19th Oct 2006 12:40
Edge Performance VCT PLC19 October 2006 Corporate Policy and Financial Highlights Investment ObjectiveEdge Performance VCT plc ("Edge" or the "Company") is a specialist VCT whichoffers the opportunity to invest in a portfolio of live event promotioncompanies. With the support of event licensing arrangements which underpin minimum returns,the Directors and the Investment Team intend to manage the Company and itsinvestments so as to achieve a targeted minimum tax-free return for investors of115p per 100p invested after taking account of the tax refund of 40p (equivalentto a return of 75p per 60p invested net of income tax). Investment StrategyEdge invests in Event Companies which have negotiated an event licensingagreement with an established event promoter under which the revenues receivedby the Event Company from the events promoted with that promoter over aspecified period will be at least 75% of the aggregate of the amount invested byEdge in the Event Company and the agreed running costs of the Event Company. Edge intends to invest in the equity capital and the loan capital of the EventCompanies; typically 30% of each investment will be in equity and 70% will be inthe form of secured loan stock. The Company will hold up to 50% of the ordinaryshare capital of the Event Companies. Generally, up to 50% of the ordinary sharecapital of the Event Companies will be held by an established promoter which hasalso entered into an event licensing agreement with the Event Company. Capital StructureThrough an offer for subscription which opened in February 2006 £6,288,150 wasraised in respect of the 2005/06 tax year.The capital structure of the Company is 6,400,640 ordinary shares of 10p eachand 50,000 redeemable, non-voting preference shares of £1 each. Financial Highlights Capital Values As at 31 Aug 06 Net asset value per ordinary share 93.87pShare price 100.00pPremium 6.13pNet assets £6.0mQualifying Holdings - Revenue Returns Period ended 31 Aug 06 Revenue return per share (0.06)pCapital return per share 0.09pTotal return per share 0.03p Chairman's Statement In this, my first Chairman's statement, I would like to welcome all shareholdersto the Company. I am pleased to report that, during our Offer which opened on 6 February 2006and closed on 28 April 2006, more than £6 million was raised. This was anexcellent achievement given the short timescale and I would like to thank all ofour shareholders for their support. Overview of ActivitiesThe period under review has featured two significant activities. Fundraisingdominated the period to 5 April 2006, while the development of a stronginvestment pipeline and research of investment opportunities has marked thesubsequent period. Our Investment Manager, Edge Investment Management Limited ("EIM"), has revieweda wide variety of investment opportunities and expects to make severalinvestments in the near future. I am pleased to say that we have, in principle,committed a substantial portion of our existing funds and expect to be fullyinvested within a reasonable period. I will contact you with details of ourfirst and subsequent VCT qualifying investments. EIM has also continued to develop its relationships in the media andentertainment sector and has been approached by a number of UK promoters seekinginvestment. This level of interest and the quality of many of the investment opportunitiesbeing seen by EIM gives us confidence we are on target for the achievement ofour investment objective - a targeted minimum tax-free return for investors of115p per 100p invested after taking account of the tax refund of 40p (equivalentto a return of 75p per 60p invested net of income tax).As we make our investments, we will be updating our websitewww.edgeperformancevct.com with details of priority booking opportunities. Ifyou wish to be notified when opportunities become available, please email ourcompany secretary, Kate Glick, at [email protected] to register youremail details with us. ResultsOur results for the period ended 31 August are presented in the pages followingthis statement.The Board is not recommending the payment of an interim dividend. Further FundraisingEncouraged by the support given to our initial Offer for Subscription, thevolume and quality of the deal flow seen by EIM, the continuing tax advantagesof investing in a VCT and the current outlook for the live event promotionsmarket (see below), your Board of Directors has decided to propose thatadditional funds be raised through the issue of C Shares (a new class of shares)in Edge and, possibly, of New Ordinary Shares in a new VCT. We plan to start thefundraising in November and will send to you then a copy of the relevantprospectus. A successful Offer will, we believe, benefit our existing shareholders byproviding access to a greater range of investment opportunities, allowing thedevelopment of a more diversified portfolio with lower investment risk, andreducing the proportion of cash being spent on running costs. Increased fundsunder management would also raise the maximum amount we may invest in anindividual company in a given tax year. (Although a VCT is limited to investing£1million in an individual company in a given tax year, Edge is currentlyconstrained to less than this amount by the rule that it must not hold more than15% by value of its investments in a single company.) The Board believes that by raising additional capital for the Company through anissue of C Shares, some of the potential disadvantages otherwise associated withraising additional share capital will be overcome. In particular, the use of CShares avoids the need to vary the offer price if the net asset value of theCompany were to fluctuate during the course of the Offer. Furthermore, therewill be no dilution of the net assets attributable to existing Shareholders as adirect result of the