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IMPORTANT NOTICE
The content of this First Edition EIS Information Memorandum investment consequences and risks of doing so. Your capital is at has been approved as a financial promotion for the purposes risk and you may not get back all that you invested. Taxation levels, of section 21 of the Financial Services and Markets Act 2000 bases and reliefs may change if the law changes and the tax benefits (‘FSMA’) by Edition Capital Investments Limited (‘Edition of this product will vary according to your personal circumstances; Capital Investments’) which is authorised and regulated by the we would therefore encourage you to seek independent advice. Financial Conduct Authority, 25 The North Colonnade, London The First Edition EIS will invest in unquoted securities. Such E14 5HS (FRN: 747132) whose registered office is at 83 investments can be more risky than investments in quoted securities Clerkenwell Road, London, EC1R 5AR. Edition Capital or shares and market-makers may not be prepared to deal in them. Investments is also the Manager of First Edition EIS and is Unquoted securities may be subject to transfer restrictions and registered as a subthreshold Alternative Investment Fund Manager. may be difficult to sell. It may be difficult to obtain information This Information Memorandum is issued solely for the purpose of as to how much an investment is worth or how risky it is at any seeking subscriptions from potential Investors for an investment given time. Investing in private companies may expose you to a in the discretionary investment management service known as the significant risk of losing all the money invested. Before investing, First Edition EIS. This Information Memorandum is provided to you are strongly recommended to consult an authorised person you on a confidential basis. You may not copy, reproduce or further specialising in advising on investments of the kind described in this distribute this Information Memorandum or any of its content to Information Memorandum. any other person at any time, nor discuss with any other person You should not invest in the First Edition EIS unless you have taken the proposal in this without the prior written consent of Edition appropriate financial advice. otherwise than for the purpose of evaluating this investment opportunity. Edition Capital Investments, its directors and employees do not accept any liability for any direct, indirect or consequential Edition Capital Investments has taken reasonable care to ensure loss or damage suffered by any person as a result of relying on that all facts stated in this Information Memorandum are true any information or opinions contained herein or in any other and accurate in all material respects at the date stated on this communication in connection with an investment in the First Information Memorandum and that there are no other material Edition EIS except where such liability arises under the FSMA, or facts, or opinions, which have been omitted, which would make any regulations made under the FSMA or the FCA rules and may not part of this Information Memorandum misleading. Edition Capital be excluded. Investments accepts responsibility accordingly. However, where information has been obtained from third party sources, Edition Any application to invest in the First Edition EIS may only be made Capital Investments or RAM Capital Partners LLP (see below) and will only be accepted subject to the terms and conditions of cannot accept responsibility for the completeness or accuracy of that this Information Memorandum (which includes the Investment information and potential Investors must form their own opinion Management Agreement contained in the First Edition EIS as to the reliance they place on that information. Any references to Application Pack). past performance are not indicative of future performance. In compliance with the provisions of the FCA Rules that implement RAM Capital Partners LLP, which is authorised and regulated the EC Distance Marketing Directive, which will apply to you in by the FCA (FRN 470347), is acting as Promoter in connection circumstances where your subscription to invest in the First Edition with the Fund and is not acting for anyone else and will not be EIS has not resulted from a face-to-face meeting with either Edition responsible to anyone other than the Manager for providing the Capital Investments or your own financial adviser, Edition Capital protections offered to customers of RAM Capital Partners LLP or Investments specifically draws to your attention that you have a for providing advice in respect of the contents of this document or right to cancel your subscription. Your rights in this respect are the Fund. No liability is accepted by RAM Capital Partners LLP more fully set out in the Investment Management Agreement which for the accuracy of any information or opinions contained in or for forms part of the First Edition EIS Application Pack. the omission of any material information from this document. By receiving this Information Memorandum, you agree to be bound You will need, and be expected to, make your own independent by the foregoing conditions and restrictions. Investing in the First assessment of the First Edition EIS and to rely on your own judgment Edition EIS is speculative and involves a significant degree of risk. (or that of your financial adviser) in respect of any investment you The attention of prospective Investors is drawn to the contents of may make in the First Edition EIS and the legal, regulatory, tax and the section in this document entitled ‘Understanding the Risks’.
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CONTENTS
1. Important Notice 3
2. contents 4
3. professional Advisors 5
4. summary – First Edition EIS 6
5. edition Capital – What We Do 8
6. Investment Strategy and Portfolio Examples 10
7. our Experience 14
8. the Edition Capital Partners 16
9. the Edition Capital Investment Committee 18
10. eIS – Key Tax Reliefs 19
11. understanding the Risks 20
12. conflicts of Interest 22
13. fees and Charges 23
14. how to Invest 24
15. glossary 25
16. Appendix 1 – Terms & Conditions 26
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Professional Advisors
Promoter Tax Advisor RAM Capital Partners LLP Philip Hare & Associates LLP 4 Staple Inn 4-6 Staple Inn London London WC1V 7QH WC1V 7QH
Legal Advisor Custodian Howard Kennedy LLP Thompson Taraz Managers Limited No. 1 London Bridge 47 Park Lane London London SE1 9BG W1K 1PR
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SUMMARY – fIRST EdITION EIS
First Edition EIS (the ‘Fund’) is a discretionary portfolio management service run by media and entertainment investment experts with significant experience in sourcing, operating and exiting qualifying EIS investments.
The Fund will invest into a portfolio of pre-identified fast growing The portfolio will comprise a mixture of post-profit and early stage companies within the media and entertainment sectors that qualify projects that have exceptional growth potential, with a core focus on under EIS rules, targeting a return in excess of £2 per share per £1 the roll-out of profitable businesses in line with the target fund invested over 4-6 years. allocation illustrated below.
Target Fund Allocation
20% Later stage Development capital
30% Pre-profit Early stage, high-growth
50% Post-profit High-growth, roll-out
The Edition Team led on the fundraising for Impresario Festivals plc (‘Impresario’) (£9 million EIS funds raised in two tranches in the 2012/13 and 2013/14 tax years) and have been actively involved in the operational management of Impresario over its 4 years of trading, including managing all investments and acquisitions for the group. On 5th October 2016, Impresario announced that it had sold its assets to media and entertainment group Global in a multi-million pound deal – a process managed by Edition. This equates to shareholder value of approximately £2.09 per share after performance fees on an initial offer price of £1; capital distribution commenced in October 2017.
