Fund Information / Factsheet • Sep 20, 2010
Fund Information / Factsheet
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Ordinary Share Offer Registration Document
Sponsored by Singer Capital Markets Limited
Promoted by Investec Structured Products and Managed in conjunction with Calculus Capital
Calculus Capital
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT ABOUT WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK YOUR OWN FINANCIAL ADVICE IMMEDIATELY FROM YOUR STOCKBROKER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISER AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 (''FSMA'').
THIS DOCUMENT CONSTITUTES A REGISTRATION DOCUMENT (''THE REGISTRATION DOCUMENT'') ISSUED BY INVESTEC STRUCTURED PRODUCTS CALCULUS VCT PLC (''THE COMPANY'') DATED 20 SEPTEMBER 2010.
THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF COMPLYING WITH THE PROSPECTUS DIRECTIVE, ENGLISH LAW AND THE RULES OF THE UKLA AND THE INFORMATION DISCLOSED MAY NOT BE THE SAME AS THAT WHICH WOULD BE DISCLOSED IF THIS DOCUMENT HAD BEEN PREPARED IN ACCORDANCE WITH THE LAWS OF A JURISDICTION OUTSIDE ENGLAND. ADDITIONAL INFORMATION RELATING TO THE COMPANIES IS CONTAINED IN A SECURITIES NOTE ISSUED BY THE COMPANIES (''THE SECURITIES NOTE''). A BRIEF SUMMARY WRITTEN IN NON-TECHNICAL LANGUAGE CONVEYING THE ESSENTIAL CHARACTERISTICS OF AND RISKS ASSOCIATED WITH THE COMPANY AND THE ORDINARY SHARES OF 1 PENCE EACH IN THE CAPITAL OF THE COMPANY (''ORDINARY SHARES'') WHICH ARE BEING OFFERED FOR SUBSCRIPTION (''NEW ORDINARY SHARES'') (''THE OFFER'') IS CONTAINED IN A SUMMARY ISSUED BY THE COMPANY (''THE SUMMARY''). THE REGISTRATION DOCUMENT, THE SECURITIES NOTE AND THE SUMMARY HAVE BEEN PREPARED IN ACCORDANCE WITH THE PROSPECTUS RULES MADE UNDER FSMA AND HAVE BEEN APPROVED BY THE FINANCIAL SERVICES AUTHORITY (''FSA'') IN ACCORDANCE WITH FSMA.
THIS REGISTRATION DOCUMENT, THE SECURITIES NOTE AND THE SUMMARY TOGETHER COMPRISE A PROSPECTUS ISSUED BY THE COMPANY DATED 20 SEPTEMBER 2010 (''THE PROSPECTUS''). THE PROSPECTUS HAS BEEN FILED WITH THE FSA IN ACCORDANCE WITH THE PROSPECTUS RULES AND YOU ARE ADVISED TO READ THE PROSPECTUS IN FULL. The Prospectus is subject to being updated as required by the Prospectus Rules, the Listing Rules and the Disclosure and Transparency Rules.
The Company and the Directors (whose names are set out on page 7 accept responsibility for the information contained in this document. To the best of the knowledge of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.
Registered in England and Wales under number 07142153
In connection with the Offer, Singer Capital Markets Limited (''Singer'') is acting as sponsor for the Company and Investec Structured Products, a trading name of Investec Bank plc (''Investec Structured Products''), is acting as promoter for the Company and no-other party and neither Singer nor Investec Structured Products shall be responsible to any other party than the Company, subject to the responsibilities and liabilities imposed by FSMA, or the regulatory regime established thereunder for the provision of protections afforded to customers of either Singer or Investec Structured Products respectively nor for the provision of advice in relation to the Offer. Singer and Investec Structured Products are each authorised and regulated in the UK by the FSA.
In connection with the Offer, Investec Structured Products and Calculus Capital Limited (''Calculus Capital'') are acting for the Company as investment managers. Neither Investec Structured Products nor Calculus Capital will be responsible to anyone other than the Company for the provision of protections afforded to customers of Investec Structured Products and Calculus Capital respectively, nor for the provision of advice in relation to the Offer. Investec Bank plc (trading as Investec Structured Products) and Calculus Capital are each authorised and regulated in the UK by the FSA.
The Company's existing Ordinary Shares are listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange's main market for listed securities. Application has been made to the UK Listing Authority for the New Ordinary Shares to be admitted to the Official List and to the London Stock Exchange plc for such New Ordinary Shares to be admitted to trading on its main market for listed securities. It is expected that admission to the Official List will become effective and that dealings in the New Ordinary Shares will commence three Business Days following allotment.
Copies of this Registration Document, the Securities Note and the Summary (and any supplementary prospectus published by the Company) are available free of charge from the offices of each of the Company's managers, Investec Structured Products, 2 Gresham Street, London EC2V 7QP and Calculus Capital, 104 Park Street, London W1K 6NF as well as the Company's sponsor, Singer, One Hanover Street, London W1S 1YZ.
The Offer is not being made, directly or indirectly, in or into the United States, Canada, Australia, Japan or South Africa (each a ''Restricted Territory''). In particular, prospective shareholders who are resident in a Restricted Territory should note that this document is being sent for information purposes only. The distribution of this document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any of these restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities law of any such jurisdiction. The Application Form is not being and must not be forwarded to or transmitted in or into a Restricted Territory. Any person (including, without limitation, custodians, nominees and trustees) who may have a contractual or legal obligation to forward this document and/or the Application Form should read the paragraph entitled ''Overseas Investors'' in paragraph 12 of Part Three of this document before taking any action.
| Page | |
|---|---|
| Risk Factors | 3 |
| Corporate Information | 7 |
| Definitions | 8 |
| Part One – The Offer |
11 |
| Part Two – The Directors and the Managers |
14 |
| Part Three – General Information on the Company | 20 |
| Part Four – Financial Information |
44 |
| Part Five – The Portfolios and Expected Returns |
59 |
| Part Six – Investments |
64 |
Existing and prospective investors should consider carefully the following risk factors in addition to the other information presented in this document and the Prospectus as a whole. If any of the risks described below were to occur, it could have a material affect on the Company's business, financial condition, result of operations or on the value of the Ordinary Shares. The risks and uncertainties described below are not the only ones the Company, the Board or investors in the Ordinary Shares will face. Additional risks not currently known to the Company or the Board, or that the Company or the Board currently believe are not material, may also adversely affect the Company's business, financial condition and result of operations. The value of the Ordinary Shares could decline due to any of these risk factors described below, and investors could lose part or all of their investment. Investors who are in doubt should consult their independent financial adviser.
Investors should consider a shareholding in the Company as a long term investment and any prospective investors need to carefully consider the following risks.
. HM Revenue & Customs set the qualifying requirements for VCT status and may withdraw a company's status if it fails to continue to meet these qualifying requirements.
(though not materially) lower than the Initial Index Level applicable to the existing investment (i.e. the capital protection may be, though not materially, lower than 50 per cent.).
The following risk factors may result in the value of, and the returns from, the Ordinary Shares being reduced:
impose other compliance costs. It is uncertain how the more rigorous regulatory climate will impact financial institutions, including the Issuer, which may affect the value and the liquidity of a Structured Product.
Christopher Paul James Wightman (Chairman) Arthur John Glencross Steven Guy Meeks Michael O'Higgins Mark Gary Rayward Philip Hilary Swatman Ian Robert Wohlman (all of the registered office)
Investec Structured Products 2 Gresham Street London EC2V 7QP Telephone: 020 7597 4000 Website: www.investecstructuredproducts.com
Capita Sinclair Henderson Limited Beaufort House 51 New North Road Exeter EX4 4EP
Martineau No. 1 Colmore Square Birmingham B4 6AA
Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU
Beaufort House 51 New North Road Exeter EX4 4EP Telephone: 01392 477500
07142153
Calculus Capital Limited 104 Park Street London W1K 6NF Telephone: 020 7493 4940 Website: www.calculuscapital.com
Capita Registrars Northern House Woodsome Park Huddersfield West Yorkshire HD8 0GA
Singer Capital Markets Limited One Hanover Street London W1S 1YZ
Capita Registrars Corporate Actions The Registry 34 Beckenham Road Beckenham Kent BR3 4TU
The following definitions are used throughout this document unless the context otherwise requires:
| ''Adjusted Unaudited NAV'' | the unaudited net asset value of the Company calculated in accordance with the Company's normal accounting policies, save that the valuation of the investments in Structured Products included will use the offer price in place of the bid price |
|---|---|
| ''Admission'' | the date on which the New Ordinary Shares allotted pursuant to the Offer are listed on the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange's main market for listed securities |
| ''AiM'' | the Alternative Investment Market |
| ''Application Form'' | the application form for use in respect of the Offer set out in this document |
| ''Approved Issuers'' | the Issuers selected by the Investec Structured Products team and approved by the Board as set out on page 61 |
| ''Articles'' | the articles of association of the Company |
| ''Board'' | the board of Directors of the Company |
| ''Business Days'' | a day on which commercial banks and foreign exchange markets settle payments and are open for general business in London |
| ''C Shareholders'' | holders of C Shares (and each a ''C Shareholder'') |
| ''C Shares'' | C ordinary share of 1p each in the capital of the Company (and each a ''C Share'') |
| ''C Shares Fund'' | the net assets of the Company attributable to the C Shares, and if they are issued (including, for the avoidance of doubt, any income and/or revenue arising from or relating to such assets) |
| ''CA 2006'' | the Companies Act 2006 (as amended) |
| ''Calculus Capital'' | Calculus Capital Limited, which is authorised and regulated by the FSA |
| ''Capita Registrars'' | a trading name of Capita Registrars Limited |
| ''Capita Sinclair Henderson'' | Capita Sinclair Henderson Limited, the Company's fund administrator |
| ''close company'' | a company which is a close company within the meanings of section 414 of the Income and Corporation Taxes Act 1988 |
| ''Company'' | Investec Structured Products Calculus VCT plc |
| ''Directors'' | the directors of the Company |
| ''Final Index Level'' | the closing (or average closing) level of the FTSE 100 Index at the end of the relevant Index Calculation Period for a Structured Product |
| ''FSA'' | the Financial Services Authority |
| ''FTSE 100 Index'' | a capitalisation weighted index of the 100 most highly capitalised companies traded on the London Stock Exchange |
| ''Index Calculation Period'' | the relevant period from when the Initial Index Level is calculated to when the Final Index Level is calculated for a Structured Product |
| ''Initial Index Level'' | the closing (or average closing) level of the FTSE 100 Index at the start of the relevant Index Calculation Period for a Structured Product |
| ''Interim Return'' | the total of Shareholder Proceeds made or offered for payment on or before the Interim Return Date |
|---|---|
| ''Interim Return Date'' | 14 December 2015 |
| ''Investec Bank plc'' | Investec Bank plc, a wholly owned subsidiary of Investec plc, which is part of an international banking group with operations in three principal markets: the UK, Australia and South Africa |
| ''Investec Issued Structured Product(s)'' |
Structured Product(s) issued by Investec Bank plc |
| ''Investec Structured Products'' | the Investec Structured Products team within Investec Bank plc |
| ''IPEVC Guidelines'' | the International Private Equity and Venture Capital Valuation Guidelines |
| ''IRR'' | internal rate of return, as calculated in accordance with normal accepted practice in the venture capital industry |
| ''Issuer Group'' | the Issuer and any company (including for this purpose any undertaking within the meaning of section 1161(1) of the CA 2006) within its group (within the meaning of section 471(1) of CA 2006) |
| ''Issuers'' | issuers of Structured Products, which for the avoidance of doubt may also include the provider of a structured deposit (and each an ''Issuer'') |
| ''Listing Rules'' | the Listing Rules of the UK Listing Authority |
| ''London Stock Exchange'' | London Stock Exchange plc |
| ''Managers'' | Investec Structured Products and Calculus Capital (and each a ''Manager'') |
| ''Memorandum'' | the memorandum of association of the Company |
| ''NAV'' or ''net asset value'' | the net asset value of a company calculated in accordance with that company's normal accounting policies |
| ''New Ordinary Shares'' | new Ordinary Shares being offered for subscription pursuant to the Offer (and each a ''New Ordinary Share'') |
| ''Offer'' | the offer for subscription of New Ordinary Shares as described in the Prospectus |
| ''Offer Price'' | the offer price of a New Ordinary Share as determined by the Pricing Formula |
| ''Official List'' | the official list of the UK Listing Authority |
| ''Ordinary Shares Fund'' | the net assets of the Company attributable to the Ordinary Shares (including, for the avoidance of doubt, any income and/or revenue arising from or relating to such assets) |
| ''Ordinary Shareholders'' | holders of Ordinary Shares (and each an ''Ordinary Shareholder'') |
| ''Ordinary Shares'' | ordinary shares of 1p each in the capital of the Company (and each an ''Ordinary Share'') |
| ''Performance Incentive'' | a performance related incentive fee equal to 10 per cent. of any Shareholder Proceeds above 105p per Ordinary Share payable to each of the Managers provided an Interim Return of at least 70p per Ordinary Share has been paid or offered for payment on or before the Interim Return Date, as more particularly detailed on page 38 |
| ''PLUS Markets'' | 'PLUS quoted', a prescribed market for the purposes of section 118 of Financial Services and Markets Act 2000 operated by PLUS Markets Group plc |
| ''Pricing Formula'' | the pricing formula used to calculate the price of New Ordinary Shares to be issued pursuant to the Offer as detailed on page 11 |
|---|---|
| ''Prospectus'' | together the Registration Document, the Securities Note and the Summary |
| ''Prospectus Rules'' | the prospectus rules of the UK Listing Authority |
| ''Qualifying Company'' | an unquoted (or AiM-listed or PLUS Markets-listed) company which satisfies the requirements of Part 4, Chapter 6 of the Tax Act |
| ''Qualifying Investors'' | an individual aged 18 or over who subscribes for Ordinary Shares within the investor's qualifying subscription limit of £200,000 per tax year (and each a ''Qualifying Investor'') |
| ''Receiving Agent'' | Capita Registrars, in its capacity as receiving agent to the Offer |
| ''Registrar'' | Capita Registrars, in its capacity as registrars to the Company |
| ''Registration Document'' | this document |
| ''Regulations'' | the Uncertificated Securities Regulations 1995 |
| ''Securities Note'' | the securities note issued by the Company dated 20 September 2010 in connection with the Offer |
| ''Shareholder'' | a holder of Shares in the Company |
| ''Shareholder Proceeds'' | amounts paid by way of dividends or other distributions, share buy backs and any other proceeds or value received by or offered to, or deemed to be received by or offered to, by Shareholders in the Company, excluding any income tax relief on subscription |
| ''Shares'' | Ordinary Shares and/or (as the context permits and if they are issued) C Shares |
| ''Singer'' | Singer Capital Markets Limited, the Company's sponsor |
| ''Structured Product(s)'' | notes and/or deposits and/or securities whose cash flow characteristics reflect the performance of an index or indices (which may or may not be linked to a market) |
| ''Summary'' | the summary issued by the Company dated 20 September 2010 in connection with the Offer |
| ''Tax Act'' | the Income Tax Act 2007 (as amended) |
| ''Total Return'' | the aggregate value of an investment or collection of investments made by the Company comprising net asset value, valued where appropriate in accordance with IPEVC Guidelines, plus the aggregate amount of all distributions (both revenue and capital) made by the Company |
| ''UKLA'' or ''UK Listing Authority'' |
the FSA in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 |
| ''UK'' | the United Kingdom of Great Britain and Northern Ireland |
| ''United States'' or ''US'' | the United States of America, its states, territories and possessions (including the District of Columbia) |
| ''VCT Value'' | the value of an investment calculated in accordance with section 278 of the Tax Act |
| ''Venture Capital Investments'' | shares in, or securities of, a Qualifying Company held by a venture capital trust which meets the requirements described in Parts 6, Chapters 3 and 4 to the Tax Act |
| ''Venture Capital Trust'' or ''VCT'' | a venture capital trust as defined in section 259 of the Tax Act |
The Company is seeking to raise up to £10 million (before expenses) by offering a maximum of 15,000,000 New Ordinary Shares for subscription. The Board believes that, by investing funds raised into two distinct asset classes of Structured Products and Venture Capital Investments, attractive returns for Shareholders may be achieved. Further, investors will also benefit from being able to invest in a VCT which has two established managers.
