Income VCT Prospectus - The Tax Shelter Report
Income VCT Prospectus - The Tax Shelter Report
Income VCT Prospectus - The Tax Shelter Report
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<strong>Tax</strong> <strong>Shelter</strong> <strong>Report</strong><br />
Venture Capital Trusts Risk Warnings<br />
Allenbridge Group plc<br />
17 Hill Street<br />
Mayfair<br />
London, W1J 5NZ<br />
TEL 020 7409 1111<br />
FAX 020 7629 7026<br />
www.tax-shelter-report.co.uk<br />
editor@tax-shelter-report.co.uk<br />
Dear Investor,<br />
It is important you read, understand and acknowledge these notes. If you choose to<br />
make any <strong>VCT</strong> investment through Allenbridge please return a signed copy of the Risk<br />
Warning Notice with your application form and any money laundering documents.<br />
Any investment in a Venture Capital Trust (<strong>VCT</strong>) should be viewed as a high risk<br />
and long-term commitment (i.e. at least over five years, but plan for a seven to<br />
ten year timeframe). Due to the nature of the underlying assets, <strong>VCT</strong>s are<br />
highly illiquid. As such investors must be aware that they may have difficulty,<br />
or be unable to realise their shares at levels close to that that which reflect the<br />
value of the underlying assets. <strong>The</strong> tax incentives available to investors exist in order<br />
to attract investment into an asset class that warrants high risk categorisation.<br />
A brief summary detailing the primary risks of investing in <strong>VCT</strong>s:<br />
• <strong>VCT</strong>s invest in small UK companies. <strong>The</strong> failure rate of these is typically much<br />
higher than that of larger companies.<br />
• All <strong>VCT</strong>s are inherently illiquid. <strong>The</strong> underlying investments are primarily in<br />
small companies, either unquoted or listed on AIM or OFEX. <strong>The</strong>se investments<br />
may be extremely difficult for fund managers to realise at fair value, and<br />
therefore shareholders may not be able to dispose of shares at a price that<br />
reflects the value of the underlying assets. <strong>The</strong>re is unlikely to be an active<br />
market in the shares. Any buy-back policies in place are always subject to<br />
liquidity. <strong>The</strong> future realisation of shares at, or close to net asset value can<br />
never be guaranteed by a <strong>VCT</strong> manager.<br />
• <strong>VCT</strong>s are quoted on the stock exchange and, like investment trusts, usually trade<br />
at a discount to net asset value, which reflects the likely realisable value of the<br />
assets at any given time relative to the net value of the assets.<br />
• <strong>The</strong>re is currently no effective secondary market for <strong>VCT</strong> shares, primarily<br />
because the initial income tax relief is only available to those subscribing for<br />
newly issued shares. This compounds the difficulties shareholders may encounter<br />
when attempting to sell <strong>VCT</strong> shares.<br />
• Shareholders must retain <strong>VCT</strong> investments for at least three years. If shares<br />
are sold within this period, the initial income tax relief will be required to be<br />
repaid. All tax reliefs are subject to change.<br />
• <strong>VCT</strong> managers have three years from the issue of shares to invest 70% of the<br />
fund's assets in qualifying companies. If this is not achieved the fund's status as a<br />
<strong>VCT</strong> is risked meaning investors could lose their tax relief. <strong>The</strong>re are also<br />
Registered Office: Devonshire House, 60 Goswell Road, London, EC1N 7AD. Registered in England Number 1919345<br />
Regulated and authorised by the Financial Services Authority
additional requirements that <strong>VCT</strong>s must meet – if these are not met HMRC may<br />
withdraw the fund's status as a <strong>VCT</strong> and associated tax reliefs.<br />
• <strong>VCT</strong>s should be viewed as long-term investments. <strong>The</strong>y are designed to give<br />
shareholders their capital gain through a tax free dividend stream. Although<br />
investors may be free to dispose of their holding after three years (in order to<br />
retain their initial income tax relief) we recommend investors should expect to<br />
retain their shares for no less than a period of seven to ten years.<br />
• Investment strategies employed by <strong>VCT</strong> managers differ enormously. To<br />
understand the likely nature of the underlying investments, timeframe and<br />
return expectations, we strongly recommend individuals considering a <strong>VCT</strong><br />
investment to contact us for independent advice.<br />
• Always read the 'Risk Warning' notices included in <strong>VCT</strong> Securities Notes.<br />
• Beware of investing in <strong>VCT</strong>s that do not have critical mass. We believe that a <strong>VCT</strong><br />
usually requires assets of approximately £10 million in order to achieve a spread<br />
of investments and thus lower company specific risk within the portfolio. Smaller<br />
<strong>VCT</strong>s may be less diverse (increasing risk) and prove more costly to manage.<br />
• <strong>VCT</strong>s are complex investment products and are only suitable for<br />
sophisticated investors.<br />
• Past <strong>VCT</strong> performance is not and never should be used as a guide to<br />
future <strong>VCT</strong> performance. <strong>The</strong> value of your investment may go down as<br />
well as up.<br />
<strong>The</strong> Allenbridge Group plc is authorised and regulated by the Financial Services<br />
Authority. <strong>The</strong> Allenbridge Website is intended for use by UK investors only and the<br />
investments referred are available only in the UK.<br />
Yours faithfully<br />
Anthony Yadgaroff<br />
Group Managing Director<br />
Registered Office: Devonshire House, 60 Goswell Road, London, EC1N 7AD. Registered in England Number 1919345<br />
Regulated and authorised by the Financial Services Authority
<strong>Tax</strong> <strong>Shelter</strong> <strong>Report</strong><br />
Risk Warning Notice<br />
Allenbridge Group plc<br />
17 Hill Street<br />
Mayfair<br />
London, W1J 5NZ<br />
TEL 020 7409 1111<br />
FAX 020 7629 7026<br />
www.tax-shelter-report.co.uk<br />
editor@tax-shelter-report.co.uk<br />
INVESTMENTS WHICH ARE NOT READILY REALISABLE<br />
This warning notice draws attention to the risks associated with<br />
investments which are not readily realisable and which have been listed in<br />
the Venture Capital Trusts Risk Warnings as issued by us.<br />
• You may have difficulty in selling these investments at a reasonable<br />
price.<br />
• In some circumstances it may be difficult to sell them at any price.<br />
• Accordingly you should carefully consider whether such<br />
investments are suitable for you in the light of your<br />
personal circumstances and the financial resources available<br />
to you.<br />
I have received, read, understood and acknowledge the Venture Capital<br />
Trusts Risk Warnings and the risk warning notice set out above.<br />
Name<br />
Date<br />
Signature<br />
Registered Office: Devonshire House, 60 Goswell Road, London, EC1N 7AD. Registered in England Number 1919345<br />
Regulated and authorised by the Financial Services Authority
Keydata <strong>Income</strong> <strong>VCT</strong><br />
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.<br />
If you are in any doubt about the contents of this document you should consult your bank manager, solicitor,<br />
accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act<br />
2000 who specialises in advising upon investment in shares and other securities without delay.<br />
This document, which comprises a prospectus relating to Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc (“Keydata <strong>Income</strong> <strong>VCT</strong> 1”)<br />
and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc (“Keydata <strong>Income</strong> <strong>VCT</strong> 2”), has been prepared in accordance with the <strong>Prospectus</strong><br />
Rules made by the Financial Services Authority pursuant to Part VI of the Financial Services and Markets Act 2000.<br />
<strong>The</strong> Directors of the Companies whose names appear on page 19 of this <strong>Prospectus</strong>, together with the<br />
Companies, accept responsibility for the information contained herein. To the best of the knowledge of the<br />
Directors and the Companies (who have taken all reasonable care to ensure that such is the case) the information<br />
contained in this document is in accordance with the facts and does not omit anything likely to affect the import of<br />
such information.<br />
<strong>The</strong> existing Shares are traded on the London Stock Exchange and listed on the Official List of the UKLA .<br />
Application has been made to the UKLA for all of the Shares to be issued as described herein to be admitted to<br />
the Official List. Application has also been made to the London Stock Exchange for such Shares to be traded on<br />
the main market. It is expected that such admission will become effective and that dealings in such Shares will<br />
commence within 5 business days of allotment of such Shares. Applications for the Shares may be made at any<br />
time after the date of publication of this <strong>Prospectus</strong> prior to 5 April 2006. Your attention is drawn to the risk factors<br />
set out on pages 7 to 8 of this <strong>Prospectus</strong>.<br />
Howard Kennedy is acting as sponsor in connection with the Offers, and is not advising any other person or<br />
treating any other person as a customer or client in relation to the Offers, nor will it be responsible to any such<br />
person for providing the protections afforded to their respective customers or client or for providing advice in<br />
connection with the Offers.<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc<br />
(Incorporated in England and Wales under the Companies Act 1985 with registered number 5366736)<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc<br />
(Incorporated in England and Wales under the Companies Act 1985 with registered number 5366735)<br />
Offers for Subscription in respect of the 2005/2006 tax year of up to, in aggregate,<br />
20,000,000 ‘Ordinary’ Shares of 1p each totalling 40,000,000 for both Companies at an<br />
issue price of 100p each, payable in full in cash on application<br />
Sponsor<br />
Howard Kennedy<br />
Promoter<br />
Keydata Investment Services Limited<br />
Share capital of each Company following the issue of Ordinary Shares under the Offers and assuming full<br />
subscription<br />
Authorised<br />
Issued and maximum number to be issued, fully paid<br />
Nominal Value Number Nominal Value Number<br />
1p 30,000,000 Ordinary Ordinary Shares Ordinary Shares<br />
Shares of 1p each 1p 24,513,626<br />
<strong>The</strong> Offers will be open from 15 December 2005 until the earlier of 11 a.m. on 5 April 2006 and the date on which<br />
the maximum subscriptions are reached. <strong>The</strong> Directors may extend the closing date of the Offers at their<br />
discretion. Dealings will commence within 5 business days of the allotment date of the relevant Shares. <strong>The</strong> Offers<br />
are not underwritten. This is no minimum Offer size as the Companies are already capitalised pursuant to the<br />
Original Offers. In no circumstances will the Offer be revoked after dealings in the Shares to be issued under the<br />
Offer have commenced.<br />
<strong>The</strong> terms and conditions of application are set out in Part VIII of this document followed by an Application Form<br />
for use in connection with the Offers. <strong>The</strong> minimum subscription per Investor is £3,000.<br />
Completed Application Forms in respect of the Offers should be sent by post or delivered by hand to Keydata<br />
Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk, Reading RG1 7QF.<br />
3
Keydata <strong>Income</strong> <strong>VCT</strong><br />
CONTENTS<br />
Page<br />
Summary 5<br />
Risk factors 7<br />
Details of the Offers Timetable and Statistics 9<br />
Letter from the Chairman of Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc 10<br />
Part I 11<br />
Introduction 11<br />
Introduction to the Offers 11<br />
Principal Features of the Offers 11<br />
– <strong>The</strong> Companies’ Investment Strategy 11<br />
– Investment Pipeline 12<br />
– Typical contract terms and insurances 12<br />
– Experienced Investment Manager 12<br />
– Substantial tax reliefs for Investors 13<br />
Investment Policy 13<br />
– <strong>The</strong> Investment Management Team 14<br />
– <strong>The</strong> Board 15<br />
– Corporate Governance 15<br />
– Financial Information 15<br />
<strong>The</strong> Offers 16<br />
– Details of the Offers 16<br />
– <strong>The</strong> Promoter 16<br />
– Allotment, Dealings and Settlement 16<br />
Management, Administration and Costs 16<br />
– Investment Manager 16<br />
– Dividend Policy 17<br />
– Buy Back Policy 17<br />
– <strong>Report</strong>ing to Shareholders 17<br />
– <strong>VCT</strong> Company Status Monitoring and Inland Revenue Approval 17<br />
– Life of the Companies 17<br />
– Cancellation of the Companies’ Share Premium Account 18<br />
– Launch Costs 18<br />
– Introducers’ Commissions 18<br />
– Annual Fees and Expenses 18<br />
Part II 19<br />
Directors and Advisers 19<br />
Part III 20<br />
Definitions 20<br />
Part IV 22<br />
<strong>Tax</strong> Position of the Companies 22<br />
<strong>Tax</strong> Considerations for Shareholders 22<br />
Part V 26<br />
Additional Information 26<br />
Part VI 40<br />
Financial Information - Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc 40<br />
Part VII 48<br />
Financial Information - Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc 48<br />
Part VIII 56<br />
Terms and Conditions of Application 56<br />
Application Procedure 59<br />
Application Form 61<br />
4
Keydata <strong>Income</strong> <strong>VCT</strong><br />
SUMMARY<br />
<strong>The</strong> Opportunity<br />
• <strong>The</strong> Companies have raised some £9 million (£8.55 million net of costs) between February and August this year<br />
and are now seeking to raise a further £20 million for each Company (£19 million net of costs) by way of further<br />
share offers at £1 per share.<br />
• Funds raised have provided a solid foundation for the Companies and have enabled the Investment Manager<br />
to build a pipeline of prospective investment opportunities.<br />
• Most investors will be able to claim 40 per cent income tax relief on shares purchased on or before 5 April 2006.<br />
• <strong>The</strong> UK Government has set a target of producing over 15% of the UK’s electricity supply requirements from<br />
renewable energy by 2015 and the Scottish Executive has endorsed a target for Scotland of 20% by 2010.<br />
(Source: Planning Policy Statement 22: Renewable Energy).<br />
• Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 were established in order to provide Investors with an<br />
opportunity to invest, with significant tax benefits, in wind, biomass and waste-to-energy power generation (in<br />
this prospectus called “renewable” energy).<br />
• Keydata <strong>Income</strong> <strong>VCT</strong> 1 is managed by Green Power 1 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 is managed by Green Power<br />
2, each supported by a team of individuals with considerable experience in the management of renewable<br />
power generation projects in the UK and Europe and who have an established track record in delivering<br />
investments with a quality, long-term income flow.<br />
• <strong>The</strong> Offers will open on 15 December 2005 and close on 5 April 2006, unless fully subscribed before then.<br />
<strong>The</strong> Investment Strategy of each Company is:<br />
• to maximise tax free dividend distributions to shareholders whilst minimising risk;<br />
• to invest in companies with strong and stable income flow which should support greater share liquidity than for<br />
other <strong>VCT</strong>s - it is the intention to secure a proper secondary market in the Companies’ shares based on the<br />
intended long term nature of the income stream and the tax free status of secondary investors;<br />
• to invest predominantly in fixed interest debt securities of investee companies;<br />
• to invest primarily in a portfolio of small companies directly involved in the operation of small onshore wind<br />
projects or in other renewable power generation projects, thereby diversifying the investment risks;<br />
• to focus only on projects which are either entering into construction or are already in operation to reduce the<br />
risk to Investors of exposure to projects at the planning and development stage; and<br />
• as soon as practical after the closing of the Offers, to have committed all available funds to renewable power<br />
investments. <strong>The</strong> current year should see a number of renewable energy products seeking investments and<br />
several of these should meet the Companies’ investment criteria.<br />
This low risk approach should provide a regular income to fund the target dividend once Keydata <strong>Income</strong> <strong>VCT</strong> 1<br />
and Keydata <strong>Income</strong> <strong>VCT</strong> 2 are fully invested and all their portfolio companies are operating at projected capacity,<br />
the Companies’ objective will be to pay an annual tax free dividend of 5 pence per Share per Company (equivalent<br />
to 13.88 pence per Share on the net investment for a higher rate taxpayer). However, no profit forecast is to be<br />
inferred or implied from this statement. <strong>The</strong> above investment strategy will only be varied to any material extent<br />
with the approval of Shareholders.<br />
Experienced Investment Manager<br />
• Green Power 1 and Green Power 2 (each an “Investment Manager”) are companies supported by a team of<br />
individuals (the “Investment Management Team”) with considerable experience in the management of<br />
renewable power generation projects in the UK and Europe.<br />
• <strong>The</strong> Investment Management Team is led by William Heller who is also Managing Director of Falck Renewables<br />
Limited which currently manages renewable energy projects with capital investment requirements in excess of<br />
£200 million. This data is unaudited. (Source: Falck Renewables Limited).<br />
• <strong>The</strong> Investment Management Team together has more than 100 years of experience investing in and managing<br />
renewable power and conventional power generation projects and currently manages in excess of £260 million<br />
of renewable power project investments and has been responsible for the development of over £1 billion of<br />
power projects over the past 10 years. This data is unaudited.(Source: Investment Management Team).<br />
5
Keydata <strong>Income</strong> <strong>VCT</strong><br />
<strong>The</strong> Boards<br />
• <strong>The</strong> Companies’ Boards are entirely independent of the Investment Managers. <strong>The</strong> Board members are<br />
Stephen Oxenbridge (as chairman), David Hurst-Brown and Stewart Ford.<br />
• <strong>The</strong> Boards, members of the Investment Management Team, the advisers and their families have invested a<br />
total of £184,000 under the Original Offers.<br />
Subscriptions under the Offers will be allocated equally between the Companies.<br />
Substantial <strong>Tax</strong> Reliefs<br />
• Investors will receive the following tax benefits:<br />
- income tax relief of 40 per cent. on the amount invested (irrespective of the rate of income tax that an Investor<br />
pays), up to a maximum investment of £200,000 per tax year, subject only to an Investor’s income tax liability<br />
in the year;<br />
- tax-free dividends; and<br />
- Capital Gains <strong>Tax</strong> exemption on sale.<br />
• For an Investor able to use the full tax credit, the targeted annual dividend yield of 5 pence per Share is<br />
equivalent to an annual tax free dividend of 8.33 per cent on their net investments. An 8.33 per cent tax free<br />
dividend is equivalent to a 10.4 per cent taxable income for a basic rate tax payer or a 13.8 per cent taxable<br />
income for a higher rate taxpayer, based on current income tax bands.<br />
Key Risks<br />
<strong>The</strong> attention of potential investors is drawn to the following factors associated with investing in companies such<br />
as the Companies: the past performance of the Investment Managers is no indication of future performance and<br />
there can be no guarantee that the Companies will meet their objectives or that suitable investment opportunities<br />
will be identified; investments in unquoted companies may not be readily realisable; whilst it is the intention of the<br />
directors that the Companies will be managed so as to qualify as <strong>VCT</strong>s there can be no guarantee that they will<br />
maintain such status - a failure to qualify could result in the Companies losing the tax reliefs previously obtained,<br />
resulting in adverse tax consequences for investors, including a requirement to repay the 40 per cent. income tax<br />
relief; levels and bases of, and relief from, taxation are subject to change and such changes could be retrospective;<br />
Qualifying companies have gross assets of not more than £15 million prior to investment and such companies<br />
generally have a higher risk profile than larger “blue chip” companies. Investors are advised to seek independent<br />
advice. Investors must retain their shares for three years or the 40 per cent income tax relief on the initial<br />
investment must be repaid. <strong>VCT</strong>s invest in small companies which may not produce the anticipated returns and<br />
investors could get back less than they invested. An investment in a <strong>VCT</strong> is a long term investment.<br />
Notice<br />
This Summary should be read as an introduction to the <strong>Prospectus</strong>. Any decisions to invest in shares in the<br />
Companies should be based on consideration of the <strong>Prospectus</strong> as a whole. Where a claim by an investor relating<br />
to the information contained in a prospectus is brought before a court, the investor might, under national legislation<br />
of the EEA States, have to bear the costs of translating the prospectus before the legal proceedings are initiated.<br />
Civil liability attaches to those persons who are responsible for this Summary, including any translation of the<br />
same, but only if the Summary is misleading, inaccurate or inconsistent when read together with other parts of the<br />
<strong>Prospectus</strong>.<br />
6
Keydata <strong>Income</strong> <strong>VCT</strong><br />
RISK FACTORS<br />
Prospective Investors should be aware that the value of Shares can fluctuate and that they may not get back the<br />
full amount they invest. In addition, there is no certainty that the market price of Shares will fully reflect the underlying<br />
net asset value or that Investors will be able to realise their shareholdings or that any dividends will be paid.<br />
<strong>The</strong> attention of prospective Investors is also drawn to the following risk factors associated with investing in<br />
companies such as Keydata <strong>Income</strong> <strong>VCT</strong> 1 or Keydata <strong>Income</strong> <strong>VCT</strong> 2 and to some of the risks associated with<br />
the renewable energy industry:<br />
Investment Risks<br />
• <strong>The</strong>re can be no guarantees that the Companies will meet their objectives or that suitable investment<br />
opportunities will be identified.<br />
• <strong>The</strong> past performance of the Investment Managers (and the individuals in the Investment Management Team)<br />
is no indication of their future performance.<br />
• An investment in a Venture Capital Trust may not be suitable for all Investors.<br />
• Investments made by the Companies may be in companies whose shares are not readily marketable and<br />
therefore may be difficult to realise. <strong>The</strong>re may also be constraints imposed on the realisation of investments<br />
to maintain the <strong>VCT</strong> tax status of the Companies.<br />
• Whilst it is the intention of the Directors that the Companies will be managed so as to qualify as a <strong>VCT</strong>, there<br />
can be no guarantee that they will qualify or that such status will be maintained. A failure to meet the qualifying<br />
requirements could result in the Companies losing the tax reliefs previously obtained, resulting in adverse tax<br />
consequences for Investors, including a requirement to repay the 40 per cent. income tax relief. <strong>The</strong> Company<br />
has applied for provisional approval as a <strong>VCT</strong>, effective from Admission.<br />
• It is possible for Investors to lose their tax reliefs by themselves taking or not taking certain steps.<br />
• Levels and bases of, and relief from, taxation are subject to change. Those shown in this document are based<br />
upon current legislation, practice and interpretation and not upon the individual circumstances of Shareholders.<br />
• Although it is anticipated that the Companies will be admitted to the Official List and to trading on the London<br />
Stock Exchange's market for listed securities, there may be an illiquid market for the Shares and in such<br />
circumstances Investors may find it difficult to sell their Shares for full value.<br />
• <strong>The</strong> Companies are seeking to raise up to £20 million per Company (£38 million net of costs) by the Offers.<br />
To the extent that a relatively small level of funds is raised, the Companies may not be able to create a<br />
diversified portfolio.<br />
• <strong>The</strong> Companies will invest in companies with gross assets of not more than £15 million prior to investment.<br />
Such companies generally have a higher risk profile than larger "blue chip" companies.<br />
• Investors must retain their shares for three years or the 40 per cent income tax relief on the initial investment<br />
must be repaid.<br />
• <strong>VCT</strong>s invest in small companies which may not produce the anticipated returns and investors could get back<br />
less than they invested.<br />
• An investment in a <strong>VCT</strong> is a long term investment.<br />
Specific Risks of Investment in Renewable Energy<br />
Like all business sectors, companies operating in the renewable energy sector are exposed to various market risks<br />
and while the Directors intend to structure the Companies’ investments so as to minimise their exposure to such<br />
risks, potential Investors will wish to be aware of some of the principal risks associated with the sector. <strong>The</strong> risks<br />
can be divided into the following main categories:<br />
(1) Regulatory Risks. <strong>The</strong> viability of most renewable energy investments depends on some kind of financial<br />
support regulated by the Government and there will always be a risk of change to the policy underpinning this.<br />
(2) Market Risks. Renewable energy prices in the UK typically reflect the price of conventionally produced<br />
electricity (including a link to UK power market indices) and the price of the special credits associated with the<br />
generation of renewable energy (such as Renewable Obligation Certificates - see Definitions Section). A fall in<br />
the market price of conventional power or the renewable energy credits can therefore adversely effect the<br />
profitability of investee companies. While this risk can be partially mitigated through the use of forward sale<br />
contracts, those contracts will not provide firm prices for the full life of the investment.<br />
7
Keydata <strong>Income</strong> <strong>VCT</strong><br />
(3) Wind Risk. In the wind power sector, average wind speeds in any period may be lower than projected or lower<br />
than wind speeds in prior years, thereby causing the financial performance of an investee company to<br />
fall below its expected level. This is a recognised risk in the wind sector and the Companies’ investments<br />
are intended to be in areas where there has been extensive testing and modelling of wind speeds at the<br />
relevant sites.<br />
(4) Fuel Risk. Non-wind renewable energy requires fuel, for example, waste or agricultural biomass. <strong>The</strong>re is<br />
therefore a risk that the investee company may be exposed to an increase in the market price of such fuel or<br />
that the continued availability of such fuel becomes uncertain with the result that the relevant plant cannot<br />
operate. This is not an issue for wind plants which is likely to be the primary investment focus for the<br />
Companies. For other renewable investments such as biomass and waste-to-energy projects, the emphasis<br />
will therefore be on ensuring they have long term fuel contracts that ensure a high degree of price certainty.<br />
(5) Operating Risks. Although renewable energy plants are generally reliable, interruptions to operations can<br />
occur, for example due to machinery breakdown. It is therefore important to ensure that investee companies<br />
are protected by a combination of guarantees provided by the equipment manufacturers/installers and<br />
insurance policies. It should be noted that onshore wind power generation technology (which is expected to<br />
form the bulk of the Companies’ investment portfolios) has a long history of reliable operation.<br />
(6) Timing Risks. Because the Companies only intend to invest in renewable energy opportunities which are<br />
either in commercial operation or in construction (as opposed to development) the risk and expense of delays<br />
before commercial operations commence is limited primarily to interruptions occurring during construction.<br />
Where the Companies are investing in projects in construction they will therefore be keen to ensure that the<br />
