Regulatory Filings • Apr 1, 2015
Regulatory Filings
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Amati VCTs Top Up Offers 2014/2015 and 2015/2016
Target to raise, in aggregate, up to £9,500,000 by way of an issue of New Shares in the Companies
(together the "Amati VCTs", the "Companies" or "Company" as the context requires)
If you are in any doubt about the contents of this document, you should seek your own financial advice from a person authorised under the Financial Services and Markets Act 2000 ("FSMA").
This document (the "Offer Document"), which is a financial promotion and not a prospectus, is issued by the Companies and has been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 by Amati Global Investors Limited ("Amati", the "Investment Manager" or "Manager"), which is authorised and regulated by the Financial Conduct Authority ("FCA") (registration number FRN198024), on behalf of the Companies. Any decision should be based on a reading of the whole of this document.
This document contains details of the Amati VCTs Top Up Offers 2014/2015 and 2015/2016 (the "Offers", which consist of an individual "Offer" from each of the Amati VCTs in each tax year) for new ordinary shares (the "New Shares") in the Companies.
The Offers are not being made, directly or indirectly, in or into the United States, Canada, Australia, Japan or the Republic of South Africa or their respective territories or possessions, and documents related to the Offers should not be distributed, forwarded or transmitted in or into such territories. The New Shares have not been and will not be registered under the United States Securities Act of 1933 (as amended) or the US Investment Company Act of 1940 (as amended) or the US Investment Advisers Act of 1940 (as amended) and may not be offered, sold or delivered, directly or indirectly, in or into the United States, Canada, Australia, Japan or the Republic of South Africa.
Amati is acting exclusively for the Companies in connection with the Offers and will not be responsible to anyone other than the Companies for providing the protections afforded to clients in accordance with the rules of the Financial Conduct Authority or for advising any such person in connection with the Offers.
Application will be made to the UK Listing Authority for all the New Shares issued under the Offers to be admitted to the premium segment of the Official List of the UK Listing Authority (the "Official List"). Application will also be made to the London Stock Exchange for all such shares to be admitted to trading on the London Stock Exchange's Main Market for Listed Securities. It is expected that admission of those shares will become effective and dealings will commence 2 business days following allotment.
This document as well as an Investor Guide can be viewed on Amati's website, www.amatiglobal.com, and can be requested free of charge by calling Amati Global Investors on 0131 503 9115, or by sending an email request to [email protected].
The terms and conditions are set out on pages 27 to 30 of this document, together with the subscription procedure and a subscription form for use in connection with the Offers. The minimum subscription per investor is £3,000 per tax year per Company, or £5,000 (£2,500 in each Company) if applying for both Amati VCT plc and Amati VCT 2 plc.
The completed Subscription Form in respect of the Top Up Offers should be sent by post or delivered by hand to the address below by no later than noon on Thursday 2 April 2015 in respect of the 2014/2015 tax year and noon on Friday 10 July 2015 in respect of the 2015/2016 tax year. Amati may at its absolute discretion decide to extend the Offers.
The City Partnership (UK) Ltd Thistle House 21 Thistle Street Edinburgh EH2 1DF
| Contents | ||||
|---|---|---|---|---|
| Page | ||||
| Risk Factors | 4 | |||
| Letter from the Chairmen of the Amati VCTs | 9 | |||
| Further Information | 12 | |||
| Taxation | 24 | |||
| Terms and Conditions of the Top Up Offers | 27 | |||
| Notes on how to complete the Subscription Form | 31 | |||
| Subscription Form | 33 | |||
| Timetable | |
|---|---|
| Offers close in respect of tax year 2014/15 | Noon on Thursday 2 April 2015 |
| Offers close in respect of tax year 2015/16 | Noon on Friday 10 July 2015 |
| Allotment Dates | At the Manager's discretion |
| Listing and dealings commence | On the second business day following allotment |
| Share certificates issued | Within 10 business days of allotment |
Either of the Offers will close earlier than indicated if the maximum subscription is received. They may also be extended at the absolute discretion of the Directors.
| Details of the Share Offers | ||||
|---|---|---|---|---|
| Offer Costs | 2% | |||
| Offer Price | Last published net asset value per share, divided by 0.98 | |||
| Offer Costs for existing shareholders and applications via Authorised Financial Intermediaries |
1% | |||
| Offer Price for existing shareholders and applications via Authorised Financial Intermediaries |
Last published net asset value per share, divided by 0.99 | |||
| Adviser Charging | Fees for initial advice can be facilitated through the application process |
|||
| Trail commission for applications via Authorised Financial Intermediaries acting in an Execution Only capacity (non-platform) |
0.375% per annum payable by the Manager for five years |
|||
| Minimum Subscription Level | In each tax year, £3,000 per Company, or £5,000 if applying for shares in both Companies (£2,500 in each Company) |
|||
| Minimum size of Offers | There is no minimum size of the Offers, as both VCTs are already well established |
|||
| Annual Management Fee | 1.75% of net assets | |||
| Annual cap on running costs | 3.5% of net assets | |||
| Performance Fees | The Manager has waived the right to performance fees |
For full details please see the Terms and Conditions on page 27.
In considering an investment under these Offers, prospective investors should review the following risk factors which, at the date of this document, the Directors of the Amati VCTs (the "Directors") believe to be material, and which may affect the Companies' performance and/or the availability of tax reliefs. Any decision to invest in either of the Companies should be based on consideration of this document as a whole by an investor. An investment in either of the Companies is only suitable for investors who are capable of evaluating the risks and merits of such investment and who have sufficient resources to bear any loss which might result from such investments.
Investment in either of the Companies should be regarded as long term in nature and is not suitable for all individuals. Potential investors should consult a suitably qualified financial adviser authorised under the FSMA before deciding whether to, and how much to, invest in either of the Companies.
The market price of the ordinary shares in the Companies or either of them (the "Ordinary Shares") may not fully reflect their underlying net asset value ("Net Asset Value" or "NAV"). There is a limited secondary market for shares in VCTs primarily because the initial income tax relief is only available to those subscribing for newly issued shares.
Although the Ordinary Shares will be listed on the premium segment of the Official List and admitted to trading on the London Stock Exchange, it is possible that there may not be a liquid market in the Ordinary Shares and Shareholders may have difficulty in selling their Ordinary Shares. Potential new investors in either of the Companies may be less willing to acquire Ordinary Shares which are already in issue than to subscribe for New Shares because of the tax reliefs which attach to new subscriptions.
The past performance of the Companies or other companies or funds managed or advised by Amati is not necessarily a guide to the future performance of either of the Companies.
The value of an investment in Amati VCT or Amati VCT 2 may go down as well as up. Shareholders may get back less than the amount originally
invested in a Company, even taking into account the available tax reliefs.
An investor may lose his or her entire investment and his or her capital is at risk.
Under the Prospectus Rules and the FSMA, VCTs are not required to issue a full prospectus for the Offers provided that the number of New Shares issued in any twelve month period does not exceed the lower of 10 per cent of the issued share capital of the Company, or EUR 5m. The Offers will be managed in such a way as to make the maximum use of this allowance, and this means that it is not possible to determine the exact maximum number of shares that may be issued for each Company under the Offers, and that it may be necessary to reject applications made where accepting them would mean breaching the limits imposed by these restrictions.
The rules regarding qualifying investments ("Qualifying Investments"), as set out in the Income Tax Act 2007 as amended ("ITA"), are complex and restrictive, and are aimed at steering the Manager to invest in smaller, more immature businesses. This tends to raise the overall risk profile of the investment portfolio. These rules have changed in the past and may change again in the future.
The fact that a share is traded on the Alternative Investment Market, operated by the London Stock Exchange ("AIM") or the ICAP Securities Derivatives Exchange ("ISDX") does not guarantee its liquidity. The spread between the buying and selling price of such shares may be wide and thus the price used for valuation may not be achievable. Realisations of investments in AIM-traded or ISDX-traded companies and unquoted investments can sometimes be more difficult and can take more time than realisations of investments in companies quoted on the Official List. The valuation of a Company's portfolio and opportunities for realisation may also depend on stock market conditions.
The ability of either Company to obtain maximum value from its investments (for example, through a sale or takeover) may be restricted because of the requirement to satisfy certain conditions
necessary for it to maintain its VCT status (such as the condition that not less than 70% by value of its investments must be in Qualifying Investments).
AIM is designed primarily for emerging or smaller companies. Such companies may, in comparison to companies quoted on the Official List, have less mature businesses, a more restricted depth of management and a higher risk profile. The rules of the AIM market are, in relation to admission and continuing obligations, less demanding than those of the Official List.