6 Why FirsT ediTion eis? First Edition EIS offers Investors the opportunity to gain access to a portfolio of pre-identified fast growing companies in the Following the recent raft of rule changes media and entertainment sector. This offer may be suitable for to EIS legislation, the overall theme has those Investors looking for the following: been to refocus EIS on more growth oriented areas of the investment market. • Target of £2 tax free return over an investment time As such, this has further enhanced horizon of 4-6 years the attractiveness of the opportunities currently available in the media and • A highly experienced management team that has achieved entertainment market. significant upside for previous EIS investors The media and entertainment space • provides an abundant reservoir of fast Target portfolio funding allocation: 70% profitable growing companies that have proven businesses at the point of investment; 30% earlier stage business models but require development opportunities capital and hands-on operational and strategic support to assist them in the • Access to a minimum of three pre-identified companies next growth phase of their development. requiring expansion capital that will have obtained Investors will gain access to a minimum Advance Assurance prior to investment of three EIS qualifying investments. The pre-agreed deals identified in this • Planned allotment before the end of the tax year for the pre- Information Memorandum will be agreed deals identified in this Investment Summary and the allotted before the end of the tax year Information Memorandum (subject to due diligence) and as such Investors should be able to carry back • Companies with ambitious growth strategies who will work their investment in these businesses with the Edition team to implement the strategy to the 2016/17 tax year for Income Tax purposes. • Rare blend of investment and true hands-on operational expertise • Competitive charging structure that aligns itself with investor interests • Exceptional track record of delivering timely EIS3 certificates to investors
Why Invest with EIS • 30% Income Tax Relief on up to £1 million subscribed per tax year • Capital Gains Tax Deferral on the sale of a previous investment • Tax-free growth on investment if held for at least 3 years • Inheritance Tax Relief on investments after 2 years • Loss Relief up to 45% of the net amount invested
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EDITION CAPITAL – WHAT WE DO
Edition Capital is an investment and advisory group focused on the media and entertainment sectors.
We understand that the key investment opportunities within the well-developed media and entertainment sectors lie in identifying a category, niche or genre that has a loyal following or ‘tribe’ looking for new ways to experience or interact with their favoured interest. Investment opportunities also lie in being able to identify rising trends or creating new genres, and being the first to develop them into a new experience.
Prime content - being an experience you The Team has over 60 years’ combined cannot repeat, or owned intellectual experience of working in media and property - is paramount in media and entertainment, including managing entertainment. At Edition, we find great over £300m of investor funds, giving us content and experiences and we work deep market knowledge to identify the with the best management teams to best opportunities. First Edition EIS ensure successful commercialisation. aims to replicate the previous success This is done by building brands that can achieved by the Team, by investing in be experienced or distributed in new small companies with high growth ways, developing new revenue streams, potential. or by finding innovative ways to monetise the experience.
Our specialist sectors within media and entertainment include: • Live entertainment • Bars, restaurants and multi-use venues • Television • Recorded music (distribution, publishing, artists) • Immersive media
8 We invesT in high groWTh We Work CLoseLy WiTh our We supporT The fuLL groWTh smALLer CompAnies invesTee CompAnies To CyCLe WiTh indusTry LeAding Aid groWTh experTise
The Team have successfully raised and We have a media and entertainment At Edition, we work with businesses invested over £130m of EIS and VCT focused advisory arm that utilises the across the spectrum, from start-up funds into businesses within the media Team’s commercial experience from companies receiving their first round of and entertainment sectors. These sectors senior management roles held at the SPZ funding to multinational companies. have strong growth potential in line with Group, 19 Entertainment, the Cream We look for businesses with exceptional the public’s increasing appetite for new Group and Impresario Festivals amongst growth potential and we will engage with content and experiences, and a number of other media businesses. them at any stage. The breadth of our establishing prime content can involve When needed, we can provide a full suite experience across media and minimal capital expenditure at the of advisory services for investee entertainment is our key strength, outset with follow-on brand generation companies, seeking to design and enabling us to identify the best and growth being substantial and rapid streamline business operations with a investment opportunities. if the content resonates with an particular focus on implementing strong audience. financial management. Companies that First Edition EIS will invest in should all benefit from the generous tax reliefs available under the Enterprise Investment Scheme that launched in 1993 to support Britain’s aspiring entrepreneurs. Since launch, over 24,500 individual companies have received EIS investment with circa £14bn of funds having been raised; a number set to increase as the amount invested per year has been at a record high for the past two years, encouraged by longstanding cross-party Government support.1
The Government are working to ensure that the EIS supports small and growing businesses that are free from complex structures. First Edition EIS will invest directly into such businesses – a simple structure with the potential to deliver high returns.
1 Enterprise Investment Scheme and Seed Enterprise Investment Scheme Statistics on Companies raising funds – April 2016 HMRC.
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INvESTMENT STRATEGY ANd PORTfOlIO EXAMPlES
The British media and entertainment market is forecast to expand to £80 billion by 2018, growing at 3.1 percent CAGR.2 First Edition EIS will invest in businesses across the media and entertainment sectors with a particular focus on live entertainment, TV, venues and music. We have pre-identified a number of opportunities across our specialist sectors that we believe have the potential to deliver strong growth and exceptional upside for Investors with a core focus on the roll-out of profitable businesses. Each Investor will benefit from exposure to at least three Qualifying Companies through the Fund. The first three opportunities are listed on the following pages, and act as examples of the types of businesses that First Edition EIS will continue to invest into.
secTors oF inTeresT
LIVE ENTERTAINMENT VENUES musiC The live entertainment The types of popular After many turbulent years, industry, including live music entertainment venues and the music industry has events, immersive theatre, their usage has undergone a outperformed the rest of the sporting events and comedy, period of significant change in British economy in recent has continued to outperform the UK in the last 10 years. years by generating 5% other entertainment industries Nightclubs, once the most growth.5 Investment in music with 30.9 million visits being popular late opening style of tech grew by 86% in 20156 as made to live music events alone venue in the UK, have steadily investors regained their in the UK in 2016.3 One of declined with their numbers confidence in an industry that the overarching trends in live decreasing by 45% from2 005 has recalibrated how to drive entertainment over the past 10 to 2015.4 In their place, late revenues from streaming, years has been the building of a opening bars (often themed), artists and live performances. ‘tribe’ – a group of street food markets, pop-up We believe opportunities lie like-minded people, passionate restaurants, pop-up events and in looking innovatively at about the same thing (music, immersive entertainment have music distribution, publishing the arts and sport to name a taken over as the key usage of and developing artists, with few) who return year after year venues as new and different a lean view on costs and a to the same event or venue such experiences are continually focus on new methods of as Glastonbury, the Frieze Art sought by today’s millennials. engaging with music. Fair and Wimbledon.
