Income VCT Prospectus - The Tax Shelter Report

Tax Shelter Report 

Venture Capital Trusts Risk Warnings 

Allenbridge Group plc 

17 Hill Street 

Mayfair 

London, W1J 5NZ 

TEL 020 7409 1111 

FAX 020 7629 7026 

www.tax-shelter-report.co.uk 

editor@tax-shelter-report.co.uk 

Dear Investor, 

It is important you read, understand and acknowledge these notes. If you choose to 

make any VCT investment through Allenbridge please return a signed copy of the Risk 

Warning Notice with your application form and any money laundering documents. 

Any investment in a Venture Capital Trust (VCT) should be viewed as a high risk 

and long-term commitment (i.e. at least over five years, but plan for a seven to 

ten year timeframe). Due to the nature of the underlying assets, VCTs are 

highly illiquid. As such investors must be aware that they may have difficulty, 

or be unable to realise their shares at levels close to that that which reflect the 

value of the underlying assets. The tax incentives available to investors exist in order 

to attract investment into an asset class that warrants high risk categorisation. 

A brief summary detailing the primary risks of investing in VCTs: 

• VCTs invest in small UK companies. The failure rate of these is typically much 

higher than that of larger companies. 

• All VCTs are inherently illiquid. The underlying investments are primarily in 

small companies, either unquoted or listed on AIM or OFEX. These investments 

may be extremely difficult for fund managers to realise at fair value, and 

therefore shareholders may not be able to dispose of shares at a price that 

reflects the value of the underlying assets. There is unlikely to be an active 

market in the shares. Any buy-back policies in place are always subject to 

liquidity. The future realisation of shares at, or close to net asset value can 

never be guaranteed by a VCT manager. 

• VCTs are quoted on the stock exchange and, like investment trusts, usually trade 

at a discount to net asset value, which reflects the likely realisable value of the 

assets at any given time relative to the net value of the assets. 

• There is currently no effective secondary market for VCT shares, primarily 

because the initial income tax relief is only available to those subscribing for 

newly issued shares. This compounds the difficulties shareholders may encounter 

when attempting to sell VCT shares. 

• Shareholders must retain VCT investments for at least three years. If shares 

are sold within this period, the initial income tax relief will be required to be 

repaid. All tax reliefs are subject to change. 

• VCT managers have three years from the issue of shares to invest 70% of the 

fund's assets in qualifying companies. If this is not achieved the fund's status as a 

VCT is risked meaning investors could lose their tax relief. There are also 

Registered Office: Devonshire House, 60 Goswell Road, London, EC1N 7AD. Registered in England Number 1919345 

Regulated and authorised by the Financial Services Authority

additional requirements that VCTs must meet – if these are not met HMRC may 

withdraw the fund's status as a VCT and associated tax reliefs. 

• VCTs should be viewed as long-term investments. They are designed to give 

shareholders their capital gain through a tax free dividend stream. Although 

investors may be free to dispose of their holding after three years (in order to 

retain their initial income tax relief) we recommend investors should expect to 

retain their shares for no less than a period of seven to ten years. 

• Investment strategies employed by VCT managers differ enormously. To 

understand the likely nature of the underlying investments, timeframe and 

return expectations, we strongly recommend individuals considering a VCT 

investment to contact us for independent advice. 

• Always read the 'Risk Warning' notices included in VCT Securities Notes. 

• Beware of investing in VCTs that do not have critical mass. We believe that a VCT 

usually requires assets of approximately £10 million in order to achieve a spread 

of investments and thus lower company specific risk within the portfolio. Smaller 

VCTs may be less diverse (increasing risk) and prove more costly to manage. 

• VCTs are complex investment products and are only suitable for 

sophisticated investors. 

• Past VCT performance is not and never should be used as a guide to 

future VCT performance. The value of your investment may go down as 

well as up. 

The Allenbridge Group plc is authorised and regulated by the Financial Services 

Authority. The Allenbridge Website is intended for use by UK investors only and the 

investments referred are available only in the UK. 

Yours faithfully 

Anthony Yadgaroff 

Group Managing Director 



Tax Shelter Report 

Risk Warning Notice 

Allenbridge Group plc 

17 Hill Street 

Mayfair 

London, W1J 5NZ 

TEL 020 7409 1111 

FAX 020 7629 7026 

www.tax-shelter-report.co.uk 

editor@tax-shelter-report.co.uk 

INVESTMENTS WHICH ARE NOT READILY REALISABLE 

This warning notice draws attention to the risks associated with 

investments which are not readily realisable and which have been listed in 

the Venture Capital Trusts Risk Warnings as issued by us. 

• You may have difficulty in selling these investments at a reasonable 

price. 

• In some circumstances it may be difficult to sell them at any price. 

• Accordingly you should carefully consider whether such 

investments are suitable for you in the light of your 

personal circumstances and the financial resources available 

to you. 

I have received, read, understood and acknowledge the Venture Capital 

Trusts Risk Warnings and the risk warning notice set out above. 

Name 

Date 

Signature 



Keydata Income VCT 

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. 

If you are in any doubt about the contents of this document you should consult your bank manager, solicitor, 

accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 

2000 who specialises in advising upon investment in shares and other securities without delay. 