There can be no guarantee that the investment objectives of the Companies will be achieved or that suitable investment opportunities will be available. The success of each Company will depend on the Manager's ability to identify, acquire and realise investments in accordance with each Company's investment policy and there can be no assurance that the Manager will be able to do so. If the investment objectives of the Companies are not achieved and/or the Companies are unable to identify, acquire and realise investments in accordance with their investment policies, the impact on the Companies' value and performance may be negative. In particular (i) the Companies may be left with a larger cash pool than they would wish which may act as a drag on investment returns, (ii) the Companies may be forced to make Qualifying Investments which they would not ideally hold, or which fall outside the scope of the investment policy, in order to comply with the VCT regulations (though in this circumstance the Companies would require to obtain shareholders' approval in general meeting to allow them to undertake this), (iii) the Companies may be forced to sell attractive investments which are liquid, in preference to less attractive investments which are illiquid, (iv) the Companies may not be able to realise enough cash to support their target dividend payments, and (v) the Companies may not be able to sell investments at times they believe most opportune. In any of these cases, the impact on the Companies may include a reduction in the value of their assets, a reduction in their investment performance, an inability to continue to pay dividends at the target rate, and an inability to reinvest funds on an optimum basis. The impact on an investor may include a reduction or cessation of dividend payments by the relevant Company and a reduction in that Company's
underlying NAV per share and/or the trading price of Ordinary Shares in that Company.
The spread between the bid price and the offer price of AIM-traded companies' shares may be wide and, therefore, the price of such shares for valuation purposes may not reflect the price at which such shares may be sold. Unquoted shares are inherently more difficult to value and, as a result, valuations are subject to uncertainty.
In relation to unquoted companies, proper information for determining the value of either of the Companies' underlying investments, or the risks to which they are exposed, may also not be available. This is because, although these companies generally provide accurate and timely information to the Manager, they are not necessarily required to do so. As such, valuations may have to be done on historical information presented in a summary form and without having the benefit of direct discussions with management and/or the ability to require disclosure of additional information which may be necessary or desirable in order to come to a more accurate valuation. Quoted companies are generally subject to enhanced disclosure requirements including an obligation to make announcements to the market in respect of price sensitive information. However, such announcements may be limited in details and scope. In addition, financial information, when released, will usually be historical and limited in detail. There is also no obligation for an individual quoted company's management team to have direct discussions with investors, although it is normal practice to do so.
The ability of the Amati VCTs to manage the discount to NAV at which the shares trade through share buybacks is dependent on the availability of distributable reserves. In the absence of such buybacks, it is likely that there will not be a liquid market in the Ordinary Shares, and Shareholders may only be able to realise their investment at a wide discount to NAV per share or may not be able to sell at all.
In addition, the ability of the Companies to buy back shares may be affected by the Companies' respective requirements in relation to financing their target annual dividend payments (please see Dividend Policy Risks below).
The value of Ordinary Shares in Amati VCT or Amati VCT 2 depends on the performance of their underlying assets.
The tax rules or their interpretation in relation to an investment in either of the Companies and/or rates of tax may change during the life of the Companies.
There can be no guarantee that either of the Companies will maintain full VCT status. If either of the Companies ceases to retain approval as a VCT before qualifying subscribers have held their Ordinary Shares for five years, any income tax relief obtained will have to be repaid. Following a loss of VCT status a shareholder will be taxed on dividends paid by the Company and, in addition, a liability to capital gains tax may arise on any subsequent disposal of Ordinary Shares. If either of the Companies ceased to have VCT status, that Company would also lose its exemption from corporation tax on capital gains.
The rules governing Qualifying Investments have changed a number of times over the last five years and may change further. Funds raised through share issues during different periods may be subject to different rules governing Qualifying Investments. As a result of having raised money each year through multiple sets of rules in relation to Qualifying Investments, VCTs face a potentially high level of complexity in matching the various subscriptions they have received historically to the various rule types for Qualifying Investments. This situation has been simplified somewhat by the latest set of rule revisions.
New legislation introduced during 2012 means that the Companies may lose their VCT status if they invest in new shares in a company which has raised more than £5m from state aided sources over the twelve months prior to and including the date of investment.
If at any time VCT status is lost, the relevant Company may request that dealings in its Ordinary Shares be suspended until such time as the relevant Company has published proposals either to continue as an investment company or to be wound up.
The current tax legislation applicable to individual investors provides for income tax relief of up to 30% of the amount subscribed in VCTs subject to an annual investment limit of £200,000 per tax year.
Investors who exceed the annual investment limit of £200,000 per tax year will not be able to obtain income tax relief for investment above this level, and will not benefit from other tax advantages granted on VCT shares bought below this investment limit, such as tax free dividends and freedom from capital gains tax.
Investors must hold their shares for at least 5 years to qualify for income tax relief, otherwise the initial tax relief can be withdrawn and, therefore, VCTs should be viewed as long term investments.
The UK Government has introduced legislation to restrict an individual's entitlement to VCT income tax relief where the investment is conditional upon or linked in any way to a VCT share buyback or has been made within 6 months of a disposal of shares in the same VCT.
Any realised losses on a disposal of Ordinary Shares will not be allowable losses for the purposes of capital gains tax and will, therefore, not be available for set-off against any capital gains.
The information in this document is based on existing legislation, including taxation legislation. The existing levels and bases of, and reliefs from, taxation may change. The value of tax reliefs depends on the personal circumstances of investors, who should consult their own tax advisers before making any investment.
The continued availability of the Dividend Reinvestment Schemes depends upon (i) each Company continuing to offer such a scheme, (ii) the relevant Company paying dividends which are available to be reinvested and (iii) the relevant Company having sufficient allotment and issue authority to permit the reinvestment of the dividends at the relevant time. In the event that any of these ceases to be the case, the relevant Dividend Reinvestment Scheme may no longer function temporarily or longer term or be available and a shareholder may, perhaps unexpectedly end up receiving a cash dividend.
The Dividend Reinvestment Schemes contain provisions in relation to notice which must be given in order to exit the relevant scheme. Members of the schemes may not be able to exit the relevant scheme shortly before a dividend is paid if sufficient notice is not given and a shareholder may therefore receive further Ordinary Shares when he or she desired a cash dividend.
Legislative change relating to the Companies' ability to pay dividends from distributable reserves including those introduced in the 2014 Finance Act preventing VCTs returning capital subscribed by investors within 3 years of the end of the accounting period in which the shares were issued (in respect of shares issued post 5 April 2014) could remove or impair the Companies' ability to target a dividend yield of 5-6% of year end NAV.
Prospective investors should be aware that, although neither of the Companies currently has any borrowing facilities in place, they may have from time to time a certain level of gearing (as permitted by the borrowing powers in their Articles) and, whilst the use of borrowings would enhance the NAV of the Ordinary Shares where the value of that Company's underlying assets is rising, it will have the opposite effect where the underlying assets' value is falling. The use of borrowings also creates the risk that the borrower will be unable to service the interest payments or comply with the other requirements of the loan rendering it repayable and the risk that borrowings will not be able to be refinanced upon expiry or that the terms of such refinancing may not be as favourable as the existing terms of borrowing. Increases in interest rates and levels of amortisation imposed by a lender may also have an adverse effect on the relevant Company's ability to pay dividends to its Shareholders.
The Manager may use exchange-traded or overthe-counter derivatives for hedging purposes with a view to reducing overall market risk in the portfolio as a whole. However, investors should be aware that there is no guarantee that this risk mitigation will be in place during a market fall, and it is not the Manager's intention to seek to hold such instruments at all times. The use of derivatives and other instruments will reflect the Manager's view of the market risks from time to time, and in practice their use has been rare. Such instruments as are available to reduce risk are imperfect. Instruments currently approved for use are the FTSE Mid 250 Future or Cash Swaps and the Russell 2000 Futures and Options. The Manager will be seeking to use the most appropriate and cost effective instruments for the purpose, recognising, however, the constraint that no perfect instruments are currently available. In the absence of perfectly correlated hedging instruments the Manager will only seek to hedge a strictly limited amount of market risk. Currently the limits (which are subject to variation by the Manager) are that no more than 15% of the relevant Company's Net Asset Value will be hedged through futures, and no more than 50% through a combination of futures and options. Put options may be bought up to a maximum book cost of 1.5% of the relevant Company's Net Asset Value.
Derivative positions will, therefore, always be covered by the assets of the portfolio and will not be used speculatively. Investors should be aware that although futures contracts, contracts for difference, cash swaps, and options are held in relation to stock market indices, the contracts are settled in cash. The gearing or leverage created through such derivative transactions means that a small deposit called "margin" is deposited as the contract is taken out, but this represents a much larger underlying exposure, and it is this underlying exposure which is used to measure how much of the portfolio is being hedged. If the underlying security or index moves adversely then further margin needs to be paid in order to keep the position open. Failure to do so may result in the relevant Company's position being closed and any resulting losses would need to be funded.