contractors have given suitable completion guarantees and that lost income from other causes of interruption<br />
is insured.<br />
8
Keydata <strong>Income</strong> <strong>VCT</strong><br />
DETAILS OF THE OFFER TIMETABLE<br />
AND STATISTICS<br />
Offer Timetable<br />
Offer opens 15 December 2005<br />
First allotment 31 January 2006<br />
Dealings expected to commence<br />
Share and tax certificates expected to be despatched<br />
within 5 business days of<br />
allotment<br />
within ten business days of each<br />
allotment<br />
Initial closing date 5 April 2006 1<br />
1. <strong>The</strong> closing date is subject to the Offers not being fully subscribed at an earlier date. Note also that the closing date may be extended at the Directors’ discretion.<br />
Offer Statistics<br />
Offer Price per Share<br />
Initial net asset value per Share<br />
100 pence<br />
95 pence<br />
Maximum number of Shares in issue in each Company following the Offers 24,513,626<br />
Estimated maximum net proceeds of the Offers per Company £19,000,000<br />
Minimum number of Shares in issue in each Company following the Offers 4,513,626<br />
Minimum individual investment £3,000<br />
Commission available to introducers<br />
Initial<br />
2.25 per cent. of the amount<br />
invested<br />
plus<br />
Annual trail<br />
Annual trail 0.375 per cent.<br />
of the Net Asset Value of<br />
the relevant Shares invested<br />
(subject to an aggregate<br />
maximum of 2.25 per cent.)<br />
Alternatively, Introducers may elect to receive 3 per cent. initial commission with no annual trail commission.<br />
Introducers may waive their commission in return for more Shares for themselves or their clients (see page 59<br />
for further information).<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
LETTER FROM THE CHAIRMAN OF<br />
KEYDATA INCOME <strong>VCT</strong> 1 PLC &<br />
KEYDATA INCOME <strong>VCT</strong> 2 PLC<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc<br />
19 Cavendish Square<br />
London W1A 2AW<br />
15 December 2005<br />
Dear Investor,<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 are Venture Capital Trusts. <strong>The</strong>y were established in order to<br />
invest in renewable energy companies with long-term income flows from high quality sources which should enable<br />
them to pay tax free dividend income to Shareholders. <strong>The</strong> Board are seeking further funds to allow applicants to<br />
enjoy the benefits of investing in established companies and to take advantage of the attractive income tax relief<br />
available (40%) on investment.<br />
To date, the Companies have raised £9 million (£8.55m net of costs) of the original £50 million sought under the<br />
Original Offers earlier on this year. <strong>The</strong> Board are now seeking to raise a further £40m (£38m net of costs) to take<br />
advantage of the increasing number of investment opportunities anticipated over the next 2 years and to allow<br />
Investors to take advantage of the 40% income tax relief available to Investors on or before 5 April 2006. <strong>The</strong> new<br />
funds will also enable the Companies to spread their fixed overheads over a larger asset base.<br />
Renewable energy has been selected as the focus investment sector for Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong><br />
<strong>VCT</strong> 2 since it is characterised by companies with stable, long-term income flows from sales of power to major utilities,<br />
many of which are household names.<br />
This makes Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 very different from most other <strong>VCT</strong>s currently in the<br />
market which are dedicated to more speculative investments in AIM-listed or start-up companies where the purpose<br />
is to maximise capital growth but which inevitably carry significantly greater investment risks.<br />
<strong>The</strong> tax reliefs available to <strong>VCT</strong> investors are extremely attractive: an investor investing £10,000 will receive a tax<br />
credit enabling them to reduce their personal tax bill in the tax year of investment by up to £4,000 and a tax-free<br />
dividend income, targeted at 5 per cent each year.<br />
For an investor able to use the full tax credit this is equivalent to an annual tax free dividend of 8.33 per cent. An 8.33<br />
per cent tax free dividend is equivalent to a 10.4 per cent taxable income for a basic rate tax payer or a 13.8 per cent<br />
taxable income for a higher rate tax payer, based on current income tax bands.<br />
It is the combination of the very generous tax reliefs for <strong>VCT</strong> investments together with the relatively secure prospects<br />
of regular annual income which makes Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 different.<br />
<strong>The</strong> boards of both Companies believe that there are a variety and number of investments that meet the Companies’<br />
investment criteria that are currently in the market place. Consequently, the Companies’ investment strategy is to<br />
commit all available funds to renewable power investments as soon as practical after the closing of the Offers.<br />
<strong>The</strong>se prospects are due to a team of highly experienced, senior level investment managers who between them have<br />
more than 100 years’ track record investing in the renewable energy sector and who have together overseen more<br />
than £260 million of investments in the renewable energy sector.<br />
As a sign of their belief in this investment product, the Directors, the investment management team, the advisers and<br />
with their families invested £184,000 in the Original Offer.<br />
We are therefore expecting strong demand for this product which will enable you to invest up to £200,000 in the 2005-<br />
2006 tax year and we very much look forward to welcoming you as a shareholder.<br />
Yours sincerely<br />
Stephen Oxenbridge<br />
Chairman<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART I<br />
Introduction<br />
Introduction to the Offers<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 are specialist Companies. <strong>The</strong>ir investment objective is to pay<br />
a regular tax-free dividend of approximately 5 per cent per annum to Shareholders by investing in a portfolio of<br />
small companies directly involved in the operation of renewable power generation projects, particularly in the<br />
onshore wind sector.<br />
<strong>The</strong> Companies have been structured to take advantage of the substantial tax changes announced by the<br />
Chancellor in the March 2004 Budget so that:<br />
- Investors will receive income tax relief of 40 per cent in the year 2005/2006 on the amount invested<br />
(irrespective of the rate of income tax that an Investor pays), up to a maximum investment of £200,000 per tax<br />
year, subject to an Investor’s income tax liability in the tax year 2005/2006;<br />
- dividends received by an Investor from a Company will be tax free; and<br />
- capital gains on the disposal of Shares will be tax free.<br />
In addition, the Companies’ investments will be structured to provide stable, long-term income yields (typically<br />
across a 20-25 year period) financed from the sale of electricity and related products to “blue-chip” utilities (such<br />
as Powergen, British Gas/Centrica and Scottish & Southern). <strong>The</strong> boards of both Companies believe that several<br />
renewable energy projects that could meet the Companies’ investment criteria are likely to be seeking investment<br />
in the current year. Consequently, the investment strategy of the boards of both Companies is to be fully<br />
committed to renewable energy investments as soon as practical after the closing of the Offers.<br />
<strong>The</strong> Offers will remain open until 5 April 2006 unless fully subscribed at an earlier date, or extended at the<br />
Directors’ discretion. Application will be made for all of the Shares in each Company allotted under the Offers to<br />
be admitted to the Official List and to trading on the London Stock Exchange’s market for listed securities.<br />
Principal Features of the Offers<br />
1) <strong>The</strong> Companies’ Investment Strategy<br />
<strong>The</strong> business strategy of the Companies is to invest in renewable energy opportunities in the United Kingdom.<br />
While this may include a variety of renewable generation technologies such as biomass and waste-to-energy,<br />
it is expected that the Companies’ investments will be primarily in the onshore wind sector since such wind<br />
projects offer a combination of proven technology, a stable income return (typically over a 20 to 25 year design<br />
life) from contracts with ”blue chip” customers (such as Powergen, British Gas/Centrica and Scottish &<br />
Southern) and they operate in a progressive and relatively low risk regulatory regime.<br />
<strong>The</strong> UK’s renewable energy sector is recognised to be buoyant at the present time, having been ranked<br />
amongst the top five countries in the world for renewables for several years.<br />
According to the British Wind Energy Association (“BWEA”)<br />
• 2004 was a record year for the UK wind industry and the BWEA predicts that expansion to 2010 should result<br />
in approximately £7 billion of new investment into the sector;<br />
• in the first 11 months of 2004 ten new wind projects were commissioned in the UK, totalling almost 240 MW<br />
of new capacity, with two more scheduled to be commissioned by the end of 2004;<br />
• there are currently 18 wind projects under construction in the UK totalling over 600 MW;<br />
• in 2004, a further 33 new wind projects were approved through the UK planning system totalling<br />
approximately 800 MW of new capacity; and<br />
• there are presently 94 UK onshore projects undergoing planning, representing 4767 MW capacity.<br />
To put this into context, the total power generation in the UK is approximately 80,000 MW. (Source: BWEA)<br />
<strong>The</strong> developers of these windfarms include subsidiaries of well-known companies such as Scottish Power,<br />
National Power, AMEC, and Powergen together with renewables specialists such as Fred Olsen, Renewable<br />
Energy Systems, Falck Renewables and Airtricity.<br />
Investments are envisaged to take the form of the provision of debt and equity financing to smaller companies<br />
established for the purposes of operating renewable energy projects in the United Kingdom. <strong>The</strong> Companies<br />
may invest in existing renewable energy projects or projects which are undergoing construction. <strong>The</strong><br />
investments will be in companies owning or leasing renewables assets.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
<strong>The</strong> Companies will not invest in projects prior to commencement of their construction (that is, during project<br />
development) since this is the highest risk phase. Where possible, it is intended to structure the Companies’<br />
investment participations so as to optimise stable income cashflows back to each Company over the life of the<br />
investee companies’ assets (typically 20-25 years) whilst also creating some potential to participate in better<br />
than expected operating performance.<br />
2) Investment Pipeline<br />
<strong>The</strong> Investment Manager has identified a number of separate wind energy businesses which are scheduled to<br />
commence operation in early 2006 and 2007. Such investment opportunities include renewable energy<br />
projects which have been identified by Falck Renewables with whom the Investment Management Team are<br />
associated.<br />
It is likely that the Companies’ participations in Qualifying Investments will be structured as a combination of<br />
debt and equity participations in small renewable energy businesses which either:<br />
• own and operate renewable power assets, selling their output direct or indirectly to customers under power<br />
purchase agreements; or<br />
• provide energy services to renewable energy businesses.<br />
3) Typical contract terms and insurances<br />
Renewable energy companies undertaking renewable energy projects become a party to a number of<br />
commercial and financing documents, which establish their businesses and in turn underpin the stable longterm<br />
cashflows they require. Four of the most important are the agreements under which power and the related<br />
environmental credits such as Renewable Obligation Certificates (see Definitions Section) are sold (known as<br />
the “power purchase agreement” or “PPA”), the fuel supply agreement (not relevant for wind generation), the<br />
construction agreement and the operations and maintenance agreement.<br />
In UK renewable investments, power purchase agreements are typically with major utilities and this would be<br />
the case for any project in which the Companies participate. Power purchase agreements can be short-term<br />
(e.g. less than 2 years), medium-term (e.g. 3-9 years) or long-term (8-12 years). <strong>The</strong> attraction of short-term<br />
power purchase agreements is that they tend to enjoy higher power prices, the converse being true for longerterm<br />
agreements. On expiry of the term of any power purchase agreement, the project would enter into a new<br />
contract on the best terms attainable and while this exposes the project and therefore the Companies<br />
investment to some risk, the regulatory regime in the UK has been designed to provide significant commercial<br />
benefits to encourage customers (including the major utility companies) to contract for renewable power.<br />
For non-wind renewable investments, fuel supply agreements are typically designed to match the duration of<br />
the power purchase agreements (which will normally be long term, sometimes matched to the full life of the<br />
project equipment) and will generally be entered into with creditworthy entities such as municipalities, wastecollection<br />
companies and large agricultural companies.<br />
Construction contracts are generally “turnkey” (fixed price and delivery date) contracts for construction and<br />
supply requirements with a recognised construction contractor and a leading equipment manufacturer such as,<br />
in the case of wind energy, Vestas/NEG Micon, GE Energy, Enercon, RePower, Bonus Energy or Gamesa. <strong>The</strong><br />
turnkey contracts include completion guarantees and performance guarantees (construction typically takes<br />
between 6 and 12 months depending on the size of the project) and generally are supplemented by a separate<br />
operations and maintenance service (OMS) contract for a significant period, generally 3-5 years after the start<br />
of commercial operation.<br />
It is also normal for UK renewable energy generators normally take out insurance policies to guard against<br />
various other risks including force majeure (natural disasters etc), business interruption and delays.<br />
4) Experienced Investment Manager<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 has established Green Power 1 Limited as its wholly owned subsidiary and Keydata<br />
<strong>Income</strong> <strong>VCT</strong>2 has established Green Power 2 Limited as its wholly owned subsidiary for the specific purpose<br />
of being each Company’s investment manager. To enable it to perform the investment management function,<br />
Green Power 1 and Green Power 2 will each have advisers seconded to it by Renewables Management (for<br />
further details see Section 7). <strong>The</strong> advisory team is led by William Heller (Falck Renewables Limited), Achille<br />
Colombo (Falck Group), Hans Schenk (Falck Renewables Limited) and Gerry Jewson (West Coast Energy<br />
Limited).<br />
Renewables Management has been selected to work with Green Power 1 and Green Power 2 since it brings<br />
together a strong team of experts in renewable power with more than 100 years’ collective experience in<br />
developing, investing in and managing wind power, biomass and waste-to-energy projects (called<br />
“renewables”).<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
Between them, the Investment Management Team manage in excess of £260 million of European renewable<br />
power investments. Of the total invested, £170 million is in waste-to-energy and biomass projects and over £90<br />
million is in wind power projects, of which £76 million is in UK wind power projects. This data is unaudited.<br />
(Source: Investment Management Team).<br />
5) Substantial tax reliefs for Investors<br />
<strong>The</strong> Chancellor recently improved the income tax relief available to Investors in <strong>VCT</strong>s. For a period of 2 years<br />
from 6 April 2004, the income tax relief available for investment in new shares of a <strong>VCT</strong> has been increased<br />
from 20 per cent. to 40 per cent. up to a maximum of £200,000 invested per tax year (previously £100,000),<br />
subject to holding the shares for a minimum of 3 years. <strong>The</strong> tax relief cannot exceed the amount which reduces<br />
an Investor’s income tax to nil.<br />
In summary, the main tax reliefs for Investors are:<br />
• income tax relief of 40 per cent. on the amount invested (irrespective of the rate of income tax that<br />
an Investor pays), up to £200,000 per tax year, subject to an Investor’s income tax liability in the year;<br />
<strong>The</strong> effective cost of a £1 Share in Keydata <strong>Income</strong> <strong>VCT</strong> 1 or Keydata <strong>Income</strong> <strong>VCT</strong> 2 is therefore<br />
only 60p.<br />
• dividends received by an Investor from the Company are tax free; and<br />
• capital gains on the disposal of the <strong>VCT</strong> shares are tax free.<br />
Example of initial tax relief<br />
No <strong>VCT</strong> tax relief<br />
<strong>VCT</strong> tax relief<br />
Initial Investment £100,000 £100,000<br />
40 per cent. income tax relief - (£40,000)<br />
Effective net cost of the investment £100,000 £60,000<br />
Investors are encouraged to seek their own independent tax advice to confirm this information and its<br />
applicability to them. Further general information on the tax reliefs available for investing in a <strong>VCT</strong> is given in<br />
the “<strong>Tax</strong> Considerations for Shareholders” section in Part IV of this document.<br />
6) Investment Policy<br />
a) Investment Objective and Strategy<br />
<strong>The</strong> principal investment objective of both Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 is to pay a<br />
regular tax-free dividend of approximately 5 per cent per annum predominantly derived from income generated<br />
by the Companies’ investments in renewable energy businesses.<br />
<strong>The</strong> Directors believe the Companies’ investment programme will support the targeted tax free dividend of 5<br />
pence per annum. For an Investor able to use the full <strong>VCT</strong> tax reliefs, this is equivalent to an annual tax free<br />
dividend of 8.33 per cent. A 8.33 per cent tax free dividend is equivalent to 10.4 per cent for a basic rate<br />
taxpayer or 13.8 per cent for a higher rate taxpayer, based on current income tax bands. No profit forecast<br />
should be inferred or implied from this statement.<br />
<strong>The</strong> majority of the funds will be invested in debt securities of investee companies which are intended to fund<br />
the dividend levels referred to above.<br />
Qualifying Investments will be primarily made in unquoted private companies operating renewable power<br />
generation projects.<br />
Individual Qualifying Investments by each Company will typically range in size from £500,000 to £2 million.<br />
It is intended that the Companies will invest in the same projects, on the same terms and at the same time.<br />
Any co-investment between the Companies will be approved by these directors of the Companies who are<br />
independent of the Investment Managers.<br />
b) <strong>The</strong> Non-Qualifying Investments Portfolio<br />
Initially, all monies raised by the Offers will be placed on deposit in a major clearing bank, pending the Board<br />
of each Company agreeing to commit the Companies’ funds to specific renewable energy investments.<br />
Renewable energy investments are expected to be in companies which either own and operate renewable<br />
energy assets or simply operate renewable energy assets for third parties. <strong>The</strong> structure of such investments<br />
will vary and will include ordinary shares, preference shares, unsecured loan stock, corporate bonds and<br />
secured debt instruments (or some combination of these). <strong>The</strong> final decision on any such investment will be<br />
made by the Board of each Company which will be concerned to ensure that the Company makes<br />
commercially sound investments.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
Where any such investment can be structured so that the requirements for being an investment in a Qualifying<br />
Company can be met (for the purposes of the <strong>VCT</strong> rules), this will be part of the Company’s Qualifying<br />
Investment portfolio. Where it is not possible to structure the investment in this manner, it will form part of the<br />
Non-Qualifying Investment Portfolio.<br />
In deciding whether or not to approve an investment, one consideration for each Board will be the need for<br />
Non-Qualifying Investments to have sufficient liquidity to be able to realise such investment during the initial<br />
three year investment period so that each Company can reinvest such funds into Qualifying Investments to<br />
ensure that each Company can achieve and maintain its <strong>VCT</strong> status.<br />
c) Valuation Policy<br />
All investments will be valued annually in accordance with BVCA guidelines, in the audited accounts of the<br />
Companies for the relevant period. A brief summary of the BVCA guidelines is set out below.<br />
Investments should be reported at fair value where this can be reliably determined by the Board on the<br />
recommendation of the Investment Manager. In estimating fair value for an investment, the methodology<br />
applied must be appropriate to the nature, facts and circumstances of the investment and its materiality based<br />
on reasonable assumptions and estimates. Such methodology, including earnings multiple, cost and cost less<br />
a provision for net assets, should be applied consistently.<br />
If fair value cannot be reliably measured, the carrying value at the previous reporting date will be used unless<br />
there is evidence of impairment, in which case the value will be reduced to reflect the estimated extent of the<br />
impairment.<br />
7) <strong>The</strong> Investment Management Team<br />
<strong>The</strong> Investment Management Team have, in aggregate, 100 years experience of managing power projects.<br />
<strong>The</strong> same Investment Management Team are involved with Green Power 1 and Green Power 2. Details of the<br />
experience of the individuals within the Investment Management Team are set out below:<br />
William Heller (age 49)<br />
William Heller is the Managing Director of Falck Renewables Ltd a wind power developer and Heller Consulting<br />
Limited, a renewable power consulting firm. He has been active in the electricity industry since 1982 when he<br />
joined McKinsey & Company’s Energy Practice after completing his MBA at Harvard Business School. William<br />
left McKinsey as a Partner in 1996 to join Edison International, one of the world’s largest electricity companies<br />
where he was CEO of Edison Mission, one of the top 5 independent power producers in the world with over<br />
20,000MW of power projects world-wide. William was responsible for Edison Mission’s development of 14 wind<br />
projects with a capacity of 303MW representing £209 million of capital investment. William left Edison in 2002<br />
to form Falck Renewables Limited in London.<br />
Achille Colombo (age 66)<br />
Achille Colombo is the Managing Director of the Falck Group, Chairman of Falck Renewables Limited and Deputy<br />
Chairman of Actelios, a biomass and waste-to-energy company listed on the Italian Stock Exchange. He has been<br />
active in the electricity industry for his entire career beginning in 1964, working for CERN and then Westinghouse<br />
Nuclear Energy. In 1973, Achille joined what would become ABB rising to Chairman of the SAE Sadelmi<br />
subsidiary, President of the Business Area Power Lines of ABB and board director of ABB Italy. He joined the<br />
Falck Group in 1989 as Managing Director. He is also currently a board director of Air Liquide and a member of<br />
the World Economic Forum, the World Business Council for Sustainable Development and the Aspen Club.<br />
Hans Schenk (age 53)<br />
Hans Schenk is Finance Director of Falck Renewables Limited and responsible for the Falck Group’s power<br />
generation financing activities. He has been active in the electricity industry since 1978. A qualified accountant,<br />
Hans worked for global accountants KPMG and PricewaterhouseCoopers before joining ABB in 1978, rising to<br />
the position of Business Controller for worldwide activities in Power Lines. In 1993, he joined the Falck Group.<br />
Gerry Jewson (age 47)<br />
Gerry Jewson is the Managing Director of West Coast Energy Limited and a director of the Renewable Energy<br />
Company. He has been with both companies since they were incorporated in 1996. Between 1993 and 1996,<br />
Gerry was employed at Manweb plc and was responsible for management of Manweb’s renewable energy<br />
business. In 11 years, Gerry has successfully developed over 350MW of wind energy capacity in the UK. In<br />
2002, he was awarded the “Developer of the Year” award by the British Wind Energy Association.<br />
<strong>The</strong> Investment Management Team have been seconded to each Investment Manager by Renewables<br />
Management under the terms of secondment agreements (for further details see paragraph 4.3 Part V)<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
8) <strong>The</strong> Board<br />
<strong>The</strong> Boards of each Company comprise Stephen Oxenbridge as non-executive chairman and David<br />
Hurst-Brown and Stewart Ford as non-executive directors, all of whom are independent of each Investment<br />
Manager. A summary CV for each of the Directors is shown opposite:<br />
Stephen Oxenbridge (aged 48)<br />
Stephen has a long career as an Investment Banker. His experience encompasses derivatives, money<br />
markets, securitisation and mergers and acquisitions. For the past ten years he has been involved in the<br />
utilities industries as managing director of Deutsche Morgan Grenfell’s utilities practice in New York and<br />
managing director of ING Baring’s utilities practice in London. In this capacity he has advised on acquisition<br />
strategy and innovative financing structures for many of the major US and European utilities. In addition, he<br />
has been involved in private equity and seed capital investments in the technology sector. Stephen is a<br />
graduate of Oxford University. He is now the managing partner of Oxenbridge & Co. a principal finance house<br />
investing in the energy sector which has recently acquired a renewable power generation company in Italy.<br />
Stephen is a director of Elettra Holdings, an Italian renewable power holding company.<br />
David Hurst-Brown FSI (aged 56)<br />
David worked for over 25 years in the investment banking industry starting as an investment analyst with Rowe<br />
and Pitman and becoming a partner of the firm in 1985. Following takeovers by SG Warburg and Swiss Bank<br />
Corporation and the subsequent merger with Union Bank of Switzerland, David ultimately became an<br />
executive director in the corporate finance division of UBS Warburg. In this capacity, amongst his various<br />
duties, he was responsible for establishing a smaller companies business unit. He was a consultant to UBS<br />
from 1999 to 2002 and at the same time was an adviser to techMark, the London Stock Exchange’s market for<br />
technology companies. Since then David has held a number of directorships of public and private companies<br />
including being a non-executive director of Keydata UK Limited from 2001 until 2004.<br />
David is also a director of Keydata AIM <strong>VCT</strong> PLC<br />
Stewart Owen Ford (aged 41)<br />
Stewart is the founder and managing director of Keydata Investment Services Limited and its parent company,<br />
Keydata UK Limited. Stewart’s experience of establishing new media, design, advertising, marketing and<br />
financial services organisations led to his creation of Keydata UK Limited in 1997. Keydata UK Limited<br />
acquired Keydata Investment Services in 2001 and under Stewart’s guidance the company is now established<br />
with assets under management of over £800 million (Source: Keydata UK Limited - this data is unaudited)<br />
Stewart is also a director of Keydata AIM <strong>VCT</strong> PLC.<br />
<strong>The</strong> Directors, members of the Investment Management Team and advisers together with their families<br />
invested a total of £184,000 under the Original Offers on the same terms as the Investors.<br />
9) Corporate Governance<br />
<strong>The</strong> Board is committed to the principles of sound corporate governance and each Company has taken<br />
appropriate steps, relevant to its size and operational complexity, to comply with <strong>The</strong> FRC 2003 Combined<br />
Code, published in July 2003. However, the companies do not comply fully with the corporate governance<br />
regime for UK listed companies. Due to the size of the Board and the fact that all members are independent<br />
of the Investment Manager the Boards have not set up separate audit, nomination and remuneration<br />
committees on the grounds that the Boards as a whole consider these matters.<br />
10) Financial Information<br />