This document, which comprises a prospectus relating to Keydata Income VCT 1 plc (“Keydata Income VCT 1”) 

and Keydata Income VCT 2 plc (“Keydata Income VCT 2”), has been prepared in accordance with the Prospectus 

Rules made by the Financial Services Authority pursuant to Part VI of the Financial Services and Markets Act 2000. 

The Directors of the Companies whose names appear on page 19 of this Prospectus, together with the 

Companies, accept responsibility for the information contained herein. To the best of the knowledge of the 

Directors and the Companies (who have taken all reasonable care to ensure that such is the case) the information 

contained in this document is in accordance with the facts and does not omit anything likely to affect the import of 

such information. 

The existing Shares are traded on the London Stock Exchange and listed on the Official List of the UKLA . 

Application has been made to the UKLA for all of the Shares to be issued as described herein to be admitted to 

the Official List. Application has also been made to the London Stock Exchange for such Shares to be traded on 

the main market. It is expected that such admission will become effective and that dealings in such Shares will 

commence within 5 business days of allotment of such Shares. Applications for the Shares may be made at any 

time after the date of publication of this Prospectus prior to 5 April 2006. Your attention is drawn to the risk factors 

set out on pages 7 to 8 of this Prospectus. 

Howard Kennedy is acting as sponsor in connection with the Offers, and is not advising any other person or 

treating any other person as a customer or client in relation to the Offers, nor will it be responsible to any such 

person for providing the protections afforded to their respective customers or client or for providing advice in 

connection with the Offers. 

Keydata Income VCT 1 plc 

(Incorporated in England and Wales under the Companies Act 1985 with registered number 5366736) 


(Incorporated in England and Wales under the Companies Act 1985 with registered number 5366735) 

Offers for Subscription in respect of the 2005/2006 tax year of up to, in aggregate, 

20,000,000 ‘Ordinary’ Shares of 1p each totalling 40,000,000 for both Companies at an 

issue price of 100p each, payable in full in cash on application 

Sponsor 

Howard Kennedy 

Promoter 

Keydata Investment Services Limited 

Share capital of each Company following the issue of Ordinary Shares under the Offers and assuming full 

subscription 

Authorised 

Issued and maximum number to be issued, fully paid 

Nominal Value Number Nominal Value Number 

1p 30,000,000 Ordinary Ordinary Shares Ordinary Shares 

Shares of 1p each 1p 24,513,626 

The Offers will be open from 15 December 2005 until the earlier of 11 a.m. on 5 April 2006 and the date on which 

the maximum subscriptions are reached. The Directors may extend the closing date of the Offers at their 

discretion. Dealings will commence within 5 business days of the allotment date of the relevant Shares. The Offers 

are not underwritten. This is no minimum Offer size as the Companies are already capitalised pursuant to the 

Original Offers. In no circumstances will the Offer be revoked after dealings in the Shares to be issued under the 

Offer have commenced. 

The terms and conditions of application are set out in Part VIII of this document followed by an Application Form 

for use in connection with the Offers. The minimum subscription per Investor is £3,000. 

Completed Application Forms in respect of the Offers should be sent by post or delivered by hand to Keydata 

Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk, Reading RG1 7QF. 

3


CONTENTS 

Page 

Summary 5 

Risk factors 7 

Details of the Offers Timetable and Statistics 9 

Letter from the Chairman of Keydata Income VCT 1 plc and Keydata Income VCT 2 plc 10 

Part I 11 

Introduction 11 

Introduction to the Offers 11 

Principal Features of the Offers 11 

– The Companies’ Investment Strategy 11 

– Investment Pipeline 12 

– Typical contract terms and insurances 12 

– Experienced Investment Manager 12 

– Substantial tax reliefs for Investors 13 

Investment Policy 13 

– The Investment Management Team 14 

– The Board 15 

– Corporate Governance 15 

– Financial Information 15 

The Offers 16 

– Details of the Offers 16 

– The Promoter 16 

– Allotment, Dealings and Settlement 16 

Management, Administration and Costs 16 

– Investment Manager 16 

– Dividend Policy 17 

– Buy Back Policy 17 

– Reporting to Shareholders 17 

– VCT Company Status Monitoring and Inland Revenue Approval 17 

– Life of the Companies 17 

– Cancellation of the Companies’ Share Premium Account 18 

– Launch Costs 18 

– Introducers’ Commissions 18 

– Annual Fees and Expenses 18 

Part II 19 

Directors and Advisers 19 

Part III 20 

Definitions 20 

Part IV 22 

Tax Position of the Companies 22 

Tax Considerations for Shareholders 22 

Part V 26 

Additional Information 26 

Part VI 40 

Financial Information - Keydata Income VCT 1 plc 40 

Part VII 48 

Financial Information - Keydata Income VCT 2 plc 48 

Part VIII 56 

Terms and Conditions of Application 56 

Application Procedure 59 

Application Form 61 

4


SUMMARY 

The Opportunity 

• The Companies have raised some £9 million (£8.55 million net of costs) between February and August this year 

and are now seeking to raise a further £20 million for each Company (£19 million net of costs) by way of further 

share offers at £1 per share. 

• Funds raised have provided a solid foundation for the Companies and have enabled the Investment Manager 

to build a pipeline of prospective investment opportunities. 

• Most investors will be able to claim 40 per cent income tax relief on shares purchased on or before 5 April 2006. 

