13 May 2020 07:00
Edge Performance VCT plc ("EDGE" or the "Company")
Corporate Update
At a meeting of the Company's board of directors ("Board") held on Monday 11 May 2020, the Board approved the following corporate update.
The Board is proposing to call a general meeting in order to discuss its plans with the Company's shareholders ("Shareholders"). In order to prevent a duplication of costs and given the proximity of the Company's 2020 annual general meeting ("AGM"), the Board has decided to bring forward the AGM, which will be immediately preceded by the proposed general meeting, to July.
The Board also announces that, following a tender process for the position of the Company's investment manager, it has appointed, subject to Shareholder approval, Edge Investments Limited ("EIL") under a substantially revised agreement that includes, inter alia: (i) with effect from 1 March 2021, a reduction of 'I' Share Class annual management fees from 1.75% of NAV to nil and (ii) with effect from the date of signing the revised contract, a removal of the cost cap, the exclusion of any performance incentive fee relating to the I shares and a change from a rolling 12 month notice period to a minimum 12 month notice period ending on the Company's year-end, the end of February each year. EIL is a related party of the Company under the Listing Rules and the revised investment management agreement requires the approval of Shareholders. A new Administration Agreement will also be entered into, subject to Shareholder approval, with Lupfaw 318 Limited trading as Fund Administration Services, a company of which David Glick is both a director and shareholder. Under this agreement the annual administration fees of £324,429 payable to EIL in 2020/21 will be reduced to £50,000 for year commencing 1 March 2021 and a rolling 12 month notice period will be changed to a minimum 12 month notice period ending on the Company's year-end.
The revised contracts are aligned with the Board's intention of seeking an early determination of the 'I' Share Class and a reduction in the ongoing administrative burden of the business whilst retaining the services of an investment manager with enormous sector experience and the ability to co-invest the VCT's funds alongside the Edge Creative Enterprise Fund.
In this context, the Board also now announces that, following the progress made by Coolabi (the Company's largest investment) over the past few years, Coolabi has appointed an adviser to consider the strategic opportunities open to it, including an outright sale of the business. As a consequence, a number of expressions of interest in acquiring Coolabi have been received. This process is ongoing but has been delayed by the COVID crisis. Coolabi has been doing well despite the crisis. Its target audience is at home so reading, watching and online consumption are all up and its nine months YTD trading results position it for a full year profit ahead of last year's. EIL is heavily engaged in the process and this was a significant factor in the Board's decision to re-appoint Edge Investments Limited subject to shareholder approval.
Festicket, another of the Company's significant investments, has been hit by the COVID crisis. The first two months of the current year showed continued growth, but the lockdowns around the world have heavily reduced its revenues. Nevertheless, Festicket is fundamentally a very good business and is finalising a new business plan which suggests that it may require additional funding in 2020. EIL has advised the Board that it is working with Festicket's management and other shareholders to finalise the amount of the funding requirement and an appropriate investment structure so that the Company could support the business if required and subject to VCT rule compliance.
The video calls to be hosted by EIL on Wednesday 13 May 2020 will include reports on Coolabi and Festicket but will not include discussion of the Board's plans and the recently concluded tender process. Shareholders will be asked to approve the appointments of Edge Investments Limited and Lupfaw 318 Limited trading as Fund Administration Services at the forthcoming general meeting before which the Board will circulate its plans together with the Company's 2020 Annual Report & Financial Statements.
The Board's earlier intention was to complete its strategic and cost review and hold a general meeting prior to the Company's year-end of 29 February 2020. The Board apologises to Shareholders for the delay in reaching this stage. This was caused by the volume of work involved in considering the significant number of options that the Board had open to it prior to finalising its strategy, followed by the inevitable delays caused by the COVID-19 lockdown. The Board felt very strongly, however, that Shareholders' interests were best served by carefully considering all options open to it.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement, this inside information is now considered to be in the public domain.
13 May 2020
For further information, please contact:
Edge Investments Limited, Investment Manager: 020 7317 1300
Robin Smeaton, The City Partnership (UK) Limited, Company Secretary: robin.smeaton@city.uk.com