Financial information relating to the Companies is set out in Parts VI and VII.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
<strong>The</strong> Offers<br />
Details of the Offers<br />
It is proposed to raise up to £20 million for each Company by means of an offer for subscription at 100p per Share<br />
in each Company, payable in full, by cheque or banker's draft, on subscription. <strong>The</strong> Offers will be open from 15<br />
December 2005 until the earlier of 11.00 a.m. on 5 April 2006 and the date on which the maximum subscription is<br />
reached (or until such time as the Directors may decide). <strong>The</strong> Offers are not underwritten. <strong>The</strong> maximum net<br />
proceeds of the Offers, assuming full subscription, will be £19 million for each Company.<br />
Applications will be accepted on a first come, first served basis (provided cheques are not post dated), subject<br />
always to the discretion of the Directors. Investors are encouraged to submit their Application Forms early in order<br />
to be confident that their subscriptions will be successful.<br />
<strong>The</strong> minimum investment per Investor under the Offers is £3,000. <strong>The</strong> full terms and conditions of application are<br />
set out in Part VIII of this document and an Application Form, together with details of the application procedure, is<br />
set out at the end of this document.<br />
Application for Shares under the Offer will be applied equally between Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Keydata <strong>Income</strong><br />
<strong>VCT</strong> 2, so that any investment in Shares under the Offers will be applied as to one half by way of subscription for<br />
Shares in Keydata <strong>Income</strong> <strong>VCT</strong> 1 and one-half by way of subscription for Shares in Keydata <strong>Income</strong> <strong>VCT</strong> 2.<br />
<strong>The</strong> Promoter<br />
Keydata Investment Services, an investment solutions firm, will act as promoter to the Offers, as it did in respect<br />
of the Original Offer. It has an established network of approximately 8,000 IFA contacts and a database of over<br />
52,000 investors (Source: unaudited data provided by Keydata Investment Services from its own unaudited<br />
internal records). It has raised and manages approximately £740 million of funds in its own investment products<br />
and also manages a further £250 million of funds in third party investments for organisations such as Credit Suisse<br />
First Boston, Morgan Stanley and Skandia (Source: unaudited data provided by Keydata Investment Services from<br />
its own unaudited internal records). Its directors are Stewart Ford (who is also a director of the Companies), Craig<br />
McNeil and Mark Owen.<br />
Allotment, Dealings and Settlement<br />
Application has been made to the UK Listing Authority for the Shares issued pursuant to the Offers to be admitted<br />
to the Official List of the UK Listing Authority and to the London Stock Exchange for the Shares to be admitted to<br />
trading on its market for listed securities.<br />
Dealings are expected to commence within 5 business days of allotment of the relevant Shares. Shares will be<br />
issued in registered form and bi-monthly from 31 January 2006. It is anticipated that definitive share certificates<br />
will be issued within ten business days of each allotment.<br />
Shares will be capable of being transferred by means of the CREST system. Investors who wish to take advantage<br />
of the ability to trade their Shares in uncertificated form (and who have access to a CREST account) may arrange<br />
through their professional adviser to convert their holding into dematerialised form.<br />
Management, Administration and Costs<br />
Investment Manager<br />
Green Power 1 and Green Power 2 have been appointed as the Investment Managers of the Companies for an<br />
initial period of three years, which can be terminated by not less than twelve months’ notice, given at any time by<br />
either party, after the third anniversary. Under the terms of this agreement the Companies pay to each of Green<br />
Power 1 and Green Power 2 an annual fee of 0.4 per cent. (exclusive of VAT, if any) of the Net Asset Value of the<br />
relevant Company, payable quarterly in arrears.<br />
Management Services Agreements<br />
Each Investment Manager will enter into separate Management Services Agreements with each Qualifying<br />
Company and each non-qualifying investee company under which it will agree to provide technical and<br />
management services to such companies to enable them to perform their obligations in respect of the construction<br />
and operation of wind energy systems. <strong>The</strong> payment for provision of such services will be an annual payment<br />
made by the investee company, paid quarterly in arrears, of 0.25 per cent (plus any Value Added <strong>Tax</strong>) of the<br />
amount invested in such Qualifying Company or non-Qualifying Company by each Company of which it is the<br />
Investment Manager. Each Management Services Agreement will be co-terminous with the Investment<br />
Management Agreement so that if the Investment Management Agreement is terminated for any reason, the<br />
Management Services Agreement will be automatically terminated.<br />
16
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Dividend Policy<br />
Generally, a <strong>VCT</strong> must distribute by way of dividend such amount as to ensure that it retains not more than 15 per<br />
cent. of its income from shares and securities. <strong>The</strong> Directors aim to maximise tax free distributions to Shareholders<br />
by way of dividends paid out of income and gains received from investments. <strong>The</strong> target is to distribute an annual<br />
tax-free dividend of 5 pence per Share (for an investor able to use the full <strong>VCT</strong> tax reliefs, this is equivalent to<br />
taxable income of 10.4 pence per Share for a basic rate taxpayer or 13.88 pence per Share on the net investment<br />
for higher rate taxpayers, based on current rates of taxation).<br />
Shareholders who wish to have dividends paid directly into a bank account, rather than by cheque to their<br />
registered address, should complete the dividend mandate form printed on the Application Form. Further dividend<br />
mandate forms can be obtained upon request from the Companies’ registered office. <strong>The</strong> Companies do not<br />
assume responsibility for withholding taxes at source on any dividends declared or paid.<br />
Buy Back Policy<br />
Although it is anticipated that the Shares issued pursuant to the Offers will be admitted to the Official List and to<br />
trading on the London Stock Exchange’s market for listed securities, there is a risk of an illiquid market for the<br />
Shares so that Shareholders may find it difficult to sell their Shares in the market. In contrast to <strong>VCT</strong>s focusing on<br />
capital growth, however, Shares in the Companies should be more realisable than shares in other <strong>VCT</strong>s because<br />
its investments are intended to be characterised by stable, long-term income. Nevertheless, in order to try to<br />
improve the liquidity in the Shares, the board of each Company intends, subject to the Listing Rules and<br />
companies and tax legislation, to establish a buy back policy whereby the Companies will purchase Shares for<br />
cancellation. As a guide and subject to the Board’s discretion and providing that, in the opinion of the Board, there<br />
is adequate surplus cash available, the Companies will consider buying back shares at a 10 per cent. discount to<br />
the last published NAV per Share, subject to a maximum of 105 per cent. of the middle market price per Share<br />
over the preceding 5 business days and a minimum of the nominal value of the Shares. <strong>The</strong> NAV will be published<br />
quarterly following quarterly accounts period to 31 May, 31 August, 30 November and 28 February. Shareholders<br />
are reminded that if they hold their Shares for less than three years they are likely to lose their income tax relief.<br />
<strong>Report</strong>ing to Shareholders<br />
<strong>The</strong> Directors believe that communication with Shareholders is important. Shareholders will receive a copy of the<br />
Companies annual report and accounts (expected to be published each May) and a copy of the Companies interim<br />
results (expected to be published each October).<br />
<strong>The</strong> Companies first interim accounts were published on 14 October 2005. <strong>The</strong> Companies first full year annual<br />
report and accounts are expected to be published in May 2006 and will be in respect of the period from<br />
incorporation to 28 February 2006. <strong>The</strong> first annual general meeting of each Company is expected to be held in<br />
July 2006.<br />
It is intended that all published information on the Companies will be available on www.keydataincomevct.co.uk,<br />
which will provide investors with relevant information on the portfolio and on the renewable power sector.<br />
All Qualifying Subscribers will automatically be provided with certificates enabling them to claim income tax relief.<br />
<strong>VCT</strong> Status Monitoring and HM Revenue and Customs Approval<br />
<strong>The</strong> Directors intend to manage the Companies’ affairs in order that they comply with the legislation applicable to<br />
<strong>VCT</strong>s. In this regard PricewaterhouseCoopers has been appointed to advise on tax matters generally and, in<br />
particular, on <strong>VCT</strong> status. HM Revenue and Customs has granted each Company provisional approval as a <strong>VCT</strong>,<br />
effective from the date of Admission. Full approval will be sought as soon as possible, but will only be granted by<br />
HM Revenue and Customs once 70 per cent. of the Companies investments are represented by Qualifying<br />
Investments and the Companies have complied with the other requirements relating to <strong>VCT</strong> qualification.<br />
PricewaterhouseCoopers will assist Green Power 1 and Green Power 2 (but report directly to the relevant Board)<br />
in establishing the status of each investment as a Qualifying Investment and will monitor progress towards<br />
achieving full <strong>VCT</strong> approval. Once full approval has been given the Companies must continue to satisfy the<br />
requirements of HM Revenue and Customs in relation to <strong>VCT</strong>s, or they are likely to lose full approval.<br />
Life of the Companies<br />
It is intended that each of the Companies should have an unlimited life, but the Directors consider that it is<br />
desirable for Shareholders to have the opportunity to review the future of each of the Companies at appropriate<br />
intervals. <strong>The</strong> Companies’ articles of association each require the Directors to put a proposal to Shareholders<br />
concerning the continuation of the Companies at the annual general meeting in 2009 and, if passed, at every fifth<br />
anniversary thereafter.<br />
17
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Cancellation of the Companies’ Share Premium Account<br />
<strong>The</strong> Companies propose (subject to Court approval) to cancel their share premium account, thereby creating a<br />
special reserve, which may be treated as a distributable reserve for all purposes, including making purchases of<br />
Shares. A special resolution was passed by Shareholders at the Extraordinary General Meeting authorising the<br />
cancellation of the share premium account of the Companies following the issue of Shares pursuant to the Offers.<br />
No purchases of Shares can be made by the Companies until cancellation of the share premium account has been<br />
approved by the Court and the terms of any undertaking required by the Court for protection of the creditors of the<br />
Companies has been complied with.<br />
Launch Costs<br />
<strong>The</strong> initial costs of the Offers (including irrecoverable VAT) will be 5 per cent. of the gross proceeds raised for each<br />
Company.<br />
Introducers Commissions<br />
Introducers who stamp the Application Form will be entitled to receive commission on the amount invested by their<br />
client on one of the following bases:<br />
i) 3 per cent. initial commission of the amount invested by their client (and no trail commission); or<br />
ii) 2.25 per cent. of the amount invested by their client plus an annual trail. <strong>The</strong> trail commission will be paid<br />
annually on each anniversary of the date of allotment of the Shares (provided that the financial intermediary<br />
continues to act for the client and the client continues to hold the Shares) at the rate of 0.375 per cent. per<br />
annum of the Net Asset Value of the Shares invested in by the client, subject to a maximum of 2.25 per cent.<br />
Introducers may waive their commission in return for more Shares for themselves or their clients (see page 59 for<br />
further information). Introducers must indicate on the Application Form the basis on which they wish to receive their<br />
commission.<br />
Annual Fees and Expenses<br />
Each Investment Manager is paid an annual investment management fee of 0.4 per cent. (exclusive of any VAT)<br />
of the Net Asset Value of the Companies. <strong>The</strong> fee is payable quarterly in arrears.<br />
Keydata receives from the Companies an annual payment for broking services of 0.9 per cent. of the Net Assets<br />
Value of the Companies (plus VAT, if applicable), payable quarterly in arrears, out of which it will pay trail<br />
commission due to intermediaries. In addition, under an agreement dated 23 February 2005, Keydata will provide<br />
administrative services to each Company for an annual fee of £25,000 (plus VAT), payable quarterly in arrears.<br />
This agreement is for a fixed period of 3 years and thereafter is terminable on 12 months’ notice.<br />
<strong>The</strong> Directors estimate that in the period from incorporation until 28 February 2006 (fees payable to them by each<br />
Company will not exceed £30,000 (excluding any VAT or national insurance contributions).<br />
Craig McNeil CA, a director of Keydata, is Company Secretary to each Company and is paid a fee of £12,000 per<br />
annum (plus any applicable VAT), payable quarterly in arrears. This appointment is for a fixed period of 3 years<br />
and thereafter is terminable on 12 months’ notice.<br />
Assuming full subscription under the Offers, the Directors estimate that the annual running costs of each Company<br />
will be no more than 1.75 per cent. of the Net Asset Value of the Company (excluding VAT). <strong>The</strong> running costs of<br />
each Company will include the annual fees described above, accounting, legal and administration fees, as well as<br />
fees for Directors, the auditors, taxation advisers, Sponsor, registrar and the costs of communicating with<br />
Shareholders. Total annual running costs will be capped at 2.0 per cent. of the Net Asset Value (excluding any<br />
irrecoverable VAT). <strong>The</strong> Promoter has agreed to indemnify the Company in respect of any excess.<br />
A maximum of 75 per cent. of the Company’s management expenses will be capable of being charged against<br />
capital reserves with the balance charged against revenue.<br />
18
Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART II<br />
Directors and Advisers<br />
Directors (all non-executive)<br />
Stephen Richard Oxenbridge (Chairman)<br />
David Hurst-Brown<br />
Stewart Owen Ford<br />
Secretary<br />
Craig McNeil CA<br />
all of:<br />
Registered Office<br />
19 Cavendish Square<br />
London W1A 2AW<br />
Promoter<br />
Keydata Investment Services Limited<br />
One Angel Court<br />
London EC2R 7HJ<br />
Receiving Agent and Administrator<br />
Keydata Investment Services Limited<br />
Floor 8, Fountain House<br />
2 Queens Walk<br />
Reading RG1 7QF<br />
Investment Managers<br />
Green Power 1 Limited<br />
109 Baker Street<br />
London W1U 6RP<br />
Sponsor and Solicitors<br />
Howard Kennedy<br />
19 Cavendish Square<br />
London W1A 2AW<br />
Legal Advisers on Energy Matters<br />
Watson, Farley & Williams<br />
15 Appold Street<br />
London EC2A 2HB<br />
Bankers<br />
Royal Bank of Scotland plc<br />
62/63 Threadneedle Street<br />
London EC2R 8LA<br />
Registrars<br />
Lloyds TSB Registrars<br />
<strong>The</strong> Causeway<br />
Worthing<br />
West Sussex BN99 6DA<br />
Auditors<br />
Ernst & Young LLP<br />
George House<br />
50 George Square<br />
Glasgow G2 1RR<br />
Green Power 2 Limited<br />
109 Baker Street<br />
London W1U 6RP<br />
<strong>VCT</strong> <strong>Tax</strong> Adviser<br />
PricewaterhouseCoopers LLP<br />
1 Embankment Place<br />
London WC2N 6RH<br />
19
Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART III<br />
Definitions<br />
<strong>The</strong> following definitions are used throughout this document and, except where the context requires otherwise,<br />
have the following meanings.<br />
Act<br />
the Companies Act 1985 (as amended)<br />
Admission<br />
admission of the Shares to the Official List of the UK<br />
Listing Authority and to trading on the London Stock<br />
Exchange's market for listed securities<br />
AIM<br />
the Alternative Investment Market of the London Stock<br />
Exchange<br />
Application Form<br />
the application form for use in respect of the Offers set<br />
out at the end of this document<br />
BVCA<br />
British Venture Capital Association<br />
Company<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 and/or Keydata <strong>Income</strong> <strong>VCT</strong> 2<br />
(as appropriate)<br />
Directors, Board of Directors or Board<br />
the directors of the Companies whose names appear<br />
on page 23 of this document<br />
Green Power 1<br />
Green Power 1 Limited, the manager of the Qualifying<br />
Investments<br />
Green Power 2<br />
Green Power 2 Limited, the manager of the Qualifying<br />
Investments<br />
Group<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 and Green Power 1 and/or<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 2 and Green Power 2, as<br />
appropriate.<br />
Howard Kennedy or Sponsor<br />
Howard Kennedy, which is authorised and regulated by<br />
the Financial Services Authority<br />
ICTA<br />
<strong>Income</strong> and Corporation <strong>Tax</strong>es Act 1988 (as amended)<br />
Introducers<br />
Persons authorised and regulated by the Financial<br />
Services Authority who introduce Investors to the<br />
Company in connection with the Offers.<br />
Investment Management Team<br />
William Heller, Achille Colombo, Gerry Jewson and<br />
Hans Schenk, each of whom have been seconded by<br />
Renewables Management to each Investment Manager<br />
pursuant to a Secondment Agreement, further details of<br />
which are set out in paragraph 4.3 of Part V.<br />
Investment Manager or Manager<br />
Green Power 1 and/or Green Power 2 (as appropriate)<br />
Investor<br />
an individual who subscribes for Shares under the<br />
Offers<br />
Keydata, Keydata Investment Services or KIS<br />
Keydata Investment Services Limited<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1, Keydata <strong>Income</strong> <strong>VCT</strong> 2<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc or Keydata <strong>Income</strong> <strong>VCT</strong> 2<br />
plc (as appropriate)<br />
London Stock Exchange<br />
London Stock Exchange plc<br />
MW<br />
megawatts<br />
Net Asset Value or NAV or Net Assets<br />
the aggregate of the gross assets of a Company less<br />
its gross liabilities<br />
Non-Qualifying Investments Portfolio or<br />
Non-Qualifying Investments<br />
that part of the net proceeds of the Offers that will be<br />
invested in investments other than Qualifying Holdings<br />
Offers<br />
the Offers for subscription of up to 20,000,000 Shares<br />
in each Company described in this document<br />
Offer Agreement<br />
the agreement dated the date of this document<br />
between, inter alia, each Company, its Directors,<br />
Keydata and Howard Kennedy relating to the Offers, a<br />
summary of which is set out in Part V of this document<br />
Offer Price<br />
100p per Share<br />
Official List<br />
the Official List of the UK Listing Authority<br />
20
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Original Offers<br />
the offers for subscription of up to 25,000,000 Shares<br />
issued by each of the Companies on 23 February 2005<br />
PPA<br />
a purchase power agreement for the sale of electricity<br />
and environmental credits such as ROCs (see definition<br />
below) between a power company and a purchaser of<br />
electricity<br />
Promoter and Administrator<br />
Keydata Investment Services Limited<br />
Qualifying Company<br />
a company satisfying the conditions of Schedule 28B<br />
ICTA as described in Part IV of this document<br />
Qualifying Holding<br />
shares in, or securities of, a Qualifying Company, which<br />
satisfy the conditions of Schedule 28B ICTA as<br />
described in Part IV of this document<br />
Qualifying Investment<br />
an investment in an AIM listed or unquoted company<br />
which satisfies the requirements of Schedule 28B ICTA,<br />
as described in Part IV of this document<br />
Qualifying Limit<br />
a total amount of £200,000 per individual invested in the<br />
Companies in any one tax year<br />
Qualifying Purchaser<br />
an individual who purchases Shares from an existing<br />
Shareholder and is aged 18 or over and satisfies the<br />
conditions of eligibility for tax relief available to investors<br />
in a Company<br />
Qualifying Subscriber<br />
an individual who subscribes for Shares under the<br />
Offers and is aged 18 or over and satisfies the<br />
conditions of eligibility for tax relief available to investors<br />
in a Company<br />
Renewables Management<br />
Renewables Management Limited, a limited liability<br />
company incorporated in Jersey<br />
Renewables Obligation or RO<br />
the obligation of licensed electricity suppliers to supply<br />
a specified and growing proportion of their electricity<br />
sales from renewable sources, as set out in <strong>The</strong><br />
Renewables Obligation Order 2002 (S.I. 914/2002) in<br />
respect of England and Wales and <strong>The</strong> Renewables<br />
Obligation (Scotland) Order 2002 (Scottish S.I.<br />
163/2002) in respect of Scotland<br />
ROC or Renewables Obligation Certificate<br />
Suppliers are required to produce evidence of their<br />
compliance with the RO to the Office of Gas and<br />
Electricity Markets (OFGEM). Evidence can be via<br />
certificates, referred to as Renewable Obligations<br />
Certificates (ROCs). Each ROC represents one<br />
megawatt hour (1,000,000 units) of electricity<br />
generated from eligible sources (landfill gas, co-firing of<br />
biomass with fossil fuel, biomass, sewage gas, wind<br />
and some hydro-electric facilities)<br />
Shares<br />
ordinary shares of 1p each in the capital of Keydata<br />
<strong>Income</strong> <strong>VCT</strong> 1 and/or Keydata <strong>Income</strong> <strong>VCT</strong> 2 (as<br />
appropriate)<br />
Shareholders<br />
holders of Shares<br />
UK Listing Authority<br />
the Financial Services Authority acting in its capacity as<br />
the competent authority for the purposes of Part VI of<br />
the Financial Services and Markets Act 2000<br />
<strong>VCT</strong>, Venture Capital Trust or Company<br />
a company approved as a venture capital trust under<br />
Section 842AA ICTA by HM Revenue and Customs.<br />
Qualifying Subsidiary<br />
a subsidiary company which falls within the definition of<br />
Qualifying Subsidiary contained in paragraph 10 of<br />
Schedule 28B ICTA, as described in Part IV of this<br />
document<br />
Qualifying Trade<br />
a trade complying with the requirements of Schedule<br />
28B ICTA<br />
Renewable Energy<br />
energy derived from wind, biomass (e.g. wood chip,<br />
agricultural waste etc) and waste-to-energy<br />
21
Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART IV<br />
<strong>Tax</strong> Position of the Fund<br />
(a)<br />
Qualifying as a <strong>VCT</strong><br />
In order to qualify as a <strong>VCT</strong>, a Company must satisfy the following conditions in each accounting period:<br />
(a) it must be approved as a <strong>VCT</strong> by HM Revenue and Customs;<br />
(b) it must not be a close company;<br />
(c) throughout the period, each class of its ordinary share capital must be quoted on the Official List;<br />
(d) it must derive its income in the period wholly or mainly from shares or securities;<br />
(e) it must have at least 70 per cent. by value of its investments throughout the period in newly issued shares<br />
or securities (where the securities are not redeemable within 5 years of issue) comprised in Qualifying<br />
Holdings, of which at least 30 per cent. by value must be ordinary shares which carry no preferential rights;<br />
(f) it must have at least 10 per cent. by value of its total investments in any Qualifying Company in ordinary<br />
shares which carry no preferential rights;<br />
(g) it must have not more than 15 per cent. by value of its investments throughout the period in a single<br />
company or group (other than a <strong>VCT</strong>, or other similar company); and<br />
(h) it must generally not retain more than 15 per cent. of the income which it derives from shares and<br />
securities in the period.<br />
In order, however, to facilitate the launch of the Companies, there is a relaxation of some of these tests during<br />
the Company's first and, in the case of test (e), up to the third accounting period (see below under the<br />
heading, "Approval as a <strong>VCT</strong>'').<br />
(b)<br />
(c)<br />
Qualifying Holdings<br />
In order for an investment to qualify as an investment in a Qualifying Holding, not more than £1 million may<br />
be invested in the same company in any tax year. Where investments are made in two consecutive tax years<br />
up to this limit, there must be at least a 6 month gap between them. <strong>The</strong> £1 million limit is restricted further<br />
if the trade in which the money invested is applied is carried on through a partnership or joint venture.<br />
<strong>The</strong> company in which either Company makes its investment must satisfy the following tests:<br />
(a) it must be unquoted (which will, in the case of a company which was unquoted at the time of the<br />
Company's investment, be deemed to be the case for a further five years after the company ceases to<br />
be unquoted). Companies whose shares are traded on AIM are treated as unquoted;<br />
(b) it must be a Qualifying Company (see below under the heading "Qualifying Companies'');<br />
(c) it must have gross assets of £15 million or less immediately pre-investment and £16 million or less<br />
immediately post-investment (in the case of companies which have Qualifying Subsidiaries (see below),<br />
the test is applied on a group basis);<br />
(d) it (or a relevant Qualifying Subsidiary of the company) must apply the money invested for the purposes<br />
of a qualifying trade, which is carried out wholly or mainly in the UK, (see below under the heading,<br />
“Qualifying Companies”) within certain time periods;<br />
(e) it must not be able to control (whether on its own or together with a connected person) any company<br />
which is not a Qualifying Subsidiary;<br />
(f) it must not be controlled by another company (on its own or together with a connected person); and<br />
(g) it must not have any property managing subsidiaries which do not fall into the definition of relevant<br />
Qualifying Subsidiaries (see below).<br />
In certain circumstances, a holding can be split into part-Qualifying Holdings and part-non-Qualifying Holdings.<br />
A Qualifying Company is a company which exists to carry on one or more qualifying trades (see below) or is<br />
the parent of a trading group, where all of its subsidiaries are qualifying subsidiaries and the group as a whole<br />
is not engaged in non-qualifying activities (see below).<br />
For the purposes of the Qualifying Holdings test in (d) above, a subsidiary will be a relevant Qualifying<br />
Subsidiary if at least 90 per cent. of its issued share capital and its voting power is owned by the Qualifying<br />
Company. Certain other tests as to the distribution of the subsidiary's profits and assets on a winding-up must<br />
also be satisfied.<br />
22
Keydata <strong>Income</strong> <strong>VCT</strong><br />
In the case of the Qualifying Holdings test in (e) above, a subsidiary will be a Qualifying Subsidiary if the<br />
majority of its issued share capital is owned by the Qualifying Company and the other tests are also satisfied.<br />
A trade will be a qualifying trade only if it does not to a substantial extent include non-qualifying activities<br />
(non-qualifying activities include dealing in land or shares, providing financial services or activities which are<br />
largely land-based, such as farming, hotels and nursing homes). In the case of a company which is preparing<br />
to carry on a qualifying trade, the qualifying trade must begin within two years of the issue to the <strong>VCT</strong> of the<br />
shares or securities, and must continue thereafter.<br />
(d)<br />
Approval as a <strong>VCT</strong><br />
A <strong>VCT</strong> must be approved as such at all times by HM Revenue and Customs. Approval has effect from<br />
the time specified in the approval, which cannot be earlier than the time at which the application for approval<br />
is made.<br />
A <strong>VCT</strong> cannot be approved until the relevant tests (see above under the heading, “Qualifying as a <strong>VCT</strong>”)<br />
have been satisfied throughout the most recent complete accounting period of the Company and HM<br />
Revenue and Customs is satisfied that the tests will be satisfied in relation to the accounting period of the<br />
Company which is current at the time the application is made.<br />