• The UK Government has set a target of producing over 15% of the UK’s electricity supply requirements from 

renewable energy by 2015 and the Scottish Executive has endorsed a target for Scotland of 20% by 2010. 

(Source: Planning Policy Statement 22: Renewable Energy). 

• Keydata Income VCT 1 and Keydata Income VCT 2 were established in order to provide Investors with an 

opportunity to invest, with significant tax benefits, in wind, biomass and waste-to-energy power generation (in 

this prospectus called “renewable” energy). 

• Keydata Income VCT 1 is managed by Green Power 1 and Keydata Income VCT 2 is managed by Green Power 

2, each supported by a team of individuals with considerable experience in the management of renewable 

power generation projects in the UK and Europe and who have an established track record in delivering 

investments with a quality, long-term income flow. 

• The Offers will open on 15 December 2005 and close on 5 April 2006, unless fully subscribed before then. 

The Investment Strategy of each Company is: 

• to maximise tax free dividend distributions to shareholders whilst minimising risk; 

• to invest in companies with strong and stable income flow which should support greater share liquidity than for 

other VCTs - it is the intention to secure a proper secondary market in the Companies’ shares based on the 

intended long term nature of the income stream and the tax free status of secondary investors; 

• to invest predominantly in fixed interest debt securities of investee companies; 

• to invest primarily in a portfolio of small companies directly involved in the operation of small onshore wind 

projects or in other renewable power generation projects, thereby diversifying the investment risks; 

• to focus only on projects which are either entering into construction or are already in operation to reduce the 

risk to Investors of exposure to projects at the planning and development stage; and 

• as soon as practical after the closing of the Offers, to have committed all available funds to renewable power 

investments. The current year should see a number of renewable energy products seeking investments and 

several of these should meet the Companies’ investment criteria. 

This low risk approach should provide a regular income to fund the target dividend once Keydata Income VCT 1 

and Keydata Income VCT 2 are fully invested and all their portfolio companies are operating at projected capacity, 

the Companies’ objective will be to pay an annual tax free dividend of 5 pence per Share per Company (equivalent 

to 13.88 pence per Share on the net investment for a higher rate taxpayer). However, no profit forecast is to be 

inferred or implied from this statement. The above investment strategy will only be varied to any material extent 

with the approval of Shareholders. 

Experienced Investment Manager 

• Green Power 1 and Green Power 2 (each an “Investment Manager”) are companies supported by a team of 

individuals (the “Investment Management Team”) with considerable experience in the management of 

renewable power generation projects in the UK and Europe. 

• The Investment Management Team is led by William Heller who is also Managing Director of Falck Renewables 

Limited which currently manages renewable energy projects with capital investment requirements in excess of 

£200 million. This data is unaudited. (Source: Falck Renewables Limited). 

• The Investment Management Team together has more than 100 years of experience investing in and managing 

renewable power and conventional power generation projects and currently manages in excess of £260 million 

of renewable power project investments and has been responsible for the development of over £1 billion of 

power projects over the past 10 years. This data is unaudited.(Source: Investment Management Team). 

5


The Boards 

• The Companies’ Boards are entirely independent of the Investment Managers. The Board members are 

Stephen Oxenbridge (as chairman), David Hurst-Brown and Stewart Ford. 

• The Boards, members of the Investment Management Team, the advisers and their families have invested a 

total of £184,000 under the Original Offers. 

Subscriptions under the Offers will be allocated equally between the Companies. 

Substantial Tax Reliefs 

• Investors will receive the following tax benefits: 

- income tax relief of 40 per cent. on the amount invested (irrespective of the rate of income tax that an Investor 

pays), up to a maximum investment of £200,000 per tax year, subject only to an Investor’s income tax liability 

in the year; 

- tax-free dividends; and 

- Capital Gains Tax exemption on sale. 

• For an Investor able to use the full tax credit, the targeted annual dividend yield of 5 pence per Share is 

equivalent to an annual tax free dividend of 8.33 per cent on their net investments. An 8.33 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 taxable 

income for a higher rate taxpayer, based on current income tax bands. 

Key Risks 

The attention of potential investors is drawn to the following factors associated with investing in companies such 

as the Companies: the past performance of the Investment Managers is no indication of future performance and 

there can be no guarantee that the Companies will meet their objectives or that suitable investment opportunities 

will be identified; investments in unquoted companies may not be readily realisable; whilst it is the intention of the 

directors that the Companies will be managed so as to qualify as VCTs there can be no guarantee that they will 

maintain such status - a failure to qualify could result in the Companies losing the tax reliefs previously obtained, 

resulting in adverse tax consequences for investors, including a requirement to repay the 40 per cent. income tax 

relief; levels and bases of, and relief from, taxation are subject to change and such changes could be retrospective; 

Qualifying companies have gross assets of not more than £15 million prior to investment and such companies 

generally have a higher risk profile than larger “blue chip” companies. Investors are advised to seek independent 

advice. Investors must retain their shares for three years or the 40 per cent income tax relief on the initial 

investment must be repaid. VCTs invest in small companies which may not produce the anticipated returns and 

investors could get back less than they invested. An investment in a VCT is a long term investment. 

Notice 

This Summary should be read as an introduction to the Prospectus. Any decisions to invest in shares in the 

Companies should be based on consideration of the Prospectus as a whole. Where a claim by an investor relating 

to the information contained in a prospectus is brought before a court, the investor might, under national legislation 

of the EEA States, have to bear the costs of translating the prospectus before the legal proceedings are initiated. 