VCTs were introduced on 6 April 1995 with the first Venture Capital Trust appearing in September that year. The intention was to encourage investment in small companies which were finding it hard to raise funds by providing generous tax reliefs to Qualifying Investors. To April 2010, approximately £3.9 billion has been raised by over 100 VCTs (source: 'VCTs: Market Overview' by David Cartwright, http:// www.theaic.co.uk/Documents/Member%20Director%20centre/AIC%20Conferences/David CartwrightVCT2010.pps.).
VCTs were created so that their investors could benefit from a spread of Venture Capital Investments under the supervision of professional managers who can, in many cases, contribute valuable experience, contacts and advice to the businesses in which they invest. VCTs, if approved by HM Revenue & Customs, are entitled to exemption from corporation tax on any gains arising on the disposal of their investments and such gains may be distributed tax-free to Qualifying Investors.
The Company has been designed for investors seeking to invest through a tax efficient vehicle in two distinct investment classes:
Investments in Structured Products will primarily be capital protected so long as the FTSE 100 Index does not fall by 50 per cent. of the Initial Index Level at any time during the investment period and fails to recover (where this is the case the capital will be at risk on a one to one basis).
The Offer opens on 20 September 2010 and will close (unless extended) by 10 December 2010.
The Offer Price per New Ordinary Share in the Company will be calculated in accordance with the Pricing Formula, this being:
The first allotment will take place on 5 October 2010. Thereafter, allotments will be fortnightly on Tuesdays with an Offer Price based on the Adjusted Unaudited NAV as at close of business two days prior to the day of allotment (ie the preceding Friday). The final allotment will take place on 13 December 2010 (or, if the Offer is closed earlier, the next Business Day immediately following the closing date).
By making allotments by reference to an Adjusted Unaudited NAV on specified days, investors have clarity as to when allotments will be made and on what basis. In addition, investors are advised that, to be included in a particular allotment, cleared funds will be required to have been received by midday on the Friday preceding the date of that allotment.
An Adjusted Unaudited NAV is being used so as to include the valuations of the Company's investments in Structured Products at the offer price of the Structured Products rather than their bid price as would normally be the case when calculating the Company's unaudited NAV. The bid/offer spread at which Structured Products (which form the material part of the Company's portfolio) of the same type could be purchased would normally be in the region of 1 to 2 per cent. (including any fees to which Investec Bank plc is entitled on the purchase of Structured Products). By using an Adjusted Unaudited NAV this minimises dilution on existing Shareholders who would otherwise contribute to investment acquisition costs.
The unaudited NAV per Ordinary Share as at 31 August was 94.54p. The Adjusted Unaudited NAV per Ordinary Share as at the same date would have been 95.48p referenced against FTSE 100 close on this date of 5225.22. Based on the Adjusted Unaudited NAV per Ordinary Share as at 31 August 2010, the New Ordinary Shares would be issued at 100.5p per New Ordinary Share. The Offer Price may be higher or lower than this, dependent on the relevant Adjusted Unaudited NAV, which is subject to market conditions and would be expected to be higher or lower where the FTSE 100 is higher or lower.
The Offer Price is determined by the Pricing Formula to avoid dilution to the NAV of each existing Ordinary Share when the New Ordinary Shares are issued. The application of the Pricing Formula also avoids the need to announce repeatedly the Offer Price of the New Ordinary Shares during the Offer period and makes explicit the basis on which the price of the New Ordinary Shares will be determined.
An investor who invests £20,000 pursuant to the Offer will, therefore, receive (ignoring reinvested authorised financial intermediary commission) 19,900 New Ordinary Shares (based on an Offer Price of 100.5p as set out above). The minimum investment by an investor under the Offer is £5,000. The Offer is not underwritten and there is no minimum subscription level so investors can be sure the Offer will proceed.
Fractions of New Ordinary Shares will not be issued. Subscription monies of £1 or more not used to acquire New Ordinary Shares will be refunded.
Applications will be accepted (in whole or part) at the discretion of the Board, but the Board intends to meet applications on a 'first come, first served' basis.
The Offer, therefore, provides the opportunity for existing Shareholders and new investors to invest in the Company at an Offer Price linked to NAV plus costs. Investors will access a number of initial investments already made by the Company as well as being able to participate in the proposed annual dividend of 5.25p per Ordinary Share for the first 5 years of the Company's life (the first of which is expected in July 2011) and a further return of at least 43.75p per Ordinary Share on or before the Interim Return Date by way of a special dividend or a cash tender offer for Ordinary Shares.
On investment in the Company, a Qualifying Investor will be entitled to claim up to 30 per cent. income tax relief on amounts subscribed in VCTs up to a maximum of £200,000 in any tax year (save that a Qualifying Investor's income tax liability may only be reduced to nil).
The following shows the effect of the tax reliefs for a Qualifying Investor who invests £10,000:
| Initial investment | £10,000 |
|---|---|
| Less income tax relief | £3,000 |
| Effective cost to a Qualifying Investor | £7,000 |
(i.e. your investment of £10,000 effectively only costs you £7,000.)
Dividends paid on VCT shares subscribed by a Qualifying Investor (subject to such shares having a value of up to a maximum of £200,000 in any one tax year) will also not be liable to income tax. Disposal of VCT shares subscribed by a Qualifying Investor (subject to such shares having a value of up to a maximum of £200,000 in any one tax year) will give rise to neither a chargeable gain nor an allowable loss for the purposes of UK capital gains tax (subject to being held for five years).
It is intended that the proceeds of the Offer will be used by the Company in accordance with its investment policy set out in Part Three.
Investec Structured Products has agreed to underwrite all the costs of the Offer (including initial commission to authorised financial intermediaries but excluding annual trail commission) in return for a fee of 5.0 per cent. of the gross funds raised (i.e. £500,000 assuming full subscription under the Offer). Investec Structured Products will be responsible for paying all the costs of the Offer out of this fee (save for annual trail commission which will be borne by the Company).
The net proceeds of the Offer, assuming full subscription will, therefore, amount to approximately £9,500,000.
Authorised financial intermediaries will be entitled to receive an initial commission of either 3.25 per cent. or 2 per cent. (depending on whether they wish to receive annual trail commission) of the amount invested by their clients pursuant to the Offer for New Ordinary Shares. Intermediaries who elect to take an initial commission of 2 per cent. will additionally, provided that the intermediary continues to act for the client and the client continues to be the beneficial owner of the New Ordinary Shares, be paid an annual trail commission by the Company of 0.5 per cent. of the net asset value of their client's holding in New Ordinary Shares (subject to, in respect of the cumulative annual trail commission, a cap of 2.5 per cent. of the Offer Price of such New Ordinary Shares). Trail commission will be paid annually in July (commencing July 2011) based on the audited net asset value at the preceding 28 February.
Initial commission may be waived by financial intermediaries. If this is the case then the investor's application will be increased by the amount of the commission waived.
Set out below is a table illustrating the hypothetical returns to investors at four different potential levels of Shareholder Total Return (Interim Return plus NAV per Ordinary Share) at the Interim Return Date. Returns after this date will be dependent on the performance of the Venture Capital Investments portfolio.
Shareholders' and Managers' interests are aligned through the Performance Incentive (see page 38 for details). The Performance Incentive is only triggered if Shareholders have received or been offered an Interim Return totalling at least 70p per Ordinary Share on or before the Interim Return Date. If Shareholders have received or been offered an Interim Return of at least 70p per Ordinary Share for payment on or before the Interim Return Date, then the Managers will each receive a performance fee of 10 per cent. of all dividends and distributions paid (including the relevant distribution being offered) to Shareholders above a level of 105p per Ordinary Share.
| 70p (26.25+43.75+0) |
100p (26.25+43.75+30) |
116p (26.25+43.75+46) |
130p (26.25+43.75+60) |
|
|---|---|---|---|---|
| Less net cost of investment (assuming 30% income tax relief) |
(70p) | (70p) | (70p) | (70p) |
| Tax-free cash profit | 0p | 30p | 46p | 60p |
| Tax-free profit (as a % of net cost of investments) |
+0% | +43% | +66% | +86% |
| Net Return* | 0% p.a. | 7.66% p.a. | 10.90% p.a. | 13.42% p.a. |
| Gross Equivalent Return** (to a 40% taxpayer) |
0% p.a. | 12.77% p.a. | 18.17% p.a. | 22.37% p.a. |
* The Net Return is the internal rate of return based on an investment of 100p deemed to be made on launch of the Offer, 30p income tax relief deemed to be received seven months later in or around July 2011 and either 70p, 100p, 116p or 130p of Shareholder Total Return, comprising dividends of 5.25p payable on 30 July in each year from 2011 to 2015, 43.75p paid by way of a special dividend or tender offer for shares on 14 December 2015 (the Interim Return Date) and the balance as the NAV of the remaining funds (assumed to be Venture Capital Investments continuing to be held at cost) as at the Interim Return Date.
** The gross equivalent return to a 40 per cent. taxpayer is calculated by dividing the Net Return by 0.6.
The Board comprises seven non-executive directors, four of whom are independent of the Managers. The Board has substantial experience of venture capital businesses and overall responsibility for the Company's affairs, including determining the investment policy of the Company. Ian Wohlman is a director of Investec Bank plc, John Glencross is a director of Calculus Capital and Steve Meeks is a former consultant to Investec Structured Products.
Chris was appointed non-executive chairman of the board of directors of Puricore PLC in August 2002 and executive chairman in June 2010. Puricore completed a successful IPO raising £30 million in June 2006. Chris is chairman or director of a number of private UK companies including ASI Solutions plc, Clickstream Technologies plc, and Equinox Capital Ltd. He is also a partner in Mount Row Capital LLP. He previously spent 14 years in the investment banking industry with Goldman Sachs, Bankers Trust, NatWest, and NationsBank. He read law at Nottingham University before joining Arthur Andersen & Co., where he qualified with the Institute of Chartered Accountants.