During the periods that each Company has been managed by the Manager, the Companies have generally been run with no hedging. On only a few occasions and for short periods has hedging been put in place covering more than 10% of the relevant Company's net asset value. Overall, the net result of hedging has not made a material impact on the Net Asset Value of either Company.
The performance of the Companies depends on the investment performance of the Manager which in turn is dependent upon the performance and continued availability of certain key personnel.
In the event that any one or more of these persons were unavailable either temporarily or permanently, the investment performance of the Companies may be adversely affected resulting in capital loss, reduction in dividends and/or reduction in liquidity for shareholders.
number SC278722 number 04138683
Directors: Directors: Peter Lawrence (Chairman) Julian Avery (Chairman) Julia Henderson Mike Killingley Charles Pinney Christopher Macdonald Brian Scouler Christopher Moorsom
Registered office: Registered office: Thistle House, 21 Thistle Street, 27-28 Eastcastle Street, Edinburgh, EH2 1DF London, W1W 8DH
Incorporated in Scotland under the Incorporated in England and Wales under Companies Act 1985, with registered the Companies Act 1985, with registered
The Amati VCTs offer exposure to a well-diversified portfolio of small and medium sized businesses, focused on companies whose shares are traded on AIM in London, and to the new Qualifying Investment opportunities which are regularly brought to this market. In a share offer such as this, where no prospectus is being issued, each VCT may issue shares in any twelve month period up to a limit which is the lower of 10% of its existing share capital, or a number of shares which raises EUR 5m. The Offers, therefore, will be managed in accordance with these limits, and applications will be taken on a first come, first served basis.
The subscription form to subscribe for New Shares is on page 33 (the "Subscription Form").
The Directors believe that the attractions of investing in the Amati VCTs are the following:
(iii) Both Amati VCTs provide access to a wide-ranging portfolio of investments, offering exposure to a variety of sectors, and to companies at various stages of maturity. Amati uses the non-qualifying portfolios to invest in the TB Amati UK Smaller Companies Fund, an award winning portfolio of around 60 companies, as well as individual small and mid cap companies that are larger than those typically found in the qualifying portfolios, to bring greater diversity and lower risk to the VCTs as a whole.
(iv) Amati is unusual amongst AIM VCT managers in its use of private equity-style structuring in some unquoted investments, for example, through the use of convertible loans and board representation. Convertible loans are used to reduce the risk profile of investments and to increase income.
The Companies operate dividend reinvestment schemes ("Dividend Reinvestment Schemes") to enable shareholders ("Shareholders") of each to use all of their dividends to subscribe for further Ordinary Shares in the relevant Company in a cost effective manner. The price at which the Ordinary Shares are issued is the Net Asset Value per Share as close as possible to the dividend payment date. The relevant Company bears all of the costs of operating the Dividend Reinvestment Scheme. Dividend reinvestment enables Shareholders to increase their total holding in the Company without incurring dealing costs, issue costs or stamp duty. Subject to the limits on investments in VCTs, these New Shares would qualify for the VCT tax reliefs that are applicable to subscriptions for new VCT shares. Shareholders wishing to participate in one or both of the Dividend Reinvestment Schemes in respect of New Shares issued to them under the Top Up Offer(s) should tick the relevant boxes in Section 5 of the Subscription Form. The terms of the Dividend Reinvestment Schemes are available on the website (www.amatiglobal.com) or by contacting Amati Global Investors on 0131 503 9115. Shareholders and potential investors should be aware that the terms of the Dividend Reinvestment Schemes for the two Companies are not identical. Please also note that any instruction given in respect of one of the Dividend Reinvestment Schemes will be applied to any existing holdings in the same company.
Persons considering acquiring Ordinary Shares in either of the Companies are referred to the risk factors set out on pages 4 to 8 of this document.
1 Dividends are subject to the relevant Company having sufficient distributable reserves and sufficient cash receipts in the period and no profit forecast is to be inferred from or implied by this statement (please see Risk Factors on pages 4 to 8). This is not a reliable indicator of future performance.
Before making a decision to invest in the Offers we recommend that you seek advice from a financial adviser authorised under the FSMA. If you have any questions about the application process please contact The City Partnership on 0131 243 7210 or you can email [email protected]. The fund managers also welcome calls from existing and potential investors and can be contacted on 0131 503 9115. The suitability (or otherwise) of any investment in the Company will depend on your individual circumstances and neither The City Partnership nor Amati Global Investors Limited will be able to provide investment advice in connection with any investment in the Companies.
The application form can be found on page 33 of this document. If you wish to subscribe for shares in the Offers you should complete this application form, and return it together with any required identity documents to The City Partnership (UK) Limited, who are the Receiving Agent for the Offers.
Yours faithfully
Peter Lawrence Julian Avery
Chairman, Amati VCT plc Chairman, Amati VCT 2 plc
Amati VCT and Amati VCT 2 are established venture capital trusts which are managed by an award winning investment management team. The objective of the Companies is to provide an attractive return to Shareholders. The Companies seek to generate tax-free capital gains and income by building and maintaining a wellbalanced portfolio of Qualifying Investments for the purposes of the tax legislation under which the Companies operate. The Qualifying Investments are predominantly in AIM-traded companies or companies expected to be traded on AIM in the future. The Companies are managed as venture capital trusts in order that Shareholders may benefit from the tax reliefs available.
Amati VCT was incorporated and registered in Scotland on 21 January 2005 with limited liability as a public limited company under the Companies Act 1985, with the name First State Investments AIM VCT plc, with registered number SC278722. The company changed its name to Noble AIM VCT plc on 29 June 2007, and changed its name to Amati VCT plc on 5 July 2010.
Amati VCT intends to carry on its business such that its VCT status will be maintained.
Amati VCT 2 was incorporated and registered in England and Wales on 10 January 2001 with limited liability as a public limited company under the Companies Act 1985, with the name Singer & Friedlander AIM 3 VCT plc and with registered number 04138683. The company changed its name to ViCTory VCT PLC on 16 June 2009. The company changed its name to Amati VCT 2 plc on 9 November 2011.
Amati VCT 2 intends to carry on its business such that its VCT status will be maintained.
Both the Amati VCTs conduct their affairs so that the shares issued to them can be recommended to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream pooled investments and intend to so for the foreseeable future. The shares are excluded from the FCA's restrictions which apply to non-mainstream pooled investments because they are shares in a VCT.
As at 31 December 2014 the issued share capital of Amati VCT was £5,157,770, made up of 51,577,700 Ordinary Shares of 10p each, and the issued share capital of Amati VCT 2 was £1,432,178, made up of 28,643,562 Ordinary Shares of 5p each.
Since its launch in 1995, over 3,000 companies have joined AIM. Throughout this time, AIM has been a crucial source of finance for ambitious UK growth companies. This was especially true during the global economic downturn, when conventional sources of finance, principally bank debt, became harder for smaller companies to procure. In many circumstances, banks remain unwilling to lend to small companies. In addition to providing a source of capital, AIM brings credibility to small, growth companies due to the regulatory requirements placed upon businesses wishing to join. For investors, this provides an added degree of comfort as AIM quoted companies must comply with more onerous reporting and corporate governance requirements than private businesses. The status of AIM companies also allows fund managers flexibility in managing portfolios due to the potential added liquidity that comes with a stock market quote. This means that, subject to liquidity, AIM VCTs can reduce exposure to quoted holdings by selling on the market. Conversely, there is no pressure to sell a holding that the managers believe continues to have good prospects for growth and share price appreciation.
The chart above outlines the categories of investments in each VCT portfolio, as at 31 December 2014. The most significant differences between the VCTs lie in two categories: Convertible Loans in Quoted Companies; and Maturing Small Cap Companies (defined as those with market capitalisations between £50 million and £250 million). These differences arise for historic reasons. Regarding the difference in Convertible Loans, prior to taking on the
management of Amati VCT 2, the Manager completed a series of convertible loan deals on behalf of Amati VCT. There have been fewer opportunities to make convertible loan deals since Amati became investment managers of Amati VCT 2*. Regarding the difference in Maturing Small Cap Companies, during the restructuring of Amati VCT 2, which followed the take-on of the investment management contract, Amati decided to retain some attractive, more mature holdings, which have since continued to grow into substantial companies, some of which were not in Amati VCT's portfolio. The weighted average market capitalisation of qualifying investments held by Amati VCT was £59m and by Amati VCT 2 was £82m, as at 31 December 2014. (Market capitalisation is a measure of the value of a company.)