Civil liability attaches to those persons who are responsible for this Summary, including any translation of the 

same, but only if the Summary is misleading, inaccurate or inconsistent when read together with other parts of the 

Prospectus. 

6


RISK FACTORS 

Prospective Investors should be aware that the value of Shares can fluctuate and that they may not get back the 

full amount they invest. In addition, there is no certainty that the market price of Shares will fully reflect the underlying 

net asset value or that Investors will be able to realise their shareholdings or that any dividends will be paid. 

The attention of prospective Investors is also drawn to the following risk factors associated with investing in 

companies such as Keydata Income VCT 1 or Keydata Income VCT 2 and to some of the risks associated with 

the renewable energy industry: 

Investment Risks 

• There can be no guarantees that the Companies will meet their objectives or that suitable investment 

opportunities will be identified. 

• The past performance of the Investment Managers (and the individuals in the Investment Management Team) 

is no indication of their future performance. 

• An investment in a Venture Capital Trust may not be suitable for all Investors. 

• Investments made by the Companies may be in companies whose shares are not readily marketable and 

therefore may be difficult to realise. There may also be constraints imposed on the realisation of investments 

to maintain the VCT tax status of the Companies. 

• Whilst it is the intention of the Directors that the Companies will be managed so as to qualify as a VCT, there 

can be no guarantee that they will qualify or that such status will be maintained. A failure to meet the qualifying 

requirements could result in the Companies losing the tax reliefs previously obtained, resulting in adverse tax 

consequences for Investors, including a requirement to repay the 40 per cent. income tax relief. The Company 

has applied for provisional approval as a VCT, effective from Admission. 

• It is possible for Investors to lose their tax reliefs by themselves taking or not taking certain steps. 

• Levels and bases of, and relief from, taxation are subject to change. Those shown in this document are based 

upon current legislation, practice and interpretation and not upon the individual circumstances of Shareholders. 

• Although it is anticipated that the Companies will be admitted to the Official List and to trading on the London 

Stock Exchange's market for listed securities, there may be an illiquid market for the Shares and in such 

circumstances Investors may find it difficult to sell their Shares for full value. 

• The Companies are seeking to raise up to £20 million per Company (£38 million net of costs) by the Offers. 

To the extent that a relatively small level of funds is raised, the Companies may not be able to create a 

diversified portfolio. 

• The Companies will invest in companies with gross assets of not more than £15 million prior to investment. 

Such companies generally have a higher risk profile than larger "blue chip" companies. 

• Investors must retain their shares for three years or the 40 per cent income tax relief on the initial investment 

must be repaid. 

• VCTs invest in small companies which may not produce the anticipated returns and investors could get back 

less than they invested. 

• An investment in a VCT is a long term investment. 

Specific Risks of Investment in Renewable Energy 

Like all business sectors, companies operating in the renewable energy sector are exposed to various market risks 

and while the Directors intend to structure the Companies’ investments so as to minimise their exposure to such 

risks, potential Investors will wish to be aware of some of the principal risks associated with the sector. The risks 

can be divided into the following main categories: 

(1) Regulatory Risks. The viability of most renewable energy investments depends on some kind of financial 

support regulated by the Government and there will always be a risk of change to the policy underpinning this. 

(2) Market Risks. Renewable energy prices in the UK typically reflect the price of conventionally produced 

electricity (including a link to UK power market indices) and the price of the special credits associated with the 

generation of renewable energy (such as Renewable Obligation Certificates - see Definitions Section). A fall in 

the market price of conventional power or the renewable energy credits can therefore adversely effect the 

profitability of investee companies. While this risk can be partially mitigated through the use of forward sale 

contracts, those contracts will not provide firm prices for the full life of the investment. 

7


(3) Wind Risk. In the wind power sector, average wind speeds in any period may be lower than projected or lower 

than wind speeds in prior years, thereby causing the financial performance of an investee company to 

fall below its expected level. This is a recognised risk in the wind sector and the Companies’ investments 

are intended to be in areas where there has been extensive testing and modelling of wind speeds at the 

relevant sites. 

(4) Fuel Risk. Non-wind renewable energy requires fuel, for example, waste or agricultural biomass. There is 

therefore a risk that the investee company may be exposed to an increase in the market price of such fuel or 

that the continued availability of such fuel becomes uncertain with the result that the relevant plant cannot 

operate. This is not an issue for wind plants which is likely to be the primary investment focus for the 

Companies. For other renewable investments such as biomass and waste-to-energy projects, the emphasis 

will therefore be on ensuring they have long term fuel contracts that ensure a high degree of price certainty. 

(5) Operating Risks. Although renewable energy plants are generally reliable, interruptions to operations can 

occur, for example due to machinery breakdown. It is therefore important to ensure that investee companies 

are protected by a combination of guarantees provided by the equipment manufacturers/installers and 

insurance policies. It should be noted that onshore wind power generation technology (which is expected to 

form the bulk of the Companies’ investment portfolios) has a long history of reliable operation. 

(6) Timing Risks. Because the Companies only intend to invest in renewable energy opportunities which are 

either in commercial operation or in construction (as opposed to development) the risk and expense of delays 

before commercial operations commence is limited primarily to interruptions occurring during construction. 