2 Top Markets Report Media and Entertainment, US department of Commerce, International Trade Administration. 3 Wish You Were Here, UK Music 2017. 4 Whatever happened to the Great British nightclub? BBC, 16/3/2016. 5 UK Measuring Music Report 2015. 6 Invested Interests: How Music/Tech funding Nearly doubled in 2015, Music Ally, 23/2/16.
10 Pre-identified Live Entertainment and Venues investment Campus Group
INVESTMENT: £2.10M
Campus Group is a profitable The business has a strong management global youth agency, team including the co-founder of MAMA Group, the UK’s former largest specialising in reaching live music and artist management From start to finish, implementation to debrief, Campus Group’s attention to detail group before its sale to HMV for £64m students through creative resulted in a fantastic campaign brand experiences and in 2010. The management team have throughout. Their ability to anticipate and experience in managing major live react to any issues that arose out of the innovative campaigns. venues including the Hammersmith activity being a market first; their attitude Apollo, as well as live events such as to getting the task done no matter how With offices in London and Sydney, Lovebox in London and The Great much effort it took, is a true testament to and with clients as diverse as Microsoft, Escape in Brighton. the company and how other agencies ASOS and Cadbury, the group have a should strive to be. We look forward to stronghold in a clearly defined After the model has been scaled in the working with them throughout the next year marketplace, with a good UK, the team will look to develop the understanding of their target audience. concept in Australia before launching MICROSOFT an Asia-Pacific focussed division of the The Group has five divisions, ensuring business. all client needs can be met in-house: Campus Ambassadors, Campus Media, The Group generated £706k EBITDA Campus Live, Campus Digital and pre-management charges on £2.8m Campus Create. The investment will be revenue in the year to 31 July 2017. We started working with Campus Group used to extend Campus’ reach by in 2010. During this time they have launching ‘Campus Events’ (student continued to deliver and impress on focused events in conjunction with every campaign. They worked with us in student unions) and ‘Campus The team took time to developing a marketing strategy that Venues’ (live venues, including a understand the brand… and assisted in arresting a decline in sales London based members club for young managed the whole process and has delivered substantial growth graduates), driven by the continued of marketing to, and engaging year on year ever since importance of live experiences to with, the hard-to-reach student population STA TRAVEL students and young professionals.
CADBURY www.campusgroup.co.uk 11 6
Pre-identified Live and Immersive Media investment Little Lion Entertainment
INVESTMENT: £3.15M
Little Lion Entertainment is the The two venues are currently generating company behind the highly annualised £2.2m EBITDA on £8m of revenue. successful Crystal Maze Live, the Incredible new attraction sell-out live version of the The investment will be used to relaunch DAILY MIRROR popular 90’s TV show. the company’s London venue in a flagship Central London location The current London venue opened in opening January 2019, as the current March 2016, with teams of up to eight London site closes. The new venue will Hang the expense and DO IT navigating the zones and challenges featured be designed to double the capacity from THE TELEGRAPH in the programme before reaching the 256 to 512 people per day, with the iconic crystal dome. At launch, Crystal corporate booking and sponsorship Maze Live London achieved 4 pieces of opportunities developed further. The broadcast coverage on the major UK TV team forecast annual EBITDA of £4.7m across the new London and existing channels, 14 pieces of print coverage (both The real life version of the Manchester venues, once London is fully regional and national) and 53 pieces of Maze surpasses the hype online coverage. Overall, the launch created operational. an estimated 1.34 million coverage views, HARPERS BAZAAR was circulated 21.5 million times and Following the success of Crystal Maze generated an Advertising Value Equivalent Live, the show returned to TV on (AVE) of £342K. Channel 4 introducing a new generation of fans to the concept to further strengthen the brand appeal. The experience was met with critical acclaim Crystal Maze London: This exhilirating and consistently positive reviews in the ride is worth every penny press, resulting in an expansion of the brand to include a central Manchester location. www.the-crystal-maze.com EVENING STANDARD
12 Pre-identified Live Entertainment investment Festival Production Services
INVESTMENT: £3.67M
Festival Productions Services It will use the funds raised to pay for the ('FPS') has been launched to provision of these services, and will provide production advice to generate a return by receiving a fee for the work undertaken by the business as Belladrum Tartan Heart: Voted the music festivals throughout the well as performance fees based on the UK's Most Popular Summer Music UK to enhance commercial profits generated by the festival (both Festival operations whilst allowing the annually and on a long-term basis). festival business to focus on HOLIDAY LETTINGS BY TRIPADVISOR creative expansion. The focus on long term performance fees, rather than using a traditional model of providing production services The company will look to work with in return for a fixed fee, will allow the festival promoters whose events are business to build a long-term, already established to look at new ways sustainable and profitable business. to enhance their efficiency and improve profitability. The first opportunity has been identified as the Belladrum Tartan Heart festival in FPS would be contracted by the festival Scotland, and the team are currently in to produce the festival for them – discussions with another established and working with production partners to profitable family event in Dorset. enhance profitability.
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OUR EXPERIENCE
We have a strong track record of identifying and working with great businesses. Below is a selection of past and current projects that members of our team are proud to have been involved with.
Please remember that past performance in not indicative of future performance and your capital is at risk. You might not get back what you invested.
