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

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4 Edge Performance VCT plc • Early return of capital and liquidity It is the Company’s objective to return funds to Shareholders as soon as possible after the end of the minimum holding period required by the VCT legislation. Consistent with this approach, the Company returned its original Ordinary Share Fund to Ordinary Shareholders in June 2009, a matter of weeks after the end of the minimum VCT holding period which applied to that Fund. • Leading commercial partners Edge Performance intends to invest part of the proceeds of the Offer in Events Companies which have event licensing arrangements with established event promoters. Edge Performance has existing arrangements providing for promotion opportunities with the leading UK concert promoters, SJM and AEG Live (UK), part of Anschutz Entertainment Group, one of the world’s leading sports and entertainment promoters. • An expert team The Edge Investment Management team and Board combine almost 250 years’ relevant experience. The principal members of the team include: The Board Sir Robin Miller (Chairman) – has many years’ experience across different aspects of the media industry at EMAP plc, HMV Group plc and Channel 4 Television. Julian Paul FCA – a director of various quoted media and entertainment companies. Co-founder and previously Deputy Chairman of Eagle Rock Entertainment. Michael Eaton – a qualified (non-practising) solicitor. CEO of Bushbranch Limited, which manages Eric Clapton. Frank Presland – a qualified (non-practising) solicitor. Chairman of the Rocket Music Group, which manages Elton John, Lily Allen, James Blunt and others. Previously, CEO of The Sanctuary Group plc. David Glick – an experienced venture capital investor in the entertainment and media sector, who has specialised in various aspects of the industry, and who has been involved in the sale and purchase of multi-million pound entertainment and media assets. The Manager Gordon Power – with 26 years’ experience in private equity fund management, Gordon has particular expertise in the media sector. Harvey Goldsmith CBE – one of the UK’s pioneering promoters since the 1960s. He has promoted many major events including Live Aid and Live 8 and worked with numerous international artists. David Glick – see above. Alasdair George – a qualified (non-practising) solicitor who has 25 years’ experience of legal, strategic, commercial and operational management in the entertainment industry. Kate Glick – a member of the Securities & Investment Institute, a chartered accountant and chartered tax adviser. Investment approach • Events Companies Each investment will typically be in a mix of equity and the maximum amount of secured loan stock permitted under VCT rules. No more than 50% of the ordinary share capital of any one Events Company will be held by Edge Performance or any third party. • Other Qualifying Investments Edge Performance will also pursue other investment opportunities in the broader entertainment industry which the Manager believes are complementary to the investment strategy of the Company. Again, investments will normally be in a mix of equity and the maximum amount of secured loan stock. XV:1.1
Edge Performance VCT plc 5 • Non-qualifying Investments Initially, the net proceeds of the Offer will be invested in various fixed income securities, cash and cash equivalent assets, offering a high degree of capital preservation. Whilst a suitable level of return will be sought, the Company also regards capital preservation as an important consideration. Subsequently, up to 30% of the investment funds will be maintained in such investments whilst the balance is reinvested in Qualifying Investments. • Dividends and share buy-backs The Board intends to distribute most of the Company’s available net income through dividends, and to make share buy-backs at a discount of no more than 10% to net asset value, subject to liquidity constraints and regulatory requirements. Summary of Investment Policy • Edge Performance offers the opportunity to invest in the entertainment industry, and seeks to allow investors to take advantage of VCT tax reliefs whilst combining: • high targeted returns; • downside risk protection; and • liquidity. • Up to 30% of each of the C, D, E, F and G Share Funds will remain in a range of fixed income securities and cash and cash equivalent assets. Of the remainder, the Company will balance investments with a high level of capital protection with other investments where the potential for significantly higher returns justifies a lower level of capital protection. • The intention is that the Investor’s risk is thereby minimised, underpinning the return of the Investor’s effective cost of investment of 70p per Share (assuming income tax relief at 30%). XV:1.1 VCT tax benefits VCT status currently confers the following benefits on Shareholders: Income tax relief at 30% – Qualifying Investors will receive tax relief of up to 30% of the amount subscribed for G Shares, provided the G Shares are held for at least five years. For every £10,000 invested, up to £3,000 can be reclaimed from HM Revenue & Customs, so an investment of £10,000 could effectively cost only £7,000. Therefore, after the initial costs of the Offer (5.5%), that £7,000 could be worth £9,450, an increase of 35%, before the Company even makes its first investment. Example £ Investment in G Shares 10,000 Less income tax relief at 30% (3,000) Net cost of investment 7,000 Tax-free dividends, capital distributions and capital gains – in respect of VCT investments not exceeding £200,000 in aggregate in any one tax year, dividends and gains on disposal of G Shares are exempt from tax under current legislation. Remuneration of Edge Investment Management • Annual management fees of 1.75 % of the net asset value attributable to the G Shares. • Annual administrative services fee of £175,000 (plus VAT), in total attributable to the C, D, E, F and G Shares. • Total annual operating expenses of the Company (excluding performance-related incentive fees, irrecoverable VAT and trail commission to intermediaries in respect of the C, D, E and F Share funds) capped by the Manager at 3% of the net asset value of the Company. Assuming full subscription under the Offer, it is anticipated that such annual operating expenses will be no more than 2.5%.
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