However, in order to facilitate the launch of the Companies, HM Revenue and Customs may grant provisional<br />
approval to a Company, notwithstanding that not all the relevant tests are satisfied at the time of the<br />
application, provided that HM Revenue and Customs is satisfied that the tests will be satisfied within a certain<br />
period. In particular, HM Revenue and Customs may grant provisional approval if it is satisfied that:<br />
(a) the relevant tests in (c), (d), (g) and (h) under the heading, “Qualifying as a <strong>VCT</strong>” above will either be<br />
satisfied in the accounting period current when the application for approval is made or the following<br />
accounting period;<br />
(b) the relevant test in (e) under the heading, “Qualifying as a <strong>VCT</strong>” above, will be satisfied in relation to any<br />
accounting period beginning not more than three years after the time when approval is given, or if earlier,<br />
when it has effect; and<br />
(c) the relevant tests in (c), (d), (e), (g) and (h) under the heading, “Qualifying as a <strong>VCT</strong>” above, will continue<br />
to be satisfied in all subsequent accounting periods.<br />
<strong>The</strong> Company has applied for approval as a <strong>VCT</strong>, effective from Admission.<br />
(e)<br />
Withdrawal of approval<br />
Approval as a <strong>VCT</strong> may be withdrawn by HM Revenue and Customs if the relevant tests (see above under<br />
the heading, “Approval as a <strong>VCT</strong>”) are not satisfied. Withdrawal of approval generally has effect from the time<br />
when notice of withdrawal is given to the Company but, in relation to capital gains of the Company only, can<br />
be backdated to not earlier than the first day of the accounting period commencing immediately after the last<br />
accounting period of the Company in which all the tests were satisfied.<br />
Where provisional approval is withdrawn, approval is deemed to have never been given. <strong>The</strong> taxation<br />
consequences of approval being deemed to have never been given are set out below under the heading<br />
“Loss of <strong>VCT</strong> status”.<br />
<strong>Tax</strong> Considerations for Shareholders<br />
(a) Individual Shareholders<br />
<strong>The</strong> following is a summary of the tax benefits available to <strong>VCT</strong>s and their individual shareholders who are either<br />
Qualifying Subscribers or Qualifying Purchasers. It assumes that the <strong>VCT</strong> has one class of shares only.<br />
Investors who are in any doubt as to their tax position are recommended to take professional advice.<br />
For each accounting period in respect of which a company is approved by the Inland Revenue as a <strong>VCT</strong>, the<br />
company is exempt from corporation tax on chargeable gains. <strong>The</strong> company continues to be liable to<br />
corporation tax on income in the usual way.<br />
A number of tax benefits are available to individuals, aged 18 or over, who invest in shares in a <strong>VCT</strong>. <strong>The</strong> tax<br />
benefits available to those individuals are different, depending on whether the individual subscribes for<br />
shares or acquires shares otherwise than by way of subscription. <strong>The</strong>re is also a limit (the Qualifying Limit)<br />
on the amount which, in any tax year, an individual may invest in <strong>VCT</strong>s which will qualify for any tax benefits.<br />
<strong>The</strong> current limit is £200,000. Investments in ordinary shares in <strong>VCT</strong>s in excess of the Qualifying Limit<br />
will not be eligible for any tax benefits.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
Set out below is a summary of the tax benefits available to Qualifying Subscribers and Qualifying<br />
Purchasers.<br />
(b)<br />
Qualifying Subscribers (not Qualifying Purchasers)<br />
<strong>The</strong> tax relief is available on aggregate investments in <strong>VCT</strong>s of up to £200,000 in any one tax year. Where<br />
advantage is taken of this relief, a Qualifying Subscriber will be able to obtain total initial tax relief of up to 40<br />
per cent. of the amount of his investment providing the subscription is made pre 6 April 2006, as shown in<br />
the table below.<br />
Example of initial tax relief<br />
No <strong>VCT</strong> tax relief<br />
<strong>VCT</strong> tax relief<br />
Initial Investment £100,000 £100,000<br />
40 per cent. income tax relief - (£40,000)<br />
Effective net cost of the investment £100,000 £60,000<br />
Whereas the above reliefs are only available on subscription, for Qualifying Subscribers and Qualifying<br />
Purchasers on investments up to a maximum of £200,000 in <strong>VCT</strong>s in any one tax year, dividends will be<br />
exempt from income tax; and any profits on the disposal of the shares will be exempt from capital gains tax.<br />
Relief from income tax up to the higher rate (40 per cent.) will be available on subscriptions for shares in a<br />
<strong>VCT</strong> made before 6 April 2006, subject to the Qualifying Limit (currently £200,000 in each tax year). <strong>The</strong><br />
relief, which will be available in the year of subscription, cannot exceed the amount which reduces the<br />
income tax liability of the Qualifying Subscriber in that year to nil. Relief may not be available if there is a loan<br />
linked with the investment.<br />
Relief will not be available, or, where given, will be withdrawn, either in whole or in part, where there is any<br />
disposal (except on death) of the shares (or of an interest in them or right over them) before the end of the<br />
period of three years beginning with the date on which the shares were issued to the Qualifying Subscriber.<br />
To obtain relief, a Qualifying Subscriber must subscribe for the shares in his own name, and not through a<br />
nominee, although the shares may subsequently be transferred into the name of a nominee. Where a<br />
Qualifying Subscriber has acquired shares in the same <strong>VCT</strong> on more than one occasion, he, or she, will be<br />
treated as disposing of the shares which he or she acquires on an earlier date, in priority to those which he<br />
acquires on a later date. Where he, or she, has acquired shares on the same occasion, some of which qualify<br />
for relief and some of which do not, he, or she, will be treated as disposing of the shares which do not qualify<br />
for relief in priority to those which qualify.<br />
(c)<br />
Qualifying Subscribers and Qualifying Purchasers<br />
(i) Exemption from capital gains tax<br />
Any gain or loss accruing to Qualifying Subscribers or Qualifying Purchasers on a disposal of shares in<br />
a company which was a <strong>VCT</strong> at the time he, or she, acquired the shares, and remained a <strong>VCT</strong> throughout<br />
his, or her, period of ownership, will neither be a chargeable gain, nor an allowable loss, for the purposes<br />
of capital gains tax.<br />
(ii) Exempt dividend income<br />
Dividend income will be exempt from tax. No tax credits will be repayable in respect of dividends paid.<br />
(iii) Procedure for obtaining income tax reliefs available to Qualifying Subscribers<br />
All Qualifying Subscribers will automatically be provided with certificates enabling them to claim income<br />
tax relief. <strong>The</strong> certificate will specify details of the shareholder, the date on which the shares were issued<br />
and the amount paid for the shares, and also will certify that the shares have been issued to a Qualifying<br />
Subscriber, and that certain other conditions are met to the best of the <strong>VCT</strong>’s knowledge and belief. <strong>The</strong><br />
relief may not be available unless the Qualifying Subscriber holds such a certificate.<br />
<strong>The</strong> investor may use the certificate to claim income tax relief either by obtaining from HM Revenue and<br />
Customs an adjustment to his tax coding under the PAYE system or by waiting until the end of the tax<br />
year and using a Self Assessment <strong>Tax</strong> Return to claim the relief.<br />
Dividends received on shares acquired in <strong>VCT</strong>s up to the qualifying maximum value of £200,000 per tax<br />
year need not be shown in the investor’s Self Assessment <strong>Tax</strong> Return.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
(d)<br />
Loss of <strong>VCT</strong> status<br />
<strong>The</strong> following is a summary of the tax consequences for <strong>VCT</strong>s and their shareholders resulting from a loss<br />
of <strong>VCT</strong> status.<br />
(i) <strong>VCT</strong>s<br />
Exemption from corporation tax on chargeable gains will not be available in relation to any gain realised<br />
after the <strong>VCT</strong> status is lost (and if approval is deemed never to have been given).<br />
(ii) Qualifying Subscribers<br />
<strong>Income</strong> tax relief on investment<br />
Where <strong>VCT</strong> approval is treated as never having been given, or where it is withdrawn before the shares<br />
have been held for three years, the relief will be withdrawn in full, and the Qualifying Subscriber will be<br />
assessed to tax in the tax year in which the relief was given on an amount equal to that relief. Interest on<br />
overdue tax may arise.<br />
(iii) Qualifying Subscribers and Qualifying Purchasers<br />
1. Exempt dividend income<br />
Dividend income will not be exempt from tax if the dividend is paid in respect of profits or gains arising or<br />
accruing in any accounting period in which the <strong>VCT</strong> is not approved as such.<br />
2. Exemption from capital gains<br />
Where <strong>VCT</strong> approval is treated as never having been given, any gains and losses arising on a disposal<br />
of shares in the <strong>VCT</strong> will be taxable and allowable in the ordinary way. Where <strong>VCT</strong> approval is withdrawn<br />
at any time (whether or not the shares have been held for three years), the Qualifying Subscriber or the<br />
Qualifying Purchaser will be treated as having disposed of his shares immediately before the <strong>VCT</strong> ceased<br />
to be approved, for an amount equal to their market value at that time, and as having immediately<br />
reacquired them at that value. Thus, any capital gain up to that date will be exempt from tax, but any gains<br />
arising after that date will be taxable in the ordinary way.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART V<br />
Additional Information<br />
1 Incorporation, Registration and Share Capital<br />
1.1 <strong>The</strong> Companies were incorporated and registered in England and Wales on 16 February 2005 under<br />
the name Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc with registered number 5366736 and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc<br />
with registered number 5366735 as public companies limited by shares under the Act. <strong>The</strong> principal<br />
legislation under which each Company operates is the Act.<br />
1.2 On 23 February 2005 the Registrar of Companies issued each Company with a certificate under<br />
section 117 of the Act. In February 2005 each Company gave notice to the Registrar of Companies of<br />
its intention to carry on business as an investment company under section 266 of the Act.<br />
1.3 <strong>The</strong> registered office of each Company is 19 Cavendish Square, London W1A 2AW and its principal<br />
place of business is at One Angel Court, London EC2R 7HJ. <strong>The</strong> telephone number of each Company<br />
is 020 770 6906<br />
1.4 Each Company’s memorandum of association provides that its principal object is to carry on the<br />
business of a Venture Capital Trust. <strong>The</strong> objects of each Company are set out in full in Clause 4 of the<br />
memorandum of association, which is available for inspection at the address specified in paragraph 8.<br />
1.5 Share Capital<br />
1.5.1 Each Company was incorporated with an authorised share capital of £300,000 divided into<br />
25,000,000 ordinary shares of 1p each and 50,000 redeemable preference shares of £1 each<br />
(“the Redeemable Preference Shares”) of which two ordinary shares were issued nil paid to<br />
the subscribers to the memorandum of each Company (“the Subscriber Shares”).<br />
1.5.2 By ordinary and special resolutions passed on 22 February 2005 by each Company:<br />
(a) the Directors were generally and unconditionally authorised in accordance with section<br />
80 of the Act to exercise all the powers of each Company to allot relevant securities (as<br />
defined in that section). This power was limited to the allotment of relevant securities up<br />
to an aggregate nominal amount of £300,000.<br />
Such authority is to expire on 21 February 2010 (unless previously revoked, varied or<br />
extended by the Company in general meeting);<br />
(b) the Directors were empowered (pursuant to section 95(1) of the Act) to allot or make<br />
offers or agreements to allot equity securities (as defined in section 94(2) of the Act) for<br />
cash pursuant to the authority referred to in paragraph (a) above as if section 89(1) of the<br />
Act did not apply to any such allotment, such power to expire at the conclusion of the<br />
Company’s next annual general meeting, or on the expiry of fifteen months following the<br />
passing of the resolution, whichever is the later (unless previously renewed or extended<br />
by the Company in general meeting). This power was limited to the allotment of equity<br />
securities in connection with:<br />
(i) the issue of 50,000 Redeemable Preference Shares in each Company to Keydata<br />
UK Limited;<br />
(ii) the Original Offers;<br />
(iii) an offer of equity securities by way of rights; and<br />
(iv) otherwise than pursuant to sub-paragraphs (i)-(iii), an offer of equity securities up to<br />
an aggregate nominal amount of 10 per cent. of the issued ordinary share capital of<br />
each Company immediately following closing of the Offers.<br />
(c) subject to approval by the High Court of Justice, the amount standing to the credit of the<br />
share premium account of the Company immediately after the final closing date of the<br />
Original Offers be cancelled;<br />
(d) each Company was authorised to make one or more market purchases (within the<br />
meaning of section 163(3) of the Act) of Shares provided that:<br />
(i) the maximum aggregate number of Shares authorised to be purchased is an amount<br />
equal to 15 per cent. of the issued ordinary share capital following the Offers;<br />
(ii) the minimum price which may be paid for a Share is 1 pence;<br />
(iii) the maximum price which may be paid for a Share is an amount, exclusive of<br />
expenses, equal to 105 per cent. of the average of the middle market prices shown<br />
in the quotations for a Share in the Daily Official List of the London Stock Exchange<br />
for the five business days immediately preceding the day on which that Share is<br />
purchased; and<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
(iv) unless renewed, the authority hereby conferred shall expire either at the conclusion<br />
of the next annual general meeting of the Company or on the expiry of 15 months<br />
from the passing of this resolution, whichever is the later to occur, save that the<br />
Company may, prior to such expiry, enter into a contract to purchase Shares which<br />
will or may be completed or executed wholly or partly after such expiry.<br />
1.6 On 22 February 2005, the 50,000 Redeemable Preference Shares in each Company were allotted and<br />
issued to Keydata UK Limited and paid up as to one-quarter so as to enable each Company to obtain<br />
a certificate under section 117 of the Act. <strong>The</strong> Redeemable Preference Shares were fully paid up on<br />
21 April 2005 and redeemed by the Company out of the proceeds of the Original Offers on 21 April<br />
2005. On redemption, each of the Redeemable Preference Shares was automatically redesignated as,<br />
and sub-divided into, 100 Shares in the authorised, but unissued, capital of the Company without any<br />
further resolution or consent.<br />
1.7 No share or loan capital of either Company is under option or has been agreed conditionally or<br />
unconditionally to be put under option.<br />
1.8 <strong>The</strong> Shares will be in registered form and temporary documents of title will not be issued. <strong>The</strong> ISIN of<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 is GB00B07T4F29 and the ISIN of Keydata <strong>Income</strong> <strong>VCT</strong> 2 is<br />
GB00B07T4H443.<br />
1.9 At the date of this document and following admission of the Shares to be issued under the Offers to<br />
the Official List, the authorised and issued share capital of each Company, assuming full subscription<br />
under the Offers, will be as follows:<br />
At Date of this Document<br />
Authorised<br />
Issued<br />
Number Nominal Value Number Nominal Value<br />
Ordinary Shares (1p) 30,000,000 £300,000 4,513,626 £45,136.26<br />
After Admission<br />
Authorised<br />
Issued<br />
Number Nominal Value Number Nominal Value<br />
Ordinary Shares (1p) 30,000,000 £300,000 24,513,626 £245,136.26<br />
Of the above Shares which will be in issue if the Offers are fully subscribed, 24,513,626 will have<br />
been issued and fully paid in cash by each Company. <strong>The</strong> unissued share capital will be at least<br />
£54,863.74 comprising 5,486,374 Shares (equivalent to approximately 18.3 per cent. of the authorised<br />
share capital).<br />
1.10 Each Company will be subject to the continuing obligations of the UK Listing Authority with regard to<br />
the issue of securities for cash and the provisions of section 89 of the Act (which confers on<br />
shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to<br />
be, paid up in cash) will apply to the balance of the authorised but unissued share capital of each<br />
Company which is not subject to the proposed disapplication referred to in sub-paragraph 10(a) below.<br />
1.11 Keydata <strong>Income</strong> <strong>VCT</strong> 1 has only one subsidiary, namely Green Power 1, which it wholly owns.<br />
1.12 Keydata <strong>Income</strong> <strong>VCT</strong> 2 has only one subsidiary, namely Green Power 2, which is wholly owns.<br />
1.13 Green Power I is incorporated in England and Wales under company number 5374052 and is a wholly<br />
owned subsidiary of the Keydata <strong>Income</strong> <strong>VCT</strong>1. Green Power 2 is incorporated in England and Wales<br />
under company number 5374066 and is a wholly owned subsidiary of Keydata <strong>Income</strong> <strong>VCT</strong> 2.<br />
1.14 On 12 August 2005 each Company issued fully paid a further 407,013 Shares.<br />
1.15 Over the period 23 February 2005 to 30 June 2005 pursuant to the Original Offers each Company<br />
issued fully paid 4,106,613 Shares.<br />
1.16 Save for the Offer Agreement referred to in paragraph 4.8, no member of either Group has entered<br />
into any related party transaction since their respective dates of incorporation.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
2. Memorandum and Articles of Association<br />
<strong>The</strong> Company’s memorandum of association provides that its principal object is to carry on the business of<br />
a Venture Capital Trust. <strong>The</strong> objects of the Company are set out in full in Clause 4 of the memorandum of<br />
association, which is available for inspection at the address specified in paragraph 11 below.<br />
<strong>The</strong> articles of association of each Company contain, inter alia, provisions to the following effect:<br />
2.1 Voting Rights<br />
Subject to any disenfranchisement as provided in paragraph 2.5 below and subject to any special<br />
terms as to voting on which any Shares may be issued, on a show of hands every member present in<br />
person (or being a corporation, present by authorised representative) shall have one vote and, on a<br />
poll, every member who is present in person or by proxy shall have one vote for every Share of which<br />
he is the holder. <strong>The</strong> Shares shall rank pari passu as to rights to attend and vote at any general<br />
meeting of the Company.<br />
2.2 Rights Attaching to the Redeemable Preference Shares<br />
Each of the Redeemable Preference Shares carries the right to a fixed dividend of 0.1 per cent. per<br />
annum (exclusive of any imputed tax credit available to shareholders) on the nominal amount thereof,<br />
but confers no right to vote except as otherwise agreed by the holders of a majority of the Shares. On<br />
a winding-up the Redeemable Preference Shares confer the right to be paid the nominal amount paid<br />
on such shares. <strong>The</strong> Redeemable Preference Shares are redeemable at any time by the Company.<br />
Each Redeemable Preference Share which is redeemed, shall, thereafter, be redesignated as and<br />
sub-divided into 100 Shares in the authorised, but unissued capital of the Company, without further<br />
resolution or consent.<br />
2.3 Transfer of Shares<br />
<strong>The</strong> Shares are in registered form and will be freely transferable. All transfers of Shares must be<br />
effected by a transfer in writing in any usual form or any other form approved by the Directors. <strong>The</strong><br />
instrument of transfer of a Share shall be executed by or on behalf of the transferor and, in the case<br />
of a partly paid share, by or on behalf of the transferee. <strong>The</strong> Directors may refuse to register any<br />
transfer of a partly paid Share, provided that such refusal does not prevent dealings taking place on<br />
an open and proper basis and may also refuse to register any instrument of transfer unless:<br />
(i) it is duly stamped (if so required), is lodged with the Company’s registrars or at such other<br />
place as the Directors may appoint and is accompanied by the certificate for the shares to<br />
which it relates and such other evidence as the Directors may reasonably require to show the<br />
right of the transferor to make the transfer;<br />
(ii) it is in respect of only one class of share; and<br />
(iii) the transferees do not exceed four in number<br />
2.4 Dividends<br />
<strong>The</strong> Company may in general meeting by ordinary resolution declare dividends in accordance with the<br />
respective rights of the members, provided that no dividend shall be payable in excess of the amount<br />
recommended by the Directors. <strong>The</strong> Directors may pay such interim dividends as appear to them to<br />
be justified. No dividend or other monies payable in respect of a Share shall bear interest as against<br />
the Company. <strong>The</strong>re are no fixed dates on which entitlement to a dividend arises.<br />
All dividends unclaimed for a period of twelve years after being declared or becoming due for payment<br />
shall be forfeited and shall revert to the Company.<br />
2.5 Disclosure of Interest in Shares<br />
If any member or other person appearing to be interested in Shares of the Company is in default in<br />
supplying within 14 days after the date of service of a notice requiring such member or other person<br />
to supply to the Company in writing all or any such information as is referred to in section 212 of the<br />
Act, the Directors may, for such period as the default shall continue, impose restrictions upon the<br />
relevant shares.<br />
<strong>The</strong> only sanction available in the case of a shareholding of less than 0.25% of the relevant class<br />
(calculated exclusive of treasury shares) is a prohibition against attending at meetings and voting.<br />
Additional sanctions in the case of a shareholding of 0.25% or more of the relevant class (calculated<br />
exclusive of treasury shares), include the withholding of payment of dividends (including shares issued<br />
in lieu of dividend) on the shares concerned; and restrictions on the transfer of shares, provided that<br />
restrictions on transfer do not apply to a sale to a bona fide unconnected third party (such as a sale<br />
through a recognised investment exchange for the purposes of the Financial Services and Market Act<br />
2000 or an overseas exchange or by the acceptance of a takeover offer).<br />
Any sanctions imposed upon a shareholding in such circumstances will cease to apply after a period<br />
of 7 days after the earlier of receipt by the Company of notice that the shareholding has been sold to<br />
a third party in the manner described above and due compliance, to the satisfaction of the Company,<br />
with notice under section 212 of the Act.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
2.6 Distribution of Assets on Liquidation<br />
On a winding-up any surplus assets will be divided amongst the holders of the Shares in the Company<br />
according to the respective numbers of Shares held by them and in accordance with the provisions of<br />
the Act, subject to the rights of any shares which may be issued with special rights or privileges. <strong>The</strong><br />
Articles provide that the liquidator may, with the sanction of an extraordinary resolution and any other<br />
sanction required by the Act, divide amongst the members in specie the whole or any part of the assets<br />
of the Company in such manner as he may determine.<br />
2.7 Changes in Share Capital<br />
(i) Without prejudice to any rights attaching to any existing shares, any share may be issued with<br />
such rights or restrictions as the Company may by ordinary resolution determine or in the<br />
absence of such determination, as the Directors may determine. Subject to the Act, the<br />
Company may issue shares, which are, or at the option of the Company or the holder are,<br />
liable to be redeemed.<br />
(ii) <strong>The</strong> Company may by ordinary resolution increase its share capital, consolidate and divide all<br />
or any of its share capital into shares of larger amount, sub-divide its shares or any of them<br />
into shares of smaller amounts, or cancel or reduce the nominal value of any shares which<br />
have not been taken or agreed to be taken by any person and diminish the amount of its share<br />
capital by the amount so cancelled or the amount of the reduction.<br />
(iii) Subject to the Act, the Company may by special resolution reduce its share capital, any capital<br />
redemption reserve and any share premium account, and may also, subject to the Act,<br />
purchase its own shares.<br />
2.8 Variation of Rights<br />
Whenever the capital of the Company is divided into different classes of shares, the rights attached to<br />
any class may (unless otherwise provided by the terms of issue of that class) be varied or abrogated<br />
either with the consent in writing of the holders of not less than three-fourths of the nominal amount of<br />
the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate<br />
meeting of such holders.<br />
2.9 Directors’ Interests<br />
2.9.1 A Director who is in any way, directly or indirectly, interested in a transaction or arrangement with the<br />
Company shall, at a meeting of the Directors, declare, in accordance with the Act, the nature of his<br />
interest.<br />
2.9.2 Provided that he has declared his interest in accordance with paragraph 2.9.1, a Director may be a<br />
party to or otherwise interested in any transaction or arrangement with the Company or in which the<br />
Company is otherwise interested and may be a director or other officer or otherwise interested in any<br />
body corporate promoted by the Company or in which the Company is otherwise interested. No<br />
Director so interested shall be accountable to the Company, by reason of his being a Director, for any<br />
benefit that he derives from such office or interest or any such transaction or arrangement.<br />
2.9.3 A Director shall not vote nor be counted in the quorum at a meeting of the Directors in respect of a<br />
matter in which he has any material interest otherwise than by virtue of his interest in shares,<br />
debentures or other securities of, or otherwise in or through the Company, unless his interest arises<br />
only because the case falls within one or more of the following paragraphs:<br />
(a) the giving to him of any guarantee, security or indemnity in respect of money lent or an<br />
obligation incurred by him at the request of or for the benefit of the Company or any of its<br />
subsidiary undertakings;<br />
(b) the giving to a third party of any guarantee, security or indemnity in respect of a debt or an<br />
obligation of the Company or any of its subsidiary undertakings for which he has assumed<br />
responsibility in whole or in part under a guarantee or indemnity or by the giving of security;<br />
(c) any proposal concerning the subscription by him of shares, debentures or other securities of<br />
the Company or any of its subsidiary undertakings or by virtue of his participating in the<br />
underwriting or sub-underwriting of an offer of such shares, debentures or other securities;<br />
(d) any proposal concerning any other company in which he is interested, directly or indirectly,<br />
whether as an officer or shareholder or otherwise, provided that he and any persons<br />
connected with him do not to his knowledge hold an interest in shares representing one per<br />
cent. or more of any class of the equity share capital of such company or of the voting rights<br />
available to members of the relevant company;<br />
(e) any proposal relating to an arrangement for the benefit of the employees of the Company or<br />
any subsidiary undertaking which does not award to any Director as such any privilege or<br />
advantage not generally awarded to the employees to whom such arrangement relates; and<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
(f) any arrangement for purchasing or maintaining for any officer or auditor of the Company<br />
or any of its subsidiaries insurance against any liability which by virtue of any rule of law<br />