IMPRESARIO FESTIVALS GROUP The Team led on the fundraising for Impresario Festivals plc (‘Impresario’) On 5th October 2016, Impresario (£9 million EIS funds raised in two tranches in the 2012/13 and 2013/14 tax years) announced it had sold its assets to media and have been actively involved in the operational management of Impresario over and entertainment group Global in a its 4 years of trading, including managing all investments and acquisitions for the multi-million pound deal – a process group. Impresario aimed to group together UK music festivals with the qualities managed by Edition. This equates to that we believe are required to succeed in the competitive festival world: a clearly shareholder value of £2.09 per share defined identity and loyal target audience. after performance fees on an initial offer price of £1; capital distribution The company was an immediate success, quickly establishing itself as a leading commenced in October 2017. independent music festival operator in the UK with controlling interests in: • Rewind – three 80s festivals across the UK and a touring brand; • Field Day – an East London instituion with a focus on new music discovery The Team have been with me from • Boardmasters – a seven day surf competition and music festival in the first Rewind festival in 2009 Newquay, rooted in surf culture; and to the Impresario Festivals of today. • SW4 – one of the UK’s longest running dance music festivals bringing the I wouldn’t work with anyone else.
biggest names in dance music to Clapham Common, London. David Heartfield, CEO, Impresario Festivals
14 CREAM GROUP I9 ENTERTAINMENT GPZ GROUP
The Cream business was reinvented in Having delivered earlier success with With hugely successful artists such as the mid 2000’s after dance music had the Spice Girls, 19 Entertainment was Seal, Gabrielle, The Pogues and Mark experienced a significant downturn. re-positioned from an artist manager to Morrison, SPZ was one of the most The Team helped to re-energise the a rights owning company. It had successful independent music groups of Creamfields brand, refocusing on its massive success with the ‘Pop Idol’ the 1990’s. With interests in record labels core dance music audience and taking format, capitalising on the growing (the iconic ZTT Records), music it from a 1 day event to a 3 day camping appetite for music based reality shows, publishing, recording studios, music festival. By 2012, the event had 60,000 which became the biggest format-based production and producer management, attendees per day and had earned the TV show in North America. the business covered the spectrum of title of the UK’s biggest dance festival. music related activities. Paul Bedford was the Finance Director The Team also helped to develop new for 4 years – taking the business from Paul Bedford was the Finance Director revenue streams by licensing the brand investment to a sale to CKX for for 10 years and played a key role in to more than a dozen international £100 million in 2005. multi-million dollar deals such as the territories and producing 15 compilation sale of the interest in Seal. records.
Cream was sold to Live Nation in The Team were instrumental in 2012 for a significant undisclosed making Cream the foremost sum, generating a 9.1x return on dance brand of its time. investment. JaMeS BaRTon, pReSIDenT of eLeCTRonIC MuSIC, LIve naTIon
First Edition EIS invested into the following businesses in April 2017:
MAINSTAGE FESTIVALS HOTPOD YOGA LITTLE DOOR & CO.
Snowboxx is a week-long ski festival and In 2012 Hotpod Yoga developed the The 'Little Door & Co.' venues create holiday that is on track to become the world’s first portable hot yoga studios an authentic customer experience largest ski festival in Europe in 2018. with the goal of demystifying yoga through a series of house parties & and bringing it to the mainstream. Mainstage Festivals are now looking to dinner parties in a fun and intimate The company has now run over launch a new event that replicates the environment, for those after a 60,000 classes and has built a fan- business model of combining a festival homely, neighbourhood style base of 100,000 customers spread with a popular interest. experience. Events such as ‘vintage over 40 locations and 7 countries. games and pizza’ night, cocktail making classes and afternoon tea parties ensure the space is utilised throughout the week and not just during peak weekend times. INFINITY CREATIVE MEDIA
Infinity Creative Media create and co-own high quality magazine TV series based on popular passions and hobbies. The series are designed for global commercial exploitation and can be leveraged further by live show activations and offline revenue streams.
The Wine Show is a TV production run by the Infinity Create Media team and the investment has been used for the second series of the show.
The Football Show is another TV production run by the Infinity Creative Media team. The investment is being used to deliver the first series of the show which will air in April 2018. The Infinity team produced 'The Best FIFA Football Awards' in October 2017 and will look to pair the awards and TV show in the coming years. 15 8
THE EDITION CAPITAL PARTNERS
With over 60 years’ combined experience and with the members of the team having managed and advised on investments exceeding £300m (including over £130m of EIS and VCT investments), we are an investment team that is uniquely placed in today’s media and entertainment space.
Our experience is enhanced by the Whilst the partners collaboratively play varied roles we have held before joining a role in the key decisions for each Edition, ranging from corporate finance investee company, we choose the to event production. We have three partner best suited to sit on the board. chartered accountants in the team and That partner is then on hand to offer have held senior management roles at a practical day to day help, networking number of media and entertainment opportunities and strategy, playing a companies. prominent role in the growth of the company. We identify the best investment opportunities and work closely with our business partners to instil commercial focus, driving returns for Investors and investee companies alike. We understand the ‘blood, sweat and tears’ needed to succeed and support businesses at each stage of their development.
We like to take a hands on approach where possible – you’re as likely to meet us on the gate of a festival site as in a meeting room.
Paul Bedford, Edition Capital
The Team have spent 450 days working at festivals, and have overseen the sale of 4.5 million festival tickets and in excess of 17 million recorded music albums.
16 Paul Bedford Lisa Boden Harry Heartfield Adam Spence Paul has spent over 30 years in Also a chartered accountant, Harry has over 10 years’ Adam is a chartered the media sector, specialising Lisa worked as Investment experience in media and accountant with over 10 years’ in both live events and music. Manager at a leading entertainment and spent experience in the media sector. Starting as a chartered investment house within the the past 5 years working as Prior to joining Edition, accountant, including time live entertainment sector a Senior Investment Manager Adam was an Investment spent at Deloitte, Paul has before joining Edition, where at a boutique investment Manager with responsibility subsequently been Finance she led investments into music manager, focused on for providing financial and Director for a number of festivals, immersive theatre, structuring investment commercial guidance to leading music and live events comedy festivals and live vehicles and conducting companies in the live companies, alongside venues, and focused on the capital fundraises in this entertainment sector. managing a number of the commercial operation of sector. During this time, Alongside this, Adam acted UK’s largest specialist live investee companies. he raised and invested over as Director of Finance for entertainment investment £30m across a wide range Previously, Lisa spent 4 years Waxarch, the company behind funds (totalling £120 million of live entertainment at a global accountancy firm, Field Day Festival, and over of assets under management). companies. Mazars, working in corporate 3 years oversaw a doubling of Previous roles have included finance advisory and assurance In addition to this, Harry revenues and profits, 10 years as Finance Director across a broad range of sectors. worked as Head of Investments culminating in the sale of the of the SPZ Group, 4 years as and Acquisitions for the business for an undisclosed Finance Director for Simon Impresario Festivals Group, sum in 2015. Fuller’s 19 Group, 10 years leading the acquisitions of Previously, Adam spent as Finance Director for the each of their festival brands: 4 years leading a financial Cream Group and most Rewind, Boardmasters, control team for investment recently as Finance Director SW4 and Field Day and products and operating for the Impresario Festivals advising on the commercial companies in the film and Group – the UK’s largest operation of the group. video game sectors. independent operator of music festivals.