Both VCTs are now managed under broadly similar mandates and, therefore, new investments and sales are allocated pro-rata between the portfolios, unless there is a clear reason to diverge from this.
*In March 2010, when Amati VCT 2 was called ViCTory VCT plc.
During 2013, Amati appraised 77 qualifying investment opportunities on AIM. This can be split by initial public offerings ("IPOs"), of which 32 were appraised; and secondary fund raisings in companies already listed on AIM, of which 45 were appraised. The Amati VCTs invested in 13 of these fund raisings, in which the companies concerned were seeking to raise a total of £88m. This represented 9 IPOs and 4 secondary fund raisings. In one instance (Frontier Developments plc, "Frontier"), the Amati VCTs invested two months prior to the IPO using a convertible loan instrument, which converted to equity at a discount to the IPO price. Taking into account the return made from Frontier based on actual costs rather than the IPO price, the average increase in share price, as at 31 December 2014, of AIM deals participated in by Amati VCTs in 2013 was 40.9% (or 38.1% based on Frontier's IPO price). The average increase in share price of the 55 VCT qualifying AIM deals screened by Amati that succeeded in raising funds in 2013 was 3.1%*.
During 2014, Amati appraised 74 qualifying investment opportunities on AIM, comprising 35 IPOs and 39 secondary fund raisings in companies already listed on AIM. The Amati VCTs invested in 12 of these fund raisings, comprising 3 IPOs and 9 secondary fund raisings, in which the companies concerned were seeking to raise a total of £64.4m. The average increase in the share price, as at 31 December 2014, of AIM deals in which the Amati VCTs participated was 4.0%, as compared to the average decrease in the share price of qualifying opportunities screened of -5.6%.
Amati is unusual amongst AIM VCT managers in that it also makes a small number of investments in select pre-IPO opportunities, where private companies are seeking a final round of funding before an AIM flotation. Amati prefers to invest in these situations predominantly through a convertible loan instrument rather than ordinary shares in order to increase downside protection and increase income to the VCTs, as these instruments tend to have a yield.
*returns in this paragraph refer to the movement in share price from the placing price of new shares to the mid-price of those shares at the close of business on 31 December 2014. Source: Amati Global Investors Ltd
Crawshaw operates a chain of discount butcher shops across the north east of England. The original family business was reversed into an AIM shell company in 2008 by the current chairman, who is also chairman of leading food wholesaler Booker Group. The group is vertically integrated, incorporating in-house processing, warehousing and logistics, with a portfolio of 23 shops. Products comprise mostly raw meats (65% of sales), but also cooked and takeaway items, with a focus on quality and value. Crawshaw was a big beneficiary of the recent horse meat scandal.
The investment case was built on the following attributes:
Quixant is a Cambridge-based specialist manufacturer and supplier of computers to gaming machine manufacturers. Gaming machines are subject to stringent and changing regulations, and the computers which drive them are their most critical component. In addition, increasing graphics demands and processing power requirements add significant complexity to the computer design. Hence one of the top tier global manufacturers and several of the second tier are outsourcing their computer design and supply to Quixant, and other manufacturers are expected to follow.
It was these barriers to entry and Quixant's technological lead in their market that attracted Amati to the opportunity. Quixant had several other attributes that we seek in a portfolio company, including:
Ideagen is a supplier of compliance information management (CIM) software. Their products allow organisations to meet increasingly stringent governance and risk regulations across a variety of sectors such as healthcare, pharmaceuticals, aerospace, defence, banking, finance and utilities. Their software organises unstructured data, replacing legacy paper systems. They supply mainly UK and US markets, and growth has been a combination of organic and acquisitions, principally in healthcare and commercial risk management.
The investment case was built on the following:
The following figures are an indication of past performance. Past performance is not a reliable indicator of future results. The information has been compiled by Amati which is the source of the information and is based on the time periods indicated on each table and graph.
The following table and graph show the NAV Total Return performance of Amati VCT over certain periods to 31 December 2014 (assuming that dividends are reinvested on the ex-dividend date), showing a comparison against the FTSE AIM All-Share Total Return Index.
| Time Period | 1 yr | 3yr | 5yr | Since Launch* |
|---|---|---|---|---|
| Amati VCT NAV Total Return | 2.1% | 25.9% | 38.6% | 27.1% |
| FTSE AIM All-Share Total Return Index | -16.5% | 4.2% | 12.3% | -31.1% |
* Return since launch is calculated from 24/03/05 (date of first allotment of shares)
Amati VCT NAV Total Return (rebased)
FTSE AIM All-Share Total Return Index (rebased)
Below is a table indicating the returns to Shareholders in Amati VCT as at 31 December 2014 for representative allotments by Amati VCT of Ordinary Shares in each of the tax years since it floated in March 2005.
| Date | Price gross of costs |
Price net of costs |
Price gross after tax rebate |
Total return excluding subscription costs and tax rebate |
Total return including full subscription costs and tax rebate* |
|---|---|---|---|---|---|
| Initial Offer | 100.00p | 94.75p | 60.00p | 27.1% | 100.6% |
| 4 April 2006 | 123.50p | 117.02p | 74.10p | 2.9% | 62.5% |
| 21 March 2007 | 132.96p | 130.30p | 93.07p | -9.4% | 26.8% |
| 4 April 2008 | 96.51p | 91.68p | 67.56p | 16.3% | 57.8% |
| 3 April 2009 | 54.50p | 51.78p | 38.15p | 101.4% | 173.3% |
| 3 April 2010 | 79.19p | 75.23p | 55.43p | 31.2% | 78.0% |
| 5 April 2011 | 93.17p | 88.05p | 65.22p | 5.8% | 42.8% |
| 5 April 2012 | 81.84p | 77.74p | 57.28p | 12.5% | 52.7% |
| 5 April 2013 | 72.63p | 69.00p | 50.84p | 18.1% | 60.3% |
*Assumes full recovery of tax relief (prior to 6 April 2006 at 40% of monies subscribed, subsequent years at 30%)
The following table and graph show the NAV total return performance of Amati VCT 2 over certain periods to 31 December 2014 (and assuming that dividends are reinvested on the ex-dividend date), showing a comparison against the FTSE AIM All-Share Index. They split out the performance since Amati became the manager of Amati VCT 2 on 25 March 2010 (then called ViCTory VCT Plc), and since the merger with Invesco Perpertual AIM VCT PLC and relaunch as Amati VCT 2 on 8 November 2011. At inception Amati VCT 2 was called Singer & Friedlander AIM VCT 3.
| Time Period | Since Being Managed by Amati |
Since Merger |
1yr | 3yr | 5yr | Since Inception* |
|---|---|---|---|---|---|---|
| Amati VCT 2 NAV Total Return | 35.3% | 29.0% | -7.4% | 31.4% | 33.9% | -31.7% |
| FTSE AIM All-Share Total Return Index |
2.9% | -1.0% | -16.5% | 4.2% | 12.3% | -44.6% |
* Return since launch is calculated from 29/01/2001 (date of first allotment of shares)
Amati VCT 2 NAV Total Return (rebased) FTSE AIM All-Share Total Return Index (rebased)
Below is a table indicating the returns to Shareholders in Amati VCT 2 as at 31 December 2014 for representative allotments by Amati VCT 2 of Ordinary Shares since the merger and relaunch on 8 November 2011.
| Date | Price gross of costs |
Price net of costs |
Price gross after tax rebate |
Total return excluding subscription costs and tax rebate |
Total return including full subscription costs and tax rebate* |
|---|---|---|---|---|---|
| 21 Nov 2011 | 105.63 | 100.35 | 73.94 | 28.1% | 73.9% |
| 10 Sep 2012 | 106.50 | 101.18 | 74.55 | 23.4% | 67.4% |
| 2 Oct 2013 | 124.44 | 118.22 | 87.11 | -0.2% | 35.5% |
*Assumes full recovery of tax relief (prior to 6 April 2006 at 40% of monies subscribed, subsequent years at 30%)
The following table shows the investment portfolios of Amati VCT and Amati VCT 2 with value shown as at 31 December 2014*, being the last practicable date before publication.