costs of the Offer and the existing Shareholders'investments are, in effect, "ring-fenced". It will also ensure that the numberof Ordinary Shares to which holders of C Shares will in due course becomeentitled can accurately reflect the relative contribution of the net proceeds ofthe Offer to the enlarged net assets of the Company. Live UK Promotions MarketThe Board believe that the current outlook in the live UK promotions market isvery positive. A recent Mintel report (August 2006*) forecasts that the livemusic, concerts and festivals market will grow a total of 106% over the nextfive year period. This continues a historical growth of 82% in the number ofconcerts between 2001 and 2005, increasing from an estimated value of £475m in1999 to £613m in 2004 and predicted to rise to £836m in 2009 (August 2004**). Outlook for the CompanyYour Board believes the Company is well-placed to produce growth in shareholdervalue. The Investment Manager is seeing a good flow of high-quality investmentopportunities, the underlying asset class is vibrant, the early soundings on ourfundraising plans are positive and our first equity investments are imminent. Weare looking forward with confidence and we hope you share our expectation. Should you have any questions about your investment, please do not hesitate tocontact either the Company Secretary or the Investment Manager whose details aregiven at the back of this report. Further information on Edge is also available on the Company's web site(www.edgeperformancevct.com). Sir Robin MillerChairman19 October 2006 *Music Concerts and Festivals, Leisure Intelligence, August 2006**Music Concerts and Festivals, Leisure Intelligence, August 2004 Income Statementfor the period ended 31 August 2006 Period ended 31 Aug 2006 (unaudited) Revenue Capital Total Note £'000 £'000 £'000 Realised/unrealised movements oninvestments - 7 7Income 91 - 91Investment management fees (1) (2) (3)Other expenses (93) - (93) Return on ordinary activities before (3) 5 2taxTaxation on ordinary activities - - - Return attributable to equity (3) 5 2shareholdersDividends paid - - - Transfer to reserves (3) 5 2 Return per shareBasic per Ordinary Share 2 (0.06)p 0.09p 0.03p The total column of this statement is the profit and loss account of theCompany.All revenue and capital items in the above statement derive from continuingoperations. Balance Sheetas at 31 August 2006 31 Aug 2006 (unaudited) Note £'000 Fixed assetsInvestments 852 Current AssetsDebtors 167Cash at bank 5,210 5,377 Creditors: amounts falling due within one year (221) Net current (liabilities)/assets 5,156 Net assets 6,008 Capital and reservesCalled up share capital 640Share premium account 5,366Realised capital reserve (2)Unrealised capital reserve 7Revenue reserves (3) 6,008 Net asset value per share 3 93.87p Cash Flow Statementfor the period ended 31 August 2006 Period ended 31 Aug 2006 (unaudited) £'000 £'000Operating activitiesInvestment income received - qualifying 7Deposit and similar interest received - non qualifying 76Investment adviser's fees paid (119)Cash paid to and on behalf of directors (21)Other cash payments (23) Net cash outflow from operating activities (80)Financial investmentPurchase of corporate bonds (844)Purchased interest (2)Recovery of purchased interest 2 Net cash outflow from financial investment (844) Net cash outflow before financingFinancingNew share issue 6,300Share issue expenses paid (166) Net cash inflow from financing 6,134 Increase in cash 5,210 Reconciliation of Movements in Shareholders' Fundsfor the period ended 31 August 2006 Total £'000 Capital subscribed 6,288Expenses of issue (282)Total recognised gains and losses for the period 2 Total net assets attributable at 31 August 2006 6,008 Notes to the Interim Financial Statements 1. Accounting PoliciesThe financial statements have been prepared in accordance with UK GenerallyAccepted Accounting Practice ("UK GAAP") and with the Statement of RecommendedPractice for "Financial Statements of Investment Trust Companies" (December2005). In accordance with the requirements of FRS 26 "Financial Instruments:Measurement" the Company's investments have been designated as "financial assetsat fair value through profit or loss". Unlisted investments are valued byDirectors at fair value. The Company owns a 51% stake in Edge Investment Management Limited ("EIM") acompany registered in England and Wales (registration number 05507396). Inaccordance with Section 229(3)(c) of the Companies Act 1985 and FRS 2 (para 25)the Company has not prepared consolidated accounts for the period as it is fullyintending to dispose of its stake in EIM before the year end. This investment istherefore carried as a current asset (at cost) in the Balance Sheet. 2. Return per ordinary shareThe return per share has been calculated based on a weighted average number ofordinary shares in issue for the period ended 31 August 2006 of 6,400,640. 3. Net asset value per shareThe net asset value per ordinary share has been calculated based on 6,400,640ordinary shares (being the number of ordinary shares in issue as at 31 August2006). 4. The financial information for the period ended 31 August 2006 has not beenaudited and does not comprise full financial statements within the meaning ofSection 240 of the Companies Act 1985. 5. Copies of this interim report have been mailed to shareholders and areavailable to the public at the Company's registered office. 6. The Net Asset Value is lower than 94.5 pence per share because of the effectof the issue of additional shares to early investors as set out in theprospectus. No additional monies have been paid towards the start up costs andthe amount available for investment remains unaffected. For every £1 invested,5.5 pence has been used to pay the start up costs. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
EDG.L