would otherwise attach to him in respect of any negligence, breach of duty or breach of<br />
trust for which he may be guilty in relation to the Company or any of its subsidiaries of<br />
which he is a director, officer or auditor.<br />
2.9.4 When proposals are under consideration concerning the appointment of two or more Directors<br />
to offices or employment with the Company or any company in which the Company is<br />
interested the proposals may be divided and considered in relation to each Director separately<br />
and (if not otherwise precluded from voting) each of the Directors concerned shall be entitled<br />
to vote and be counted in the quorum in respect of each resolution except that concerning his<br />
own appointment.<br />
2.10 Remuneration of Directors<br />
2.10.1 <strong>The</strong> ordinary remuneration of the Directors shall be such amount as the Directors shall from<br />
time to time determine (provided that unless otherwise approved by the Company in general<br />
meeting the aggregate ordinary remuneration of such Directors, including fees, shall not<br />
exceed £200,000 per year) to be divided among them in such proportion and manner as the<br />
Directors may determine. <strong>The</strong> Directors shall also be paid by the Company all reasonable<br />
travelling, hotel and other expenses they may incur in attending meetings of the Directors or<br />
general meetings or otherwise in connection with the discharge of their duties.<br />
2.10.2 Any Director who, by request of the Directors, performs special services for any purposes of<br />
the Company may be paid such reasonable extra remuneration as the Directors may<br />
determine.<br />
2.10.3 <strong>The</strong> emoluments and benefits of any executive director for his services as such shall be<br />
determined by the Directors and may be of any description, including membership of any<br />
pension or life assurance scheme for employees or their dependants or, apart from<br />
membership of any such scheme, the payment of a pension or other benefits to him or his<br />
dependants on or after retirement or death.<br />
2.11 Retirement of Directors<br />
At the annual general meeting of the Company next following the appointment of a Director he<br />
shall retire from office. A Director shall also retire from office at of before the third annual<br />
general meeting following the annual general meeting at which he last retired and was reelected.<br />
A retiring Director shall be eligible for re-election. A Director shall be capable of being<br />
appointed or re-appointed a Director despite having attained the age of 70 or any other age<br />
and shall not be required to retire by reason of his having attained any particular age, subject<br />
to the provisions of the Act.<br />
2.12 Borrowing Powers<br />
Subject as provided below, the Directors may exercise all the powers of the Company to<br />
borrow money and to mortgage or charge its undertaking, property and uncalled capital.<br />
<strong>The</strong> Directors shall restrict the borrowings of the Company and exercise all voting and other<br />
rights or powers of control over its subsidiary undertakings (if any) so as to secure that the<br />
aggregate amount at any time outstanding in respect of money borrowed by the group, being<br />
the Company and its subsidiary undertakings for the time being (excluding intra-group<br />
borrowings), shall not without the previous sanction of an ordinary resolution of the Company<br />
exceed a sum equal to 15 per cent. of the aggregate total amount received from time to time<br />
on the subscription of shares of the Company, less the total amount paid by the Company to<br />
redeem or repurchase its shares, the aggregate of the amount paid up or credited as paid up<br />
on the allotted or issued share capital of the Company and the amount standing to the credit<br />
of the consolidated capital and revenue reserves of the group as shown by the latest audited<br />
consolidated balance sheet of the group adjusted as specified in the Articles.<br />
2.13 Distribution of Realised Capital Profits<br />
At any time when the Company has given notice in the prescribed form (which has not been<br />
revoked) to the Registrar of Companies of its intention to carry on business as an investment<br />
company (“a Relevant Period”) the distribution of the Company’s capital profits (within the<br />
meaning of section 266(2)(c) of the Act) shall be prohibited. <strong>The</strong> Board shall establish a<br />
reserve to be called the capital reserve. During a Relevant Period, all surpluses arising from<br />
the realisation or revaluation of investments and all other monies realised on or derived from<br />
the realisation, payment or other dealing with any capital asset in excess of the book value<br />
thereof and all other monies which are considered by the Board to be in the nature of accretion<br />
to capital shall be credited to the capital reserve. Subject to the Act, the Board may determine<br />
whether any amount received by the Company is to be dealt with as income or capital or partly<br />
one way and partly the other. During a Relevant Period, any loss realised on the realisation or<br />
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payment or other dealing with investments, or other capital losses, and, subject to the Act, any<br />
expenses, loss or liability (or provision therefor) which the Board considers to relate to a capital<br />
item or which the Board otherwise considers appropriate to be debited to the capital reserve<br />
shall be carried to the debit of the capital reserve. During a Relevant Period, all sums carried<br />
and standing to the credit of the capital reserve may be applied for any of the purposes for<br />
which sums standing to any revenue reserve are applicable except and provided that during a<br />
Relevant Period no part of the capital reserve or any other money in the nature of accretion to<br />
capital shall be transferred to the revenue reserves of the Company or be regarded or treated<br />
as profits of the Company available for distribution (as defined in section 263(2) of the Act)<br />
except for the purpose of redeeming or purchasing its own shares in accordance with sections<br />
160 and 162 of the Act or applied in paying dividends on any shares in the Company. In<br />
periods other than a Relevant Period, any amount standing to the credit of the capital reserve<br />
may be transferred to the revenue reserves of the Company or be regarded or treated as<br />
profits of the Company available for distribution (as defined by section 263(2) of the Act) or<br />
applied in paying dividends on any shares in the Company.<br />
2.14 Duration of the Company<br />
<strong>The</strong> Directors shall put an ordinary resolution to the annual general meeting of the Company<br />
in 2009 and, if passed, to every fifth subsequent annual general meeting, proposing that the<br />
Company should continue as a Venture Capital Trust for a further five year period. If any such<br />
resolution is not passed, the Directors shall draw up proposals for the reorganisation,<br />
reconstruction or voluntary winding up of the Company for submission to the members of the<br />
Company at an extraordinary general meeting to be convened by the Directors on a date not<br />
more than 9 months after such annual general meeting. Implementation of the proposals will<br />
require the approval of members by ordinary resolution. For the purposes of this, an ordinary<br />
resolution will not have been carried only if those members in person or by proxy who vote<br />
against such resolution hold in aggregate not less than twenty five per cent. of the issued<br />
share capital of the Company at such time entitled to attend and vote at such a meeting.<br />
2.15 General Meetings<br />
Annual General Meetings shall be held at such time and place as may be determined by the<br />
Directors and not more than fifteen months shall elapse between the date of one Annual<br />
General Meeting and that of the next.<br />
<strong>The</strong> Directors may, whenever they think fit, convene an Extraordinary General Meeting of the<br />
Company, and Extraordinary General Meetings shall also be convened on such requisition or<br />
in default may be convened by such requisitionists as are approved by the Statutes. Any<br />
meeting convened under this Article by requisitionists shall be convened in the same manner<br />
as nearly as possible as that in which meetings are to be convened by the Directors.<br />
An Annual General Meeting and an Extraordinary General Meeting called for the passing of a<br />
special resolution shall be called by not less than twenty-one days notice in writing, and all<br />
other Extraordinary General Meetings of the Company shall be called by not less than fourteen<br />
days notice in writing. <strong>The</strong> notice shall be exclusive of the day on which it is given and of the<br />
day of the meeting and shall specify the place, the day and hour of meeting, and in case of<br />
special business the general nature of such business. <strong>The</strong> notice shall be given to the<br />
Members, other than those who, under the provisions of these Articles or the terms of issue of<br />
the shares they hold, are not entitled to receive notice from the Company, to the Directors and<br />
to the Auditors. A notice calling an Annual General Meeting shall specify the meeting as such<br />
and the notice convening a meeting to pass a special resolution or an extraordinary resolution<br />
as the case may be shall specify the intention to propose the resolution as such.<br />
In every notice calling a meeting of the Company or any class of the Members of the Company<br />
there shall appear with reasonable prominence a statement that a Member entitled to attend<br />
and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him,<br />
and that a proxy need not also be a Member.<br />
If within half an hour from the time appointed for the meeting a quorum is not present, the<br />
meeting, if convened by or upon the requisition of Members, shall be dissolved. In any other<br />
case it shall stand adjourned to such time (being not less than fourteen days and not more than<br />
twenty-eight days hence) and at such place as the Chairman shall appoint. At any such<br />
adjourned meeting the Member or Members present in person or by proxy and entitled to vote<br />
shall have power to decide upon all matters which could properly have been disposed of at the<br />
meeting from which the adjournment took place. <strong>The</strong> Company shall give not less than seven<br />
clear days notice of any meeting adjourned for the want of a quorum and the notice shall state<br />
that the Member or Members present as aforesaid shall form a quorum.<br />
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<strong>The</strong> Chairman may, with the consent of the meeting (and shall, if so directed by the meeting)<br />
adjourn any meeting from time to time and from place to place. No business shall be<br />
transacted at any adjourned meeting other than the business left unfinished at the meeting<br />
from which the adjournment took place.<br />
2.16 Uncertificated Shares<br />
CREST, a paperless settlement system enabling securities to be evidenced otherwise than by<br />
a certificate and transferred otherwise than by a written instrument, was introduced in July<br />
1996. <strong>The</strong> articles of association are consistent with CREST membership and allow for the<br />
holding and transfer of shares in uncertificated form pursuant to the Regulations. <strong>The</strong><br />
Company anticipates that it will enter the CREST system on admission of the Shares to the<br />
London Stock Exchange.<br />
3. Directors and Other Interests<br />
3.1 <strong>The</strong> Companies and the Directors are not aware of any person who, as at the date of this document<br />
or immediately after the Offers (assuming full subscription), directly or indirectly, jointly or severally,<br />
exercises or could exercise control over either Company.<br />
3.2 <strong>The</strong> interests of the Directors and their immediate families in the share capital of each Company, all of<br />
which are beneficial as they are at the date of this document and as they are expected to be following<br />
the Offers and of connected persons within the meaning of section 346 of the Act, which have been<br />
notified to each Company pursuant to section 324 or 328 of the Act or are required to be entered into<br />
the register of directors’ interests maintained under the provisions of section 325 of the Act, or are<br />
interests of a person connected with a Director which would, if the connected person were a Director,<br />
be required to be disclosed under this paragraph and the existence of which is known to, or could with<br />
reasonable diligence, be ascertained by that Director are and will be as set out below together with the<br />
percentages which such interests represent of the Shares in issue as at the date of this document and<br />
if the Offers are fully subscribed:<br />
Name Number of Shares and Percentage Number of Shares and Percentage<br />
at the date of this document<br />
assuming Offers fully subscribed<br />
<strong>VCT</strong> 1 plc % <strong>VCT</strong> 2 plc % <strong>VCT</strong> 1 plc % <strong>VCT</strong> 2 plc %<br />
Stephen Oxenbridge 2,000 0.04 2,000 0.04 2,000 0.01 2,000 0.01<br />
David Hurst-Brown 12,500 0.28 12,500 0.28 12,500 0.05 12,500 0.05<br />
Stewart Owen Ford 5,000 0.11 5,000 0.11 5,000 0.02 5,000 0.02<br />
3.3 Save as disclosed above, no Director has any interest in the share capital or loan capital of either<br />
Company or any of its subsidiaries, nor does any person connected with any of the Directors (within<br />
the meaning of section 346 of the Act) have any such interest, whether beneficial or non-beneficial.<br />
3.4 <strong>The</strong>re are no service contracts in existence between any member of either Group and any of their<br />
directors nor are any such contracts proposed. <strong>The</strong> services of the Directors are provided to each<br />
Company pursuant to letters of appointment further details of which are set out in paragraph 4.5 below.<br />
All the Directors are non-executive.<br />
3.5 During the five years immediately prior to the date of this <strong>Prospectus</strong>, the Directors have been<br />
members of the administrative, management or supervisory bodies or partners of the companies and<br />
partnerships specified below (excluding subsidiaries of any company of which he is also a member of<br />
the administrative, management or supervisory)<br />
Name Current Directorships/Partnerships Past Directorships/Partnerships<br />
Stephen Oxenbridge<br />
King’s School, Bruton<br />
Elettra GP Limited.<br />
Oxenbridge & Co. Limited<br />
Darleyfield Limited<br />
Morgan Grenfell International<br />
Limited<br />
DB UK Bank Limited<br />
DSO Food Services Limited<br />
Information Software Solutions plc<br />
Riskfactor Solutions Limited<br />
50 Frome Road Management<br />
Company Limited<br />
Misys Eagleye Limited<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
Name Current Directorships/Partnerships Past Directorships/Partnerships<br />
David Hurst-Brown<br />
Anite Group Plc<br />
Ffastfill PLC<br />
Grove House Publishing Limited<br />
Imagination Technologies Group Plc<br />
Keydata AIM <strong>VCT</strong> Plc<br />
MGHB Investments Limited<br />
Smart Approach Limited<br />
Smart Approach Group PLC<br />
Tante Marie Catering Company Limited<br />
Tante Marie Limited<br />
Tante Marie School of Cookery Limited<br />
Electra Kingsway <strong>VCT</strong> 3 plc<br />
Azlan Group Limited<br />
Keydata UK Limited<br />
Name Current Directorships/Partnerships Past Directorships/Partnerships<br />
Stewart Owen Ford<br />
Fundworks UK Limited<br />
Keydata AIM <strong>VCT</strong> plc<br />
Keydata Investment Products Nominees<br />
Limited<br />
Keydata Investment Services Limited<br />
Keydata Media Management Limited<br />
Keydata Media & Marketing 1 Limited<br />
Keydata Media Services Limited<br />
Keydata UK Limited<br />
Pension Products Services Limited<br />
Skyline Printing Company Limited<br />
SOF Services Limited<br />
Macrocom (391) Limited<br />
3.6 In the five years prior to the date of this <strong>Prospectus</strong> the Directors have not had:<br />
(i) any convictions in relation to fraudulent offences;<br />
(ii) any bankruptcies, receiverships or liquidations when acting in the capacity of a member of any<br />
administrative, management or supervisory bodies or as a partner, founder or senior manager;<br />
and<br />
(iii) any official public incriminations and/ or sanctions by statutory or regulatory authorities<br />
(including designated professional bodies) and have not been disqualified by a court from<br />
acting as a member of the administrative, management or supervisory bodies of any company<br />
or from acting in the management or conduct of the affairs of any company.<br />
3.7 No Shares are being reserved for allocation to existing Shareholders, Directors or employees.<br />
3.8 Each Company will take out directors’ and officers’ liability insurance for the benefit of the Directors.<br />
3.9 <strong>The</strong> estimated aggregate remuneration, including benefits in kind, to be paid to the Directors in the<br />
financial period ending 28 February 2006 is £29,250 in respect of each Company excluding any VAT<br />
or national insurance contributions, based on the arrangements currently in place with each Director.<br />
3.10 <strong>The</strong> Companies and the Directors are not aware of any person who, as at the date of this document<br />
or immediately after the Offers (assuming full subscription), could be or is interested directly or<br />
indirectly in 3 per cent or more of the issued share capital of either Company (calculated, exclusive of<br />
treasury shares).<br />
3.11 No Director has any conflict of interest between his duties to each Company and their private interests<br />
or other duties.<br />
3.12 From incorporation of each Company until the date of this <strong>Prospectus</strong> the amount of remuneration paid<br />
(including any contingent or deferred compensation) and benefits in kind granted to each of the<br />
Directors of each Company and its subsidiaries for services in all capacities to each Company and<br />
their subsidiaries were as follows:<br />
£<br />
Stephen Oxenbridge 3,750<br />
David Hurst-Brown 3,000<br />
Stewart Ford 3,000<br />
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3.13 <strong>The</strong>re are no amounts set aside or accrued by either Company or its subsidiaries to provide pension,<br />
retirement or similar benefits to the Directors or director of either Investment Manager.<br />
3.14 None of the Directors or directors of either Investment Manager have any service contract with either<br />
Company or any of its subsidiaries providing for benefits upon termination of employment.<br />
3.15 Stewart Ford, a director of the Company, is interested in the Agreements referred to in paragraphs 4.1,<br />
4.7, 4.9 and 4.10 in his capacity as a director of Keydata Investment Services and a director and<br />
shareholder of its parent company.<br />
4. Material Contracts<br />
<strong>The</strong> following material contracts have been entered into by members of either Group other than contracts<br />
entered into in the ordinary course of business, since their respective dates of incorporation and there are no<br />
other contracts (not being contracts entered into in the ordinary course of business) which have been entered<br />
into by any member of either Group which contain a provision under which any member of either Group has<br />
any obligation or entitlement which is or may be material to the relevant Group as at the date of this<br />
document.<br />
4.1 Original Offer Agreement<br />
Under the Original Offers Agreement dated 23 February 2005 between, inter alia, each Company (1),<br />
its Directors (2), the Sponsor (3), Keydata Investment Services Limited (“KIS”) (4), and Falck<br />
Renewables Limited (5), the Sponsor agreed to act as sponsor to the Original Offers and KIS<br />
undertook as agent of the Companies to use its reasonable endeavours to procure subscribers under<br />
the Original Offers for up to 25,000,000 Shares. KIS was entitled to any interest earned on subscription<br />
monies prior to the allotment of Shares which will be applied to defray the costs of the Offers. Under<br />
the Original Offer Agreement, each Company paid to KIS a fee of 5 per cent. of the aggregate value<br />
of accepted applications for Shares received pursuant to the Offers. Each Company will also pays to<br />
KIS a broking commission of 0.9 per cent. per annum of the Net Asset Value of each Company<br />
payable quarterly in arrears, plus VAT (if any).<br />
Out of its fee, KIS paid all other costs and expenses of or incidental to the Original Offers and<br />
Admission including paying the Sponsor’s fee of £40,000. Authorised financial advisers were paid by<br />
KIS out of its capital raising fees. Total initial costs payable by each Company under the Original Offer<br />
Agreement were limited to 5 per cent of the gross proceeds of the Offers.<br />
KIS has agreed to indemnify each Company against annual running costs exceeding 2.0 per cent. of<br />
its Net Asset Value (excluding irrecoverable VAT).<br />
Under the Original Offer Agreement, which may be terminated by the Sponsor and KIS in certain<br />
circumstances of breach, the Investment Manager, KIS and the Directors have given certain<br />
warranties which are subject to certain limitations. Warranty claims must be made by no later than 3<br />
months after each Company’s first annual general meeting following the closing date of the Original<br />
Offers at which Shareholders approve that Company’s accounts. Each Company has also agreed to<br />
indemnify the Sponsor in respect of its role as Sponsor and under the Original Offer Agreement. <strong>The</strong><br />
indemnities are standard for an agreement of this nature and without limit as to time and amount. <strong>The</strong><br />
Original Offer Agreement may be terminated, inter alia, if any statement in the <strong>Prospectus</strong> is untrue,<br />
any material omission from the <strong>Prospectus</strong> arises or any breach of warranty occurs.<br />
4.2 Investment Management Agreement<br />
Agreements (“the Investment Management Agreements”) dated 23 February 2005 between each<br />
Company and the Investment Manager whereby the Investment Manager provides non-discretionary<br />
investment management and advisory services to that Company in respect of its portfolio of Qualifying<br />
Investments.<br />
<strong>The</strong> Investment Manager receives fees (exclusive of VAT) equal to 0.4 per cent. per annum of the Net<br />
Asset Value of each Company until the termination of the Investment Management Agreement, payable<br />
quarterly in arrears. <strong>The</strong> Investment Manager is not entitled to receive reimbursement of expenses<br />
incurred in performing its obligations, unless such expenses have been approved by the Company.<br />
Save in circumstances of losses and expenses arising due to an Investment Manager’s fraud,<br />
negligence or wilful default, each Company has agreed to indemnify the relevant Investment Manager<br />
and its employees and agents in respect of losses or expenses incurred in connection with the<br />
Investment Manager’s provision of services pursuant to the Investment Management Agreements or<br />
as a result of the Investment Managers acting on any instruction given by the relevant Company.<br />
<strong>The</strong>se indemnities are standard for agreements of this nature and are unlimited as to time and amount.<br />
<strong>The</strong> appointment continues for a period of 3 years and thereafter and on each subsequent anniversary<br />
will be automatically renewed for a further 12 calendar months’ period provided that on such renewal<br />
date (save in respect of the first renewal date) and for the previous 12 months, at least 75 per cent of<br />
the Company’s investments are Qualifying Investments. Either party is entitled at any time to give<br />
notice of immediate termination should the other party be in material default and the Agreement will<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
also be subject to earlier termination in certain other circumstances. Any action taken by the<br />
Investment Manager in the event of a breach of the Investment Management Agreement will be<br />
announced through the RNS.<br />
4.3 Secondment Agreement<br />
Agreements (each a “Secondment Agreement”) both dated 23 February 2005, entered into between<br />
each Investment Manager and Renewables Management whereby Renewables Management will<br />
make available to the relevant Investment Manager the expert services of the members of Investment<br />
Management Team in such locations and for such periods of time as will enable the Investment<br />
Manager to perform its obligations under the Investment Management Agreement.<br />
Renewables Management receives annual fees (inclusive of any VAT) equal to 0.65 per cent of<br />
amounts invested by the Company less an amount equal to the Investment Manager’s quarterly<br />
running costs until the termination of a Secondment Agreement. Such amount will be payable quarterly<br />
in arrears.<br />
<strong>The</strong> Secondment Agreement is co-terminous with the Investment Management Agreement (ie if the<br />
Investment Management Agreement is terminated for any reason, the Secondment Agreement will be<br />
automatically terminated).<br />
4.4 Directors’ Letter of Appointment<br />
Each of the Directors has entered into an agreement with each Company dated 23 February 2005 as<br />
referred to in paragraph 3.4 above whereby he is required to devote such time to the affairs of each<br />
Company as the Board reasonably requires consistent with his role as a non-executive Director. Each<br />
Director is entitled to receive an annual fee of £12,000 and the Chairman £15,000. Either party can<br />
terminate the agreement by giving to the others at least three months’ notice in writing to expire at any<br />
time after the date 15 months from the respective commencement dates.<br />
4.5 Administration Agreement<br />
An Agreement (“the Administration Agreement”) dated 23 February 2005 between each Company and<br />
KIS, whereby KIS provides certain administration services to the Companies in respect of all the<br />
investments of the Companies, for an annual fee of £25,000 (plus VAT) per Company.<br />
<strong>The</strong> Administration Agreement continues for a period of 3 years from Admission and thereafter is<br />
terminable by either party giving 12 months’ written notice, such notice to expire no earlier than the<br />
period 3 years from Admission, subject to early termination in certain circumstances.<br />
4.6 Company Secretarial Agreement<br />
An Agreement (“the Company Secretarial Agreement”) dated 23 February 2005 between each<br />
Company and Keydata Investment Services Limited, whereby Craig McNeil provides certain company<br />
secretarial services to the Companies for an annual fee of £12,000 (plus any applicable VAT) per<br />
Company, payable direct to Craig McNeil.<br />
<strong>The</strong> Company Secretarial Agreement continues for a period of 3 years and thereafter is terminable by<br />
either party giving 12 months’ written notice, such notice to expire no earlier than the period 3 years<br />
from Admission, subject to early termination in certain circumstances.<br />
4.7 Trade Name License Agreement<br />
An agreement (“the Trade Name License Agreement”) dated 23 February 2005 between Keydata UK<br />
Limited and each Company, whereby Keydata UK Limited grants to the Companies a non-exclusive<br />
license at no cost to use the “Keydata” name in connection with the Companies activities.<br />
<strong>The</strong> Trade Name License Agreement commenced from the date of the agreement and is terminable<br />
by either party if the other party suffers certain events of insolvency and is terminable by Keydata UK<br />
Limited if any person or persons acting in concert (as defined in the City Code on Takeovers and<br />
Mergers) obtains control of the Company.<br />
4.8 Offer Agreement<br />
Under the Offer Agreement dated 15 December 2005 between, inter alia, each Company (1), its Directors<br />
(2), the Sponsor (3), Keydata Investment Services Limited (“KIS”) (4), and Falck Renewables Limited (5),<br />
the Sponsor has agreed to act as sponsor to the Offers and KIS undertakes as agent of the Companies<br />
to use its reasonable endeavours to procure subscribers under the Offers for up to 40,000,000 Shares.<br />
KIS is entitled to any interest earned on subscription monies prior to the allotment of Shares which will<br />
be applied to defray the costs of the Offers. Under the Offer Agreement, each Company will pay to KIS<br />
a fee of 5 per cent. of the aggregate value of accepted applications for Shares received pursuant to the<br />
Offers. Each Company will also pays to KIS a broking commission of 0.9 per cent. per annum of the Net<br />
Asset Value of each Company payable quarterly in arrears, plus VAT (if any).<br />
Out of its fee, KIS will pay all other costs and expenses of or incidental to the Offers, including paying<br />
the Sponsor’s fee of £17,500 per Company. Authorised financial advisers will be paid by KIS out of its<br />
capital raising fees. Total initial costs payable by each Company under the Offer Agreement are limited<br />
to 5 per cent. of the gross proceeds of the Offers.<br />
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Keydata <strong>Income</strong> <strong>VCT</strong><br />
Under the Offer Agreement, which may be terminated by the Sponsor and KIS in certain circumstances of<br />