Michael became Chairman of Alexander Mann Solutions in August 2009 and has been chairman of the Audit Commission since October 2006. He is also a non-executive director of HM Treasury and chair of the Treasury Group Audit Committee. He is also Chair of the charity Centrepoint, having been on its Board of Trustees since 2002. Until his retirement in September 2006, Michael was a Managing Partner with PA Consulting, leading its Government and IT Consulting Groups, latterly as a director on its International Board. Prior to that he was a partner at Price Waterhouse, worked at the Organisation for Economic Co-operation and Development in Paris and held academic posts at the University of Bath, the London School of Economics, Harvard University and the Australian National University. He was recently appointed a Visiting Professor of Economics at the University of Bath.
Mark worked for Newton Investment Management for 23 years from 1986 to November 2009. He was most recently Deputy Chief Executive and Chairman of the Newton Risk and Compliance Committee. From 2001 he was Managing Director of Newton Private Investment Management which had approximately £8 billion under management. Until his resignation from Newton, Mark was also a director of Bank of New York Mellon Newton Fund Managers which is the authorised director for Mellon Newton unit trusts and quoted UK funds.
Philip was appointed chairman of Merlin Corporate Reputation Management, a financial and business communications consultancy group, in March 2009. Previously, Philip was vice-chairman of Investment Banking at NM Rothschild from 2001 until his retirement in September 2008, having originally joined NM Rothschild in 1979 as a Corporate Financier, becoming a Director in 1986. He subsequently became a Managing Director and later Co-Head of Investment Banking. He was accordingly involved in numerous transactions, including the sale of Chubb to Williams, Northern Foods' acquisition of Express Dairies, the IPOs of Vodafone and William Hill, the defence of BPB plc against a hostile bid from St Gobain, and the sale of Abbot Group plc to First Reserve. Philip qualified as a Chartered Accountant with KPMG after graduating from Christ Church, Oxford and is a Fellow of the Institute of Chartered Accountants.
Ian joined Allied Trust Bank Limited plc (now Investec Bank plc) in 1987 as an accounts manager. During his extensive time at Investec Bank plc he has been appointed to various executive positions, which include an Executive of both the Board Risk Review Committee and Risk Review Forum. He is also chairman of the PLC Credit Committee, Group Asset and Liability Committee, Audit Compliance Forum and Investment Committee. Prior to joining Investec Bank plc, Ian was at Royal Bank of Scotland initially as a branch manager and subsequently as a supervisor within the Business Development Lending group. Ian is FSA authorised both as a director and in relation to systems and controls.
Steve is a consultant specialising in structured products. Steve joined NatWest as a graduate recruit in 1978 and spent nine years working for the wholesale banking arm of the NatWest group, including five years working in the group's Executive Office for North America based in New York. Upon returning to the UK, he transferred to the group's investment bank, County NatWest, working in the capital markets origination team. In 1993, he was recruited by Union Bank of Switzerland and spent the next five years as an executive director with responsibility for marketing equity derivatives to leading UK life offices. In 2005, he finished a six year consultancy with Abbey Financial Markets working on a part time basis in their structured products team; during this time he designed and established Guaranteed Investment Products 1 PCC an investment vehicle for Abbey Group's structured products that now has in excess of £5 billion under management across 131 different structured products. Steve is also a former consultant to Investec, having assisted the Investec Structured Products team with the launch of the Company. He is a non executive director of five Guernsey incorporated investment companies including Guaranteed Investment Products 1 PCC.
John co-founded Calculus Capital in 1999. In 2000, he structured and launched the UK's first HM Revenue & Customs approved EIS Fund with Susan McDonald. Since that time, he has successfully launched and closed two VCT issues and eight further EIS funds. He is also a director of Neptune-Calculus Income and Growth VCT plc and Terrain Energy Limited. His professional experience spans private equity, investment banking and corporate restructuring and he has invested in, advised on or negotiated more than 100 transactions. Prior to founding Calculus Capital he was an Executive Director in the Corporate Finance Division of UBS Securities and a founding member of the Corporate Finance Division of Deloitte Haskins and Sells, specialising in services to small and medium size businesses. He qualified as a Chartered Accountant with Peat Marwick Mitchell (now KPMG) and has an MA (Hons) from the University of Oxford.
The Directors are currently or have been within the last 5 years, a member of the administrative, management or supervisory bodies or partners of the companies and partnerships mentioned below:
| Name | Current | Past 5 Years |
|---|---|---|
| Chris Wightman | ASI Solutions plc Asphalt Systems International Limited Clickstream Technologies plc Equinox Capital Investments plc Equinox Capital Limited Equinox Capital Management Limited Equinox Securities Limited Investec Structured Products Calculus VCT plc Mount Row Capital Limited Mount Row Capital Partners LLP Puricore plc Stowe School Limited |
Equinox VCT plc Hyde Park Investment Limited |
| Michael O'Higgins | Alexander Mann Solutions ANU (UK) Foundation Centrepoint Soho Investec Structured Products Calculus VCT plc Oxford Medical Diagnostics Limited Millers Wharf Management Company Limited National Centre for Social Research |
Ideal future Property Management Limited PA Holdings Limited PA Consulting Group |
| Name | Current | Past 5 Years |
|---|---|---|
| Mark Rayward | Consort Confectionary Limited Consort Frozen Foods Limited Investec Structured Products Calculus VCT plc |
BNY Mellon Fund Managers Limited Newton Investment Management Limited Newton Management Limited |
| Philip Swatman | Cardinal Advisers LLP Cardinal Partners Limited Investec Structured Products Calculus VCT plc Kingston Central Two (Kingston) Management Company Limited New England Seafood International Limited Nomina No 115 LLP Raigersfield Capital Limited |
Atrium Underwriting Group Limited Carillion (AM) Limited (formerly Alfred McAlpine plc) Carwash Cafe (UK) plc George Road (Kingston) Management Company Limited N M Rothschild Corporate Finance Limited |
| Ian Wohlman | Guinness Mahon & Co. Limited Guinness Mahon Investments Limited Human Resource Solutions (Bucks) Limited Investec Asia Limited Investec Asset Finance plc Investec Asset Finance (Capital) Limited Investec Asset Finance (Capital No.3) Limited Investec Asset Finance (Management) Limited Investec Bank plc Investec Bank (Nominees) Limited Investec Finance (Ireland) plc Investec Overseas Investments Limited Investec Structured Products Calculus VCT plc Leasedirect Finance Limited Kensington Group plc Omni Films 2 LLP SMAH 1 Limited |
Commercial Debt Recoveries Limited Dynamo Construction Limited Guinness Mahon Leasing No.1 Limited Guinness Mahon Mortgage Company Limited Guinness Mahon Property Investments Limited Guinness Mahon Property Managers Limited Kirkgate Developments Limited Mithras Leasing (No. 1 ) Limited Start Mortgages Holdings Limited |
| Steve Meeks | Canley Consulting Limited Dedicated Engines Limited Guaranteed Investment Products 1 plc Investec Structured Products Calculus VCT plc The Commercial Property Growth Fund Limited The Commercial Property Income Fund Limited The Westbury Commercial Property Fund Limited WCP Holdings Limited |
Clickstream Technologies plc Postged O2 Limited |
| John Glencross | Calculus Advisory Limited Calculus Asset Management Limited Calculus Capital Limited Calculus Capital Partners Limited Calculus Holdings Limited Calculus Nominees Limited Chepstow Place Limited Investec Structured Products Calculus VCT plc McDonald Glencross Limited Terrain Energy Limited |
Equity Holdings Limited Mechadyne plc Mechadyne International Limited Neptune-Calculus Income and Growth VCT plc |
The Board believes that the success of any VCT is reliant upon the judgement, experience and skills of its investment managers. The Board has sought to diversify investment risk by appointing two investment managers to manage two distinct investment portfolios. The VCT qualifying Venture Capital Investments will be managed by Calculus Capital, whilst the Investec Structured Products team has been appointed to manage the Company's portfolio of non-VCT qualifying Structured Products.
Calculus Capital is the Venture Capital Investments portfolio manager.
Calculus Capital was established in 1999 and is authorised and regulated by the FSA. Its core investment team of Susan McDonald and John Glencross has been making tax efficient investments in unquoted companies since 1997. In 2000, Calculus Capital launched the first Enterprise Investment Scheme (EIS) fund approved by HM Revenue & Customs. Since that time, it has structured, launched and closed for subscription a further nine EIS funds and three VCT offers for subscription (including the offer for subscription on launch of the Company). As at 31 July 2010, it had approximately £31.3 million of funds under management or advice (including the assets of the Neptune-Calculus Income and Growth VCT plc and the assets of the Company) and had returned approximately £7.5 million to investors by way of cash distributions or distributions in specie, as well as having completed 64 investments in VCT and EIS qualifying companies. It has been recognised as a leading manager of Venture Capital Investments, being awarded the EIS Association Best EIS Fund Manager Award for 2009 and the Professional Adviser Best EIS Provider Award in 2010.
Calculus Capital has extensive experience of investing in energy, energy services, energy technology, leisure and catering, transportation and healthcare and these sectors are likely to be the target of investments by the Company. At the same time, Calculus Capital will also take advantage of value opportunities in other sectors as they arise.
Since its establishment in 1999 to December 2009, Calculus Capital has achieved an annual compounded rate of return of 6.3 per cent. and a multiple of invested capital of 1.7x from the investments in EIS and VCT qualifying unquoted investments. These figures include both VCT and EIS unquoted qualifying investments and exclude all tax benefits and fees. Further, the figures cover companies which were at the time of first investment either private or quoted on PLUS Markets but excluding AiM companies and investments under one year.
Details for John Glencross can be found on page 15.
Susan co-founded Calculus Capital in 1999. In 2000 she structured and launched the UK's first HM Revenue & Customs approved EIS Fund with John Glencross. Since that time, she has successfully launched and closed three (including the offer for subscription on launch of the Company) VCT issues and nine further EIS funds. She has been involved in investing in approximately 50 qualifying investments in unquoted companies in the last 10 years. She was previously Director and Head of Asian Equity Sales at Banco Santander. Prior to this, she had over twelve years' experience in company analysis, equity sales and new issues with Jardine Fleming, Robert Fleming and Peregrine Securities (UK) Ltd, where she led over 30 placements and new issues. Prior to entering finance, Susan worked for Abbott Laboratories and Conoco. She has an MBA from University of Arizona.
Lesley joined Calculus Capital in 2002. She has over 18 years' experience in investment banking and held senior posts at three international investment banks, where her responsibilities included advising several companies in the FTSE 100. Previously, she was a Managing Director, Global Investment Banking at Deutsche Bank and spent 14 years at UBS, where she was a Managing Director in the Corporate Finance Division. She has extensive experience of fundraising, flotations, mergers and acquisitions, disposals and restructurings for her clients. In 2009, Lesley was appointed Non-Executive Council Member of the Competition Commission. She is a fellow of the Institute of Chartered Accountants. She qualified as a Chartered Accountant (with Price Waterhouse (now PricewaterhouseCoopers) and has a BSC (Hons) in Mathematics from Southampton University.
Diane is chairman of the Calculus Capital Investment Committee. She has an MA in Economics from Cambridge University. She joined Morgan Grenfell/Deutsche Asset Management in 1981 and specialised in investing in Asian and Global equity markets for institutional and mutual fund clients. Diane was based in Singapore from 1993-96 as CEO and CIO of Asia ex Japan and responsible for offices in Singapore, Hong Kong and a joint venture in Thailand. After leaving Deutsche Asset Management in 2005, Diane advised on developing a global equity business for WP Stewart and establishing Spencer House Capital Management for Lord Rothschild. She joined Lloyd George Management in 2007 as Head of Client and Business Strategy. Diane was a director of the China Fund (1993-2005), the Pakistan Fund (1993-96), Batavia Fund (1993-96) and Chairman of the Greater Korea Trust Advisory Board (1993-97).
Paul joined Calculus Capital in 2009. He is responsible for fund operations and administration including communications. Most recently, he worked at AdvantHedge Capital Advisors LLP, a provider of global marketing services for elite hedge fund managers. Paul qualified as a Chartered Accountant in 2007 with Rees Pollock where he worked as a senior auditor, specialising in FSA regulated firms. He graduated from the University of Durham in July 2004 and holds a BA in Business Economics.
Alexandra joined Calculus Capital in 2008. She is focused on screening new proposals, conducting research and supporting the investment team. Most recently, she worked on the hedge fund team at Apollo Management International where she conducted research into companies and markets. She graduated from University College London with a first class degree in History of Art having previously studied Engineering Science at Wadham College, Oxford.
The team at Investec Structured Products (a trading name of Investec Bank plc, which is part of the Investec group of companies) is the Structured Products portfolio manager.
The Investec group is an international specialist banking organisation that provides a diverse range of financial products and services to a niche client base in three principal markets, the UK, South Africa and Australia, as well as certain other countries. The group was established in 1974 and currently has approximately 5,600 employees.