| Amati VCT –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– |
Amati VCT 2 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– |
|||||||
|---|---|---|---|---|---|---|---|---|
| Security Description | Sector | Type | Book Cost £ |
Market Value £ |
% of NAV |
Book Cost £ |
Market Value £ |
% of NAV |
| AB Dynamics | Industrials | Equity | 302,796 | 544,856 | 1.5% | 257,890 | 449,808 | 1.4% |
| Accesso Technology | Technology | Equity | - | - | - | 273,000 | 1,610,700 | 5.2% |
| Allergy Therapeutics | Health Care | Equity | - | - | - | 28,536 | 63,709 | 0.2% |
| Anpario | Health Care | Equity | 276,139 | 997,780 | 2.7% | 271,065 | 877,880 | 2.8% |
| Antenova | Telecommunications Equity | - | - | - | 0 | 50,173 | 0.2% | |
| Antenova | Telecommunications Preference | Shares | - | - | - | 100,117 | 15,302 | 0.0% |
| Assura | Financials | Equity | 537,224 | 626,761 | 1.7% | 461,469 | 541,033 | 1.7% |
| Belvoir Lettings | Financials | Equity | 310,847 | 465,144 | 1.3% | 292,828 | 413,594 | 1.3% |
| Brady | Technology | Equity | 331,299 | 510,232 | 1.4% | - | - | - |
| Brooks Macdonald | Financials | Equity | 302,627 | 354,981 | 1.0% | 1,153,280 | 1,251,489 | 4.0% |
| Brookwell | Financials | Preference Shares |
- | - | - | 23,303 | 25,261 | 0.1% |
| China Food 15% 2012 | Consumer Goods | Convertible Loan |
876,000 | 452,016 | 1.2% | 624,000 | 321,984 | 1.0% |
| Conexion Media | Consumer Services Equity | - | - | - | 183,750 | 3,243 | 0.0% | |
| Craneware | Technology | Equity | 297,325 | 1,021,673 | 2.8% | - | - | - |
| Crawshaw | Consumer Goods | Equity | 431,466 | 557,310 | 1.5% | 368,534 | 465,055 | 1.5% |
| Deltex Medical | Health Care | Equity | 251,882 | 57,556 | 0.2% | 735,390 | 131,895 | 0.4% |
| Deltex Medical Libor + 8% 2014 |
Health Care | Convertible Loan |
1,000,220 | 993,000 | 2.7% | - | - | - |
| Dods | Consumer Services |
Equity | - | - | - | 595,868 | 130,000 | 0.4% |
| DX | Industrials | Equity | 260,973 | 227,699 | 0.6% | 242,652 | 212,321 | 0.7% |
| DXI | Technology | Equity | 363,476 | 265,440 | 0.7% | 336,527 | 245,760 | 0.8% |
| DXI 15% 2019 | Technology | Convertible Loan |
363,000 | 463,707 | 1.3% | 337,067 | 430,580 | 1.4% |
| Ebiquity | Consumer Services Equity | - | - | - | 729,005 | 393,870 | 1.3% | |
| Eclectic Bar | Consumer Services Equity | 314,086 | 200,721 | 0.5% | 292,314 | 182,696 | 0.6% | |
| EU Supply | Technology | Equity | 408,434 | 343,304 | 0.9% | 379,568 | 310,641 | 1.0% |
| FairFX | Consumer Services Equity | 483,649 | 610,404 | 1.7% | 416,351 | 514,305 | 1.6% | |
| Fox Marble | Basic Materials | Equity | 694,047 | 654,032 | 1.8% | 633,330 | 596,380 | 1.9% |
| Fox Marble 8% 2017 | Basic Materials | Convertible Loan |
551,700 | 581,327 | 1.6% | 508,300 | 535,597 | 1.7% |
| Frontier Developments | Consumer Goods | Equity | 593,622 | 1,308,499 | 3.6% | 548,816 | 1,159,490 | 3.7% |
| Futura Medical | Health Care | Equity | 399,670 | 243,659 | 0.7% | 372,091 | 221,949 | 0.7% |
* Excluding holdings valued at nil
Companies within the portfolio at 31 December 2014: Amati VCT, 62; Amati VCT 2, 62.
| Amati VCT –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– |
Amati VCT 2 –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– |
|||||||
|---|---|---|---|---|---|---|---|---|
| Security Description | Sector | Type | Book Cost £ |
Market Value £ |
% of NAV |
Book Cost £ |
Market Value £ |
% of NAV |
| GB Group | Technology | Equity | 235,364 | 888,105 | 2.4% | 222,619 | 797,458 | 2.6% |
| Hardide | Basic Materials | Equity | 401,666 | 1,362,713 | 3.7% | - | - | - |
| Ideagen | Technology | Equity | 564,631 | 942,998 | 2.6% | 496,043 | 828,264 | 2.7% |
| Idox | Technology | Equity | 298,961 | 1,493,503 | 4.1% | 238,511 | 1,256,156 | 4.0% |
| Ilika | Technology | Equity | 156,360 | 249,525 | 0.7% | 143,640 | 227,430 | 0.7% |
| Invocas | Financials | Equity | 332,285 | 35,880 | 0.1% | - | - | - |
| Kalibrate Technologies | Technology | Equity | 363,154 | 486,121 | 1.3% | 350,044 | 460,818 | 1.5% |
| Keywords | Industrials | Equity | 486,506 | 562,646 | 1.5% | 435,994 | 496,254 | 1.6% |
| London Asia Capital | Financials | Equity | 255,202 | 23,700 | 0.1% | - | - | - |
| Martinco | Financials | Equity | 154,044 | 163,672 | 0.4% | 140,456 | 144,670 | 0.5% |
| Microsaic Systems | Industrials | Equity | 399,631 | 549,000 | 1.5% | 401,936 | 491,850 | 1.6% |
| Mirada | Consumer Services Equity | 401,250 | 429,338 | 1.2% | 348,750 | 376,650 | 1.2% | |
| Mirriad | Technology | Equity | 381,246 | 313,536 | 0.9% | 353,129 | 290,414 | 0.9% |
| Mycelx Technologies | Oil & Gas | Equity | 440,349 | 366,433 | 1.0% | 425,026 | 311,152 | 1.0% |
| Netcall | Technology | Equity | - | - | - | 110,081 | 409,747 | 1.3% |
| Novae | Financials | Equity | 599,086 | 595,750 | 1.6% | - | - | - |
| Nujira | Technology | Equity | 259,991 | 259,991 | 0.7% | 240,008 | 240,008 | 0.8% |
| Paragon Entertainment | Financials | Equity | 700,875 | 229,771 | 0.6% | 321,500 | 168,626 | 0.5% |
| Polyhedra | Industrials | Equity | 340,187 | 82,779 | 0.2% | 309,813 | 75,388 | 0.2% |
| Polyhedra 8% 2017 | Industrials | Convertible Loan |
1,046,728 | 1,005,602 | 2.7% | 953,272 | 915,817 | 2.9% |
| Prezzo | Consumer Services Equity | - | - | - | 36,658 | 416,288 | 1.3% | |
| Quixant | Technology | Equity | 418,209 | 1,222,200 | 3.3% | 385,137 | 1,102,354 | 3.5% |
| Rame Energy | Industrials | Equity | 159,143 | 101,674 | 0.3% | 140,857 | 86,080 | 0.3% |
| Rame Energy 8% 2019 | Industrials | Convertible Loan |
424,380 | 398,869 | 1.1% | 375,620 | 353,040 | 1.1% |
| Rame Energy 8% 2019 | Industrials | Loan | 161,096 | 168,425 | 0.5% | 138,904 | 145,223 | 0.5% |
| Rated People | Consumer Services Equity | 97,484 | 73,111 | 0.2% | 92,587 | 69,439 | 0.2% | |
| Regenersis | Industrials | Equity | 144,759 | 92,205 | 0.3% | 134,526 | 85,785 | 0.3% |
| Rosslyn Data Technologies Technology | Equity | 384,601 | 204,791 | 0.6% | 365,387 | 186,310 | 0.6% | |
| Sabien Technology | Industrials | Equity | 573,399 | 299,380 | 0.8% | 375,354 | 201,685 | 0.6% |
| Science in Sport | Consumer Goods | Equity | 423,095 | 618,189 | 1.7% | 376,905 | 544,419 | 1.7% |
| Software Radio Technology Technology | Equity | 708,731 | 597,203 | 1.6% | 579,500 | 579,500 | 1.9% | |
| Solid State | Industrials | Equity | 257,957 | 884,464 | 2.4% | 242,041 | 820,139 | 2.6% |
| Sorbic International 10% 2013 |
Consumer Goods | Convertible Loan |
474,000 | 519,504 | 1.4% | 276,000 | 302,496 | 1.0% |
| Sportsweb | Industrials | Equity | - | - | - | 352,128 | 316,915 | 1.0% |
| Sprue Aegis | Industrials | Equity | 119,315 | 2,314,350 | 6.3% | - | - | - |
| Amati VCT | Amati VCT 2 | |||||||
|---|---|---|---|---|---|---|---|---|
| Security Description | Sector | Type | Book Cost £ |
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Market Value £ |
% of NAV |
Book Cost £ |
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Market Value £ |
% of NAV |
| Synectics | Industrials | Equity | - | - | - | 341,953 | 157,191 | 0.5% |
| Tasty | Consumer Services Equity | - | - | - | 319,504 | 516,320 | 1.7% | |
| TB Amati UK Smaller Companies Fund |
Financials | Equity | 881,684 | 894,907 | 2.4% | 749,871 | 761,078 | 2.4% |
| TLA Worldwide | Consumer Services Equity | 521,989 | 946,105 | 2.6% | 464,342 | 835,815 | 2.7% | |
| Tristel | Health Care | Equity | 542,055 | 788,596 | 2.1% | 438,143 | 701,122 | 2.2% |
| Ubisense | Technology | Equity | 541,284 | 408,061 | 1.1% | 535,577 | 371,528 | 1.2% |
| Universe | Industrials | Equity | 308,372 | 904,102 | 2.5% | 287,784 | 812,563 | 2.6% |
| Water Intelligence | Industrials | Equity | 180,114 | 141,369 | 0.4% | 169,886 | 126,427 | 0.4% |
| Total Investments | 24,489,660 | 33,098,669 | 90.2% 22,834,542 | 28,137,132 | 90.2% | |||
| Net Current Assets | 3,598,788 | 9.8% | 3,060,941 | 9.8% | ||||
| NET ASSET VALUE | 36,697,457 | 100% | 31,198,073 | 100% |
Dr Paul Jourdan, Douglas Lawson and David Stevenson are the principal fund managers responsible for the investment portfolio. Details on these individuals are set out below.