breach, the Investment Manager, KIS and the Directors have given certain warranties which are subject to<br />
certain limitations. Warranty claims must be made by no later than 90 days after publication of the Company’s<br />
accounts for the year ending 28 February 2007. Each Company has also agreed to indemnify the Sponsor<br />
in respect of its role as Sponsor and under the Offer Agreement. <strong>The</strong> indemnities are standard for an<br />
agreement of this nature and without limit as to time and amount. <strong>The</strong> Offer Agreement may be terminated,<br />
inter alia, if any statement in the <strong>Prospectus</strong> is untrue, any material omission from the <strong>Prospectus</strong> arises or<br />
any breach of warranty occurs.<br />
5. Litigation<br />
As at the date of this document, no member of either Group is or has been engaged in any governmental,<br />
legal or arbitration proceedings (including any such proceedings which are pending or threatened by or<br />
against any member of either Group of which they are aware) which may have, or has had during the period<br />
since its incorporation, a significant effect on the relevant Group’s financial position or profitability.<br />
6. General<br />
6.1 No member of either Group has or has had any employees since their respective dates of<br />
incorporation.<br />
6.2 Each Company’s accounting reference date is 28 February in each year.<br />
6.3 <strong>The</strong> Investment Managers are Green Power 1 Limited and Green Power 2 Limited, both of whose<br />
principal place of business is at One Angel Court, London EC2R 7HJ.<br />
6.4 <strong>The</strong> initial issue price of 100 pence per Share represents the nominal value of such Shares (1pence)<br />
plus a premium of 99 pence per Share and is payable in full on application.<br />
6.5 <strong>The</strong> Offers are not underwritten. <strong>The</strong> expenses of and incidental to the Offers and the listing of the<br />
Shares including registration and listing fees, printing, advertising and distribution costs, legal and<br />
accounting fees, expenses and commissions payable to Introducers will amount to 5 per cent. of the<br />
gross proceeds of the Offers (including irrevocable VAT) and are payable by the Promoter, in terms of<br />
the Offer Agreement. If the maximum of £20,000,000 for each Company is raised under the Offers the<br />
net proceeds for each Company will amount to £19,000,000. <strong>The</strong> net proceeds will be applied in<br />
accordance with the Companies’ investment strategy. In respect of each Company if the maximum<br />
subscription of £20,000,000 is raised under the Offer, Shares issued will represent 81.6 per cent. of<br />
each of the Company’s enlarged share capital.<br />
6.6 A typical Investor is expected by the Directors to be an individual (not a corporate), who is aged 18 or<br />
over. <strong>The</strong> individual should be willing to invest over the long term and be comfortable with higher risk<br />
investments, such as unquoted and smaller company shares. <strong>The</strong> Investor should either have<br />
experience of such investments and/or seek advice from an appropriate financial adviser.<br />
6.7 Ernst & Young LLP have been the only auditors of each Company since its incorporation and are<br />
members of the Institute of Chartered Accountants in England and Wales.<br />
6.8 Each Company has given notice to the Registrar of Companies, pursuant to section 266 of the Act, of<br />
its intention to carry on business as an investment company, which will enhance its ability to pay<br />
dividends out of income. Whilst it is an investment company, the Companies articles of association are<br />
required to preclude it from distributing capital profits (see paragraph 2.13 above). If and when capital<br />
profits are realised which the Directors consider it appropriate to distribute by way of dividend (for<br />
example on the disposal of a successful investment), the Directors would anticipate revoking this<br />
status, whereupon the prohibition in the Companies’ articles of association against distributing capital<br />
profits will automatically terminate.<br />
6.9 Green Power 1 and Green Power 2 have each given, and have not withdrawn, their written consent to<br />
the issue of this document with the inclusion of their name and their opinions in Part I in the form and<br />
context in which they are included.<br />
6.10 <strong>The</strong> Offers are sponsored by Howard Kennedy whose address is at 19 Cavendish Square, London<br />
W1A 2AW and which is authorised and regulated by the Financial Services Authority. <strong>The</strong> Sponsor has<br />
given, and has not withdrawn, its written consent to the issue of the document with the inclusion of its<br />
name in the form and context in which it is included.<br />
6.11 Keydata Investment Services has given, and has not withdrawn, its written consent to the issue of this<br />
document with the inclusion of its name in the form and context in which it is included.<br />
6.12 <strong>The</strong>re are no family relationships between any of the Directors or between any directors of either<br />
Investment Manager, or between any of the Directors and the directors of the Investment Manager.<br />
6.13 No member of either Group has entered into any related party transactions.<br />
36
Keydata <strong>Income</strong> <strong>VCT</strong><br />
6.14 <strong>The</strong> accountant reports set out in Parts VI and VII prepared by Ernst & Young LLP of George House,<br />
50 George Square, Glasgow G2 1RR and the reference to their name in the form and context in which<br />
they appear are included with the consent of Ernst & Young LLP.<br />
6.17 In the opinion of the Directors, the Companies compete with other venture capital entities and investors<br />
for suitable investment opportunities.<br />
6.18 Each Company had available at 13 December 2005 cash at bank of £4,278,154, which should be<br />
supplemented by the net proceeds of the Offers. This figure is unaudited. (Source: unaudited records<br />
prepared by the Companies).<br />
6.19 In the opinion of the Directors, there are no trends, uncertainties, demands, commitments or events<br />
that are reasonably likely to have a material effect on either Company’s prospects for the period ending<br />
28 February 2006.<br />
6.20 <strong>The</strong> Companies confirm that information set out in this document which has been sourced from a third<br />
party has been accurately re-produced and, so far as the Companies are aware and they are able to<br />
ascertain from information published by those third parties, no facts have been omitted which would<br />
render such information inaccurate or misleading.<br />
6.21 <strong>The</strong> unaudited net asset value per Share as at 30 November 2005 was 94.87p .<br />
6.22 Neither Company is regulated in the operation of its activities.<br />
6.23 <strong>The</strong> results of the Offer will be announced through the RNS.<br />
6.24 <strong>The</strong>re are no dividend restrictions or alternative procedures applicable to non-resident holders of<br />
the Shares.<br />
7. Working Captial<br />
7.1 Keydata <strong>Income</strong> <strong>VCT</strong> 1 is of the opinion that the Group has sufficient working capital for its present<br />
requirements, that is, for at least the next twelve months following the date of this document.<br />
7.2 Keydata <strong>Income</strong> <strong>VCT</strong> 2 is of the opinion that the Group has sufficient working capital for its present<br />
requirements, that is for at least the next 12 months following the date of this document.<br />
8. Capitalisation and indebtedness statement<br />
8.1 As extracted from its unaudited records as at 13 December 2005, being the last practical date prior to<br />
the publication of this document, the indebtedness of each Company comprised:-<br />
• Cash £4,278,154<br />
• Cash equivalent Nil<br />
• Total current debt Nil<br />
• Total non-current debt Nil<br />
Neither Company has any indirect or contingent indebtedness.<br />
8.2 <strong>The</strong> capitalisation of each Company comprised:<br />
• Share capital (including share premium) £4,287,945<br />
• Legal reserves Nil<br />
• Other reserves (£6,821)<br />
8.3 <strong>The</strong>re has been no material change in the capitalisation of either Company since 31 August 2005.<br />
9. Significant Changes<br />
9.1 <strong>The</strong>re has been no significant change in the financial or trading position of any member of either Group<br />
since 31 August 2005, the date to which the last audited interim financial statements of the Companies<br />
have been published.<br />
9.2 On the basis of full subscription under the Offers the gross assets of each Company will increase by<br />
£1 for each Ordinary Share subscribed under the Offers for that Company, the liabilities of each<br />
Company will increase by 5p for each Ordinary Share so subscribed and the Offers will be earning<br />
enhancing for each Company.<br />
37
Keydata <strong>Income</strong> <strong>VCT</strong><br />
10. Extraordinary General Meeting<br />
At an Extraordinary General Meeting of each Company held on 8 November 2005 the following Special and<br />
Ordinary Resolutions were passed:<br />
Special Resolutions<br />
(a) That, in substitution for any existing power under Section 95 of the Act, but without prejudice to the<br />
exercise of any such power prior to the date hereof, the Directors be and are hereby empowered,<br />
during the period commencing on the passing of this special resolution and expiring at the conclusion<br />
of the Company’s next annual general meeting, or on the expiry of 15 months following the passing of<br />
the resolution, whichever is the earlier (unless previously revoked, varied or extended by the Company<br />
in general meeting), pursuant to Section 95 of the Act, to allot equity securities (as defined in Section<br />
94(2) of the Act) for cash pursuant to the authority given in accordance with Section 80 of the Act as<br />
if Section 89(1) of the Act did not apply to any such allotment provided that this power shall be limited<br />
to the allotment of equity securities in connection with:<br />
i) the 2005/2006 Share Offer;<br />
ii) an offer of securities by way of rights;<br />
iii) the allotment for cash (otherwise than pursuant to sub-paragraph (i) and (ii) above) of equity<br />
securities up to an aggregate nominal amount of 10% of the issued share capital of the<br />
Company immediately following the final closing of the 2005/2006 Share Offer;<br />
(representing, at maximum subscription under the 2005/2006 Share Offer,81.6 per cent. in the<br />
case of (i) and 9.1 per cent. in the case of (iii) of the issued ordinary share capital of the<br />
Company.<br />
but so that this authority shall allow the Company to make offers or agreements before the expiry and<br />
the Directors may allot equity securities in pursuance of such offers or agreements as if the powers<br />
conferred hereby had not so expired;<br />
(b) That, subject to approval by the High Court of Justice, the amount standing to the credit of the share<br />
premium account of the Company immediately after the final closing date of the 2005/2006 Share Offer<br />
be cancelled.<br />
(c) That, the Company is and hereby is authorised to make one or more market purchases (within the<br />
meaning of section 163(3) of the Act) of Shares provided that:<br />
i) the maximum aggregate number of Shares that is purchased is an amount equal to 14.99%<br />
of the Shares in issue following the 2005/2006 Share Offer;<br />
ii) the minimum price paid for a Share is 1 pence;<br />
iii) the maximum price paid for a Share is an amount exclusive of expenses, equal to 105 per cent<br />
of the average of the middle market prices shown in the quotations for a Share in the Daily<br />
Official List of the London Stock Exchange for the five business days immediately preceding<br />
the day on which that Share is purchased;<br />
iv) the Company may validly make a contract to purchase Shares under the authority hereby<br />
conferred prior to the expiry of such authority which will or may be executed wholly or partly<br />
after the expiry of such authority, and may validly make a purchase of Shares in pursuance of<br />
any such contract; and<br />
Unless renewed, the authority conferred in resolution 3 above shall expire either at the conclusion of<br />
the next annual general meeting of the Company or on the expiry of fifteen months following the<br />
passing of this resolution, whichever is the later to occur, save that the Company may, prior to such<br />
expiry, enter into a contract to purchase Shares which will or may be completed or executed wholly or<br />
partly after such expiry.<br />
(d) Insofar as permitted under the Act and subject to the provisions of this Article, every Director or other<br />
officer (save for an officer who is employed as auditor of the Company) of the Company shall be<br />
indemnified out of the assets of the Company against all costs, charges, losses, expenses and<br />
liabilities which he may sustain or incur in or about the execution of his duties of his office or otherwise<br />
in relation thereto, in connection with any negligence, default, breach of duty or breach of trust by him<br />
in relation to the Company save that a Director of the Company shall not be entitled to be indemnified<br />
against any costs, charges, losses, expenses or liabilities incurred:<br />
i) to the Company or an associated company (as defined in section 309A(6) of the Act);<br />
ii) to pay a fine imposed in criminal proceedings;.<br />
iii) to pay a sum payable to a regulatory authority by way of a penalty in respect of noncompliance<br />
with any requirement of a regulatory nature, however arising;<br />
iv) in defending any criminal proceedings in which he is convicted;<br />
v) in connection with an application under section 144(3) or (4) of the Act in which the court<br />
refuses to grant him relief; or<br />
vi) in connection with an application under section 727 of the Act in which the court refuses to<br />
grant him relief.<br />
38
Keydata <strong>Income</strong> <strong>VCT</strong><br />
No officer of the Company other than a Director shall be liable for any loss, damage, or misfortune which may<br />
happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto.<br />
<strong>The</strong> Company shall have power to purchase and maintain for any director or officer of the Company or any<br />
associated company (as defined in section 309A(6) of the Act) insurance against any liability referred to in<br />
section 309A(1) of the Act.<br />
<strong>The</strong> Company may provide any Director of the Company with funds to meet expenditure incurred or to be<br />
incurred by him:<br />
a) in defending any civil or criminal proceedings brought against him in connection with any alleged<br />
negligence, default, breach of duty or breach of trust by him in relation to the Company; or<br />
b) in connection with any application to the court for relief from liability under section 144(3) or (4) of the<br />
Act for negligence, default, breach of duty or breach of trust in relation to the affairs of the Company,<br />
and the Company shall be permitted to do anything which would otherwise be prohibited under section 330<br />
of the Act to enable a Director to avoid incurring such expenditure, provided that if the Director is convicted<br />
or judgment is given against him or if the court refuses to grant relief, and upon such conviction or judgement<br />
or refusal becoming final (within the meaning of the Act), the Director shall become liable to repay to the<br />
Company the full amount of any such funds provided to him and any liability incurred by the Company to<br />
avoid a Director incurring any such expenditure shall fall to be discharged.<br />
Ordinary resolution<br />
(e) That, the proposed appointment by the Company of Keydata Investment Services Limited as the<br />
promoter in relation to the 2005/2006 Share Offer on the terms set out in the circular to Shareholders<br />
dated 10 October 2005 be and is hereby approved.<br />
11. Documents for Inspection<br />
Copies of the following documents are available for physical inspection at the offices of Howard Kennedy,<br />
19 Cavendish Square, London W1A 2AW, during normal business hours on any weekday (Saturdays,<br />
Sundays and public holidays excepted) during the life of this document.<br />
(a) the Memorandum and Articles of Association of each Company;<br />
(b) the material contracts referred to in paragraph 4 above;<br />
(c) the Directors’ letters of appointment referred to in paragraph 4.4 above;<br />
(d) the written consents referred to in paragraphs 6.9, 6.10, 6.11 and 6.14 above; and<br />
(e) the audited interim financial statements of each Company for the period ended 31 August 2005<br />
Dated: 15 December 2005<br />
39
Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART VI<br />
Financial Information - Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc<br />
Accountants <strong>Report</strong> on Financial Information<br />
George House<br />
50 George Square<br />
Glasgow G2 1RR<br />
<strong>The</strong> Directors,<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc<br />
19 Cavendish Square<br />
London W1A 2AW<br />
15 December 2005<br />
Dear Sirs<br />
KEYDATA INCOME <strong>VCT</strong> 1 PLC<br />
We report on the financial information set out in pages 41 to 47. This financial information has been prepared for<br />
inclusion in the <strong>Prospectus</strong> dated 15 December 2005 relating to the Offer for Subscription of up to 20,000,000<br />
Ordinary Shares of Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc on the basis of the accounting policies set out in Note 1 of<br />
paragraph 5. This report is required by Annex I item 20.1 of the <strong>Prospectus</strong> Regulation and is given for the<br />
purpose of complying with that paragraph and for no other purpose.<br />
Responsibilities<br />
<strong>The</strong> Directors of Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc are responsible for preparing the financial information on the basis of<br />
preparation set out in Note 1 of paragraph 5, and in accordance with UK GAAP.<br />
It is our responsibility to form an opinion as to whether the financial information gives a true and fair view, for the<br />
purposes of the <strong>Prospectus</strong> and to report our opinion to you.<br />
Basis of opinion<br />
We conducted our work in accordance with Standards for Investment <strong>Report</strong>ing issued by the Auditing Practices<br />
Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and<br />
disclosures in the financial information. It also included an assessment of significant estimates and judgments<br />
made by those responsible for the preparation of the financial information and whether the accounting policies are<br />
appropriate to the entity's circumstances, consistently applied and adequately disclosed.<br />
We planned and performed our work so as to obtain all the information and explanations which we considered<br />
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial<br />
information is free from material misstatement whether caused by fraud or other irregularity or error.<br />
Opinion<br />
In our opinion, the financial information gives, for the purposes of the <strong>Prospectus</strong> dated 15 December 2005, a true<br />
and fair view of the state of affairs of Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc as at 31 August 2005 and of its net revenue and<br />
cash flows for the period 16 February 2005 to 31 August 2005 in accordance with the basis of preparation as set<br />
out in Note 1, paragraph 5 and in accordance with UK GAAP.<br />
Declaration<br />
For the purposes of <strong>Prospectus</strong> Rule 5.5.3R (2)(f) we are responsible for this report as part of the <strong>Prospectus</strong> and<br />
declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best<br />
of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration<br />
is included in the <strong>Prospectus</strong> in compliance with item 1.2 of Annex I of the <strong>Prospectus</strong> Regulation.<br />
Yours faithfully<br />
Ernst & Young LLP<br />
40
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Financial Information<br />
1. BASIS OF PREPARATION<br />
<strong>The</strong> financial information set out in paragraphs 2 to 5 is based on the interim financial statements of Keydata<br />
<strong>Income</strong> <strong>VCT</strong> 1 plc (“the Company”) for the period 16 February 2005 to 31 August 2005 and has been<br />
prepared on the basis set out in Note 1 of paragraph 5, to which no adjustments were considered necessary.<br />
2. STATEMENT OF TOTAL RETURN<br />
Notes For the period 16 February 2005<br />
to 31 August 2005<br />
Revenue Capital Total<br />
£000 £000 £000<br />
Gains on investments 7 - - -<br />
<strong>Income</strong> 2 37 - 37<br />
-------- -------- --------<br />
37 - 37<br />
Management fees 3 - - -<br />
Other expenses 4 (44) - (44)<br />
-------- -------- --------<br />
(44) - (44)<br />
-------- -------- --------<br />
Return on ordinary activities before taxation (7) - (7)<br />
<strong>Tax</strong> on ordinary activities 5 - - -<br />
-------- -------- --------<br />
Return for the period attributable to<br />
equity shareholders (7) - (7)<br />
-------- -------- --------<br />
Return per share 6 (0.18)p - (0.18)p<br />
<strong>The</strong> total column of this statement is the profit and loss account of the Company. All revenue and capital<br />
items in the above statement derive from continuing operations. No operations were acquired or discontinued<br />
in the period.<br />
3. BALANCE SHEET<br />
As at 31 August 2005<br />
Notes £000<br />
Fixed assets<br />
Investments 7 -<br />
Current assets<br />
Debtors 9 31<br />
Cash at bank and in hand 4,254<br />
--------<br />
4,285<br />
Creditors: amounts falling due within one year 10 (4)<br />
--------<br />
Net current assets 4,281<br />
--------<br />
Net assets 4,281<br />
--------<br />
Capital and Reserves<br />
Called up share capital 11 45<br />
Share premium 12 4,243<br />
Capital reserve – realised 12 -<br />
Capital reserve – unrealised 12 -<br />
Revenue reserve 12 (7)<br />
--------<br />
Equity shareholders’ funds 15 4,281<br />
--------<br />
Net asset value per share 13 94.85p<br />
41
Keydata <strong>Income</strong> <strong>VCT</strong><br />
4. CASH FLOW STATEMENT<br />
Notes For the period 16 February 2005 to<br />
31 August 2005<br />
£000<br />
Net cash outflow from operating activities 14 (34)<br />
--------<br />
Capital expenditure and financial investment<br />
Purchase of investments -<br />
--------<br />
Net cash outflow before financing (34)<br />
--------<br />
Financing<br />
Net proceeds from issue of ordinary share capital 4,288<br />
--------<br />
Increase in cash 4,254<br />
--------<br />
5. Notes to the Financial Information<br />
1 Accounting Policies<br />
Basis of Preparation<br />
<strong>The</strong> financial information has been prepared under the historical cost convention, modified to include the<br />
revaluation of fixed asset investments and in accordance with UK GAAP and applicable accounting<br />
standards and with the 2003 Statement of Recommended Practice (SORP) for “Financial Statements of<br />
Investment Trust Companies” issued by the Association of Investment Trust Companies.<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc has a wholly owned subsidiary, Green Power 1 Limited established for the<br />
specific purpose of being the Company’s Investment Manager. Green Power 1 Limited has been excluded<br />
from consolidation on the basis that it is not material to the Group, having yet to register any transactions<br />
other than issuing share capital to the parent company, Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc.<br />
Investments<br />
Unquoted investments are stated at Directors’ valuation in accordance with the British Venture Capital<br />
Association guidelines for the valuation of venture capital investments. In determining this valuation the<br />
Directors give consideration to the period of investment, the performance of the investment against plan,<br />
appropriately discounted comparative listed companies’ price earnings ratios and any recent transactions.<br />
Any capital gains or losses, whether realised or unrealised, arising on fixed asset investments are taken<br />
directly to capital reserves.<br />
<strong>Income</strong><br />
Equity dividends are taken into account on the ex-dividend date, net of any associated tax credit. Fixed<br />
returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to<br />
reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course.<br />
All other income, including deposit interest receivable, is recognised on an accruals basis.<br />
Expenditure<br />
All expenditure is accounted for on an accruals basis. Investment management fees are allocated 75 per cent.<br />
to the capital reserve – realised and 25 per cent. to the revenue account in line with the Board’s expected long<br />
term split of investment returns in the form of capital gains and income respectively. Expenses incidental to the<br />
acquisition or disposal of an investment are included within the cost of the investment or deducted from the<br />
disposal proceeds as appropriate. All other expenditure is charged to the revenue account.<br />
Capital Reserves<br />
Realised profits and losses on the disposal of investments and 75 per cent. of investment management fees<br />
are accounted for in the Capital reserve - realised.<br />
Increases and decreases in the valuation of investments held at the year end are accounted for in the Capital<br />
reserve – unrealised.<br />
<strong>Tax</strong>ation<br />
<strong>The</strong> tax effect of expenditure is allocated between capital and revenue on the same basis as the particular<br />
item to which it relates, using the Company’s effective rate of tax for the accounting period. Any liability to<br />
corporation tax is based on net revenue for the period.<br />
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at<br />
the balance sheet date where transactions or events that result in an obligation to pay more tax in the future<br />
or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are<br />
differences between the Company’s taxable profits and its results as stated in the accounts. Deferred tax<br />
assets are only recognised to the extent they are recoverable.<br />
42
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing<br />
differences are expected to reverse, based on tax rates and laws that have been enacted or substantially<br />
enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis.<br />
2 <strong>Income</strong><br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
<strong>Income</strong> from listed investments:<br />
UK dividends -<br />
Unfranked investment income -<br />
------<br />
-<br />
Other income:<br />
Deposit interest 37<br />
------<br />
Total income 37<br />
------<br />
3 Management Fees<br />
For the period 16 February 2005 to 31 August 2005<br />
Revenue Capital Total<br />
£000 £000 £000<br />
Management fees - - -<br />
Irrecoverable VAT thereon - - -<br />
------ ------ ------<br />
- - -<br />
------ ------ ------<br />
<strong>The</strong> Company’s Investment Manager is Green Power 1 Limited a wholly owned subsidiary company of<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc. <strong>The</strong> investment management agreement dated 23 February 2005 will continue<br />
for a period of 3 years from 23 June 2005, the date of Admission, and thereafter and on each subsequent<br />
anniversary will be automatically renewed for a further 12 calendar months’ period provided that on such<br />
renewal date (save in respect of the first renewal date) and for the previous 12 months, at least 75% of the<br />
Company’s investments are qualifying investments. <strong>The</strong> agreement is subject to earlier termination in certain<br />
other circumstances.<br />
<strong>The</strong> Investment Manager receives an investment management fee of 0.4 per cent. per annum of the net<br />
asset value of the Company, calculated and payable quarterly in arrears. No investment fees were payable<br />
in respect of the period to 31 August 2005.<br />
4 Other Expenses<br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
General expenses 32<br />
Directors fees 10<br />
Auditors remuneration - for audit services 2<br />
-----<br />
44<br />
-----<br />
<strong>The</strong> maximum aggregate Directors emoluments authorised by the Articles of Association are £200,000<br />
per annum.<br />
43
Keydata <strong>Income</strong> <strong>VCT</strong><br />
5 <strong>Tax</strong> on ordinary activities<br />
<strong>The</strong> tax charge for the period is nil as allowable expenses exceed taxable income.<br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
Revenue on ordinary activities before taxation (7)<br />
-----<br />
UK Corporation <strong>Tax</strong> small company rate of 19 per cent. (1)<br />
Effects of: - expenses in excess of taxable income 1<br />
-----<br />
Actual current tax charge<br />
Nil<br />
----<br />
<strong>The</strong>re is no taxation in relation to capital gains or losses. No asset or liability has been recognised in relation<br />
to capital gains or losses on revaluing investments. <strong>The</strong> Company is exempt from such tax as a result of its<br />
intention to qualify as a Venture Capital Trust.<br />
<strong>The</strong>re is an unrecognised deferred tax asset of £1,000. <strong>The</strong> directors believe that there will be no taxable profits<br />
in the future against which the deferred tax assets can be offset and therefore the asset has not been recognised.<br />
6 Return per ordinary share<br />
For the period 16 February 2005 to 31 August 2005<br />
Revenue Capital Total<br />