The Investec group focuses on delivering distinctive profitable solutions for its clients in five core areas of activity: Capital Markets, Private Client Activities, Investment Banking, Asset Management and Property Activities.
Investec Structured Products has received investments from UK clients in excess of £1.375 billion in over 200 different Structured Products managed by it since May 2008, and have been recognised as a leading provider of Structured Products being awarded the Professional Adviser Best Structured Products Provider Award 2009 and 2010.
The key individuals within the Investec Structured Products team are:
Rob joined Investec Bank plc in the summer of 2007 as part of a team to build an equity derivative and structured product business. Prior to that he spent 9 years at Abbey Financial Markets (now Banco Santander Global Markets) where he was one of the founder members of the equity derivative business. He worked in various roles including risk management, derivative trading and structuring. Before that he worked in risk management at NatWest Markets and started out as an actuary with Watson Wyatt. Rob has a total of 14 years experience in the derivatives and structured product industry.
Andrew joined Investec Bank plc in the summer of 2007 to build its equity derivative and structured product business. Prior to that he worked for 9 years at Abbey Financial Markets (now Banco Santander Global Markets). One of the founder members of Abbey's equity derivative business, he finished his time there as Global Head of Equity, Commodity & Property Derivatives. Before that he worked at HSBC as a derivatives trader, having previously been a quantitative analyst, and before that, a management consultant. Andrew has a total of 14 years experience in the derivatives and structured product industry.
Mark joined Investec Bank plc in 2008 to head-up the Financial Modelling Group supporting the structured product aspect of the business. Prior to that he acted as head of Equity Derivatives Risks at Abbey Financial Markets (now Banco Santander Global Markets) for 8 years. Before that Mark worked for NatWest, Swiss Bank and Morgan Stanley within their respective equity derivative and risk management teams and started out as an actuary analyst. In total, Mark has over 25 years experience in the derivatives and structured product industry.
Ordinary Share (of the relevant class) taken from the London Stock Exchange daily official list for the five business days immediately preceding the day on which such Ordinary Share is to be purchased; and (b) the amount stipulated by Article 5(1) of the Buy Back and Stabilisation Regulation 2003;
(c) the maximum price which may be paid per C Share is an amount equal to the higher of (a) 105 per cent. of the average of the middle market quotation per C Share (of the relevant class) taken from the London Stock Exchange daily official list for the five business days immediately preceding the day on which such C Share is to be purchased; and (b) the amount stipulated by Article 5(1) of the Buy Back and Stabilisation Regulation 2003;
(d) the authority conferred shall expire on the conclusion of the annual general meeting of the Company to be held in 2011, unless such authority is renewed prior to such time; and
| Issued Number £ |
|||
|---|---|---|---|
| 13,818,165 | 138,181.65 |
The objects of the Company are not limited by any provisions of the Memorandum or the Articles of the Company.
The following is a summary of the current Articles. In this paragraph 3, reference to ''Directors'' means the directors of the Company from time to time, reference to the ''Board'' means the board of directors of the Company from time to time and reference to ''the Act'' means the CA 2006 (where the context permits as amended from time to time).
''C Share Surplus'' means the net assets of the Company attributable to the C Shares (including, for the avoidance of doubt, any income and/or revenue arising from or relating to such assets) less such proportion of the Company's liabilities including the fees and expenses of liquidation or return of capital (as the case may be) as the Directors or the liquidator (as the case may be) shall reasonably allocate to the assets of the Company attributable to the C Shareholders.
''Issue Date'' means the day on which the Company receives the net proceeds of the first issue of C Shares''.
''Ordinary Share Surplus'' means the net assets of the Company (including, for the avoidance of doubt, any income and/or revenue arising from or relating to such assets) less (i) such proportion of the Company's liabilities (including the fees and expenses of liquidation or return of capital (as the case may be) as the Directors or the liquidator (as the case may be) shall reasonably allocate to the assets of the Company attributable to the Ordinary Shareholders) and (ii) the C Share Surplus.
''Statutes'' means the CA 2006 as amended and supplemented, and every other statute for the time being in force concerning companies affecting the Company.
For the purposes of the Articles, assets attributable to the C Shareholders or the C Shares shall mean the net cash proceeds (after all expenses relating thereto) of the issue of the C Shares as invested in or represented by investments or cash or other assets from time to time less such proportion of the expenses and liabilities of the Company incurred or accrued following the Issue Date as the Directors fairly consider to be allocable to the C Shares.
Without prejudice to its obligations under the Statutes, the Company shall, without prejudice to its obligations under the Statutes (i) procure that the Company's records and bank accounts shall be operated so that the assets attributable to the C Shareholders can, at all times, be separately identified and, in particular but without prejudice to the generality of the foregoing, the Company shall procure that a separate income and expenditure account (or, if applicable, profit and loss account) balance sheet and cash flow account and such other separate accounts as may, in the opinion of the Board, be desirable to ensure compliance by the Company with the provisions of section 259 of ITA 2007 as amended, shall be created and maintained in the books of the Company for the assets attributable to the C Shareholders, (ii) allocate to the assets attributable to the C Shareholders such proportion of the expenses and liabilities of the Company incurred or accrued following the Issue Date as the Directors fairly consider to be allocable to the C Shares and (iii) give appropriate instructions to the Company's investment managers and advisers to manage the Company's assets so that such undertakings can be complied with by the Company.
(c) Voting Rights
Subject to paragraph (f) below and subject to any special terms as to voting on which any shares may be issued, on a show of hands, every member present in person or by proxy (or being a corporation, represented by an authorised representative) shall have one vote and on a poll every member who is present in person or by proxy shall have one vote for every share of which he is the holder. The Ordinary Shares and the C Shares shall rank pari passu as to rights to attend and vote at any general meeting of the Company.
The rights of members to receive dividends are as follows:
The capital and assets of the Company shall on a winding up or on a return of capital be applied as follows:
(i) the Ordinary Share Surplus shall be divided amongst the holders of the Ordinary Shares pro rata according to their holdings of Ordinary Shares; and
The holders of C Shares as a class and the holders of the Ordinary Shares as a class shall be required to approve and, accordingly, without such approval, the special rights attached to the C Shares and the Ordinary Shares shall be deemed to be varied, inter alia, by:
The Board shall convene annual general meetings and may convene other general meetings whenever it thinks fit. A general meeting shall also be convened on such requisition or in default may be convened by such requisitionists as provided by the Act. At any meeting convened on such requisition or by such requisitionists no business shall be transacted except that stated by the requisition or proposed by the Board. If there are not within the UK sufficient members of the Board to convene a general meeting, any Director may call a general meeting. The Board may make arrangements to ensure the orderly conduct of general meetings and to preserve the security of attendees.
General meetings shall be convened by the minimum period of notice required by the Act. Every notice convening a general meeting shall specify:
The accidental omission to send a notice of meeting or, in cases where it is intended that it be sent out with the notice, an instrument of proxy or any other document, to, or the non-receipt of either by, any person entitled to receive the same shall not invalidate the proceedings at that meeting.
No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business but the absence of a quorum shall not preclude the choice or appointment of a chairman which shall not be treated as part of the business of the Meeting. 2 persons entitled to attend and to vote on the business to be transacted, each being a member present in person or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum.
If within 15 minutes (or such longer interval as the Chairman in his absolute discretion thinks fit) from the time appointed for the holding of a general meeting a quorum is not present, or if during a meeting such a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case, the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other day and at such time and place as the Chairman (or, in default, the Board) may determine, being not less than 10 clear days thereafter. lf at such adjourned meeting a quorum is not present within 15 minutes from the time appointed for holding the meeting one member present in person or by proxy or (being a corporation) by a duly authorised representative shall be a quorum. If no such quorum is present or if during the adjourned meeting a quorum ceases to be present, the adjourned meeting shall be dissolved.
At any general meeting a resolution put to a vote of the meeting shall be decided on a show of hands unless (before or immediately after the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded by:
Subject to the provisions of the Act and to any special terms as to voting on which any shares may have been issued or may for the time being be held and to any suspension or abrogation of voting rights pursuant to the Articles, at any general meeting every member who (being an individual) is present in person or by proxy or (being a corporation) is present by a duly authorised representative, not being himself a member entitled to vote, shall on a show of hands have one vote and on a poll shall have one vote for each share of which he is the holder.
Subject to the provisions of the Act, if at any time the share capital of the Company is divided into shares of different classes any of the rights for the time being attached to any share or class of shares in the Company (and notwithstanding that the Company may be or be about to be in liquidation) may (unless otherwise provided by the terms of issue of the shares of that class) be varied or abrogated in such manner (if any) as may be provided by such rights or, in the absence of any such provision, either with the consent in writing of the holders of not less than three quarters in nominal value of the issued shares of the class or with the sanction of a special resolution passed at a separate general meeting of the holders of shares of the class duly convened and held as provided in these Articles (but not otherwise).
All the provisions in the Articles as to general meetings shall mutatis mutandis apply to every meeting of the holders of any class of shares save that the quorum at every such meeting shall be not less than 2 persons holding or representing by proxy at least one-third of the nominal amount paid up on the issued shares of the class; every holder of shares of the class present in person or by proxy may demand a poll; each such holder shall on a poll be entitled to one vote for every share of the class held by him; and if at any adjourned meeting of such holders, such quorum as aforesaid is not present, not less than one person holding shares of the class who is present in person or by proxy shall be a quorum
The Company in general meeting may from time to time by ordinary resolution:
Except as may be provided by any procedures implemented for shares held in uncertificated form, each member may transfer all or any of his shares by instrument of transfer in writing in any usual form or in any form approved by the Board. Such instrument shall be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid up) by or on behalf of the transferee. The transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register in respect of it.
The Board may in its absolute discretion refuse to register any share transfer (as to which it shall provide reasons) unless:
Subject to the provisions of the Act and of the Articles, the Company may by ordinary resolution declare that, out of profits available for distribution, dividends be paid to members according to their respective rights and interests in the profits of the Company available for distribution. However, no dividend shall exceed the amount recommended by the Board.
be repaid (whether at the option of the company borrowing the same or by reason of default) at such material time is less than the amount which would otherwise be taken into account in respect of such moneys borrowed for the purposes of the Articles, the amount of such moneys borrowed to be taken into account shall be such lesser amount;
The Board may, provided the quorum and voting requirements set out below are satisfied, authorise any matter that would otherwise involve a Director breaching his duty under the Act to avoid conflicts of interest except that the Director concerned and any other Director with a similar interest:
3.8.1.2 the resolution will only be valid if it would have been agreed to if his vote had not been counted.
3.8.2 Where the Board gives authority in relation to such a conflict:
If any question shall arise at any meeting as to an interest or as to the entitlement of any Director to vote such question shall be referred to the chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive except in a case where the nature or extent of the interests of the Director concerned have not been fairly disclosed.
Subject to the provisions of the Act and further provided that a Director declares his interest, a Director, notwithstanding his office:
At any time when the Company has given notice in the prescribed form (which has not been revoked) to the registrar of companies of its intention to carry on business as an investment company (a ''Relevant Period'') distribution of the Company's capital profits (within the meaning of section 833 of the Act) shall be prohibited. The Board shall establish a reserve to be called the capital reserve. During a Relevant Period all surpluses arising from the realization or revaluation of investments and all other monies realization on or derived from the realization, payment off of or other dealing with any capital asset in excess of the book value thereof and all other monies which are considered by the Board to be in the nature of accretion to capital shall be credited to the capital reserve. Subject to the Act, the Board may determine whether any amount received by the Company is to be dealt with as income or capital or partly one way and partly the other. During a Relevant Period, any loss realization on the realization or payment off of or other dealing with any investments or other capital assets and, subject to the Act, any expenses, loss or liability (or provision thereof) which the Board considers to relate to a capital item or which the Board otherwise considers appropriate to be debited to the capital reserve shall be carried to the debit of the capital reserve. During a Relevant Period, all sums carried and standing to the credit of the capital reserve may be applied for any of the purposes for which sums standing to any revenue reserve are applicable except and provided that notwithstanding any other provision of these Articles during a Relevant Period no part of the capital reserve or any other money in the nature of accretion to capital shall be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution or be applied in paying dividends on any shares in the Company. In periods other than a Relevant Period any amount standing to the credit of the capital reserve may be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution or be applied in paying dividends on any shares in the Company.
A special resolution sanctioning a transfer or sale to another company duly passed pursuant to section 110, Insolvency Act 1986 may in the like manner authorize the distribution of any shares or other consideration receivable by the liquidator among the members otherwise than in accordance with their existing rights and any such determination shall be binding on all the members, subject to the right of dissent and consequential rights conferred by the said section.
In order for the future of the Company to be considered by the members, the Board shall at the annual general meeting of the Company falling after the tenth anniversary of the last allotment of shares in the Company and thereafter at five yearly intervals, invite the members to consider whether the Company should continue as a venture capital trust and if such resolution is not carried the Board shall within 9 months of that meeting convene a general meeting to propose:
The Board may make such arrangements as it sees fit, subject to the Act, to deal with the transfer, allotment and holding of shares in uncertificated form and related issues.