Dr Paul Jourdan is an award-winning fund manager, with a strong track record in small cap investment. He co-founded Amati following the management buyout of Noble Fund Managers from Noble Group in January 2010. He had joined Noble Fund Managers in 2007 as Head of Quoted Equities. He moved to Edinburgh in 1998, joining Stewart Ivory to work on UK, emerging market and global equities. In 2000, Stewart Ivory was taken over by Colonial First State (subsequently First State Investments). From September 2000, Paul became manager of what is now TB Amati UK Smaller Companies Fund, winning several awards, more recently the Growth Company Investors "Small Cap Fund of the Year Award 2011", the "Lipper Best UK Small and Mid-Cap Fund 2012" and "FE Alpha Manager 2013". In November 2004 he was appointed Head of UK Equities at First State. In early 2005 he launched the First State Investments AIM VCT plc, which is now called Amati VCT plc.
Prior to 1998 Paul worked as a professional violinist, including a four year period with the City of Birmingham Symphony Orchestra. He currently serves as a Director of Sistema Scotland, and also as a Governor of the Royal Conservatoire of Scotland. He also serves as a director of Fox Marble Holdings plc, in which Amati VCT and Amati VCT 2 both hold an investment.
Douglas Lawson co-founded Amati following the management buyout of Noble Fund Managers from Noble Group in January 2010. Prior to this he worked in corporate finance, then private equity, before moving into UK Small Caps. Douglas has managed the TB Amati UK Smaller Companies Fund since 2009, winning several awards and achieving the Citywire AAA rating in April 2012. Douglas started his career at Ernst & Young in London, where he qualified as a Chartered Accountant in 2002. He serves as a director of Amati and also Polyhedra Group plc, in which Amati VCT and Amati VCT 2 both hold an investment.
David Stevenson joined Amati in February 2012. Prior to this he was a partner with investment boutique Cartesian Capital, which managed a range of retail and institutional UK equity funds in long only and long/short strategies. David co-founded Cartesian Capital in 2005, and saw growth in client assets to a peak of £600m.
Previously he was Assistant Director at SVM, where he also managed equity products including the UK Opportunities small/midcap fund which was ranked top decile amongst peers for the period from inception to late 2005. David started his career at KPMG where he qualified as a Chartered Accountant. He latterly specialised in corporate finance, before moving into private equity with Dunedin Fund Managers.
| Amati VCT plc | Amati VCT 2 plc | |
|---|---|---|
| Financial year end | February | January |
| Annual results announcement |
May | May |
| Annual General Meeting |
June | June |
| Dividends paid | August and December |
July and October |
| Half year results announcement |
October | September |
The full investment policy of the Amati VCTs, along with information about the investment process adopted by the Manager, is set out on pp. 37-43 of the Companies' Joint Share Offer Prospectus published on 6 February 2013, which should be read together with amendments set out in the Companies' Joint Circular published on 12 November 2014. Both documents are available on Amati's website: www.amatiglobal.com
Although investments in VCTs are long term investments, with the full benefit of their tax reliefs being available to subscribers only where they hold their investments for more than 5 years, the Directors of each of the Companies believe that there should be an opportunity for Shareholders to consider the future of each Company at regular intervals. The articles of Amati VCT had previously provided that a resolution for the continuation of that Company be put to Shareholders at the Annual General Meeting in 2016, however a resolution to delay this vote until 2020 was duly passed at the Company's AGM on 26 June 2014. The articles of
Amati VCT 2 had previously provided that a resolution for the continuation of that Company be put to Shareholders at the Annual General Meeting in 2018, however a resolution to delay this vote until 2020 was duly passed at the Company's AGM on 26 June 2014. The duration of both Companies is thus extended to 2020 or later, a date at least five years after the closing of the Offers.
The annual management fee for both Companies payable to Amati is 1.75%, paid quarterly in arrears.
On 28th March 2014, the boards of the two Companies each announced that the Manager had offered to waive the right to future performance fees and that that offer had been accepted. The waiver took effect in respect of periods after 31 August 2014 in respect of Amati VCT and 31 July 2014 in respect of of Amati VCT 2. Therefore performance fees are no longer payable in respect of Amati VCT and Amati VCT 2. We believe that the removal of performance fees creates a simpler and more transparent charging structure and helps protect the long term interests of our shareholders.
The Companies also pay an annual administration fee to Amati, which in turn engages The City Partnership (UK) Limited as Company Secretary, and Capita Asset Services as the Companies' fund accountants. The performance figures quoted for the Amati VCTs in this document are net of all fees and charges, whether paid or accrued.
Any trail commissions paid to intermediaries are paid by the Manager. Further details of the Amati VCTs' investment management and administration arrangements are set out on pp.43-46 of the Companies' joint Prospectus published on 6 February 2013, which is available on Amati's website at www.amatiglobal.com/avct_literature.php (this prospectus was accurate at the time of publication and the period during which it was live but does not reflect the recent waiver of future performance fees as described above).
Amati makes a small number of investments in private companies or unquoted convertible loan instruments in AIM quoted companies. In these cases a deal fee may be paid to Amati by the investee company, out of which legal expenses
and other associated costs arising from the investment are covered. If such deals are aborted Amati pays for any costs which have arisen.
Where Amati appoints a non-executive director to the board of an investee company they will generally be paid by the investee company in line with other non-executive directors. This payment may also take the form of a monitoring fee.
Jarvis Investment Management Limited acts as custodian to Amati VCT and Bank of New York Mellon SA/NV acts as custodian to Amati VCT 2. The custodians are responsible for ensuring safe custody and dealing with settlement arrangements for their respective Companies. In addition from time to time Nimmo WS provides safe keeping for physical certificates for securities owned by the Companies.
The following is a general guide to the tax benefits available to VCTs and their shareholders. It does not set out any of the legislative provisions in full and investors should seek their own independent taxation advice. Tax treatment is dependent on the circumstances of the individual investor. A full guide to the VCT legislation can be found on HMRC's web pages at www.hmrc.gov.uk/guidance/vct.htm#6, which includes links to all of the source legislation. The provisions for Income Tax relief on subscription and distributions are in Part 6 of the Income Tax Act 2007 ("ITA"), the provisions for VCTs in sections 274 to 285, and the provisions for what constitutes qualifying investments are in sections 286 to 313.
For each accounting period in respect of which a company is approved by HMRC as a VCT, the company is exempt from corporation tax on chargeable gains. The company continues to be liable to corporation tax on income in the usual way.
The tax reliefs set out below are available to individuals aged 18 or over who invest in shares in a VCT. There is no specific limit on the amount an individual can invest in a VCT, but tax reliefs will only be given to the extent that the total of an individual's subscription or other acquisitions of shares in VCTs in any tax year does not exceed £200,000. Most investors should not consider investing more than £200,000 in VCTs in any one tax year, and are advised to take professional tax advice if they intend to do so. A husband and wife can both make use of a £200,000 VCT allowance in any one tax year.
An investor subscribing for shares in a VCT will be entitled to claim income tax relief on amounts subscribed up to a maximum of £200,000 in any tax year. The current taxation legislation applicable to individual investors provides for income tax relief of up to 30% of the amount
subscribed (subject to an amount that reduces the investor's income tax liability to nil). Relief from income tax on subscription for shares in a VCT is withdrawn if the shares are disposed of (other than between spouses) within five years of issue, or if the VCT loses its approval within this period. According to the provisions of the Finance Act 2014, an investor disposing of shares in a VCT is generally prevented from claiming upfront tax relief for a subscription up to the equivalent value of shares in the same VCT, where the disposal is within the period from six months before to six months after the new subscription, or is linked to a share buyback.