Return per ordinary share: - basic (0.18)p - (0.18)p<br />
--------- --------- ---------<br />
Basic return per ordinary share is based on the net loss on ordinary activities after taxation of £7,000 and on<br />
3,780,373 ordinary shares, being the weighted average number of ordinary shares in issue during the period.<br />
Capital return per ordinary share is based on a net capital profit of £Nil for the period and on 3,780,373<br />
ordinary shares, being the weighted average number of ordinary shares in issue during the period.<br />
7 Investments<br />
As at 31 August 2005<br />
Investments<br />
£000<br />
Investments -<br />
------<br />
Opening valuation -<br />
Movement in period:<br />
Purchases at cost -<br />
Sales - proceeds -<br />
- realised gains -<br />
Movements unrealised -<br />
------<br />
Closing valuation -<br />
Closing book cost -<br />
------<br />
Closing unrealised gain -<br />
------<br />
On 22 February 2005, Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc subscribed for 1 ordinary share of £1 in Green Power 1<br />
Limited, representing the entire issued share capital of that Company.<br />
8 Significant Interests<br />
Notwithstanding the investment in Green Power 1 Limited, at the period end the Company did not hold 3 per<br />
cent. or more of the issued share capital of any investment.<br />
9 Debtors<br />
As at 31 August 2005<br />
£000<br />
Prepayments and accrued income 31<br />
-----<br />
44
Keydata <strong>Income</strong> <strong>VCT</strong><br />
10 Creditors<br />
As at 31 August 2005<br />
£000<br />
Accruals and deferred income 4<br />
-----<br />
11 Called up share capital<br />
As at 31 August 2005<br />
£000<br />
Authorised: 30,000,000 ordinary shares of 1p each 300<br />
-----<br />
Allotted, called-up and fully paid: 4,513,628 ordinary shares of 1p each 45<br />
-----<br />
During the financial period to 31 August 2005, ordinary shares of 1p each were issued as follows:<br />
Date of Issue Number of Issue Price Gross Proceeds<br />
Shares Issued (pence) £000<br />
16 February 2005 (on incorporation) 2 1p -<br />
1 April 2005 to 12 August 2005 4,513,626 100 4,514<br />
------------- --------<br />
4,513,628 4,514<br />
------------- --------<br />
<strong>The</strong> Company issued 50,000 Redeemable Preference Shares of £1 on 22 February 2005 for a consideration<br />
of £50,000. On 21 April 2005, the Company redeemed in full the 50,000 Redeemable Preference Shares for<br />
a consideration of £50,000. On redemption the authorised share capital of £50,000 was converted into an<br />
additional 5,000,000 ordinary shares of 1p each. <strong>The</strong> authorised ordinary share capital increased from<br />
25,000,000 to 30,000,000 ordinary shares of 1p each.<br />
12 Reserves<br />
As at 31 August 2005<br />
Date of Issue Share Capital Capital Revenue<br />
Premium reserve reserve reserve<br />
realised unrealised<br />
£000 £000 £000 £000<br />
Proceeds from issue of shares 4,469 - - -<br />
Costs related to issue of shares (226) - - -<br />
Net revenue return for period - - - (7)<br />
------ ------ ------ ------<br />
At 31 August 2005 4,243 - - (7)<br />
------ ------ ------ ------<br />
13 Net asset value per ordinary share<br />
Net asset value As at 31 August 2005<br />
per share Net assets attributable<br />
(pence) £000<br />
Ordinary shares - Basic 94.85p 4,281<br />
--------- ---------<br />
Net asset value per ordinary share is based on net assets at the period end and on 4,513,628 ordinary<br />
shares, being the number of shares in issue at period end.<br />
45
Keydata <strong>Income</strong> <strong>VCT</strong><br />
14 Reconciliation of net revenue to net cash inflow from operating activities<br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
Net revenue return on ordinary activities before taxation (7)<br />
Investment management fee charged to capital -<br />
Increase in debtors (31)<br />
Increase in creditors 4<br />
-----<br />
Net cash outflow from operating activities (34)<br />
-----<br />
15 Reconciliation of movement in shareholders’ funds<br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
Revenue return for period (7)<br />
Capital return for the period -<br />
-----<br />
(7)<br />
Issue of ordinary shares 4,288<br />
-----<br />
Closing shareholders’ funds 4,281<br />
-----<br />
16 Contingencies, guarantees and financial commitments<br />
<strong>The</strong>re were no contingencies, guarantees or financial commitments of the Company at the period end.<br />
17 Related party transactions<br />
One of the Directors of the Company, Mr S Ford, is a director of Keydata Investment Services Limited<br />
(“KISL”) and has an interest in excess of 20% in that company. As such, KISL is considered to be a related<br />
party to the Company. KISL acts as Promoter and Administrator to the Company. KISL, in its capacity as<br />
Promoter of the Offer for Subscription, receives annual commission of 0.9% per annum of the net asset value<br />
of the Company, calculated and payable quarterly in arrears. KISL is responsible for payment of all trail<br />
commission due to intermediaries. KISL also receives a fee of £25,000 per annum for administration<br />
services. In total, KISL earned fees of £22,000 during the period. Of those fees, £nil was still owing at the<br />
period end.<br />
KISL has agreed to indemnify the Company against annual running costs (excluding VAT) exceeding 2.0%<br />
of its net asset value.<br />
46
Keydata <strong>Income</strong> <strong>VCT</strong><br />
18 Financial instruments<br />
<strong>The</strong> Company’s financial instruments comprise cash balances, debtors and creditors that arise directly from<br />
its operations and, in due course, securities and other investments. <strong>The</strong>se financial instruments expose the<br />
Company to certain inherent risks, the most predominant of which are market price risk, liquidity risk and<br />
interest rate risk. Market price risk arises from fluctuations in the value of any investments held by the<br />
Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type<br />
of security or issuer. Due to their nature, unlisted investments may not be readily realisable. <strong>The</strong>refore, the<br />
Company holds sufficient cash and other assets which are readily realiseable to meet any funding<br />
requirements that may arise. It seeks to minimise interest rate risk by using equity (as opposed to debt)<br />
funding to grow its investment portfolio.<br />
<strong>The</strong> Company’s financial assets and liabilities are denominated in Sterling as follows:<br />
As at 31 August 2005<br />
Floating Rate Non-interest bearing Total<br />
£000 £000 £000<br />
Investments - - -<br />
Cash 4,254 - 4,254<br />
------- ------- -------<br />
4,254 - 4,254<br />
Other net short term liabilities - 27 27<br />
------- ------- -------<br />
Net assets 4,254 27 4,281<br />
------- ------- -------<br />
Interest received on cash balances is variable and is dependent on UK bank base rates.<br />
<strong>The</strong> Company had no uncommitted borrowing facilities at the period end.<br />
<strong>The</strong> fair value of financial assets and liabilities is represented by their carrying value in the balance sheet.<br />
19 Post balance sheet events<br />
<strong>The</strong> Company obtained shareholder approval on 8 November 2005 to raise up to £20 million in additional<br />
funds through a further ordinary share issue.<br />
47
Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART VI<br />
Financial Information - Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc<br />
Accountants <strong>Report</strong> on Financial Information<br />
George House<br />
50 George Square<br />
Glasgow G2 1RR<br />
<strong>The</strong> Directors,<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc<br />
19 Cavendish Square<br />
London W1A 2AW<br />
15 December 2005<br />
Dear Sirs<br />
KEYDATA INCOME <strong>VCT</strong> 2 PLC<br />
We report on the financial information set out in pages 49 to 55. This financial information has been prepared for<br />
inclusion in the <strong>Prospectus</strong> dated 15 December 2005 relating to the Offer for Subscription of up to 20,000,000<br />
Ordinary Shares of Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc on the basis of the accounting policies set out in Note 1 of<br />
paragraph 5. This report is required by Annex I item 20.1 of the <strong>Prospectus</strong> Regulation and is given for the purpose<br />
of complying with that paragraph and for no other purpose.<br />
Responsibilities<br />
<strong>The</strong> Directors of Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc are responsible for preparing the financial information on the basis of<br />
preparation set out in Note 1 of paragraph 5, and in accordance with UK GAAP.<br />
It is our responsibility to form an opinion as to whether the financial information gives a true and fair view, for the<br />
purposes of the <strong>Prospectus</strong> and to report our opinion to you.<br />
Basis of opinion<br />
We conducted our work in accordance with Standards for Investment <strong>Report</strong>ing issued by the Auditing Practices<br />
Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and<br />
disclosures in the financial information. It also included an assessment of significant estimates and judgments<br />
made by those responsible for the preparation of the financial information and whether the accounting policies are<br />
appropriate to the entity's circumstances, consistently applied and adequately disclosed.<br />
We planned and performed our work so as to obtain all the information and explanations which we considered<br />
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial<br />
information is free from material misstatement whether caused by fraud or other irregularity or error.<br />
Opinion<br />
In our opinion, the financial information gives, for the purposes of the <strong>Prospectus</strong> dated 15 December 2005, a true<br />
and fair view of the state of affairs of Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc as at 31 August 2005 and of its net revenue and<br />
cash flows for the period 16 February 2005 to 31 August 2005 in accordance with the basis of preparation as set<br />
out in Note 1, paragraph 5 and in accordance with UK GAAP.<br />
Declaration<br />
For the purposes of <strong>Prospectus</strong> Rule 5.5.3R (2)(f) we are responsible for this report as part of the <strong>Prospectus</strong> and<br />
declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best<br />
of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration<br />
is included in the <strong>Prospectus</strong> in compliance with item 1.2 of Annex I of the <strong>Prospectus</strong> Regulation.<br />
Yours faithfully<br />
Ernst & Young LLP<br />
48
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Financial Information<br />
1. BASIS OF PREPARATION<br />
<strong>The</strong> financial information set out in paragraphs 2 to 5 is based on the interim financial statements of Keydata<br />
<strong>Income</strong> <strong>VCT</strong> 2 plc (“the Company”) for the period 16 February 2005 to 31 August 2005 and has been<br />
prepared on the basis set out in Note 1 of paragraph 5, to which no adjustments were considered necessary.<br />
2. STATEMENT OF TOTAL RETURN<br />
Notes For the period 16 February 2005<br />
to 31 August 2005<br />
Revenue Capital Total<br />
£000 £000 £000<br />
Gains on investments 7 - - -<br />
<strong>Income</strong> 2 37 - 37<br />
-------- -------- --------<br />
37 - 37<br />
Management fees 3 - - -<br />
Other expenses 4 (44) - (44)<br />
-------- -------- --------<br />
(44) - (44)<br />
-------- -------- --------<br />
Return on ordinary activities before taxation (7) - (7)<br />
<strong>Tax</strong> on ordinary activities 5 - - -<br />
-------- -------- --------<br />
Return for the period attributable to<br />
equity shareholders (7) - (7)<br />
-------- -------- --------<br />
Return per share 6 (0.18)p - (0.18)p<br />
<strong>The</strong> total column of this statement is the profit and loss account of the Company. All revenue and capital<br />
items in the above statement derive from continuing operations. No operations were acquired or discontinued<br />
in the period.<br />
3. BALANCE SHEET<br />
As at 31 August 2005<br />
Notes £000<br />
Fixed assets<br />
Investments 7 -<br />
Current assets<br />
Debtors 9 31<br />
Cash at bank and in hand 4,254<br />
--------<br />
4,285<br />
Creditors: amounts falling due within one year 10 (4)<br />
--------<br />
Net current assets 4,281<br />
--------<br />
Net assets 4,281<br />
--------<br />
Capital and Reserves<br />
Called up share capital 11 45<br />
Share premium 12 4,243<br />
Capital reserve – realised 12 -<br />
Capital reserve – unrealised 12 -<br />
Revenue reserve 12 (7)<br />
--------<br />
Equity shareholders’ funds 15 4,281<br />
--------<br />
Net asset value per share 13 94.85p<br />
49
Keydata <strong>Income</strong> <strong>VCT</strong><br />
4. CASH FLOW STATEMENT<br />
Notes For the period 16 February 2005 to<br />
31 August 2005<br />
£000<br />
Net cash outflow from operating activities 14 (34)<br />
--------<br />
Capital expenditure and financial investment<br />
Purchase of investments -<br />
--------<br />
Net cash outflow before financing (34)<br />
--------<br />
Financing<br />
Net proceeds from issue of ordinary share capital 4,288<br />
--------<br />
Increase in cash 4,254<br />
--------<br />
5. Notes to the Financial Information<br />
1 Accounting Policies<br />
Basis of Preparation<br />
<strong>The</strong> financial information has been prepared under the historical cost convention, modified to include the<br />
revaluation of fixed asset investments and in accordance with UK GAAP and applicable accounting<br />
standards and with the 2003 Statement of Recommended Practice (SORP) for “Financial Statements of<br />
Investment Trust Companies” issued by the Association of Investment Trust Companies.<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc has a wholly owned subsidiary, Green Power 2 Limited established for the<br />
specific purpose of being the Company’s Investment Manager. Green Power 2 Limited has been excluded<br />
from consolidation on the basis that it is not material to the Group, having yet to register any transactions<br />
other than issuing share capital to the parent company, Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc.<br />
Investments<br />
Unquoted investments are stated at Directors’ valuation in accordance with the British Venture Capital<br />
Association guidelines for the valuation of venture capital investments. In determining this valuation the<br />
Directors give consideration to the period of investment, the performance of the investment against plan,<br />
appropriately discounted comparative listed companies’ price earnings ratios and any recent transactions.<br />
Any capital gains or losses, whether realised or unrealised, arising on fixed asset investments are taken<br />
directly to capital reserves.<br />
<strong>Income</strong><br />
Equity dividends are taken into account on the ex-dividend date, net of any associated tax credit. Fixed<br />
returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to<br />
reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course.<br />
All other income, including deposit interest receivable, is recognised on an accruals basis.<br />
Expenditure<br />
All expenditure is accounted for on an accruals basis. Investment management fees are allocated 75 per cent.<br />
to the capital reserve – realised and 25 per cent. to the revenue account in line with the Board’s expected long<br />
term split of investment returns in the form of capital gains and income respectively. Expenses incidental to the<br />
acquisition or disposal of an investment are included within the cost of the investment or deducted from the<br />
disposal proceeds as appropriate. All other expenditure is charged to the revenue account.<br />
Capital Reserves<br />
Realised profits and losses on the disposal of investments and 75 per cent. of investment management fees<br />
are accounted for in the Capital reserve - realised.<br />
Increases and decreases in the valuation of investments held at the year end are accounted for in the Capital<br />
reserve – unrealised.<br />
<strong>Tax</strong>ation<br />
<strong>The</strong> tax effect of expenditure is allocated between capital and revenue on the same basis as the particular<br />
item to which it relates, using the Company’s effective rate of tax for the accounting period. Any liability to<br />
corporation tax is based on net revenue for the period.<br />
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at<br />
the balance sheet date where transactions or events that result in an obligation to pay more tax in the future<br />
or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are<br />
differences between the Company’s taxable profits and its results as stated in the accounts. Deferred tax<br />
assets are only recognised to the extent they are recoverable.<br />
50
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing<br />
differences are expected to reverse, based on tax rates and laws that have been enacted or substantially<br />
enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis.<br />
2 <strong>Income</strong><br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
<strong>Income</strong> from listed investments:<br />
UK dividends -<br />
Unfranked investment income -<br />
------<br />
-<br />
Other income:<br />
Deposit interest 37<br />
------<br />
Total income 37<br />
------<br />
3 Management Fees<br />
For the period 16 February 2005 to 31 August 2005<br />
Revenue Capital Total<br />
£000 £000 £000<br />
Management fees - - -<br />
Irrecoverable VAT thereon - - -<br />
------ ------ ------<br />
- - -<br />
------ ------ ------<br />
<strong>The</strong> Company’s Investment Manager is Green Power 1 Limited a wholly owned subsidiary company of<br />
Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc. <strong>The</strong> investment management agreement dated 23 February 2005 will continue<br />
for a period of 3 years from 23 June 2005, the date of Admission, and thereafter and on each subsequent<br />
anniversary will be automatically renewed for a further 12 calendar months’ period provided that on such<br />
renewal date (save in respect of the first renewal date) and for the previous 12 months, at least 75% of the<br />
Company’s investments are qualifying investments. <strong>The</strong> agreement is subject to earlier termination in certain<br />
other circumstances.<br />
<strong>The</strong> Investment Manager receives an investment management fee of 0.4 per cent. per annum of the net<br />
asset value of the Company, calculated and payable quarterly in arrears. No investment fees were payable<br />
in respect of the period to 31 August 2005.<br />
4 Other Expenses<br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
General expenses 32<br />
Directors fees 10<br />
Auditors remuneration - for audit services 2<br />
-----<br />
44<br />
-----<br />
<strong>The</strong> maximum aggregate Directors emoluments authorised by the Articles of Association are £200,000<br />
per annum.<br />
51
Keydata <strong>Income</strong> <strong>VCT</strong><br />
5 <strong>Tax</strong> on ordinary activities<br />
<strong>The</strong> tax charge for the period is nil as allowable expenses exceed taxable income.<br />
For the period 16 February 2005 to 31 August 2005<br />
Revenue on ordinary activities before taxation (7)<br />
-----<br />
UK Corporation <strong>Tax</strong> small company rate of 19 per cent. (1)<br />
Effects of: - expenses in excess of taxable income 1<br />
-----<br />
Actual current tax charge<br />
Nil<br />
----<br />
<strong>The</strong>re is no taxation in relation to capital gains or losses. No asset or liability has been recognised in relation<br />
to capital gains or losses on revaluing investments. <strong>The</strong> Company is exempt from such tax as a result of its<br />
intention to qualify as a Venture Capital Trust.<br />
<strong>The</strong>re is an unrecognised deferred tax asset of £1,000. <strong>The</strong> directors believe that there will be no taxable profits<br />
in the future against which the deferred tax assets can be offset and therefore the asset has not been recognised.<br />
£000<br />
6 Return per ordinary share<br />
For the period 16 February 2005 to 31 August 2005<br />
Revenue Capital Total<br />
Return per ordinary share: - basic (0.18)p - (0.18)p<br />
--------- --------- ---------<br />
Basic return per ordinary share is based on the net loss on ordinary activities after taxation of £7,000 and on<br />
3,780,373 ordinary shares, being the weighted average number of ordinary shares in issue during the period.<br />
Capital return per ordinary share is based on a net capital profit of £Nil for the period and on 3,780,373<br />
ordinary shares, being the weighted average number of ordinary shares in issue during the period.<br />
7 Investments<br />
As at 31 August 2005<br />
Investments<br />
£000<br />
Investments -<br />
------<br />
Opening valuation -<br />
Movement in period:<br />
Purchases at cost -<br />
Sales - proceeds -<br />
- realised gains -<br />
Movements unrealised -<br />
------<br />
Closing valuation -<br />
Closing book cost -<br />
------<br />
Closing unrealised gain -<br />
------<br />
On 22 February 2005, Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc subscribed for 1 ordinary share of £1 in Green Power 2<br />
Limited, representing the entire issued share capital of that Company.<br />
8 Significant Interests<br />
Notwithstanding the investment in Green Power 2 Limited, at the period end the Company did not hold 3 per<br />
cent. or more of the issued share capital of any investment.<br />
9 Debtors<br />
As at 31 August 2005<br />
£000<br />
Prepayments and accrued income 31<br />
-----<br />
52
Keydata <strong>Income</strong> <strong>VCT</strong><br />
10 Creditors<br />
As at 31 August 2005<br />
£000<br />
Accruals and deferred income 4<br />
-----<br />
11 Called up share capital<br />
As at 31 August 2005<br />
£000<br />
Authorised: 30,000,000 ordinary shares of 1p each 300<br />
-----<br />
Allotted, called-up and fully paid: 4,513,628 ordinary shares of 1p each 45<br />
-----<br />
During the financial period to 31 August 2005, ordinary shares of 1p each were issued as follows:<br />
Date of Issue Number of Issue Price Gross Proceeds<br />
Shares Issued (pence) £000<br />
16 February 2005 (on incorporation) 2 1p -<br />
1 April 2005 to 12 August 2005 4,513,626 100 4,514<br />
------------- --------<br />
4,513,628 4,514<br />
------------- --------<br />
<strong>The</strong> Company issued 50,000 Redeemable Preference Shares of £1 on 22 February 2005 for a consideration<br />
of £50,000. On 21 April 2005, the Company redeemed in full the 50,000 Redeemable Preference Shares for<br />
a consideration of £50,000. On redemption the authorised share capital of £50,000 was converted into an<br />
additional 5,000,000 ordinary shares of 1p each. <strong>The</strong> authorised ordinary share capital increased from<br />
25,000,000 to 30,000,000 ordinary shares of 1p each.<br />
12 Reserves<br />
As at 31 August 2005<br />
Date of Issue Share Capital Capital Revenue<br />
Premium reserve reserve reserve<br />
realised unrealised<br />
£000 £000 £000 £000<br />
Proceeds from issue of shares 4,469 - - -<br />
Costs related to issue of shares (226) - - -<br />
Net revenue return for period - - - (7)<br />
------ ------ ------ ------<br />
At 31 August 2005 4,243 - - (7)<br />
------ ------ ------ ------<br />
13 Net asset value per ordinary share<br />
Net asset value As at 31 August 2005<br />
per share Net assets attributable<br />
(pence) £000<br />
Ordinary shares - Basic 94.85p 4,281<br />
--------- ---------<br />
Net asset value per ordinary share is based on net assets at the period end and on 4,513,628 ordinary<br />
shares, being the number of shares in issue at period end.<br />
53
Keydata <strong>Income</strong> <strong>VCT</strong><br />
14 Reconciliation of net revenue to net cash inflow from operating activities<br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
Net revenue return on ordinary activities before taxation (7)<br />
Investment management fee charged to capital -<br />
Increase in debtors (31)<br />
Increase in creditors 4<br />
-----<br />
Net cash outflow from operating activities (34)<br />
-----<br />
15 Reconciliation of movement in shareholders’ funds<br />
For the period 16 February 2005 to 31 August 2005<br />
£000<br />
Revenue return for period (7)<br />
Capital return for the period -<br />
-----<br />
(7)<br />
Issue of ordinary shares 4,288<br />
-----<br />
Closing shareholders’ funds 4,281<br />
-----<br />
16 Contingencies, guarantees and financial commitments<br />
<strong>The</strong>re were no contingencies, guarantees or financial commitments of the Company at the period end.<br />
17 Related party transactions<br />
One of the Directors of the Company, Mr S Ford, is a director of Keydata Investment Services Limited<br />
(“KISL”) and has an interest in excess of 20% in that company. As such KISL is considered to be a related<br />
party to the Company. KISL acts as Promoter and Administrator to the Company. KISL, in its capacity as<br />
Promoter of the Offer for Subscription, receives annual commission of 0.9% per annum of the net asset value<br />
of the Company, calculated and payable quarterly in arrears. KISL is responsible for payment of all trail<br />
commission due to intermediaries. KISL also receives a fee of £25,000 per annum for administration<br />
services. In total, KISL earned fees of £22,000 during the period. Of those fees, £nil was still owing at the<br />
period end.<br />
KISL has agreed to indemnify the Company against annual running costs (excluding VAT) exceeding 2.0%<br />
of its net asset value.<br />
54
Keydata <strong>Income</strong> <strong>VCT</strong><br />
18 Financial instruments<br />
<strong>The</strong> Company’s financial instruments comprise cash balances, debtors and creditors that arise directly from<br />
its operations and, in due course, securities and other investments. <strong>The</strong>se financial instruments expose the<br />
Company to certain inherent risks, the most predominant of which are market price risk, liquidity risk and<br />
interest rate risk. Market price risk arises from fluctuations in the value of any investments held by the<br />
Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type<br />
of security or issuer. Due to their nature, unlisted investments may not be readily realisable. <strong>The</strong>refore, the<br />
Company holds sufficient cash and other assets which are readily realiseable to meet any funding<br />
requirements that may arise. It seeks to minimise interest rate risk by using equity (as opposed to debt)<br />
funding to grow its investment portfolio.<br />
<strong>The</strong> Company’s financial assets and liabilities are denominated in Sterling as follows:<br />
As at 31 August 2005<br />
Floating Rate Non-interest bearing Total<br />
£000 £000 £000<br />
Investments - - -<br />
Cash 4,254 - 4,254<br />
------- ------- -------<br />
4,254 - 4,254<br />
Other net short term liabilities - 27 27<br />
------- ------- -------<br />
Net assets 4,254 27 4,281<br />
------- ------- -------<br />
Interest received on cash balances is variable and is dependent on UK bank base rates.<br />
<strong>The</strong> Company had no uncommitted borrowing facilities at the period end.<br />
<strong>The</strong> fair value of financial assets and liabilities is represented by their carrying value in the balance sheet.<br />
19 Post balance sheet events<br />
<strong>The</strong> Company obtained shareholder approval on 8 November 2005 to raise up to £20 million in additional<br />
funds through a further ordinary share issue.<br />
55
Keydata <strong>Income</strong> <strong>VCT</strong><br />
PART VIII<br />
Terms and Conditions of Application<br />
1. In these terms and conditions which apply to the Offers, "Applicant" means a person whose name appears<br />
in an Application Form, "Application" means the offer by an Applicant completing an Application Form and<br />
posting (or delivering) it to Keydata Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk,<br />
Reading RG1 7QF ("the Receiving Agents") or as otherwise indicated in this document or the <strong>Prospectus</strong>;<br />
and "<strong>Prospectus</strong>" means the document dated 15 December 2005 issued in connection with the Offers. Save<br />
where the context otherwise requires, words and expressions defined in this document have the same<br />
meanings when used in the Application Form and explanatory notes in relation thereto.<br />
<strong>The</strong> section headed "Application Procedure" in this Part VIII forms part of these terms and conditions of<br />
Application.<br />
2. <strong>The</strong> contract created by the acceptance of an Application under the Offers will be conditional on:<br />
(i) Admission becoming effective; and<br />
(ii) the Offer Agreement between each Company, its Directors, Keydata, Renewables Management and<br />
Howard Kennedy becoming unconditional in all respects, and not being terminated in accordance with<br />
its terms before Admission becomes effective.<br />
3. <strong>The</strong> right is reserved by each Company to present all cheques and bankers' drafts for payment on receipt<br />
and to retain share certificates and application monies pending clearance of successful Applicants' cheques<br />
and bankers' drafts. Each Company may treat Applications as valid and binding even if not made in all<br />
respects in accordance with the prescribed instructions and each Company may, at its discretion, accept an<br />
Application in respect of which payment is not received by such Company prior to the closing of the Offers.<br />
If any Application is not accepted in full or if any contract created by acceptance does not become<br />