The Company shall indemnify the directors to the extent permitted by law and may take out and will maintain insurance for the benefit of the directors.
4.1 Save as set out below, as at 17 September 2010 (this being the latest practicable date prior to publication of this document), the Company is not aware of any person who, directly or indirectly, has an interest in the Company's capital or voting rights which is notifiable under UK law (under which, pursuant to CA 2006 and the Listing Rules and the Disclosure & Transparency Rules of the FSA, a holding of 3 per cent. or more must be notified to the Company).
| Ordinary Shares held | % of issued shared capital | |
|---|---|---|
| Michael O'Higgins | 205,500 | 5.31 |
| Shares held | % of issued shared capital | |
|---|---|---|
| Director | ||
| Chris Wightman | 10,000 | 0.26 |
| John Glencross | 25,000 | 0.65 |
| Steven Meeks | 20,550 | 0.53 |
| Michael O'Higgins | 205,500 | 5.31 |
| Mark Rayward | 50,875 | 1.32 |
| Philip Swatman | 10,275 | 0.27 |
| Ian Wohlman | 30,000 | 0.78 |
which was effected by the Company in the period since its incorporation and remains in any respect outstanding or unperformed.
Steven Meeks was a director of Postged O2 Limited until it was voluntary struck off the Register of Companies on 5 November 2008.
Philip Swatman was a director of Carwash Cafe´ (UK) plc which was voluntarily struck off the Register of Companies on 21 July 2009. Philip Swatman is currently a director of Cardinal Partners Limited, which applied to be voluntarily struck off the Register of Companies on 28 July 2010.
Ian Wohlman was a director of the following companies, which were all placed in to members voluntary liquidation on the respective dates shown: Guinness Mahon Leasing No.1 Limited (June 2005), Dynamo Construction Limited (May 2008), Guinness Mahon Mortgage Company Limited (June 2007), Guinness Mahon Property Investments Limited (June 2007), Guinness Mahon Property Managers Limited (June 2005) and Kirkgate Developments Limited (May 2008).
Christopher Wightman was a director of Equinox VCT plc which was voluntarily struck off the Register of Companies on 29 August 2006.
4.14 There has been no official public incrimination and/or sanction of any Director by statutory or regulatory authorities (including designated professional bodies) and no Director has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company during the previous five years.
(ie 12 months after the Ordinary Shares Fund Interim Return Date) as described in paragraph 6.3 is also intended to be entered into.
Annual running costs include, inter alia, Directors' fees, fund administration fees, fees for audit, taxation and legal advice, registrar's fees, costs of communicating with Shareholders and annual trail commission and the annual fees payable to Calculus Capital, but not the performance incentive (as set out below). Assuming full subscription, the Board estimates that the annual running costs of the Company will be approximately 2.1 per cent. (excluding annual trail commission) of its net assets (excluding irrecoverable VAT) in the first accounting period (calculated on an annualised basis).
5.10 The members of the Board also comprise the members of the audit committee of the Company, with Michael O'Higgins being the chairman. The audit committee members are considered to have sufficient recent and relevant financial experience to discharge the role, and will meet at least twice a year to consider, amongst other things, the following:
Set out below is a summary of all contracts (not being contracts entered into in the ordinary course of business) entered into by the Company since incorporation that are material and all other contracts (not being contracts entered into in the ordinary course of business) that contain any provision under which the Company has an obligation or entitlement which is material to the Company as at the date of the document.
investment manager to the Company in respect of the Venture Capital Investments portfolio and to advise in respect of the Company's investments in near cash assets. The agreement is for an initial period up to the Interim Return Date, and the appointment may be terminated on 12 months' notice expiring on the Interim Return Date or at any time thereafter. This appointment may also be terminated (inter alia) in circumstances of material breach by either party. Calculus Capital will receive an annual management fee of 1 per cent. of the net assets of the Company, calculated and payable quarterly in advance, together with any applicable VAT thereon.
6.3 A performance incentive agreement between the Company (1), Investec Structured Products (2) and Calculus Capital (3) dated 2 March 2010 pursuant to which Investec Structured Products and Calculus Capital will be entitled to 10 per cent. of dividends paid to shareholders provided that the performance conditions set out below are achieved.
Investec Structured Products and Calculus Capital will each receive a performance incentive fee payable in cash of an amount equal to 10 per cent. of dividends and distributions paid to Shareholders following the payment of such dividends and distributions provided that Shareholders have received or been offered an Interim Return of at least 70p per Share on or before the Interim Return Date and aggregate distributions of at least 105p per Share have been paid (including the relevant distribution being offered). Such performance incentive fees will be paid within 10 business days of the payment of the relevant dividend or distribution.
If the appointment of either of the Managers as investment manager to the Company is terminated by the Company as a result of a material breach by the Manager concerned of the provisions of the investment management agreement between it and the Company, no further Performance Incentive will be payable to the Manager concerned.
If the appointment of Investec Structured Products is terminated for any other reason, it will continue to be entitled to the Performance Incentive.
If the appointment of Calculus Capital is terminated for any other reason, it will be entitled to a Performance Incentive in respect of distributions paid during the period of 5 years after the date of termination, but the amount payable to it shall reduce pro rata during that period and no Performance Incentive will be payable in respect of distributions made thereafter.
It is intended that approximately 75 per cent. of the monies raised by the Company will be invested within 60 days in a portfolio of Structured Products. The balance will be used to meet initial costs and invested in cash or near cash assets (as directed by the Board) and will be available to invest in Venture Capital Investments, as well as to fund ongoing expenses.
In order to qualify as a VCT, at least 70 per cent. of the Company's assets must be invested in Venture Capital Investments within approximately three years. Thus, in respect of monies raised from time to time, there will be a phased reduction in the Structured Products portfolio and corresponding build up in the portfolio of Venture Capital Investments to achieve and maintain this 70 per cent. threshold along the following lines:
| Average exposure per year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6+ |
|---|---|---|---|---|---|---|
| Structured Products and cash/near cash | 85% | 75% | 35% | 25% | 25% | 0% |
| Venture Capital Investments | 15% | 25% | 65% | 75% | 75% | 100% |
Note: the investment allocation set out above is only an estimate and the actual allocation will depend on market conditions, the level of opportunities and the comparative rates of returns available from Venture Capital Investments and Structured Products.
The combination of Venture Capital Investments and the Structured Products will be designed to produce ongoing capital gains and income that will be sufficient to maximise both annual dividends for the first 5 years from funds being raised and an interim return by an interim return date by way of a special dividend or cash tender offer for shares. After the interim return date, unless Investec Structured Products are requested to make further investments in Structured Products, the relevant fund will be left with a portfolio of Venture Capital Investments managed by Calculus Capital with a view to maximising long-term returns. Such returns will then be dependent, both in terms of amount and timing, on the performance of the Venture Capital Investments.
The portfolio of Structured Products will be constructed with different issuers and differing maturity periods to minimise risk and create a diversified portfolio. The maximum exposure to any one issuer will be limited to 15 per cent. of the assets of the Company at the time of investment. Structured Products can and may be sold before their maturity date if required for the purposes of making Venture Capital Investments and Investec Structured Products have agreed to make a market in the Structured Products, should this be required by the Company.
The intention for the portfolio of Venture Capital Investments is to build a diverse portfolio of primarily established unquoted companies across different industries and investments may be by way of loan stock and/or redeemable preference shares as well as ordinary shares to generate income. The amount invested in any one sector and any one company will be no more than approximately 20 per cent. and 10 per cent. respectively of the Venture Capital Investments portfolio.
The Board and its Managers will review the portfolio of investments on a regular basis to assess asset allocation and the need to realise investments to meet the Company's objectives or maintain VCT status. Where investment opportunities arise in one asset class which conflicts with assets held or opportunities in another asset class, the Board will make the investment/divestment decision.
Under its Articles, the Company has the ability to borrow a maximum amount equal to 25 per cent. of the aggregate amount paid on all shares issued by the Company (together with any share premium thereon). The Board will consider borrowing if it is in the Shareholders' interests to do so. In particular, because the Board intends to minimise cash balances, the Company may borrow on a short-term to medium-term basis (in particular, against Structured Products) for cashflow purposes and to facilitate the payment of dividends and expenses in the early years.
The Company will not vary the investment objective or the investment policy, to any material extent, without the approval of shareholders. The Company intends to be a generalist VCT investing in a wide range of sectors.
The Board controls the overall risk of the Company. Calculus Capital will ensure the Company has exposure to a diversified range of Venture Capital Investments from different sectors. Investec Structured Products will ensure the Company has exposure to a diversified range of Structured Products. The Board believes that investment in these two asset classes provides further diversification.
Calculus Capital has a co-investment policy between its various funds whereby investment allocations are generally offered to each party in proportion to their respective funds available for investment, subject to: (i) a priority being given to any of the funds in order to maintain their tax status; (ii) the time horizon of the investment opportunity being compatible with the exit strategy of each fund; and (iii) the risk/reward profile of the investment opportunity being compatible with the target return for each fund. The terms of the investments may differ between the parties. In the event of any conflicts between the parties, the issues will be resolved at the discretion of the independent directors, designated members and committees. It is not intended that the Company will co-invest with Directors or Members of the Calculus Capital Management team) including family members).
In respect of the Venture Capital Investments, funds attributable to separate share classes will co-invest (i.e. pro rata allocation per fund unless as otherwise approved by the Board). Any potential conflict of interest arising will be resolved on a basis which the Board believes to be equitable and in the best interests of all Shareholders.
A co-investment policy is not considered necessary for the Structured Products.
The following related party transactions have taken place since incorporation of the Company to the date of this document:
''US person'' means any person or entity defined as such in Rule 902(o) under the US Securities Act of 1933 and (without limiting the generality of the foregoing) includes a natural person resident in the US, a corporation or partnership organised or incorporated under the laws of the US (including any State thereof) and an estate or trust if any executor, administrator or trustee is a US person but shall not include a branch or agency of a US person located outside the US if such agency or branch operates for valid business reasons and is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located.
The following paragraphs, which are intended as a general guide only and are based on current legislation and HM Revenue & Customs practice, summarise advice received by the Directors as to the position of shareholders who hold Shares other than for trading purposes. Any person who is in any doubt as to his taxation position or is subject to taxation in any jurisdiction other than the UK should consult his professional advisers.
13.1 Taxation of dividends – under current law, no tax will be withheld by the Company when they pay a dividend.
14.11 The Company and its shareholders are subject to the provisions of the Takeover Code and the CA 2006, which require shares to be acquired/transferred in certain circumstances.
14.12 The typical investor for whom investment in the Company is designed is a retail investor (either as a direct investor or through an authorised financial intermediary) who is an individual higher rate tax payer aged 18 or over and who is resident in the UK.
Copies of the following documents will be available for inspection during usual business hours on weekdays, Saturdays and public holidays excepted, at the offices of Martineau, No.1 Colmore Square, Birmingham B4 6AA whilst the Offer is open:
Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU
The Directors Investec Structured Products Calculus VCT plc Beaufort House 51 New North Road Exeter EX4 4EP
20 September 2010
Dear Sirs
We report on the financial information set out in Section B of Part Four of this document. This financial information has been prepared for inclusion in the Registration Document dated 20 September 2010 on the basis of the accounting policies set out in note 1 of the financial information.
This report is required by paragraph 20.1 of Annex I to the Commission Regulation (EC) 809/2004 and is given for the purpose of complying with that regulation and for no other purpose.
Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with paragraph 23.1 of Annex I to the Commission Regulation (EC) 809/2004, consenting to its inclusion in the Registration Document.
The Directors of Investec Structured Products Calculus VCT plc are responsible for preparing the financial information on the basis of preparation set out in note 1 to the financial information and in accordance with UK Accounting Standards.
It is our responsibility to form an opinion as to whether the financial information gives a true and fair view, for the purposes of the Registration Document, and to report our opinion to you.
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of the significant estimates and judgements made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the entity's circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement, whether caused by fraud or other irregularity or error.
In our opinion, the financial information gives, for the purposes of the Registration Document dated 20 September 2010, a true and fair view of the state of affairs of Investec Structured Products Calculus VCT plc as at the dates stated and of its losses, cash flows and changes in equity for the periods then ended in accordance with the basis of preparation set out in note 1 and in accordance with UK Accounting Standards as described in note 1.
For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Registration Document and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Registration Document in compliance with paragraph 1.2 of Annex I of the Commission Regulation (EC) 809/2004.
Yours faithfully
| Period ended 30 June 2010 | ||||
|---|---|---|---|---|
| Note | Revenue return £'000 |
Capital return £'000 |
Total £'000 |
|
| Losses on investments at fair value | ||||
| through profit or loss | 6 | – | (88) | (88) |
| Income | – | – | – | |
| Investment management fee | 2 | (2) | (7) | (9) |
| Other operating expenses | 3 | (30) | – | (30) |
| Loss on ordinary activities before finance costs and taxation Finance costs |
(32) – |
(95) – |
(127) – |
|
| Loss on ordinary activities before taxation | (32) | (95) | (127) | |
| Taxation | 4 | – | – | – |
| Loss for the period | (32) | (95) | (127) | |
| Return per ordinary share (pence) | 5 | (1.17) | (3.46) | (4.63) |
The total column of this statement represents the Company's income statement.