An investor who acquires, whether by subscription, purchase or otherwise, VCT shares up to a maximum of £200,000 in any one tax year will not be liable to income tax on dividends paid by the VCT on those shares.
| 5% tax free yield | 6% tax free yield | |
|---|---|---|
| Gross investment | £10,000 | £10,000 |
| Less 2% costs | (£200) | (£200) |
| Value of holding after costs |
£9,800 | £9,800 |
| Income tax relief (30% of gross investment) |
(£3,000) | (£3,000) |
| Net cost (gross investment less income tax relief) |
£7,000 | £7,000 |
| Tax free dividend (5-6% of value after costs ie £9,800) |
£490 | £588 |
| Tax free dividend yield on net cost of investment |
7.0% | 8.4% |
| Gross equivalent return to: | ||
| 40% tax payers | 9.3% | 11.2% |
| 45% tax payers | 10.1% | 12.2% |
The gross equivalent return is a comparison to a franked dividend paying security that attracts income tax at a shareholder's marginal rate of tax, taking into account tax credit. These figures have been calculated by dividing the 'Tax free dividend yield on net cost of investment' by 0.75 for 40% taxpayers and by 0.69 for 45% taxpayers. The Companies both target a dividend yield of 5% to 6%.
Any gains made on shares held in a VCT are not subject to capital gains tax (subject to a maximum investment by an individual of £200,000 in any one tax year). Similarly, any loss on shares held in a VCT will not be treated as an allowable loss. If a VCT which has been granted approval subsequently fails to comply with the conditions for approval, any gains on the shares after the date on which loss of VCT status takes effect will be taxable. Where VCT status is treated as never having been given, all gains are taxable.
A VCT issues each investor with a certificate which should be used to claim the income tax relief, either by obtaining from HMRC an adjustment to his/her tax coding under the PAYE system, or by waiting until the end of the tax year and using his/her Self Assessment Tax Return to claim relief.
Dividends received on shares acquired in VCTs up to the qualifying maximum of £200,000 per tax year need not be shown in the investor's Self Assessment Tax Return.
VCT reliefs may not be available if the investor takes out a loan specifically to subscribe for New Shares in the VCT.
Investors not resident in the UK should seek their own professional advice as to the consequences of making an investment in a VCT as they may be subject to tax in other jurisdictions as well as in the UK.
The tax rules set out here are a summary of certain applicable rules as at the date of this document. The taxation rules and their interpretation and/or any applicable rates of tax and tax reliefs may change at any time.
Investors should consult their own tax adviser before making an investment.
The Companies have to satisfy a number of tests in order to qualify as a VCT and, therefore, to obtain the tax benefits available to VCTs and their individual shareholders. These are set out on HMRC's website at:
www.hmrc.gov.uk/guidance/vct.htm#6.
Both the Companies have full approval as VCTs as at the date of this document.
Approval of a VCT may be withdrawn by HMRC if the relevant tests are not satisfied. Withdrawal of approval generally has effect from the time when notice of withdrawal is given to the VCT but, in relation to capital gains of the VCT only, can be backdated to not earlier than the first day of the accounting period commencing immediately after the last accounting period of the VCT in which all the tests were satisfied.
The following is a summary of the tax consequences for VCTs and their shareholders resulting from a loss of VCT Status.
i. For the VCT
The exemption from corporation tax on capital gains will not apply to any gain realised after the time from which VCT status is lost. Where provisional approval is lost, all gains realised over the period during which provisional approval was in force will be subject to corporation tax. Should tax status be lost under section 274 of ITA the FCA will be notified as soon as possible.
ii. For qualifying subscribers income tax relief on investment
If VCT approval is withdrawn before the shares have been held for five years, the relief will be withdrawn by the making of an assessment for the year of assessment for which the relief was originally given on an amount equal to that relief. Interest on overdue tax may arise.
iii. For qualifying subscribers and qualifying purchasers dividend income
Dividend income will not be exempt from tax in respect of profits or gains arising or accruing in any accounting period at a time when VCT status has been lost. A notional tax credit equal to 1/9th of the net dividend paid may be available to offset against income due on the dividend.
iv. Capital gains
Gains and losses on shares in the VCT will be taxable and allowable in the ordinary way. If full VCT approval is withdrawn, the individual is treated as having disposed of his shares immediately before the status is lost. Thus, any capital gains realised up to that date will be exempt from tax, but gains after that date will be taxable in the ordinary way.
No taxation will be withheld at source on any income arising from the New Shares and the Company assumes no responsibility for such withholding.
any subscription or any part thereof and to shorten or extend any closing date and to arrange for the issue and listing and admission of any shares to be issued at the Directors' discretion. The right is reserved for either Company to scale down the number of New Shares available for subscription under the Offers at any time prior to the closing of the Offers. The maximum number of New Shares to be issued by either Company without publishing a prospectus in any 12 month period must not exceed the lower of 10 per cent of the issued share capital or the Sterling equivalent of €5m in each Company. No New Shares will be issued under the Offers where such issue would trigger the requirement for a prospectus.
until after (in case of a subscription in respect of the tax year 2014/2015) 2 April 2015 and (in case of a subscription in respect of the tax year 2015/2016) 10 July 2015 and that this paragraph shall constitute an irrevocable contract between you and the relevant Company and its agents which will become binding upon dispatch by post to, or (in the case of delivery by hand) on receipt by, the Receiving Agent of your Subscription Form;
Agent, you submit to the non-exclusive jurisdiction of the English Courts;
as amended or replaced from time to time;
may be rectified and, in addition and without prejudice to the foregoing, you hereby irrevocably authorise the relevant Company, or any person appointed by it for this purpose, to execute on your behalf any instrument of transfer which may be necessary to effect any re-allocation or sale of New Shares to any other person arising as a result of the foregoing;
calculated each year, based on net asset value attributable to financial intermediaries' clients' holdings at the relevant Company's year end date and paid annually in June of each year, or as otherwise determined by the Manager (the first such payment being expected to be made in June 2015). The Manager will be entitled to rely on a notification from an investor that he has changed his financial intermediary, in which case the trail commissions will cease to be payable. In the event of the termination of the Manager's appointment as investment manager to the relevant Company, any continued obligation of the Manager to pay further annual trail commissions will also terminate. The Manager's calculation of trail commissions shall be conclusive.
Financial intermediaries should keep a record of Subscription Forms submitted bearing their stamp to substantiate any claim for commission. Claims for commission must be made and substantiated on subscription.
Please complete all relevant parts of the Subscription Form in accordance with the instructions in these notes.
Insert your full name, full address, daytime telephone number, National Insurance number, date of birth and e-mail address (if you have one).
Tick the box to let us know you are an existing shareholder of one of the Amati VCTs.
Insert (in figures) the amount you wish to invest in each Company in each tax year, the total for each tax year and the total amount of your investment.
You do not have to invest in both tax years but your subscription, for each tax year you do choose to invest, must be for a minimum of £3,000 per tax year, or £5,000 (£2,500 in each Company) if applying for both Amati VCT plc and Amati VCT 2 plc.
Payments can be made by cheque, banker's draft or by electronic bank transfer. Please tick the relevant box to let us know how you are making your payment.
If you are making your payment by cheque or banker's draft, please make it payable to 'City Partnership – Amati Offer' for the exact amount shown for the total subscription in Section 2. Your cheque or banker's draft should be crossed 'A/C payee only' and pinned to the completed Subscription Form.
Payments must be made by cheque or banker's draft in pounds sterling, drawn on a branch in the United Kingdom of a bank or building society which is either a member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques or banker's drafts to be cleared through the facilities provided for members of any of these companies. Such cheques or banker's drafts must bear the appropriate sort code in the top right hand corner and must be drawn on the personal account of the individual investor where
they have a sole or joint title to the funds. Third party cheques will not be accepted with the exception of building society cheques or banker's drafts where the building society or bank has confirmed the name of the account holder by stamping and endorsing the cheque/banker's draft to such effect.
If you are making your payments by electronic bank transfer, please pay 'City Partnership – Amati Offer' the exact amount shown for the total subscription in Section 2. Please use your surname as the payment reference.