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THE EDITION CAPITAL INVESTMENT COMMITTEE
The Edition Capital investment committee is made up of the four Edition partners and three independent non-executive committee members who are responsible for overseeing the Fund’s investment strategy. The non-executive committee members have experience of investment in companies of all sizes and are well respected in their fields of live entertainment, TV and music.
David Heartfield Jonathan Jackson Martin Goldschmidt CEO – Impresario Festivals plc CEO – JBS Media Ltd Chairman – Cooking Vinyl David worked as Executive Producer of Jonathan set up JBS Media in 2001 to Martin Goldschmidt is MD and Founder all UK Productions and International provide consulting services to companies of the Cooking Vinyl Group. Cooking Vice-President of IMG from 1992 to 1999. in the creative industries including Vinyl Records, home to The Prodigy, In 1999, David left IMG to form CSS TV Production and Distribution, Private Marilyn Manson, Billy Bragg, Richard Stellar with other ex-IMG colleagues, Equity Funds, PR and Marketing services Ashcroft and the Cranberries, is one of heading the entertainment division. organisations. Prior to this Jonathan spent Europe’s prime artist-focused independent In 2001 CSS Stellar went public and in six Years at DRG, the UK’s largest labels. Martin founded the UK’s first 2003 David bought out the entertainment Independent International TV Distributor, online distribution company (sold to division, rebranding it The Rival initially as Chief Operating Officer and IODA/Orchard/Sony) a management Organisation. In 2008 he set up Rewind then as Group Managing Director leading company and booking agency (sold to Festival, growing it to be the largest DRG through a successful sale process. Rob Challice/CODA) and an independent 80s music festival in the world, before Jonathan has also held senior financial label and artist services company selling it to Impresario and becoming roles at BBC Worldwide, Channel 4 Essential Music, sold to Sony Red. CEO of the group. and Ingenious Media.
Due Diligence and Investment Process Any business that the Fund will look to invest in will have to satisfy our rigorous due diligence process. First, the investment will be reviewed by the Edition partners, including a review of the business plan, current and historic financials for established businesses, experience and expertise of the key directors and a look at the wider industry and economic picture to establish if the investment case is sound. On the basis of a positive review, the lead Edition partner will draft an investment recommendation, which then goes to the Investment Committee, where it is subjected to further testing and scrutiny. If it passes this last stage of the due diligence process, the proposed investment can be signed off for approval and the investment will be made.
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EIS – KEY TAX RELIEFS
The EIS tax reliefs provided by the UK government include:
Income tax relief CGT deferral relief Inheritance tax relief 30% Income Tax Relief can be claimed Capital Gains Tax arises from the sale of An investment in shares in an on an investment of up to £1 million an investment (for example, a second EIS Qualifying Company will quality for subscribed for shares in EIS Qualifying home or a share portfolio). The entire bill up to 100% relief against Inheritance Tax Companies in any tax year. can be deferred by investing the capital provided the investment is still held at the gain in an EIS Qualifying Company. time of the investor’s death and was held The capital gain would continue to be for at least 2 years. Tax-free capital gains deferred for the lifetime of the EIS Successful investments made under the investment and would be eliminated if the EIS are capable of returning the original shares were still held at the time of death. investment several times over. Provided There are no limits to the amount of the Income Tax Relief you receive has not CGT that may be deferred in this way been withdrawn and the shares have been and there is no minimum period for held for 3+ years, then you won’t have to which the shares must be held to qualify pay any tax on the profit you make when for this relief. you choose to sell the shares.
Loss relief If a capital loss arises on the disposal of shares in EIS Qualifying Companies, EIS investors can obtain tax relief for the net amount invested, and can choose whether to set their loss relief against other capital gains (made now or in the future), or against Income Tax owed for the current or previous tax year. Claiming the net loss against income provides relief at the investor’s marginal Income Tax Relief of up to 45%.
Please note: This summary is based on current law and HMRC practice and may be subject to change. The tax reliefs also depend on the individual circumstances of each Investor and will only be relevant to Investors who pay UK Income Tax and/or wish to defer a liability to UK Capital Gains Tax. In addition, the availability of tax reliefs depends on the EIS portfolio companies maintaining their EIS-qualifying status. We encourage you to take specialist tax advice on the applicability of these tax reliefs to your personal circumstances. The risks associated with EIS investments and First Edition EIS are detailed on pages 20 and 21.
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UNDERSTANDING THE RISKS
First Edition EIS is a high-risk product and we therefore recommend that you seek independent advice first if you are thinking of investing, as it may not be suitable for all Investors. The Edition team are unable to advise on whether you should invest in First Edition EIS.