The supplementary revenue return and capital return columns are both prepared in accordance with the Association of Investment Companies (''AIC'') Statement of Recommended Practice (''SORP'').
All items in the above statement derive from continuing operations.
| Share | |||||
|---|---|---|---|---|---|
| Share capital £'000 |
premium account £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
|
| For the period to 30 June 2010 | |||||
| At 1 February 2010 | – | – | – | – | – |
| Issue of redeemable | |||||
| non-voting shares | 50 | – | – | – | 50 |
| Redemption of redeemable | |||||
| non-voting shares | (50) | – | – | – | (50) |
| Issue of ordinary shares | 39 | 3,829 | – | – | 3,868 |
| Ordinary share issue expenses | – | (213) | – | – | (213) |
| Loss for the period | – | – | (95) | (32) | (127) |
| At 30 June 2010 | 39 | 3,616 | (95) | (32) | 3,528 |
| Note | 30 June 2010 £'000 |
|
|---|---|---|
| Fixed assets Investments at fair value through profit or loss |
6 | 1,855 |
| Current assets Trade and other receivables Cash at bank |
7 | 79 1,739 |
| Current liabilities Trade and other payables |
8 | 1,818 (126) |
| Net current assets | 1,692 | |
| Total assets less current liabilities Non-current liabilities IFA trail commission |
3,547 (19) |
|
| Net assets | 3,528 | |
| Equity attributable to shareholders Share capital Share premium Capital reserve Revenue reserve |
9 10 10 10 |
39 3,616 (95) (32) |
| Total shareholders' funds | 3,528 | |
| Net asset value per ordinary share (pence) | 11 | 91.21 |
| Period ended 30 June 2010 £'000 |
|
|---|---|
| Cash flows from operating activities Net loss before taxation |
(127) |
| Adjustments to reconcile net return before taxation to net cash flows from operating activities: Losses on investments Increase in trade and other payables Increase in trade and other receivables Purchase of investments |
88 61 (79) (1,943) |
| Net cash flows generated from operating activities | (2,000) |
| Financing Issue of redeemable non-voting shares Redemption of redeemable non-voting shares Issue of ordinary shares Ordinary share issue expenses |
50 (50) 3,868 (129) |
| Net cash flows from financing | 3,739 |
| Net increase in cash and cash equivalents Cash and cash equivalents at the start of the period |
1,739 – |
| Cash and cash equivalents at the end of the period | 1,739 |
These Financial Statements cover the five month period from 1 February 2010 to 30 June 2010, and have been prepared under the historical cost convention, except for the valuation of investments at fair value through profit or loss, in accordance with applicable UK accounting standards. As these Financial Statements do not form statutory accounts they do not include disclosures required by company law.
In determining the analysis of total income and expenses as between capital return and revenue return, the Directors have followed the guidance contained in the Statement of Recommended Practice (the ''SORP'') for Investment Trusts and Venture Capital Trusts issued by the Association of Investment Companies (the ''AIC''), as revised in 2009 and on the assumption that the Company maintains VCT status.
The Company's Financial Statements are presented in Sterling.
The Company aims to invest in a portfolio of Structured Products and Venture Capital Investments that will provide sufficient total returns to allow the Company to pay annual dividends and provide long-term capital returns for investors. As a result, all investments held by the Company are designated, upon initial recognition, as held at fair value through profit or loss, in accordance with Financial Reporting Standard (FRS) 26. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the portfolio is provided internally on this basis to the Board. Fair value is the amount for which an asset can be exchanged between knowledgeable, willing parties in an arm's length transaction. Investments held at fair value through profit or loss are initially recognised at cost, being the consideration given and excluding transaction or other dealing costs associated with the investment, which are expensed and included in the capital column of the Income Statement. Subsequently, investments are measured at
fair value, with gains and losses on investments recognised in the Income Statement and allocated to capital. All purchases and sales of investments are accounted for on the trade date basis.
For investments actively traded in recognised financial markets, fair value is generally determined by reference to quoted market bid, or last, prices depending on the convention of the exchange on which the investment is quoted, at the close of business on the Balance Sheet date.
Structured products are valued by reference to the FTSE 100 Index with Mid prices for the Structured Products provided by the product issuers. An adjustment is made to these prices to take into account any bid/offer spreads prevalent in the market at each valuation date. These spreads are either determined by the issuer or recommended by the Structured Products Investment Manager, Investec Bank plc.
Returns are linked to the FTSE 100 Index by way of a fixed return that is payable as long as the Final Index Level is no lower than the Initial Index Level (Final Index Level and Initial Index Level have the same meaning as described in the original prospectus). All of the Structured Products will be capital protected so long as the FTSE 100 Index does not fall by 50 per cent. of the Initial Index Level at any time during the investment period. If the FTSE 100 Index does fall by 50 per cent. at any time during the investment period and fails to recover, the capital will be at risk on a maximum one to one basis (i.e. if the FTSE 100 Index falls by 50 per cent. during the investment period and on maturity is down 25 per cent., capital within that Structured Product will be reduced by 25 per cent.).
The majority of the Structured Products are designed to produce capital appreciation, rather than income, giving rise to gains which will be tax-free for the Company.
Unquoted investments are valued using an appropriate valuation technique so as to establish what the transaction price would have been at the Balance Sheet date. Such investments are valued in accordance with the International Private Equity and Venture Capital Association (''IPEVCA'') guidelines. Primary indicators of fair value are derived from earnings multiples, recent arm's length market transactions, net assets, or where appropriate, at cost for recent investments or the valuation as at the previous reporting date.
Dividends receivable on equity shares are recognised as income on the date on which the shares or units are marked as ex-dividend. Where no ex-dividend date is available, the income is recognised when the Company's right to receive it has been established.
Interest receivable from fixed income securities is recognised using the effective interest rate method. Interest receivable on bank deposits is included in the Financial Statements on an accruals basis.
The gains and losses arising on investments in structured products are allocated between revenue and capital according to the nature of each structured product. This is dependent on the extent to which the return on the structured product is capital or revenue based.
Other income is credited to the revenue column of the Income Statement when the Company's right to receive the income has been established.
All expenses are accounted for on an accruals basis. Expenses are charged to the Income Statement as follows:
Annual IFA trail commission to 14 December 2015 has been provided for in the Financial Statements as, due to the nature of the fund, it is likely that this will be payable. The commission is apportioned between current and non-current liabilities.
Expenses incurred by the Company in excess of the agreed cap, currently 3 per cent. of the gross amount raised from the offer for subscription of offers shares for the 2009/2010 and 2010/2011 tax years (excluding irrecoverable VAT, annual trail commission and performance incentive fees), can be clawed back from Investec Structured Products until 14 December 2015 (the Interim Return Date). Any claw back is treated as a credit against the expenses of the Company.
Calculus Capital, as manager of the qualifying portfolio, will receive an annual investment management fee of an amount equivalent to 1.0 per cent. of the net assets of the Company.
Investec Structured Products, as manager of the structured product portfolio, will not receive any annual management fees from the Company. Investec Structured Products is entitled to an arrangement fee from the providers of Structured Products as detailed in note 13.
The managers will each receive a performance incentive fee payable in cash of an amount equal to 10 per cent. of dividend and distributions paid (including the relevant distribution being offered) to Shareholders over and above 105 pence per share (this being a 50 per cent. return on an initial net investment of 70 pence per share taking into account up front income tax relief) provided Shareholders have received or been offered an Interim Return of at least 70 pence per Share for payment on or before the Interim Return Date. Such performance incentive fees will be paid within ten business days of the date of payment of the relevant dividend or distribution.
The capital return component of the loss for the period is taken to the non-distributable capital reserves within the Statement of Changes in Equity.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date where transactions or events that result in an obligation to pay more tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversals of the underlying timing differences can be deducted. Timing differences are differences between the Company's taxable profits and its results as stated in the Financial Statements.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred tax is measured on a non-discounted basis.
No taxation liability arises on gains from sales of fixed asset investments by the Company by virtue of its Venture Capital Trust status. However, the net revenue (excluding UK dividend income) accruing to the Company is liable to corporation tax at the prevailing rates.
Dividends to shareholders are accounted for in the period in which they are paid or approved in general meetings. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they are paid, or have been approved by shareholders in the case of a final dividend and become a liability of the Company.
| Period ended 30 June 2010 | ||||
|---|---|---|---|---|
| Revenue | Capital | Total | ||
| £'000 | £'000 | £'000 | ||
| Investment management fee | 2 | 7 | 9 | |
| Period ended 30 June 2010 £'000 |
|
|---|---|
| Auditors' remuneration – audit of the Company's Financial Statements Directors' emoluments Other administrative expenses |
6 20 48 |
| Claw back of fees in excess of expenses cap (see note 1) | 74 (44) |
| 30 |
Grant Thornton UK LLP also received fees of £10,000 as reporting accountant in connection with the issued ordinary shares which has been included in the issue expenses deducted from the share premium account.
| Period ended 30 June 2010 | |||||
|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
|||
| Corporation tax at 28% | – | – | – |
The Company is subject to corporation tax at 28%. As at 30 June 2010 the total current taxation charge in the Company's revenue account is lower than the standard rate of corporation tax in the UK (28%). The differences are explained below
| Period ended 30 June 2010 | ||||
|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
||
| Loss on ordinary activities before taxation | (32) | (95) | (127) | |
| Corporation tax at 28% Effects of: |
(9) | (27) | (36) | |
| Non-taxable capital losses | – | 25 | 25 | |
| Excess expenses for the period | 9 | 2 | 11 | |
| Tax expense on ordinary activities | – | – | – |
At 30 June 2010, the Company has excess management expenses of approximately £39,000 to carry forward against future taxable profits.
| Period ended 30 June 2010 | ||||
|---|---|---|---|---|
| Revenue | Capital | Total | ||
| pence | pence | pence | ||
| Return per ordinary share | (1.17) | (3.46) | (4.63) | |
Revenue return per ordinary share is based on the net revenue loss on ordinary activities after taxation of £32,000, and on 2,742,697 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.
Capital return per Ordinary Share is based on the net capital loss for the period of £95,000, and on 2,742,697 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.
Total return per Ordinary Share is based on the net loss for the period of £127,000, and on 2,742,697 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.
| a) Investment portfolio summary Investments in Structured Products |
30 June 2010 £'000 1,855 |
|
|---|---|---|
| b) Movement in investments | Structured Products £'000 |
Total £'000 |
| Opening book cost Opening investment holding gains/(losses) |
– – |
– – |
| Opening valuation Movements in the period: Purchases Sales – Proceeds – Gains/(losses) on sale |
– 1,943 – – |
– 1,943 – – |
| Movement in investment holding losses | (88) | (88) |
| Fair value at 30 June 2010 | 1,855 | 1,855 |
| Closing book cost Closing investment holding losses |
1,943 (88) |
1,943 (88) |
| 1,855 | 1,855 |
Financial Reporting Standard (''FRS'') 29 'Financial Instruments: Disclosures' requires an analysis of investments classified as fair value through profit or loss, based on the reliability and significance of the information used to measure their fair value. FRS 29 requires that the investments are classified into a fair value hierarchy as follows:
The level of the fair value hierarchy, within which the fair value measurement is categorised, is determined on the basis of the lowest level input that is significant to the fair value of the investment. The following table analyses within the fair value hierarchy the Company's financial assets and liabilities (by class) measured at fair value at 30 June 2010:
| 30 June 2010 | |||||
|---|---|---|---|---|---|
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
||
| Structured Products | – | 1,855 | – | 1,855 |
Investments, whose values are based on quoted market prices in active markets, and therefore classified within level 1, include active equities. The Company does not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/ or non-transferability, which are generally based on available market information.
Inputs to level 3 fair values are unobservable inputs for the asset. Unobservable inputs may have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date (or market information for the inputs to any valuation models). As such, unobservable inputs reflect the assumptions the Company considers that market participants would use in pricing the asset. Any unquoted equities, preference shares and loan stock would be classified within this category. As detailed in note 1, unquoted investments are valued in accordance with the International Private Equity and Venture Capital (''IPEVC'') guidelines.
| 30 June 2010 £'000 |
|
|---|---|
| Prepayments and other debtors Claw back of fees in excess of expenses cap |
35 44 |
| 79 | |
| Note 8 – Trade and Other Payables | |
| 30 June | |
| 2010 | |
| £'000 | |
| Accruals and other creditors | 61 |
| Ordinary share issue expenses due to Investec | 64 |
IFA trail commission 1
126
| Ordinary shares of 1 pence each | Number | £'000 | |
|---|---|---|---|
| As at 1 February 2010 Issue of ordinary shares |
– 3,867,917 |
– 39 |
|
| Issued and fully paid at 30 June 2010 | 3,867,917 | 39 | |
| Redeemable non-voting shares of 1 pence each | Number | £'000 | |
| As at 1 February 2010 Issue of redeemable shares Redemption of redeemable shares |
– 5,000,000 (5,000,000) |
– 50 (50) |
|
| Issued and fully paid at 30 June 2010 | – | – |
| Share premium account £'000 |
Capital reserve – other £'000 |
Capital reserve – investment holding losses £'000 |
Revenue reserve £'000 |
|
|---|---|---|---|---|
| At 1 February 2010 | – | – | – | – |
| Issue of redeemable non-voting shares |
– | – | – | – |
| Redemption of redeemable non-voting shares |
– | – | – | – |
| Issue of ordinary shares | 3,829 | – | – | – |
| Ordinary share issue expenses | (213) | – | – | – |
| Retained loss for the period Movement in investment |
– | – | – | (32) |
| holding losses Investment management fee |
– | – | (88) | – |
| allocated to capital | – | (7) | – | – |
| At 30 June 2010 | 3,616 | (7) | (88) | (32) |
| 30 June | |
|---|---|
| 2010 | |
| pence | |
| Ordinary shares of 1 pence each | 91.21 |
The net asset value per ordinary share is based on net assets of £3,528,000 and on 3,867,917 Ordinary Shares, being the number of shares in issue at the period end.