The payment details are as follows:
Bank of Scotland Sort Code: 80-22-60 Account Number: 13146765 Account Name: City Partnership – Amati Offer
If you are not an existing Shareholder in the Company in which you are subscribing and the subscription amount in respect of that Company exceeds €15,000 (approximately £11,450), you will need to provide documentation to verify your identity. Please note that for the purposes of the Money Laundering Regulations 2007 any subscriptions to Amati VCT and Amati VCT 2 are considered separately. The documentation required will depend on whether you are subscribing for the Offer(s) direct or through an intermediary (see below). If you are an existing Shareholder in the Company in which you are subscribing you will not need to provide any further documentation.
If your application is made direct (not through an IFA), you must ensure that the following documents are enclosed with the Subscription Form:
the original or a certified copy of either your passport or driving licence; and
the original or a certified copy of a recent (no more than 3 months old) original bank or building society statement, utility bill or recent tax bill, in your name.
Copies of original documents should be certified by a solicitor or bank. Original documents will be returned by post at your risk. If a cheque is drawn by a third party, the above will also be required from that third party.
If your application is made through an IFA or other financial intermediary, then verification of the subscriber's identity may be provided by a 'Letter of Introduction' from an IFA or other regulated person (such as a solicitor or accountant) who is a member of a regulatory authority and is required to comply with the Money Laundering Regulations 2007 or a UK or EC financial institution (such as a bank). The City Partnership (UK) Limited will supply specimen wording on request.
Tick one box only for each Company in which you are subscribing. For each Company you can elect to receive dividends in cash or you can elect to join the Dividend Reinvestment Scheme, where dividends are reinvested into new shares for each Company in which you are subscribing. Any election that you make in respect of a subscription to a given Company will also be applied to any existing holdings in that Company; you cannot elect to receive both dividends in cash and shares issued under the Dividend Reinvestment Scheme in respect of a shareholding in the same Company.
If you elect to receive dividends in cash for one or both Companies we strongly recommend that payments are made directly into your bank account. If you do not provide bank details, dividends will be paid by cheque and sent to your registered address.
If you elect to join a Dividend Reinvestment Scheme for one or both Companies you will have confirmed that you have read and understood the full terms and conditions relating to the Dividend Reinvestment Scheme for each Company in which you are subscribing. These are available on Amati's website: www.amatiglobal.com.
Please read the declarations and sign and date Section 4. The Subscription Form may only be signed by someone other than the applicant if they are authorised to do so and have original copies of the relevant legal documents available if requested.
Intermediaries should complete Sections 7, 8 & 9, giving their contact name and address, FCA Number, email address and telephone number.
Please ensure you tick the relevant box to let us know if you have provided advice to your client or if the transaction is execution only.
Authorised financial intermediaries who, acting on behalf of their clients on an execution only and non-platform basis, return valid Subscription Forms bearing their name and FCA number and confirming their execution only and non-platform status and eligibility to receive commission, will be paid the following, based on the amount paid in respect of the New Ordinary Shares allocated for each Subscription Form: an annual trail commission of 0.375% (limited to five years) which will be paid by the Manager. Such payments are conditional in all circumstances upon them being consistent with all applicable law and regulation including the FCA COBS Handbook.
If you are in any doubt about the action you should take you are recommended to consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities.
IMPORTANT: before completing this form please read the Terms and Conditions of Subscription and the accompanying notes. PLEASE USE BLOCK CAPITALS TO COMPLETE THIS FORM.
The 2014/2015 Offers close at Noon on Thursday 2 April 2015 (or earlier if the maximum subscription has been reached). The 2015/2016 Offers close at Noon on Friday 10 July 2015 or at such date as the Directors may determine in their absolute discretion.
Return this form by post or hand (during normal business hours) to:
The City Partnership (UK) Ltd Thistle House 21 Thistle Street Edinburgh EH2 1DF
Remember to enclose the following if applicable:
| Section 1 – Personal Details | ||||
|---|---|---|---|---|
| Title (Mr/Mrs/Miss/Ms/Other): | Surname: | |||
| Forename(s) in full: | ||||
| Address: | ||||
| Postcode: | ||||
| Daytime telephone number: | Email: | |||
| Date of Birth: | National Insurance Number: | |||
| Please confirm how you would like the Receiving Agents to acknowledge receipt of your application: |
Email Post |
|||
| Please indicate if you are an existing shareholder: | Amati VCT Amati VCT 2 |
|||
| Tick here if you would like to receive monthly fact sheets for Amati funds and invitations to Amati investor events by email: |
||||
| Section 2 – Application |
I offer to subscribe the following amount or such lesser amount for which this subscription may be accepted on the terms and conditions set out in the Top Up Offers 2014/2015 and 2015/2016 Offer Document.
| Amati VCT plc | Amati VCT 2 plc | Total | |
|---|---|---|---|
| Tax year 2014/2015 Offers | £ | £ | £ |
| Tax year 2015/2016 Offers | £ | £ | £ |
| Total Subscription to the Offers | £ |
The minimum amount which may be subscribed is £3,000 per tax year in respect of an investment in one Company only, or £5,000 (£2,500 in each Company) per tax year in respect of an investment in both Companies.
Choose one subscription payment method:
Cheque or banker's draft for the total amount shown in Section 2, made payable to 'City Partnership – Amati Offer' and crossed with the words 'A/C payee only' (enclose with the completed Subscription Form).
Electronic Bank Transfer to 'City Partnership – Amati Offer' (see the Notes, pp. 31-32 for payment details).
Note: for the purposes of the Money Laundering Regulations 2007 any subscriptions to Amati VCT plc and Amati VCT 2 plc are considered separately (see Notes, pp. 31-32).
Tick one box only:
I am not an existing Shareholder in the Company in which I am subscribing and the subscription amount in respect of that Company exceeds €15,000 (approximately £11,450). I am applying for the Offer(s) direct (not through an IFA) and have provided identity verification documents as required.
I am not an existing Shareholder in the Company in which I am subscribing and the subscription amount in respect of that Company exceeds €15,000 (approximately £11,450). I am applying for the Offer(s) through an IFA, who has provided a 'Letter of Introduction' to verify my identity.
I do not need to provide identity verification documents as I am an existing Shareholder in the Company in which I am subscribing.
Dividends Paid In Cash Dividends Paid in Cash
Dividend Reinvestment Scheme Dividend Reinvestment Scheme
Now do one of the following:
Please forward, until further notice, all dividends that may from time to time become due on any Ordinary Shares now standing, or which may hereafter stand, in my name in the register of members of Amati VCT plc and/or Amati VCT 2 plc to:
| Name of Bank/Building Society: | |
|---|---|
| Address of Branch: | |
| Account Number: (Please quote all digits including zeros) | |
| Sort Code: | |
| Account Name: (BLOCK capitals please) | |
| Signature: | Date: |
| Shareholder title and full name: (BLOCK capitals please) | |
| Postcode: | |
| Signature | Date | |
|---|---|---|
| Section 7 - Intermediary's Details | ||
|---|---|---|
| -- | ------------------------------------ | -- |
| Advice provided | Execution only - On Platform | Execution Only - Off Platform | |
|---|---|---|---|
| Name of Firm: | |||
| Contact Name: | |||
| Address: | |||
| Postcode: | |||
| Telephone: | |||
| FCA number: | |||
| Email Address: | |||
Confirmation of application will be sent by email only. If you would like this to be sent to an alternative email address please insert here:
Email Address:
If you have agreed with your client that advisory fees may be deducted from their subscription detailed in Section 2 above, please state the amount of fees to be deducted below:
Advisory Fee (inclusive of VAT) to be deducted from subscription:
| Amati VCT plc | Amati VCT 2 plc | Total | |
|---|---|---|---|
| Tax year 2014/2015 Offers | £ | £ | £ |
| Tax year 2015/2016 Offers | £ | £ | £ |
| Total Advisory Fees Deducted | £ |
Annual trail commission of 0.375% per annum (limited to five years) is available to authorised execution only, non-platform financial intermediaries, and will be paid by the Manager. Such payments can no longer be made in respect of subscriptions received through advisory intermediaries or fund platforms.
Tick the box if you are applying for trail commission
Tick the box if you have previously received trail commission
If you have not previously received trail commission we will contact you to register your firm on our payments system. Please provide contact details below:
| Name of Firm: | |
|---|---|
| Contact Name: | |
| Telephone: | |
| Email Address: |
For further information or any enquiries relating to trail commission please email: [email protected]
| Section 9 - Authorised Financial Intermediary Declaration | |||
|---|---|---|---|
| Signature | Date |
Amati VCT plc, Amati VCT 2 plc and The City Partnership (UK) Limited cannot accept responsibility if any details quoted by you are incorrect.
For assistance on the completion of this Subscription Form, please contact The City Partnership (UK) Limited on weekdays between 9.00 a.m. and 5.30 p.m. on 0131 243 7210 or email [email protected].
No investment advice can be given.
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