax-efficient structure attractive. For small businesses, bank lending has contracted over the last 18 months and with many having experienced unexpected difficulties renewing loans during the period, an equity investment that comes with the expertise and connections of an established industry specialist, and which lessens exposure to volatile bank finance, is similarly very attractive. Past performance data across the venture capital industry show that many of the best performing funds were raised and invested in times of economic uncertainty, like this, when deal expectations were muted. Consequently, the Manager believes that the present environment will offer good opportunities to invest in entrepreneurial businesses on attractive terms in this defensible sector. Edge Performance VCT • Attractive targeted 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 per 100p invested). 1 • Risk reduction and capital protection Edge Performance’s structure balances investments with a high level of capital protection, ideally with contractual revenues or capital guarantees from financially sound counterparties, with other investments where significantly higher potential returns justify lower capital protection. The intention is that the Investor’s risk is thereby minimised, underpinning the return of the investor’s net cost of investment of 70p per Share (assuming income tax relief at 30%). • Portfolio diversification Edge Performance seeks to offer a means of investment portfolio diversification for the Investor, as the Company’s venture capital investment portfolio is not directly stock market correlated. • Tax free income Subject to liquidity constraints and legislative requirements, Edge Performance will seek to pay out tax-free dividends after each of the first four years to G Shareholders 2 . Since 2007, the Company has declared or paid annual dividends of between 6p and 7p per share to its Ordinary Shareholders and 7p per share to its C, D and E Shareholders. 1 This target is not guaranteed and should not be construed as a dividend or profit forecast. 2 There is no guarantee that this objective will be met and this statement does not represent a dividend forecast, and none should be implied.
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Page 9 and 10: Edge Performance VCT plc 7 Key risk
Page 11 and 12: Edge Performance VCT plc 9 • Alth
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Page 21 and 22: Edge Performance VCT plc 19 Michael
Page 23 and 24: Edge Performance VCT plc 21 The Man
Page 25 and 26: Edge Performance VCT plc 23 The act
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Page 29 and 30: Edge Performance VCT plc 27 Granon
Page 31 and 32: Edge Performance VCT plc 29 To the
Page 33 and 34: Edge Performance VCT plc 31 PART 3:
Page 35 and 36: Edge Performance VCT plc 33 Normall
Page 37 and 38: Edge Performance VCT plc 35 (C) Aud
Page 39 and 40: Edge Performance VCT plc 37 D Share
Page 41 and 42: Edge Performance VCT plc 39 F Share
Page 43 and 44: Edge Performance VCT plc 41 (d) (e)
Page 45 and 46: Edge Performance VCT plc 43 (d) (e)
Page 47 and 48: Edge Performance VCT plc 45 (l) (m)
Page 49 and 50: Edge Performance VCT plc 47 (c) Eac
Page 51 and 52: Edge Performance VCT plc 49 Current
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Edge Performance VCT plc 53 (d) (e)
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Edge Performance VCT plc 55 PART 6:
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Edge Performance VCT plc 57 “Pros
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Edge Performance VCT plc 59 (iii) a
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Edge Performance VCT plc 61 13. The
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Edge Performance VCT plc 63 APPLICA
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Edge Performance VCT plc 65 DIRECTO
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