Where the Companies are investing in projects in construction they will therefore be keen to ensure that the 

contractors have given suitable completion guarantees and that lost income from other causes of interruption 

is insured. 

8


DETAILS OF THE OFFER TIMETABLE 

AND STATISTICS 

Offer Timetable 

Offer opens 15 December 2005 

First allotment 31 January 2006 

Dealings expected to commence 

Share and tax certificates expected to be despatched 

within 5 business days of 

allotment 

within ten business days of each 

allotment 

Initial closing date 5 April 2006 1 

1. The 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. 

Offer Statistics 

Offer Price per Share 

Initial net asset value per Share 

100 pence 

95 pence 

Maximum number of Shares in issue in each Company following the Offers 24,513,626 

Estimated maximum net proceeds of the Offers per Company £19,000,000 

Minimum number of Shares in issue in each Company following the Offers 4,513,626 

Minimum individual investment £3,000 

Commission available to introducers 

Initial 

2.25 per cent. of the amount 

invested 

plus 

Annual trail 

Annual trail 0.375 per cent. 

of the Net Asset Value of 

the relevant Shares invested 

(subject to an aggregate 

maximum of 2.25 per cent.) 

Alternatively, Introducers may elect to receive 3 per cent. initial commission with no annual trail commission. 

Introducers may waive their commission in return for more Shares for themselves or their clients (see page 59 

for further information). 

9


LETTER FROM THE CHAIRMAN OF 

KEYDATA INCOME VCT 1 PLC & 

KEYDATA INCOME VCT 2 PLC 



19 Cavendish Square 

London W1A 2AW 

15 December 2005 

Dear Investor, 

Keydata Income VCT 1 and Keydata Income VCT 2 are Venture Capital Trusts. They were established in order to 

invest in renewable energy companies with long-term income flows from high quality sources which should enable 

them to pay tax free dividend income to Shareholders. The Board are seeking further funds to allow applicants to 

enjoy the benefits of investing in established companies and to take advantage of the attractive income tax relief 

available (40%) on investment. 

To date, the Companies have raised £9 million (£8.55m net of costs) of the original £50 million sought under the 

Original Offers earlier on this year. The Board are now seeking to raise a further £40m (£38m net of costs) to take 

advantage of the increasing number of investment opportunities anticipated over the next 2 years and to allow 

Investors to take advantage of the 40% income tax relief available to Investors on or before 5 April 2006. The new 

funds will also enable the Companies to spread their fixed overheads over a larger asset base. 

Renewable energy has been selected as the focus investment sector for Keydata Income VCT 1 and Keydata Income 

VCT 2 since it is characterised by companies with stable, long-term income flows from sales of power to major utilities, 

many of which are household names. 

This makes Keydata Income VCT 1 and Keydata Income VCT 2 very different from most other VCTs currently in the 

market which are dedicated to more speculative investments in AIM-listed or start-up companies where the purpose 

is to maximise capital growth but which inevitably carry significantly greater investment risks. 

The tax reliefs available to VCT investors are extremely attractive: an investor investing £10,000 will receive a tax 

credit enabling them to reduce their personal tax bill in the tax year of investment by up to £4,000 and a tax-free 

dividend income, targeted at 5 per cent each year. 

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 

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 

taxable income for a higher rate tax payer, based on current income tax bands. 

It is the combination of the very generous tax reliefs for VCT investments together with the relatively secure prospects 

of regular annual income which makes Keydata Income VCT 1 and Keydata Income VCT 2 different. 

The boards of both Companies believe that there are a variety and number of investments that meet the Companies’ 

investment criteria that are currently in the market place. Consequently, the Companies’ investment strategy is to 

commit all available funds to renewable power investments as soon as practical after the closing of the Offers. 

These prospects are due to a team of highly experienced, senior level investment managers who between them have 

more than 100 years’ track record investing in the renewable energy sector and who have together overseen more 

than £260 million of investments in the renewable energy sector. 

As a sign of their belief in this investment product, the Directors, the investment management team, the advisers and 

with their families invested £184,000 in the Original Offer. 

We are therefore expecting strong demand for this product which will enable you to invest up to £200,000 in the 2005- 

2006 tax year and we very much look forward to welcoming you as a shareholder. 

Yours sincerely 

Stephen Oxenbridge 

Chairman 

10


PART I 

Introduction 

Introduction to the Offers 

Keydata Income VCT 1 and Keydata Income VCT 2 are specialist Companies. Their investment objective is to pay 

a regular tax-free dividend of approximately 5 per cent per annum to Shareholders by investing in a portfolio of 

small companies directly involved in the operation of renewable power generation projects, particularly in the 

onshore wind sector. 

The Companies have been structured to take advantage of the substantial tax changes announced by the 

Chancellor in the March 2004 Budget so that: 

- Investors will receive income tax relief of 40 per cent in the year 2005/2006 on the amount invested 

(irrespective of the rate of income tax that an Investor pays), up to a maximum investment of £200,000 per tax 

year, subject to an Investor’s income tax liability in the tax year 2005/2006; 

- dividends received by an Investor from a Company will be tax free; and 

- capital gains on the disposal of Shares will be tax free. 