The Company's objective is to create two portfolios to produce ongoing capital gains and income that will be sufficient to fund an expected annual dividend of 5.25 pence per Ordinary Share for the first five years of the Company and provide an expected return of at least 43.75 pence per ordinary share by 14 December 2015 (the Interim Return Date) by way of a special dividend or cash tender offer for shares.
Initially, a minimum of 66.5 per cent. of the monies raised by the Company has been invested in a portfolio of Structured Products. The balance has been invested in cash or near cash assets (as directed by the Board) and it will then be available to invest in Venture Capital Investments, as well as to fund expenses.
In order to qualify as a VCT, at least 70 per cent. of the Company's investments must be invested in Venture Capital Investments within approximately three years of the relevant funds being raised. Thus, there will be a phased reduction in the Structured Products portfolio and corresponding build up in the portfolio of Venture Capital Investments to achieve and maintain this 70 per cent. threshold along the following lines:
| Average exposure per year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6+ |
|---|---|---|---|---|---|---|
| Structured Products and cash /near cash assets | 85% | 75% | 35% | 25% | 25% | 0% |
| Venture Capital Investments | 15% | 25% | 65% | 75% | 75% | 100% |
At 30 June 2010, the Company's investment portfolio was comprised solely of Structured Products.
The Company's financial instruments comprise securities and cash and liquid resources that arise directly from the Company's operations.
The principal risks the Company faces in its portfolio management activities, as at 30 June 2010 are:-
The Company does not have exposure to foreign currency risk.
With many years' experience of managing the risks involved in investing in Structured Products and Venture Capital Investments respectively, both the Investec Structured Product team and the Calculus Capital team, together with the Board, have designed the Company's structure and its investment strategy to reduce risk as much as possible. The policies for managing these risks are summarised below and have been applied throughout the period under review.
The return and valuation of the Company's investments in Structured Products is linked to the FTSE 100 Index by way of a fixed return that is payable as long as the Final Index Level is no lower than the Initial Index Level.
All of the Structured Products will be capital protected so long as the FTSE 100 Index does not fall by 50 per cent. of the Initial Index Level at any time during the investment period. If the FTSE 100 Index does fall by 50 per cent. at any time during the investment period and fails to recover, the capital will be at risk on a maximum one to one basis (Capital at Risk (''CAR'')) (i.e. if the FTSE 100 Index falls by 50 per cent. during the investment period and on maturity is down 25 per cent., capital within that Structured Product will be reduced by 25 per cent.). The table below provides details of the Initial Index Level at the date of investment and the maturity date for each of the Structured Products. As at 30 June 2010, the FTSE 100 Index closed at 4916.87. As at 17 September 2010 being the last practical date prior to the publication of these Financial Statements, the index had increased 12.03 per cent. to close at 5508.45.
| Issuer | Strike Date | Initial Index Level |
Maturity Date | Return/CAR |
|---|---|---|---|---|
| Royal Bank of Scotland | 05/05/2010 | 5342 | 12/05/2015 | 162.5% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| Investec Bank | 14/05/2010 | 5263 | 19/11/2015 | 185% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| Abbey National Treasury Services |
25/05/2010 | 4941 | 18/11/2015 | 185% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| Nomura Bank International |
28/05/2010 | 5188 | 20/02/2013 | 137% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| Morgan Stanley International |
10/06/2010 | 5133 | 17/12/2012 | 134% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
The Final Index Level is calculated using 'averaging', meaning that the average is taken of the closing levels of the FTSE 100 Index on each Business Day over the last two to six months of the structured product plan term (the length of the averaging period differs for each plan).
The Manager of the Structured Products portfolio and the Board review this risk on a regular basis and the use of averaging to calculate the return can reduce adverse effects of a falling market or sudden market falls shortly before maturity. Equally, it can reduce the benefits of an increasing market or sudden market rises shortly before maturity.
As at 30 June 2010, the value of the Company's investments in Structured Products was valued at £1,855,000. A 10 per cent. increase in the level of the FTSE 100 Index, at 30 June 2010, would have increased net assets by £143,000. A 10 per cent. decrease would have reduced net assets by £167,000. A 10 per cent increase would increase the investment management fee due to Calculus Capital by £1,000; a 10 per cent. decrease would reduce the fee by £2,000.
In recent years, the performance of the FTSE 100 Index has been volatile and the Directors consider that an increase or decrease in the aggregate value of investment by 10 per cent., or more, is reasonably possible.
The failure of a counterparty to discharge its obligations under a transaction could result in the Company suffering a loss. In its role as the Manager of the Structured Products portfolio and to diversify counterparty risk, Investec Structured Products will only invest in Structured Products issued by approved issuers. In addition the maximum exposure, to any one counterparty, will be limited to 15 per cent. of the assets of the Company at the time of investment. The Board does not consider this risk to be significant.
At 30 June 2010, the Company's credit risk exposure, by credit rating of the Structured Product issuer, was as follows:
| Credit risk rating | 30 June 2010 | |
|---|---|---|
| (Moody's unless otherwise indicated) | £'000 | % |
| A1 | 232 | 12.5 |
| A2 | 486 | 26.2 |
| Aa2 | 353 | 19.0 |
| A– (Standard & Poor's) | 324 | 17.5 |
| Baa3 | 460 | 24.8 |
| 1,855 | 100.0 |
If Structured Products are redeemed before the end of the term, the Company may get back less than the amount originally invested. The value of the Structured Products will be determined by the price at which the investments can actually be sold on the relevant dealing date. The Board does not consider this risk to be significant as the planned investment periods in Structured Products will range from six months to five and a half years and there is a planned transition from Structured Products to qualifying investment as detailed earlier in this note.
There may not be a liquid market in the Structured Products and there may never be two competitive market makers, making it difficult for the Company to realise its investment. Risk is increased further where there is a single market maker who is also the Issuer. The Board has sought to mitigate this risk by only investing in approved issuers of Structured Products, and limiting exposure to any one issuer.
The Board seeks to ensure that an appropriate proportion of the Company's investment portfolio is invested in cash and readily realisable assets, which are sufficient to meet any funding commitments that may arise.
Under its Articles of Association, the Company has the ability to borrow a maximum amount equal to 25 per cent. of the aggregate amount paid on all shares issued by the Company (together with any share premium thereon). At 30 June 2010 the Company had no borrowings.
The capital structure of the Company consists of shareholders' equity. The company's capital is analysed into its various components in notes 9 and 10. Capital is managed to ensure the Company has adequate resources to continue as a going concern, and to maximise the income and capital return to its shareholders, while maintaining a capital base to allow the Company to operate effectively in the market place and sustain future development of the business. To this end the Company may use gearing to achieve its objectives. The Company's assets and borrowing levels are reviewed regularly by the Board.
Investec Structured Products is a related party in respect of its appointment as an investment manager to the Company and is entitled to a performance incentive fee. Investec Structured Products will receive an arrangement fee of 0.75 per cent. of the amount invested in each Structured Product. This arrangement fee shall be paid to Investec Structured Products by the issuer of the relevant Structured Product. No arrangement fee will be paid to Investec Structured Products in respect of any decision to invest in Investec-issued Structured Products. Investec Structured Products has agreed not to earn an annual management fee from the Company.
As at 30 June 2010, £64,000 was payable to Investec Structured Products in relation to the initial fee of 5 per cent. of the gross funds raised pursuant to the original Ordinary Share offer. In addition, £44,000 was owed by Investec Structured Products as claw back of costs in excess of the agreed expenses cap.
Calculus Capital is regarded as a related party in respect of its appointment as an investment manager to the Company. For the period ended 30 June 2010, fees of £9,000 were payable to Calculus Capital, of which £9,000 were outstanding as at 30 June 2010. Calculus Capital is also entitled to a performance incentive fee.
No incentive fee was paid to either manager during the period.
The following Directors are related parties due to their connection with one of the managers; Ian Wohlman is a director of Investec Bank plc (of which Investec Structured Products is a trading division), and John Glencross is a director of Calculus Capital. Both Directors have agreed not to receive any remuneration for the Company.
Details of any shareholdings of the Directors in the Company are set out in Part Three of the Registration Document of which these statements form part, under paragraph 4: 'Directors' and other interests'.
Funds raised by the Company pursuant to the Offer will be invested into two distinctive portfolios: Structured Products and Venture Capital Investments, each being managed by two highly respected and successful managers; Investec Structured Products and Calculus Capital. This, coupled with the generous tax reliefs available to Qualifying Investors on the New Ordinary Shares, provides investors with an attractive investment opportunity.
Calculus Capital follows a disciplined investment approach focusing on both capital preservation and capital appreciation. The intention is to build a diverse portfolio of primarily established unquoted companies across different industries. The Board believes that the established unquoted sector offers better value, scope to exert greater influence, the opportunity to carry out stronger due diligence and to maintain better scrutiny than a portfolio invested primarily in AiM or PLUS Market quoted stocks and carries less risk than investment in seed and early stage investments. Calculus Capital's strategy for the Venture Capital Investments is to seek to reduce the risks often associated with VCTs by primarily targeting business investment opportunities according to the following criteria:
Calculus Capital intends that the Venture Capital Investments portfolio will be spread across a number of investments and the amount invested in any one sector and any one company will be no more than approximately 20 per cent. and 10 per cent. respectively. To enable the Company to pay the intended annual dividends of 5.25p per Ordinary Share and the Interim Return (including dividends) of 70p per Ordinary Share, Calculus Capital may invest by way of loan stock and/or redeemable preference shares as well as ordinary shares.
Historically, Calculus Capital has been a significant investor in the energy, transportation, leisure and catering, specialist engineering and support services sectors, and it has limited its exposure to companies with scientific or technological exposure. It is likely that the expertise it has developed and the contacts it has been made will be put to use in determining future investments.
Calculus Capital provides companies with capital for a variety of reasons. The most likely uses of proceeds include:
Calculus Capital sources its investment opportunities through a range of networks which its management team has developed, including corporate financiers, accountants and lawyers, as well as, senior City individuals who have invested in its funds. Calculus Capital carries out due diligence and may be involved in structuring or restructuring the investment as well as negotiating the price and terms of investment. Once an investment has been agreed, Calculus Capital may take a seat on the board itself in order to monitor and provide support to the firm on an ongoing basis, or may appoint one of its investors with appropriate experience to serve on the board. An example of this is Lindley Catering Limited, the UK's largest provider of catering services to professional football clubs, cricket
clubs and rugby clubs. A Calculus Capital investor with significant experience in the food wholesaling and distribution sectors served as non-executive chairman until the company was sold.
It is expected that the bulk of realisations will be achieved via trade sale, although an initial public offering, refinancing or sale to a larger private equity house may also be achieved.
£250,000 was invested in Terrain Energy in July 2010 (£50,000 in ordinary shares and £200,000 in 7 per cent. long term loan stock). The investment in ordinary shares represents 2.1 per cent. of the share capital of Terrain Energy. The total funding round in Terrain Energy was £750,000 with the remainder £500,000 invested by Calculus Capital on behalf of the Calculus Capital EIS Fund 10. Terrain Energy is an existing Calculus Capital investment having received £1.62 million in October 2009.
Terrain Energy was established in October 2009 to develop a portfolio of onshore oil and gas production and development interests in areas of low political risk, with the current focus being the UK. The balanced portfolio of licences includes currently oil producing, scheduled for near term production and exploration or rejuvenation projects. Terrain Energy currently has interests in four licences, two of which are in production, one on test production and one on which a drill or drop decision will be made in 2011.
The additional funds raised under the Offer will be used for new Venture Capital Investments as well as further developing the existing Ordinary Shares Fund portfolio (for example, by providing further investment to Terrain Energy for the purposes of acquiring additional licence interests from Terrain Energy).