GENERAL RISKS
Your capital is at risk event that a buyer can be found by the Lack of diversification Investor, the Investor may have to accept a First Edition EIS invests in shares issued The portfolio is concentrated in the media significant discount on their shares in order by unquoted companies that are both and entertainment sectors of the economy to realise their investment early. small and early stage in order for the and is not a diversified portfolio of shares companies to qualify for EIS relief. As in the ordinarily understood financial such, there’s no guarantee that the amount Keyman risk markets meaning of the phrase. As such, you invest will be returned to you. if any economic shocks affect those two The Edition team is dependent upon sectors, the volatility and value of the certain key individuals to provide certain portfolio will be disproportionately This is a long-term investment elements of expertise both to the affected when compared with a more investment decision making process and Each investment in an EIS Qualifying broadly diversified share portfolio. in the ongoing support of the investee Company must be held for a minimum of companies. If one or more of these key 3 years to retain the EIS reliefs available. If individuals were to leave Edition, this New technology you withdraw your investment before this would possibly adversely affect the ability time, you will lose your reliefs. Furthermore, Should the Fund invest into companies of Edition to implement and manage the First Edition EIS has been designed to that operate in the fast moving technology planned investments as effectively as perform over a period of 4 to 6 years and world within media and entertainment, currently expected. so investing for less than this period may their ideas or underlying modus mean you do not benefit in full from the operandum may be superseded by a new growth strategy. New regulation of the media technology that renders their product or industry service of little utility even before it has been able to turn a profit. Your shares may be difficult The UK, or EU or other governments to sell might introduce new laws or regulations during the life of the Fund which might Copyright, trademarks, IP The investments made by First Edition have an adverse effect on the media and EIS are in unquoted companies and as Unbeknownst to either Edition or the entertainment industry as a whole, or such they are likely to be more difficult to entrepreneurs of the investee companies specific companies within the sector sell than shareholdings in AIM-quoted of the Fund, it is possible, notwithstanding more particularly. companies or companies on the main the detailed research and due diligence London Stock Exchange. In the event of a that is undertaken, that claims for breach request to exit early, the Edition team will of marks or IP rights might be asserted cooperate with an Investor wishing to sell against the investee companies and this their shares but Investors should be aware can have an adverse effect on their that there is no market for such shares and financial performance. they are not readily realisable. Even in the
20 RISKS RELATED TO TAXATION
Tax rules can change EIS approval Tax legislation is subject to change, and First Edition EIS invests in companies the specific reliefs offered by the EIS may that the Edition team reasonably believe be withdrawn or altered at any time. qualify for inclusion in an EIS portfolio. Levels, bases of, and relief from taxation However, no guarantee can be given that are subject to change and such change any or all investments will qualify for EIS could be retrospective. The tax reliefs relief or that, once qualified, will continue referred to in this document are those to qualify. If an investee company fails to currently available and their value depends meet the requirements of EIS legislation, on the individual circumstances of EIS tax reliefs that have already been Investors. Potential Investors should claimed may be withdrawn and an consult their own tax advisers before Investor may have to repay rebated tax. investing in First Edition EIS. In order to obtain the tax reliefs, the Investor must make the proper filings with HMRC within the required time periods, and Investors may lose such relief if they do not make such filings. Potential Investors should consult their own tax advisers before investing in First Edition EIS.
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CONFLICTS OF INTEREST
What are the potential conflicts How we will manage these of interest conflicts Edition Capital Investments Limited or We have a robust Conflicts of Interest Edition Capital Limited may receive fees policy and processes in place to ensure that from the companies that First Edition EIS the interests of our customers are looked invests in two ways; after. Our investment committee contains three non-executive members whose job it • Firstly, as part of the general course of is to oversee the policies and procedures, investment such as for work involved in to flag any conflict of interest that they investing in a company or selling the identify and to discuss with the Edition Fund’s investment in a company, as well partners until a satisfactory resolution as for appointing a representative to the has been identified. board of directors. Such fees do not typically exceed 1.5% of the total amount invested per annum. • Secondly, Edition has an advisory arm that works with media and entertainment companies primarily to provide a strong financial backbone or to provide financial services. Edition may work with the companies that First Edition EIS invests into and fees will be charged for these services on an arm’s length basis.
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FEES AND CHARGES
EIS products in the marketplace can have an ever increasing number of fees and costs that make the product unnecessarily complex, so we are transparent in setting out our fees.
iniTiAL invesTmenT fee Performance Incentive Fee Other
Each investee company, upon receiving The Manager will be entitled to 20% Investee companies may require investment from First Edition EIS, will of all Fund proceeds in excess of additional services outside of the strategic pay to the Manager a fee based on each £1.20 per £1 invested. advice provided under the annual Investor. For advised retail clients, the management fee, such as financial, legal fee is 2% of the investment, for or operational support. Either Edition Custodian Fee professional clients it is 5% (with up to Capital Limited or Edition Capital 3% payable as commission to Annual custodian charges as required to Investments Limited may charge introducing financial intermediaries). meet the costs of the custodian will be additional fees to the companies on a charged by the Manager to each investee case-by-case basis at commercial rates company monthly in arrears. The annual where the company asks for this AnnuAL mAnAgemenT fee custodian fee charged by the Manager support. Each investee company will pay an will be equal to 0.15% of the total annual management fee to the Manager initial investment. of 1.5% of the total initial investment for the first 4 years, after which the annual management fee will be halved to 0.75% of the total initial investment.
Any fees, such as an adviser charge, due to an intermediary for providing investment advice to a Retail Investor should be paid directly by the Retail Investor or may be facilitated by the Manager on behalf of a Retail Investor prior to subscription to the Fund. Where an introduction has been made but no advice has been received by the Retail Investor, the introducer may still be entitled to receive commission. The Manager will continue to pay the introducer commission in line with the details noted above. A separate application form is available upon request.
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HOW TO INVEST
The arrangements described in this Your Application Pack (and cheque Information Memorandum relate if appropriate) should be sent to: to the offering by the Manager of a Thompson Taraz Managers Limited discretionary portfolio management 47 Park Lane service. That service will be provided London pursuant to the terms of the Investment W1K 1PR Management Agreement set out in the Application Pack. Please contact 020 3145 1851 if you would like any assistance. If you would like to invest after reading the Information Memorandum and Investment Management Agreement, please speak to your financial adviser. If they are satisfied that this is a suitable investment for you, please review and complete the Application Pack.