In addition, the Companies’ investments will be structured to provide stable, long-term income yields (typically 

across a 20-25 year period) financed from the sale of electricity and related products to “blue-chip” utilities (such 

as Powergen, British Gas/Centrica and Scottish & Southern). The boards of both Companies believe that several 

renewable energy projects that could meet the Companies’ investment criteria are likely to be seeking investment 

in the current year. Consequently, the investment strategy of the boards of both Companies is to be fully 

committed to renewable energy investments as soon as practical after the closing of the Offers. 

The Offers will remain open until 5 April 2006 unless fully subscribed at an earlier date, or extended at the 

Directors’ discretion. Application will be made for all of the Shares in each Company allotted under the Offers to 

be admitted to the Official List and to trading on the London Stock Exchange’s market for listed securities. 

Principal Features of the Offers 

1) The Companies’ Investment Strategy 

The business strategy of the Companies is to invest in renewable energy opportunities in the United Kingdom. 

While this may include a variety of renewable generation technologies such as biomass and waste-to-energy, 

it is expected that the Companies’ investments will be primarily in the onshore wind sector since such wind 

projects offer a combination of proven technology, a stable income return (typically over a 20 to 25 year design 

life) from contracts with ”blue chip” customers (such as Powergen, British Gas/Centrica and Scottish & 

Southern) and they operate in a progressive and relatively low risk regulatory regime. 

The UK’s renewable energy sector is recognised to be buoyant at the present time, having been ranked 

amongst the top five countries in the world for renewables for several years. 

According to the British Wind Energy Association (“BWEA”) 

• 2004 was a record year for the UK wind industry and the BWEA predicts that expansion to 2010 should result 

in approximately £7 billion of new investment into the sector; 

• in the first 11 months of 2004 ten new wind projects were commissioned in the UK, totalling almost 240 MW 

of new capacity, with two more scheduled to be commissioned by the end of 2004; 

• there are currently 18 wind projects under construction in the UK totalling over 600 MW; 

• in 2004, a further 33 new wind projects were approved through the UK planning system totalling 

approximately 800 MW of new capacity; and 

• there are presently 94 UK onshore projects undergoing planning, representing 4767 MW capacity. 

To put this into context, the total power generation in the UK is approximately 80,000 MW. (Source: BWEA) 

The developers of these windfarms include subsidiaries of well-known companies such as Scottish Power, 

National Power, AMEC, and Powergen together with renewables specialists such as Fred Olsen, Renewable 

Energy Systems, Falck Renewables and Airtricity. 

Investments are envisaged to take the form of the provision of debt and equity financing to smaller companies 

established for the purposes of operating renewable energy projects in the United Kingdom. The Companies 

may invest in existing renewable energy projects or projects which are undergoing construction. The 

investments will be in companies owning or leasing renewables assets. 

11


The Companies will not invest in projects prior to commencement of their construction (that is, during project 

development) since this is the highest risk phase. Where possible, it is intended to structure the Companies’ 

investment participations so as to optimise stable income cashflows back to each Company over the life of the 

investee companies’ assets (typically 20-25 years) whilst also creating some potential to participate in better 

than expected operating performance. 

2) Investment Pipeline 

The Investment Manager has identified a number of separate wind energy businesses which are scheduled to 

commence operation in early 2006 and 2007. Such investment opportunities include renewable energy 

projects which have been identified by Falck Renewables with whom the Investment Management Team are 

associated. 

It is likely that the Companies’ participations in Qualifying Investments will be structured as a combination of 

debt and equity participations in small renewable energy businesses which either: 

• own and operate renewable power assets, selling their output direct or indirectly to customers under power 

purchase agreements; or 

• provide energy services to renewable energy businesses. 

3) Typical contract terms and insurances 

Renewable energy companies undertaking renewable energy projects become a party to a number of 

commercial and financing documents, which establish their businesses and in turn underpin the stable longterm 

cashflows they require. Four of the most important are the agreements under which power and the related 

environmental credits such as Renewable Obligation Certificates (see Definitions Section) are sold (known as 

the “power purchase agreement” or “PPA”), the fuel supply agreement (not relevant for wind generation), the 

construction agreement and the operations and maintenance agreement. 

In UK renewable investments, power purchase agreements are typically with major utilities and this would be 

the case for any project in which the Companies participate. Power purchase agreements can be short-term 

(e.g. less than 2 years), medium-term (e.g. 3-9 years) or long-term (8-12 years). The attraction of short-term 

power purchase agreements is that they tend to enjoy higher power prices, the converse being true for longerterm 

agreements. On expiry of the term of any power purchase agreement, the project would enter into a new 

contract on the best terms attainable and while this exposes the project and therefore the Companies 

investment to some risk, the regulatory regime in the UK has been designed to provide significant commercial 

benefits to encourage customers (including the major utility companies) to contract for renewable power. 

For non-wind renewable investments, fuel supply agreements are typically designed to match the duration of 

the power purchase agreements (which will normally be long term, sometimes matched to the full life of the 

project equipment) and will generally be entered into with creditworthy entities such as municipalities, wastecollection 

companies and large agricultural companies. 

Construction contracts are generally “turnkey” (fixed price and delivery date) contracts for construction and 

supply requirements with a recognised construction contractor and a leading equipment manufacturer such as, 

in the case of wind energy, Vestas/NEG Micon, GE Energy, Enercon, RePower, Bonus Energy or Gamesa. The 

turnkey contracts include completion guarantees and performance guarantees (construction typically takes 

between 6 and 12 months depending on the size of the project) and generally are supplemented by a separate 

operations and maintenance service (OMS) contract for a significant period, generally 3-5 years after the start 

of commercial operation. 