Approximately 75 per cent. of the monies raised by the Company will be invested within 60 days in a portfolio of Structured Products by Investec Structured Products. Investec Structured Products has investment discretion in respect of the Structured Products the Company invests in, subject to the following investment mandate approved by the Board:
In its role as Manager of the Structured Products and to diversify counterparty risk, Investec Structured Products will only invest in Structured Products issued by the following Approved Issuers who have all indicated their agreement to issue geared return FTSE linked notes and securities along the lines set out above:
| Approved Issuer | Current Credit Rating (Moody's unless otherwise stated) |
|---|---|
| Abbey National Treasury Services plc | Aa3 |
| Barclays Bank plc | Aa3 |
| BBVA S.A | Aa2 |
| Citigroup Global Markets Limited | A3 |
| HSBC Bank plc | Aa2 |
| Investec Bank plc | Baa3 |
| Lloyds TSB Bank plc | Aa3 |
| Morgan Stanley International PLC | A2 |
| Nomura Bank International | A– (Standard & Poor's) |
| Royal Bank of Scotland plc | Aa3 |
Investec Structured Products will be given discretion to add two additional names to this list of Approved Issuers in each accounting year of the Company subject to these additional names having a minimum credit rating of A.
Should an Approved Issuer's rating fall below the minimum credit rating of A, such Issuer will, (with the exception of Investec Bank plc, whose credit rating at the date of this document is below the credit rating of A), no longer be granted Approved Issuer status and no further investments will be made in that relevant issuer. If, however, an investment has already been made in that issuer, Investec Structured Products will review the effect the downgrade may have on the value of the investment and consider, in consultation with the Board, whether the investment should be realised prior to the structured product reaching its maturity date, in which case the risks set out above in relation to Structured Products may be more likely to occur in respect of that investment.
The maximum exposure to any one Issuer will be limited to 15 per cent. of the assets of the Company at the time of investment.
The Company does not invest directly in the companies comprised within the FTSE 100 and therefore the maximum return regardless of any rise in the FTSE 100 Index will be a percentage of the Company's original investment. The fixed returns will obviously be lower for those Structured Products with shorter maturities.
The majority of the Company's holdings of Structured Products are primarily designed to produce capital appreciation, rather than income. Therefore, the profit arising from the disposal or maturity of the Structured Products typically gives rise to capital gains, which are tax-free (subject to maintenance of VCT status) for the Company and can be distributed tax-free to Qualifying Investors.
The Company is buying a note issued by the relevant Issuer. The Issuer is legally required to pay the agreed returns when the note matures. If the Issuer fails to meet its obligations (i.e. goes bankrupt or similar) the Company would not be entitled to compensation from the Financial Services Compensation Scheme (FSCS) solely on the grounds of such failure. If this happens the Company may lose some or all of its money.
Details of all of the existing Structured Product investments that have been entered into are set out below.
| Issuer | Strike Date | FTSE 100 Initial Index Level |
Notional Investment |
Purchase price |
Maturity Date |
Return/ Capital at Risk (CAR) |
|---|---|---|---|---|---|---|
| Investec Bank | 14 May 2010 | 5263 | 500,000.00 | 0.9791 | 19 Nov 2015 | 185% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| The Royal Bank of Scotland |
6 May 2010 | 5342 | 275,000.00 | 0.96 | 12 May 2015 162.5% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
|
| Abbey National Treasury Services |
25 May 2010 | 4941 | 350,000.00 | 0.9898 | 19 Nov 2015 | 185% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| Nomura Bank International |
28 May 2010 | 5188 | 350,000.00 | 0.98 | 15 Feb 2013 | 137% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| Morgan Stanley International |
10 Jun 2010 | 5133 | 500,000.00 | 1.0 | 10 Dec 2012 | 134% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
| HSBC | 1 July 2010 | 4806 | 500,000.00 | 1.0 | 6 July 2012 125.1% if FTSE 100 higher; CAR if FTSE 100 falls by 50% |
The objective is to create two portfolios to produce ongoing capital gains and income that will be sufficient to:
The success of this strategy is dependent upon the Final Index Level being above the Initial Index Level when each of the Structured Products mature, there being no Approved Issuer default and there being some repayment of loan stock or preference shares from the portfolio of Venture Capital Investments.
Assuming this to be the case, investors in the Offer will have received or have been offered back their net investment of 70p by the Interim Return Date and will still be left with a portfolio of Venture Capital Investments which will continue to be managed by Calculus Capital with a view to maximising long-term tax free returns.
In the event of a long term decline in the FTSE 100 Index, there will be no gains from the Structured Products and in the event of a fall of 50 per cent. in the FTSE 100 Index there will be losses on the investments in Structured Products. Structured Products can and may be sold before their maturity date if required for the purposes of making Venture Capital Investments and Investec Structured Products have agreed to make a market in the Structured Products, should this be required by the Company. The portfolio of Structured Products will be constructed with different Issuers and differing maturity periods to minimise risk and create a diversified portfolio.
The Board and its Managers review the portfolio of investments on a regular basis to assess asset allocation and the need to realise investments. In the event that the Company is unable to realise funds from its investments in Structured Products (whether this be original capital or gains), the pool of potential Venture Capital Investments is likely to be reduced and the Company may not be able to meet its objectives or maintain VCT status.
As it is possible that the intended return to the Ordinary Shareholders on or before 14 December 2015 could be regarded as a disposal, the Board proposes to raise further funds after the closing of the Offer through the issue of C Shares. It is intended to use a new class of share in order to provide a five-year holding period for investors as required for maintenance of the up-front income tax relief for qualifying investors in VCTs.
If a C Shares Fund is raised, the objective of the Board will be to maximise both the annual and interim returns for the C Share Fund, however, the intended level of returns are unknown at this time and will be assessed and agreed prior to the launch of the C Share offer for subscription.
Creation of a separate class of C Shares and raising funds under the C Share offer for subscription will, if a C Shares Fund is raised, increase the assets of the Company over which the annual running costs can be spread.
Although the C Shares Fund will, if raised, be managed and accounted for separately from the Ordinary Shares Fund, a number of company regulations and VCT requirements are assessed at company level and, therefore, the performance of one fund may impact adversely on the other fund. The Board will monitor both the performance of each separate fund as well as requirements at company level to reduce the risk of this occurring.
The following unaudited information represents all the investments of the Company as at the date of this document.
| Valuation (£) |
% | |
|---|---|---|
| Investee companies | ||
| Terrain Energy Limited | 250,000 | 6.56 |
| Structured products | ||
| Investec Bank plc | 529,331 | 13.89 |
| HSBC Bank plc | 538,000 | 14.12 |
| Morgan Stanley | 546,650 | 14.35 |
| Abbey National Treasury Services plc | 402,185 | 10.55 |
| Nomura Bank International | 365,365 | 9.59 |
| Royal Bank of Scotland | 267,960 | 7.03 |
| Money market securities | – | – |
| Other | – | – |
| Cash at bank | 911,067 | 23.91 |
| Total investments | 3,810,558 | 100.00 |
Set out below are all of the investments (other than cash/near cash assets) held by the Company. This unaudited investment portfolio is that carried by the Company as at the date of this document.
| Morgan Stanley Morgan Stanley provides diversified financial services on a worldwide basis. The Company has invested in a structured equity derivative issued by Morgan Stanley which pays 34 per cent. if the FTSE 100 is up after 2.5 years. Capital is at risk if the FTSE 100 is less than 50 per cent. of its Initial Index Level. Maturity date – 10 December 2012. |
||||
|---|---|---|---|---|
| Accounts for the year ended 31 December 2009 |
||||
| Pre-tax profit/(loss) Total assets Total equity |
597 million USD 436,801 million USD 6,817 million USD |
|||
| Description of securities held |
Equity Percentage (%) |
Cost (£) |
Valuation (£) |
Percentage of Investment Portfolio (%) |
| 500,000 warrants of £1 (ISIN – XS0517463922) |
n/a | 500,000 | 546,650 | 14.35 |
The HSBC Group operates worldwide, providing a variety of international banking and financial services.
The Company has invested in a structured equity derivative issued by HSBC Bank plc which pays 25.1 per cent. if the FTSE 100 is up after 2 years. Capital is at risk if the FTSE 100 is less than 50 per cent. of its Initial Index Level. Maturity date – 6 July 2012.
Accounts for the year ended 31 December 2009
| Pre-tax profit/(loss) Total assets Total equity |
£4,014 million £751,928 million £27,787 million |
|||
|---|---|---|---|---|
| Description of securities held |
Equity Percentage (%) |
Cost (£) |
Valuation (£) |
Percentage of Investment Portfolio (%) |
| 10 notes of £50,000 | n/a | 500,000 | 538,000 | 14.12 |
| (ISIN – XS0524656211) |
A specialist bank and asset manager which provides services to an international client base.
The Company has invested in a structured equity derivative issued by Investec Bank plc which pays 85 per cent. if the FTSE 100 is up after 5 years. Capital is at risk if the FTSE 100 is less than 50 per cent. of its Initial Index Level. Maturity date – 19 November 2015.
| Accounts for the year ended 31 March 2010 |
||||
|---|---|---|---|---|
| Pre-tax profit/(loss) Total assets Total equity |
£33.45 million £16,980 million £1,181 million |
|||
| Description of | Equity Percentage |
Cost | Valuation | Percentage of Investment |
| securities held | (%) | (£) | (£) | Portfolio (%) |
| 500,000 notes of £1 | n/a | 489,550 | 529,330.50 | 13.89 |
| (ISIN – n/a) |
Abbey National Treasury Services is the main funding vehicle for Santander UK plc, a financial services group in the UK.
The Company has invested in a structured equity derivative issued by Abbey National Treasury Services plc which pays 85 per cent. if the FTSE 100 is up afer 5 years. Capital is at risk if the FTSE 100 is less than 50 per cent. of its Initial Index Level. Maturity date – 19 November 2015.
| Accounts for the year ended 31 December 2009 |
||||
|---|---|---|---|---|
| Pre-tax profit/(loss) Total assets Total equity |
£456 million £282,846 million £3,503 million |
|||
| Percentage of | ||||
| Equity | Investment | |||
| Description of | Percentage | Cost | Valuation | Portfolio |
| securities held | (%) | (£) | (£) | (%) |
| 350,000 warrants of £1 | n/a | 346,430 | 402,185 | 10.55 |
| (ISIN – GB00G4N16Q50 |
Nomura Bank International provides a range of banking and financial services.
The Company has invested in a structured equity derivative issued by Nomura Bank International plc which pays 37 per cent. if the FTSE 100 is up after 2.7 years. Capital is at risk if the FTSE 100 is less than 50 per cent. of its Initial Index Level. Maturity date – 15 February 2013.
Accounts for the year ended 31 December 2009
Net income (£244 million) Total assets £15,838 million Total equity £451 million
| Description of securities held |
Equity Percentage (%) |
Cost (£) |
Valuation (£) |
Percentage of Investment Portfolio (%) |
|---|---|---|---|---|
| 7 notes of £50,000 | n/a | 343,000 | 365,365 | 9.59 |
| (ISIN – XS0514795052) |
The Royal Bank of Scotland Group, through subsidiaries, accepts deposits and offers commercial banking services.
The Company has invested in a structured equity derivative issued by The Royal Bank of Scotland Group plc which pays 62.5 per cent. if the FTSE 100 is up after 5 years. Capital is at risk if the FTSE 100 is less than 50 per cent. of its Initial Index Level. Maturity date – 12 May 2015.
| Accounts for the year ended 31 December 2009 |
||||
|---|---|---|---|---|
| Pre-tax profit/(loss) Total assets Total equity |
(£2,595 million) £1,696,486 million £94,631 million |
|||
| Percentage of | ||||
| Equity | Investment | |||
| Description of | Percentage | Cost | Valuation | Portfolio |
| securities held | (%) | (£) | (£) | (%) |
| 2,750 certificates of £100 | n/a | 264,000 | 267,960 | 7.03 |
| (ISIN – GB00B618MD11) |
UK based company with a portfolio of oil and gas interests based onshore in the UK.
| Pre-tax profit/(loss) Turnover Net assets/(liabilities) |
No accounts produced since incorporation £n/a £n/a £n/a |
|||
|---|---|---|---|---|
| Description of securities held |
Equity Percentage (%) |
Cost (£) |
Valuation (£) |
Percentage of Investment Portfolio (%) |
| 44,643 ordinary shares and £200,000 loan stock |
2.1 | 250,000 | 250,000 | 6.56 |
Note:
The investment and portfolio information in this Part Six has been extracted from the Company's records as at 14 September 2010. In respect of the information on investee companies' sales, profits and losses and net assets, these have been taken from the latest financial year end accounts published by those investee companies as referred to in this Part Six (''Third Party Information''). As at the date of this document, there has been no material change in the valuations set out in this Part Six since 14 September 2010. The Third Party Information has been accurately reproduced and, as far as the Company is aware and are able to ascertain from information provided, no facts have been omitted which would render the reproduced information inaccurate or misleading.
Investec Structured Products is a trading name of Investec Bank plc, registered address 2 Gresham Street, London EC2V 7QP. Investec Bank plc is authorised and regulated by the Financial Services Authority. Registered under Financial Services Authority No. 172330.
Calculus Capital Limited, registered address 104 Park Street, London W1K 6NF, is authorised and regulated by the Financial Services Authority. Registered under Financial Services Authority No. 190854.
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