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GLOSSARY
The following definitions apply throughout this document unless the context otherwise requires:
AIM FCA Minimum Subscription The alternative investment market The Financial Conduct Authority and £10,000 operated by the London Stock its successors Nominee Exchange plc The Fund TT Nominees Limited Application(s) First Edition EIS Qualifying Company Applications to participate in the Fund HMRC A Company which meets the requirements made in the form of the Application Form HM Revenue and Customs set out in Chapter 4 of Part 5 ITA Application Form Impresario Qualifying Holdings The application form set out in the Impresario Festivals plc, a Qualifying Holdings in Qualifying Companies Application Pack Company Qualifying Trade Application Pack Information Memorandum A qualifying trade as defined by section The First Edition EIS application pack This information memorandum for the Fund 189 of ITA containing the Investment Management Agreement, Investor Suitability Assessment Investment Management Agreement Relevant Period and Application Form The investment management agreement The period that an investment must be set out in the Application Pack held to retain the EIS reliefs available CGT Capital Gains Tax Investor Retail Investor An actual or potential investor in the Any Investor in the Fund who is not Closing Date Fund, as the context dictates categorised as a professional investor in The Fund has up to four closings per accordance with the FCA Conduct of year subject to capacity and Manager’s Income Tax Relief Business Sourcebook (COBS) discretion, typically in January, March Relief in respect of Income Tax on (just prior to the end of the tax year), subscriptions to the Fund pursuant to Subscriptions July, October the ITA In respect of each Investor the aggregate amount paid by such Investor to the ITA Companies Act Custodian pursuant to the Subscription The Companies Act 2006 Income Tax Act 2007 indicated in the Application Form Custodian Loss Relief Investor Suitability Assessment Thompson Taraz Managers Limited Relief in respect of Income Tax for The investor suitability assessment set out allowable losses pursuant to section 131 of in the Application Pack Edition or Edition Capital the ITA Edition Capital Investments Limited Team Manager Members of Edition Capital personnel, EIS tax reliefs The manager of the First Edition EIS Income Tax Relief and/or CGT Deferral either at Edition or in previous being Edition Capital Investments Relief and/or CGT Exemption employment, as the context dictates Limited Enterprise Investment Scheme or EIS VCT Maximum Subscription The Enterprise Investment Scheme, Venture capital trusts as defined by There is no restriction on the maximum comprised in ITA sections 156-257, and section 259 of the ITA investment by an individual, however the in TCGA sections 150A-150C and maximum amount on which an Investor Schedule 5B can obtain EIS Income Tax Relief in any tax year is limited to £1,000,000
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APPENdIX 1 – TERMS & CONdITIONS
fund sTruCTure invesTmenT AmounTs And ALLoCATions First Edition EIS is an evergreen discretionary portfolio management The minimum individual investment in the Fund is £10,000. There service open to Investors for subscription throughout the year. is no restriction on the maximum investment by an individual, Funds received from Investors will be held by a custodian on the however, the maximum amount on which an Investor can obtain Investor’s behalf until such time as those funds are used to subscribe EIS Income Tax Relief in any tax year is limited to £1,000,000. for shares in Qualifying Companies. Each spouse has his or her own limit of £1,000,000 and they are not aggregated. This limit applies for all EIS investments made within The Fund has up to four closings per year, subject to the discretion a given tax year. There is, however, no limit to the capital gains of the Manager, which typically will be in January, March (prior which may be deferred by means of an investment in the Fund, to the end of the tax year), July and October. or in the value of assets acquired which qualify for business property relief. invesTmenT proCess And AdminisTrATion The minimum subscription for the Fund to proceed is £1 million as Client Accounts at the first Closing Date subject to the discretion of the Manager. Investors’ funds will be held on client account with the Custodian prior to investment in Qualifying Companies, and following the Funds which have been received into the Fund by the Closing Dates realisation of investments in Qualifying Companies prior to the will then be deemed as ready to invest. All Investors who have sent distribution of proceeds. The interest arising thereon will be funds to the Custodian ready for that Closing Date will be treated as retained by the Custodian as a contribution towards the running a single investor group, and all Investors in that group will gain of the client account. exposure to the same portfolio companies in the same proportion. Shares in Qualifying Companies will be issued in the name of a The process of allotting shares in Qualifying Companies will take nominee company managed by the Custodian (and, for EIS place at various times throughout the year. When a suitable purposes, the shares will be treated as if they were subscribed for by investment has been found, funds will be drawn on a ‘first come, Investors, and, on the instruction of the Manager, issued dividends first served’ basis, with priority given to investor groups who have received by the Nominee from Qualifying Companies will be been in the Fund the longest. This helps ensure that Investors’ forwarded directly to Investors). Shares in Qualifying Companies funds are placed into portfolio companies with minimum delay. within your account will be beneficially owned by you at all times Variations to this standard procedure will only occur to avoid but the Nominee will be the legal owner of such Qualifying issuing fractions of shares, or if an Investor is subject to a professional Company shares. rule preventing him or her from making an investment in a All documents of title will be held by the Custodian. particular Qualifying Company. The subscriptions made by all Investors will be aggregated into Should an Investor die before his or her Subscription is fully investor groups at each Closing Date for the purpose of making invested, all uninvested sums subscribed by him or her will be investments through the Fund, and investment will be made by the repaid by the Manager upon receipt of notice from the Investor’s Manager into Qualifying Companies on behalf of each investor personal representatives. Consideration will be given to liquidating group. The Manager will be responsible for discretionary decisions the deceased Investor’s holdings in Qualifying Holdings, subject in relation to the selection of, and (subject to limitations) the exercise to the Manager’s absolute discretion. of rights in relation to, investments made, but the Investor retains beneficial ownership of the underlying shares. An Investor cannot doCumenTATion And CommuniCATion require the Manager to dispose of his or her interest in a Qualifying The Manager will send each Investor half-yearly reports made up to Company prior to disposal of the Fund’s overall position in that 31 March and 30 September in each year, containing details of all company. The Manager may, at its absolute discretion, however, have investments made by the Fund, together with a commentary on the regard to any requests made to it to liquidate any individual progress of each of these investments. shareholdings in the Fund (but such termination may result in a loss of EIS relief and crystallisation of any deferred gain).