It is also normal for UK renewable energy generators normally take out insurance policies to guard against 

various other risks including force majeure (natural disasters etc), business interruption and delays. 

4) Experienced Investment Manager 

Keydata Income VCT 1 has established Green Power 1 Limited as its wholly owned subsidiary and Keydata 

Income VCT2 has established Green Power 2 Limited as its wholly owned subsidiary for the specific purpose 

of being each Company’s investment manager. To enable it to perform the investment management function, 

Green Power 1 and Green Power 2 will each have advisers seconded to it by Renewables Management (for 

further details see Section 7). The advisory team is led by William Heller (Falck Renewables Limited), Achille 

Colombo (Falck Group), Hans Schenk (Falck Renewables Limited) and Gerry Jewson (West Coast Energy 

Limited). 

Renewables Management has been selected to work with Green Power 1 and Green Power 2 since it brings 

together a strong team of experts in renewable power with more than 100 years’ collective experience in 

developing, investing in and managing wind power, biomass and waste-to-energy projects (called 

“renewables”). 

12


Between them, the Investment Management Team manage in excess of £260 million of European renewable 

power investments. Of the total invested, £170 million is in waste-to-energy and biomass projects and over £90 

million is in wind power projects, of which £76 million is in UK wind power projects. This data is unaudited. 

(Source: Investment Management Team). 

5) Substantial tax reliefs for Investors 

The Chancellor recently improved the income tax relief available to Investors in VCTs. For a period of 2 years 

from 6 April 2004, the income tax relief available for investment in new shares of a VCT has been increased 

from 20 per cent. to 40 per cent. up to a maximum of £200,000 invested per tax year (previously £100,000), 

subject to holding the shares for a minimum of 3 years. The tax relief cannot exceed the amount which reduces 

an Investor’s income tax to nil. 

In summary, the main tax reliefs for Investors are: 

• income tax relief of 40 per cent. on the amount invested (irrespective of the rate of income tax that 

an Investor pays), up to £200,000 per tax year, subject to an Investor’s income tax liability in the year; 

The effective cost of a £1 Share in Keydata Income VCT 1 or Keydata Income VCT 2 is therefore 

only 60p. 

• dividends received by an Investor from the Company are tax free; and 

• capital gains on the disposal of the VCT shares are tax free. 

Example of initial tax relief 

No VCT tax relief 

VCT tax relief 

Initial Investment £100,000 £100,000 

40 per cent. income tax relief - (£40,000) 

Effective net cost of the investment £100,000 £60,000 

Investors are encouraged to seek their own independent tax advice to confirm this information and its 

applicability to them. Further general information on the tax reliefs available for investing in a VCT is given in 

the “Tax Considerations for Shareholders” section in Part IV of this document. 

6) Investment Policy 

a) Investment Objective and Strategy 

The principal investment objective of both Keydata Income VCT 1 and Keydata Income VCT 2 is to pay a 

regular tax-free dividend of approximately 5 per cent per annum predominantly derived from income generated 

by the Companies’ investments in renewable energy businesses. 

The Directors believe the Companies’ investment programme will support the targeted tax free dividend of 5 

pence per annum. For an Investor able to use the full VCT tax reliefs, this is equivalent to an annual tax free 

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 

taxpayer or 13.8 per cent for a higher rate taxpayer, based on current income tax bands. No profit forecast 

should be inferred or implied from this statement. 

The majority of the funds will be invested in debt securities of investee companies which are intended to fund 

the dividend levels referred to above. 

Qualifying Investments will be primarily made in unquoted private companies operating renewable power 

generation projects. 

Individual Qualifying Investments by each Company will typically range in size from £500,000 to £2 million. 

It is intended that the Companies will invest in the same projects, on the same terms and at the same time. 

Any co-investment between the Companies will be approved by these directors of the Companies who are 

independent of the Investment Managers. 

b) The Non-Qualifying Investments Portfolio 

Initially, all monies raised by the Offers will be placed on deposit in a major clearing bank, pending the Board 

of each Company agreeing to commit the Companies’ funds to specific renewable energy investments. 

Renewable energy investments are expected to be in companies which either own and operate renewable 

energy assets or simply operate renewable energy assets for third parties. The structure of such investments 

will vary and will include ordinary shares, preference shares, unsecured loan stock, corporate bonds and 

secured debt instruments (or some combination of these). The final decision on any such investment will be 

made by the Board of each Company which will be concerned to ensure that the Company makes 

commercially sound investments. 

13


Where any such investment can be structured so that the requirements for being an investment in a Qualifying 

Company can be met (for the purposes of the VCT rules), this will be part of the Company’s Qualifying 

Investment portfolio. Where it is not possible to structure the investment in this manner, it will form part of the 

Non-Qualifying Investment Portfolio. 

In deciding whether or not to approve an investment, one consideration for each Board will be the need for 

Non-Qualifying Investments to have sufficient liquidity to be able to realise such investment during the initial 

three year investment period so that each Company can reinvest such funds into Qualifying Investments to 

ensure that each Company can achieve and maintain its VCT status. 

c) Valuation Policy 

All investments will be valued annually in accordance with BVCA guidelines, in the audited accounts of the 

Companies for the relevant period. A brief summary of the BVCA guidelines is set out below. 