unconditional, the application monies or, as the case may be, the balance thereof will be returned (without<br />
interest) by returning each relevant Applicant's cheque or bankers’ draft or by crossed cheque in favour of<br />
the Applicant, through the post at the risk of the person(s) entitled thereto. In the meantime, application<br />
monies will be retained by the Receiving Agents in a separate account. All Applications will be applied as to<br />
one-half for investment in Keydata <strong>Income</strong> <strong>VCT</strong> 1 and one-half for investment in Keydata <strong>Income</strong> <strong>VCT</strong> 2.<br />
Applications for an odd number of Shares will be rounded down and the excess subscription monies retained<br />
by the Promoter. Multiple applications are not permitted.<br />
4. By completing and delivering an Application Form, you:<br />
(i) offer to subscribe for the number of Shares specified in your Application Form (or such lesser number<br />
for which your Application is accepted) at the Offers Price on the terms of and subject to this document,<br />
including these terms and conditions, and subject to the memorandum and articles of association of<br />
each Company;<br />
(ii) agree that, in consideration of each Company agreeing that it will not on or prior to the Offers closing<br />
issue or allot any Shares the subject of the Offers to any person other than by means of the procedures<br />
referred to in this document, your Application may not be revoked and that this paragraph shall<br />
constitute a collateral contract between you and each Company which will become binding upon<br />
despatch by post to, or (in the case of delivery by hand) on receipt by, the Receiving Agents of your<br />
Application Form;<br />
(iii) agree and warrant that your cheque or banker's draft may be presented for payment on receipt and<br />
will be honoured on first presentation and agree that if it is not so honoured you will not be entitled to<br />
receive a certificate in respect of the Shares until you make payment in cleared funds for such Shares<br />
and such payment is accepted by each Company in its absolute discretion (which acceptance shall be<br />
on the basis that you indemnify it, the Sponsor, and the Receiving Agents against all costs, damages,<br />
losses, expenses and liabilities arising out of or in connection with the failure of your remittance to be<br />
honoured on first presentation) and you agree that, at any time prior to the unconditional acceptance<br />
by each Company of such late payment, each Company may (without prejudice to its other rights)<br />
avoid the agreement to subscribe such Shares and may issue or allot such Shares to some other<br />
person, in which case you will not be entitled to any payment in respect of such Shares, other than the<br />
refund to you, at your risk, of the proceeds (if any) of the cheque or bankers’ draft accompanying your<br />
Application, without interest;<br />
56
Keydata <strong>Income</strong> <strong>VCT</strong><br />
(iv) agree that, in respect of those Shares for which your Application has been received and is not rejected,<br />
your Application may be accepted at the election of each Company either by notification to the London<br />
Stock Exchange of the basis of allocation or by notification of acceptance thereof to the Receiving<br />
Agents;<br />
(v) agree that any monies refundable to you may be retained by the Receiving Agents pending clearance<br />
of your remittance and any verification of identity which is, or which each Company or the Receiving<br />
Agents may consider to be, required for the purposes of the Money Laundering Regulations 2003 and<br />
that such monies will not bear interest;<br />
(vi) authorise the Receiving Agents to send share certificate(s) in respect of the number of Shares for<br />
which your Application is accepted (or any lesser number for which your Application is accepted)<br />
and/or a crossed cheque for any monies returnable, by post, without interest, to your address set out<br />
in the Application Form and to procure that your name is placed on the register of members of each<br />
Company in respect of such Shares;<br />
(vii) agree that all Applications, acceptances of Applications and contracts resulting therefrom shall be<br />
governed in accordance with English law, and that you submit to the jurisdiction of the English courts<br />
and agree that nothing shall limit the right of each Company or the Sponsor to bring any action, suit or<br />
proceeding arising out of or in connection with any such Applications, acceptances of Applications and<br />
contracts in any other manner permitted by law or any court of competent jurisdiction;<br />
(viii) confirm that, in making such Application, you are not relying on any information or representation in<br />
relation to each Company other than the information contained in this document or the <strong>Prospectus</strong> and<br />
accordingly you agree that no person responsible solely or jointly for this document, or any part thereof<br />
or involved in the preparation thereof shall have any liability for such information or representation;<br />
(ix) irrevocably authorise the Receiving Agents and/or the Sponsor or any person authorised by either of<br />
them, as your agent, to do all things necessary to effect registration of any Shares subscribed by or<br />
issued to you into your name and authorise any representative of the Receiving Agents or of the<br />
Sponsor to execute any document required therefore;<br />
(x) agree that, having had the opportunity to read this document, you shall be deemed to have had notice<br />
of all information and statements concerning each Company and the Shares contained therein;<br />
(xi) confirm that you have reviewed the restrictions contained in paragraph 6 below and warrant that you<br />
are not a "US Person" as defined in the United States Securities Act of 1933 ("Securities Act") (as<br />
amended), nor a resident of Canada and that you are not applying for any Shares with a view to their<br />
offer, sale or delivery to or for the benefit of any US Person or a resident of Canada;<br />
(xii) declare that you are an individual aged 18 or over;<br />
(xiii) agree that all documents and cheques sent by post to, by or on behalf of each Company or the<br />
Receiving Agents will be sent at the risk of the person entitled thereto;<br />
(xiv) agree, on request by each Company, or the Sponsor on behalf of each Company, to disclose promptly<br />
in writing to each Company, any information which each Company or the Sponsor may reasonably<br />
request in connection with your Application including, without limitation, satisfactory evidence of<br />
identity to ensure compliance with the Money Laundering Regulations 2003 and authorise each<br />
Company and the Sponsor to disclose any information relating to your Application as it considers<br />
appropriate;<br />
(xv) agree that the Sponsor will not treat you as its customer by virtue of your Application being accepted<br />
or owe you any duties or responsibilities concerning the price of the Shares or the suitability for you of<br />
Shares or be responsible to you for providing the protections afforded to its customers;<br />
(xvi) where applicable, authorise each Company to make on your behalf any claim to relief from income tax<br />
in respect of any dividends paid by each Company;<br />
(xvii) declare that the Application Form has been completed to the best of your knowledge;<br />
(xviii) undertake that you will notify each Company if you are not or cease to be either a Qualifying<br />
Subscriber or beneficially entitled to the Shares; and<br />
(xix) declare that a loan has not been made to you or any associate, which would not have been made or<br />
not have been made on the same terms, but for you offering to subscribe for, or acquiring, Shares and<br />
that the Shares are being acquired for bona fide commercial purposes and not as part of a scheme or<br />
arrangement the main purpose of which is the avoidance of tax.<br />
57
Keydata <strong>Income</strong> <strong>VCT</strong><br />
5. No person receiving a copy of this document or an Application Form in any territory other than the UK may<br />
treat the same as constituting an invitation or offer to him, nor should he in any event use such Application<br />
Form unless, in the relevant territory, such an invitation or offer could lawfully be made to him or such<br />
Application Form could lawfully be used without contravention of any regulations or other legal requirements.<br />
It is the responsibility of any person outside the UK wishing to make an Application to satisfy himself as to<br />
full observance of the laws of any relevant territory in connection therewith, including obtaining any requisite<br />
governmental or other consents, observing any other formalities requiring to be observed in such territory<br />
and paying any issue, transfer or other taxes required to be paid by such territory.<br />
6. <strong>The</strong> Shares have not been and will not be registered under the Securities Act, as amended, and may not be<br />
offered or sold in the United States of America, its territories or possessions or other areas subject to its<br />
jurisdiction ("the USA"). In addition, each Company has not been and will not be registered under the United<br />
States Investment Company Act of 1940, as amended. <strong>The</strong> Investment Manager will not be registered under<br />
the United States Investment Advisers Act of 1940, as amended. No application will be accepted if it bears<br />
an address in the USA.<br />
7. <strong>The</strong> basis of allocation will be determined by the Company in its absolute discretion after consultation with<br />
the Sponsor. <strong>The</strong> right is reserved to reject in whole or in part and/or scale down and/or ballot any Application<br />
or any part thereof including, without limitation Applications in respect of which any verification of identity<br />
which each Company or the Receiving Agents consider may be required for the purposes of the Money<br />
Laundering Regulations 2003 has not been satisfactorily supplied. Dealings prior to the issue of certificates<br />
for Shares will be at the risk of Applicants. Dealings may commence before an applicant has been notified<br />
as to the amount allotted to him under the Offers. A person so dealing must recognise the risk that an<br />
Application may not have been accepted to the extent anticipated or at all.<br />
8. Money Laundering Regulations 2003<br />
Investors should be aware of the following requirements in respect of the above law.<br />
Money Laundering Regulations 2003 - Important note for applications of £9,000 or more. If the value of the<br />
Shares applied for is between £3,000 and £9,000 but is drawn on your own UK clearing bank account or on<br />
a building society cheque or bankers’ draft that has been endorsed with the client's name and address and<br />
stamped with a branch stamp then no further money laundering documents are required. However, if the<br />
value of the Shares applied for is £9,000 or more, or if the value of the Shares applied for is between £5,000<br />
and £9,000 but is drawn on a third party cheque, please supply either an Identity Verification Certificate from<br />
your financial intermediary or, if you do not have an adviser, one of the following:<br />
a) a copy of your passport or driving licence certified by a bank or solicitor stating that it is a "true copy<br />
of the original and a true likeness of the client" followed by your name.<br />
b) a recent bank or building society statement or utility bill showing your name and address. Your<br />
cheque or bankers' draft must be drawn in sterling on a account at a branch (which must be in the<br />
United Kingdom, the Channel Islands or the Isle of Man) of a bank which is either a member of the<br />
Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited, a member<br />
of the Scottish Clearing Banks Committee or the Belfast Clearing Committee or which has arranged<br />
for its cheques or bankers' drafts to be cleared through facilities provided for members of any of those<br />
companies or associations and must bear the appropriate sorting code in the top right hand corner.<br />
<strong>The</strong> right is reserved to reject any Application Form in respect of which the cheque or bankers' draft<br />
has not been cleared on first presentation. In the event that the offer does not reach its minimum<br />
subscription any monies returned will be sent by cheque crossed "A/C Payee only" in favour of the<br />
person named in Section 1 ("the Applicant").<br />
Dated 15 December 2005<br />
58
Keydata <strong>Income</strong> <strong>VCT</strong><br />
APPLICATION PROCEDURE<br />
Please send the completed Application Form together with your cheque or bankers draft to:<br />
Keydata Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk, Reading RG1 7QF.<br />
If you have any questions on how to complete the Application Form please contact Keydata Investment Services<br />
Limited on 020 7710 6900.<br />
Section 1<br />
Please insert your full name, permanent address, daytime telephone number, date of birth and national insurance<br />
number in Section 1. Your national insurance number, which you will find on your pay slip, is required to ensure you<br />
obtain your income tax relief. Joint applications are not permitted, but husbands and wives may apply separately.<br />
Section 2<br />
Please note that the minimum investment is £3,000. <strong>The</strong> maximum investment on which tax reliefs on investments<br />
in the Companies are available is £200,000 per individual per tax year. Attach your cheque or bankers' draft to the<br />
Application Form for the total amount of your investment. You should apply for an even number of Shares as your<br />
investment will be split equally between the Companies.<br />
Make cheques payable to "KEYDATA INCOME <strong>VCT</strong>" and crossed "A/C Payee only". Cheques must be from a<br />
recognised UK bank account and your payment must relate solely to this application. No receipt will be issued.<br />
Section 3<br />
Read the declaration below and sign and date the Application Form.<br />
If this form is completed and signed by the investor named in Section 1:<br />
By signing this form I HEREBY DECLARE THAT:<br />
(i) I have received the <strong>Prospectus</strong> dated 15 December 2005 and have read the terms and conditions of<br />
application therein and agree to be bound by them;<br />
(ii) I will be the beneficial owner of the Shares in Keydata <strong>Income</strong> <strong>VCT</strong> 1 PLC and Keydata <strong>Income</strong> <strong>VCT</strong> 2 PLC<br />
(as appropriate) issued to me under these Offers; and<br />
(iii) To the best of my knowledge and belief, the personal details I have given are correct.<br />
If this form is completed and signed by an authorised financial intermediary or any other person apart from<br />
the investor:<br />
By signing this form on behalf of the individual whose details are shown above, I make a declaration (on behalf of<br />
such individual) on the terms of sub-paragraphs (i) to (iii) above.<br />
Section 4<br />
Please complete the mandate instruction if you wish to have dividends paid directly into your bank or building<br />
society account.<br />
Section 5<br />
Authorised financial intermediaries who are entitled to receive commission should stamp and complete Section 5,<br />
giving their full name and address, telephone number and details of their authorisation under the Financial Services<br />
and Markets Act 2000. <strong>The</strong> right is reserved to withhold payment of commission if Keydata <strong>Income</strong> <strong>VCT</strong> 1 or Keydata<br />
<strong>Income</strong> <strong>VCT</strong> 2 plc (as appropriate) are not, in their sole discretion, satisfied that the authorised financial intermediary<br />
is authorised.<br />
Please tick the appropriate box to indicate which commission structure you would prefer. Alternatively, if you wish to<br />
waive some or all of your commission, please insert the number of Shares in respect of which you wish commission<br />
to be waived.<br />
Frequently asked questions<br />
Q: Who should I make the cheque payable to?<br />
A: Cheques should be made payable to "Keydata <strong>Income</strong> <strong>VCT</strong> ".<br />
Q: Where should I send my application?<br />
A: Your application form and cheque should be sent to Keydata Investment Services Limited, Floor 8, Fountain<br />
House, 2 Queens Walk, Reading RG1 7QF.<br />
Q: What happens after I invest?<br />
A: We will send you confirmation that we have received your application by return of post. You should expect to<br />
receive your share certificate and tax certificate within a few weeks of making your investment.<br />
Please call us if you have any questions on 020 7710 6900<br />
59
Keydata <strong>Income</strong> <strong>VCT</strong><br />
NOTES<br />
60
Keydata <strong>Income</strong> <strong>VCT</strong><br />
APPLICATION FORM<br />
Before completing this Application Form you should read the Terms and Conditions of Application and Application Procedure. This Offer<br />
opens on 15 December 2005 and the closing date will be 5 April 2006 (or earlier if the maximum subscription has been reached before<br />
then). <strong>The</strong> final closing date will be determined by the Directors and may be extended at their absolute discretion.<br />
Please complete in block capitals<br />
Section 1<br />
Title (Mr/Mrs/Miss/Ms/Other)<br />
Surname<br />
Forename(s) in full<br />
Date of Birth<br />
National Insurance Number<br />
(You should be able to find your NI number on a payslip, form P45 or P60, a letter from the Inland Revenue, a letter from the DSS, or pension order book)<br />
Permanent residential address<br />
Postcode<br />
E-mail<br />
Telephone (work)<br />
Telephone (home)<br />
Section 2<br />
I offer to subscribe for the following number of Ordinary Shares on the Terms and Conditions of Application set out in the <strong>Prospectus</strong> dated 15 December<br />
2005. Applications must be for a minimum of £3,000 (or such lesser number for which this application may be accepted). All investments will be split equally<br />
between Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc.<br />
I ENCLOSE A CHEQUE(S) OR BANKERS’ DRAFT(S) DRAWN ON A UK CLEARING BANK, MADE PAYABLE TO “KEYDATA INCOME <strong>VCT</strong> ”.<br />
Number of shares at 100p per share £<br />
Section 3<br />
Signature<br />
Date<br />
Section 4<br />
Dividends on Ordinary Shares held in Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc may be paid directly into bank and building society<br />
accounts. In order to facilitate this, please complete the mandate instruction form below.<br />
Dividends paid directly to your account will be paid in cleared funds on the dividend payment dates. Your bank or building society statement will identify<br />
details of the dividend as well as the dates and amounts paid.<br />
Please forward until further notice, all dividends that may from time to time become due on any Ordinary Shares now standing, or which may hereafter<br />
stand, in my name in the register of members of Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc to:<br />
Bank or Building Society reference number and details:<br />
Sort Code Number<br />
Name of Bank/Building Society<br />
Title of Branch<br />
Address of Branch<br />
Account Number<br />
Postcode<br />
Signature<br />
Date<br />
61
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Section 5<br />
Regulatory Introducer Certificate For Financial Adviser completion<br />
Date of commencement of business relationship<br />
I certify that: (please tick as appropriate)<br />
1. I have verified the identity of the Applicant in accordance with the Money Laundering<br />
Regulations 2003 and confirm that documentary evidence has been obtained and<br />
identity checks have been undertaken to confirm that the Applicant name and address<br />
as shown on the Application Form is correct:<br />
AND the details of the underlying records of identity are as described below (document name +<br />
detail + date, e.g. Driving licence SMITH625082JT4EG, Gas bill 30.11.05 cus<br />
ref 12345678) and copies are available for inspection if required:<br />
proof(s) of identity:<br />
3. I confirm that the Applicant is applying on his/her own behalf and not as nominee,<br />
trustee, or in a fiduciary capacity for any other person.<br />
Signature<br />
X<br />
Date<br />
X<br />
Financial Adviser details<br />
proof(s) of residency:<br />
any additional check(s) or relevant customer information:<br />
FSA No.<br />
Any additional instructions<br />
OR<br />
2. I have not verified the identity of the Applicant for the following reason:<br />
Select commission structure by ticking the<br />
appropriate box: 3 per cent. 2.25 per cent<br />
Insert ‘ALL’ or the number of Shares in respect of which you wish initial commission to be<br />
waived and reinvested in Shares<br />
KEYDATA INCOME <strong>VCT</strong> 1 PLC, KEYDATA INCOME <strong>VCT</strong> 2 PLC and KEYDATA INVESTMENT SERVICES LIMITED cannot accept<br />
responsibility if any details quoted by you are incorrect.<br />
62
Keydata <strong>Income</strong> <strong>VCT</strong><br />
APPLICATION FORM<br />
Before completing this Application Form you should read the Terms and Conditions of Application and Application Procedure. This Offer<br />
opens on 15 December 2005 and the closing date will be 5 April 2006 (or earlier if the maximum subscription has been reached before<br />
then). <strong>The</strong> final closing date will be determined by the Directors and may be extended at their absolute discretion.<br />
Please complete in block capitals<br />
Section 1<br />
Title (Mr/Mrs/Miss/Ms/Other)<br />
Surname<br />
Forename(s) in full<br />
Date of Birth<br />
National Insurance Number<br />
(You should be able to find your NI number on a payslip, form P45 or P60, a letter from the Inland Revenue, a letter from the DSS, or pension order book)<br />
Permanent residential address<br />
Postcode<br />
E-mail<br />
Telephone (work)<br />
Telephone (home)<br />
Section 2<br />
I offer to subscribe for the following number of Ordinary Shares on the Terms and Conditions of Application set out in the <strong>Prospectus</strong> dated 15 December<br />
2005. Applications must be for a minimum of £3,000 (or such lesser number for which this application may be accepted). All investments will be split equally<br />
between Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc.<br />
I ENCLOSE A CHEQUE(S) OR BANKERS’ DRAFT(S) DRAWN ON A UK CLEARING BANK, MADE PAYABLE TO “KEYDATA INCOME <strong>VCT</strong> ”.<br />
Number of shares at 100p per share £<br />
Section 3<br />
Signature<br />
Date<br />
Section 4<br />
Dividends on Ordinary Shares held in Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc may be paid directly into bank and building society<br />
accounts. In order to facilitate this, please complete the mandate instruction form below.<br />
Dividends paid directly to your account will be paid in cleared funds on the dividend payment dates. Your bank or building society statement will identify<br />
details of the dividend as well as the dates and amounts paid.<br />
Please forward until further notice, all dividends that may from time to time become due on any Ordinary Shares now standing, or which may hereafter<br />
stand, in my name in the register of members of Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc to:<br />
Bank or Building Society reference number and details:<br />
Sort Code Number<br />
Name of Bank/Building Society<br />
Title of Branch<br />
Address of Branch<br />
Account Number<br />
Postcode<br />
Signature<br />
Date<br />
63
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Section 5<br />
Regulatory Introducer Certificate For Financial Adviser completion<br />
Date of commencement of business relationship<br />
I certify that: (please tick as appropriate)<br />
1. I have verified the identity of the Applicant in accordance with the Money Laundering<br />
Regulations 2003 and confirm that documentary evidence has been obtained and<br />
identity checks have been undertaken to confirm that the Applicant name and address<br />
as shown on the Application Form is correct:<br />
AND the details of the underlying records of identity are as described below (document name +<br />
detail + date, e.g. Driving licence SMITH625082JT4EG, Gas bill 30.11.05 cus<br />
ref 12345678) and copies are available for inspection if required:<br />
proof(s) of identity:<br />
3. I confirm that the Applicant is applying on his/her own behalf and not as nominee,<br />
trustee, or in a fiduciary capacity for any other person.<br />
Signature<br />
X<br />
Date<br />
X<br />
Financial Adviser details<br />
proof(s) of residency:<br />
any additional check(s) or relevant customer information:<br />
FSA No.<br />
Any additional instructions<br />
OR<br />
2. I have not verified the identity of the Applicant for the following reason:<br />
Select commission structure by ticking the<br />
appropriate box: 3 per cent. 2.25 per cent<br />
Insert ‘ALL’ or the number of Shares in respect of which you wish initial commission to be<br />
waived and reinvested in Shares<br />
KEYDATA INCOME <strong>VCT</strong> 1 PLC, KEYDATA INCOME <strong>VCT</strong> 2 PLC and KEYDATA INVESTMENT SERVICES LIMITED cannot accept<br />
responsibility if any details quoted by you are incorrect.<br />
64
Keydata <strong>Income</strong> <strong>VCT</strong><br />
APPLICATION FORM<br />
Before completing this Application Form you should read the Terms and Conditions of Application and Application Procedure. This Offer<br />
opens on 15 December 2005 and the closing date will be 5 April 2006 (or earlier if the maximum subscription has been reached before<br />
then). <strong>The</strong> final closing date will be determined by the Directors and may be extended at their absolute discretion.<br />
Please complete in block capitals<br />
Section 1<br />
Title (Mr/Mrs/Miss/Ms/Other)<br />
Surname<br />
Forename(s) in full<br />
Date of Birth<br />
National Insurance Number<br />
(You should be able to find your NI number on a payslip, form P45 or P60, a letter from the Inland Revenue, a letter from the DSS, or pension order book)<br />
Permanent residential address<br />
Postcode<br />
E-mail<br />
Telephone (work)<br />
Telephone (home)<br />
Section 2<br />
I offer to subscribe for the following number of Ordinary Shares on the Terms and Conditions of Application set out in the <strong>Prospectus</strong> dated 15 December<br />
2005. Applications must be for a minimum of £3,000 (or such lesser number for which this application may be accepted). All investments will be split equally<br />
between Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc.<br />
I ENCLOSE A CHEQUE(S) OR BANKERS’ DRAFT(S) DRAWN ON A UK CLEARING BANK, MADE PAYABLE TO “KEYDATA INCOME <strong>VCT</strong> ”.<br />
Number of shares at 100p per share £<br />
Section 3<br />
Signature<br />
Date<br />
Section 4<br />
Dividends on Ordinary Shares held in Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc may be paid directly into bank and building society<br />
accounts. In order to facilitate this, please complete the mandate instruction form below.<br />
Dividends paid directly to your account will be paid in cleared funds on the dividend payment dates. Your bank or building society statement will identify<br />
details of the dividend as well as the dates and amounts paid.<br />
Please forward until further notice, all dividends that may from time to time become due on any Ordinary Shares now standing, or which may hereafter<br />
stand, in my name in the register of members of Keydata <strong>Income</strong> <strong>VCT</strong> 1 plc and Keydata <strong>Income</strong> <strong>VCT</strong> 2 plc to:<br />
Bank or Building Society reference number and details:<br />
Sort Code Number<br />
Name of Bank/Building Society<br />
Title of Branch<br />
Address of Branch<br />
Account Number<br />
Postcode<br />
Signature<br />
Date<br />
65
Keydata <strong>Income</strong> <strong>VCT</strong><br />
Section 5<br />
Regulatory Introducer Certificate For Financial Adviser completion<br />
Date of commencement of business relationship<br />
I certify that: (please tick as appropriate)<br />
1. I have verified the identity of the Applicant in accordance with the Money Laundering<br />
Regulations 2003 and confirm that documentary evidence has been obtained and<br />
identity checks have been undertaken to confirm that the Applicant name and address<br />
as shown on the Application Form is correct:<br />
AND the details of the underlying records of identity are as described below (document name +<br />
detail + date, e.g. Driving licence SMITH625082JT4EG, Gas bill 30.11.05 cus<br />
ref 12345678) and copies are available for inspection if required:<br />
proof(s) of identity:<br />
3. I confirm that the Applicant is applying on his/her own behalf and not as nominee,<br />
trustee, or in a fiduciary capacity for any other person.<br />
Signature<br />
X<br />
Date<br />
X<br />
Financial Adviser details<br />
proof(s) of residency:<br />
any additional check(s) or relevant customer information:<br />
FSA No.<br />
Any additional instructions<br />
OR<br />
2. I have not verified the identity of the Applicant for the following reason:<br />
Select commission structure by ticking the<br />
appropriate box: 3 per cent. 2.25 per cent<br />
Insert ‘ALL’ or the number of Shares in respect of which you wish initial commission to be<br />
waived and reinvested in Shares<br />
KEYDATA INCOME <strong>VCT</strong> 1 PLC, KEYDATA INCOME <strong>VCT</strong> 2 PLC and KEYDATA INVESTMENT SERVICES LIMITED cannot accept<br />
responsibility if any details quoted by you are incorrect.<br />
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