26 Borrowing Policy 3.3 Seek to ensure, on the instruction of the Manager, that any dividends shall be paid direct to the Investor. In the event that It is not intended that the Qualifying Companies will borrow, but any money in relation to the Investor’s shares is received by the the Manager retains the right to permit borrowings under certain Custodian, it shall, on the instruction of the Manager, pay circumstances. such money or monies’ worth to the Manager to make retentions for payment of tax and/or fees and expenses payable The Custodian to the Manager; and By completing the Application Form contained in the Application 3.4 Be entitled to carry out such other acts and deeds which are in Pack, prospective Investors will be deemed to have irrevocably agreed its reasonable opinion necessary or reasonably incidental to its to the Custodian being appointed to exercise the following powers: appointment as a custodian. 1.0 Function 4.0 Appointment of a new custodian The function of the Custodian will be to exercise the powers and The Manager may at any time accept the resignation of, or duties which are conferred on it by the terms of this document remove, the Custodian and appoint a new custodian in its (including this paragraph). place. 2.0 Restrictions on transfer 5.0 Investment 2.1. The Custodian shall not be obliged to recognise the title of The Custodian may place any monies for the time being held any person in whom an interest in shares in any Qualifying by it on deposit with any bank or building society or in Company (‘Shares’) shall have become vested unless a properly investment companies with variable capital investing in cash/ validated notice or evidence of that person’s entitlement shall or cash equivalents or in any Government T-bills or gilts. have been produced to the Custodian. 6.0 Indemnity 2.2. The Custodian shall not be obliged to recognise any transfer By completing the Application Form, each Investor indemnifies or assignment of any interest in the Shares to any person unless the Custodian (in proportion to their respective interests in such person shall have first agreed to enter into a transfer or the Fund shares at the date of the claim to indemnity), against assignment in a form approved by the Manager which shall any claim made against it arising out of the fulfilment of its incorporate an undertaking that such person will be bound by duties as Custodian and in respect of any costs, charges or the terms of this paragraph. expenses incurred by it in contesting the same, save only where it is established that the subject matter of the claim was the 3.0 Custodian’s obligations and powers result of a conscious and deliberate breach by the Custodian of The Custodian will; its obligations hereunder. 3.1 Be authorised to buy, sell, retain, convert, exchange or otherwise deal in Investor’s shares as and when the Manager thinks fit; 3.2 Be authorised to, on the instruction of the Manager, exercise voting, pre-emption or similar rights in relation to the Investor’s shares in accordance with the articles of association of the Qualifying Companies, or any agreement entered into in connection with the subscription for the shares, and to deal with any rights relating to any share issue made or proposed by a Qualifying Company. In this regard, the Nominee’s duties shall be solely of a mechanical, safeguarding and administrative nature, acting in accordance with all reasonable and lawful instructions of the Manager with your consent and concurrence, or on instructions received from you and where authorised by the Manager;
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APPENDIX 1 – TERMS & CONDITIONS
GENERAL The Custodian is obliged to hold investment monies until satisfactory completion of checks under the Money Laundering Disclaimer Regulations by the Manager. The Manager has not authorised any person to make representations The Investor will not be entitled to interest on monies refunded or give information to any person on its behalf with respect to this following cancellation. Information Memorandum or in connection with any material or The right to cancel under the FCA rules does not give the Investor information referred to in it. Investors should, therefore, not rely on the right to cancel or terminate or reverse any particular investment any such representation or information made or given to them by transaction executed for the account of the Investor before any such person as having been made or given on behalf of the cancellation takes effect. Manager. The right is reserved to treat as valid and binding any application All statements of opinion contained in this Information not complying fully with the terms and conditions set out in this Memorandum, all views expressed and all statements relating to Information Memorandum. In particular, but without limitation, expectations regarding future events represent the Manager’s own the Manager may accept applications made otherwise than by assessment based on information available to it as at the date of issue completion of an Application Form where the Investor has agreed of this Information Memorandum. in some other manner acceptable to the Manager to apply in Delivery of this Information Memorandum shall not give rise to accordance with these terms and conditions and the Investment any implication that there has been no change in the facts set out in Management Agreement. this Information Memorandum since the date hereof or that the information contained herein is correct as of any time subsequent Withdrawals to such date. Partial withdrawals from the Fund are not permitted. However, No representation is made or warranty given as to the accuracy, Investors may terminate their Investment Management Agreement completeness, achievability, or reasonableness of any views, in respect of their investment and make an early withdrawal of all statements or illustrations. These views, statements and illustrations of their shareholdings in Qualifying Companies into their own are based on the Manager’s judgement and analysis and which are names. Such a withdrawal would not affect an Investor’s EIS tax subject to uncertainties and contingencies; actual results could reliefs. However, if a disposal of shares occurs before the end of the differ materially from those set forth in such views, statements and Relevant Period, Investors will have to repay the initial Income Tax illustrations. Potential applicants are also referred to the Relief (if it has been claimed). The Manager will have a lien on all Understanding the Risks on pages 20 and 21. assets being withdrawn by an Investor and shall be entitled to dispose of some or all of the same and apply the proceeds in Right of cancellation discharging an Investor’s liability to the Manager in respect of damages or accrued but unpaid fees. The balance of any sale The Investor may exercise a right to cancel the Investment proceeds and control of any remaining investments will then be Management Agreement by notice to the Manager within 14 days passed to the Investor. Investors may also withdraw the uninvested of signature by the Investor of the Application Form. This should and uncommitted portion of their Subscription held as cash by the be done by a letter sent to the Manager’s registered office as set out Custodian from their account prior to termination of their account in this document. by giving written notice to the Manager. Upon receipt of a On exercise of the Investor’s right to cancel, the Manager shall withdrawal notice the Manager will as promptly as possible to refund any monies paid to the Fund by the Investor, less any charges arrange for the transfer to the Investor the amount of cash they wish the Manager has already incurred for any services undertaken in to withdraw. Investors should note the full terms and conditions accordance with the Investment Management Agreement (but not applicable to such withdrawals in clause 14.2 of the Investment any initial fees paid to the Manager). Management Agreement.
28 Life of The fund
In order to retain the EIS tax reliefs, Investors must hold the shares in Qualifying Holdings acquired by the Manager for the Relevant Period. It is intended that the Manager will consider options for realising the investments in Qualifying Companies in the interests of the Investors after the expiry of the Relevant Period. Having regard to the Relevant Period and the feasibility of obtaining a realisation thereafter, the Fund has a target life of four to six years but there can be no guarantee that all investments will be realised within this period.
It would be prudent to view an investment in the Fund as medium to long term. An investment should only be made in the Fund on the basis that it will be left intact for at least four to six years. Following realisation of each investment in Qualifying Companies, the realisation proceeds will be paid to Investors. Consequently, it is possible that Investors will receive distributions from the Fund over a period of time.
The role of RAM Capital
RAM Capital is the promoter and marketing adviser to the Fund. RAM Capital has a strong record in promoting and marketing EIS (and VCT) products having raised over £1 billion since incorporation in 2007. RAM Capital is a member of the EIS Association and is authorised and regulated by the FCA.
Requests for further copies of this Memorandum can be made by contacting RAM Capital by telephone on 020 3006 7530 or by sending an e-mail to [email protected]
No investment or tax advice can be given by RAM Capital.
This Information Memorandum is dated 27th October 2017.
29 notes
30 31 For further assistance please contact
RAM Capital Partners LLP 4 Staple Inn, London WC1V 7QH T: +44 (0)20 3006 7530 E: [email protected] www.ramcapital.co.uk