Investments should be reported at fair value where this can be reliably determined by the Board on the 

recommendation of the Investment Manager. In estimating fair value for an investment, the methodology 

applied must be appropriate to the nature, facts and circumstances of the investment and its materiality based 

on reasonable assumptions and estimates. Such methodology, including earnings multiple, cost and cost less 

a provision for net assets, should be applied consistently. 

If fair value cannot be reliably measured, the carrying value at the previous reporting date will be used unless 

there is evidence of impairment, in which case the value will be reduced to reflect the estimated extent of the 

impairment. 

7) The Investment Management Team 

The Investment Management Team have, in aggregate, 100 years experience of managing power projects. 

The same Investment Management Team are involved with Green Power 1 and Green Power 2. Details of the 

experience of the individuals within the Investment Management Team are set out below: 

William Heller (age 49) 

William Heller is the Managing Director of Falck Renewables Ltd a wind power developer and Heller Consulting 

Limited, a renewable power consulting firm. He has been active in the electricity industry since 1982 when he 

joined McKinsey & Company’s Energy Practice after completing his MBA at Harvard Business School. William 

left McKinsey as a Partner in 1996 to join Edison International, one of the world’s largest electricity companies 

where he was CEO of Edison Mission, one of the top 5 independent power producers in the world with over 

20,000MW of power projects world-wide. William was responsible for Edison Mission’s development of 14 wind 

projects with a capacity of 303MW representing £209 million of capital investment. William left Edison in 2002 

to form Falck Renewables Limited in London. 

Achille Colombo (age 66) 

Achille Colombo is the Managing Director of the Falck Group, Chairman of Falck Renewables Limited and Deputy 

Chairman of Actelios, a biomass and waste-to-energy company listed on the Italian Stock Exchange. He has been 

active in the electricity industry for his entire career beginning in 1964, working for CERN and then Westinghouse 

Nuclear Energy. In 1973, Achille joined what would become ABB rising to Chairman of the SAE Sadelmi 

subsidiary, President of the Business Area Power Lines of ABB and board director of ABB Italy. He joined the 

Falck Group in 1989 as Managing Director. He is also currently a board director of Air Liquide and a member of 

the World Economic Forum, the World Business Council for Sustainable Development and the Aspen Club. 

Hans Schenk (age 53) 

Hans Schenk is Finance Director of Falck Renewables Limited and responsible for the Falck Group’s power 

generation financing activities. He has been active in the electricity industry since 1978. A qualified accountant, 

Hans worked for global accountants KPMG and PricewaterhouseCoopers before joining ABB in 1978, rising to 

the position of Business Controller for worldwide activities in Power Lines. In 1993, he joined the Falck Group. 

Gerry Jewson (age 47) 

Gerry Jewson is the Managing Director of West Coast Energy Limited and a director of the Renewable Energy 

Company. He has been with both companies since they were incorporated in 1996. Between 1993 and 1996, 

Gerry was employed at Manweb plc and was responsible for management of Manweb’s renewable energy 

business. In 11 years, Gerry has successfully developed over 350MW of wind energy capacity in the UK. In 

2002, he was awarded the “Developer of the Year” award by the British Wind Energy Association. 

The Investment Management Team have been seconded to each Investment Manager by Renewables 

Management under the terms of secondment agreements (for further details see paragraph 4.3 Part V) 

14


8) The Board 

The Boards of each Company comprise Stephen Oxenbridge as non-executive chairman and David 

Hurst-Brown and Stewart Ford as non-executive directors, all of whom are independent of each Investment 

Manager. A summary CV for each of the Directors is shown opposite: 

Stephen Oxenbridge (aged 48) 

Stephen has a long career as an Investment Banker. His experience encompasses derivatives, money 

markets, securitisation and mergers and acquisitions. For the past ten years he has been involved in the 

utilities industries as managing director of Deutsche Morgan Grenfell’s utilities practice in New York and 

managing director of ING Baring’s utilities practice in London. In this capacity he has advised on acquisition 

strategy and innovative financing structures for many of the major US and European utilities. In addition, he 

has been involved in private equity and seed capital investments in the technology sector. Stephen is a 

graduate of Oxford University. He is now the managing partner of Oxenbridge & Co. a principal finance house 

investing in the energy sector which has recently acquired a renewable power generation company in Italy. 

Stephen is a director of Elettra Holdings, an Italian renewable power holding company. 

David Hurst-Brown FSI (aged 56) 

David worked for over 25 years in the investment banking industry starting as an investment analyst with Rowe 

and Pitman and becoming a partner of the firm in 1985. Following takeovers by SG Warburg and Swiss Bank 

Corporation and the subsequent merger with Union Bank of Switzerland, David ultimately became an 

executive director in the corporate finance division of UBS Warburg. In this capacity, amongst his various 

duties, he was responsible for establishing a smaller companies business unit. He was a consultant to UBS 

from 1999 to 2002 and at the same time was an adviser to techMark, the London Stock Exchange’s market for 

technology companies. Since then David has held a number of directorships of public and private companies 

including being a non-executive director of Keydata UK Limited from 2001 until 2004. 

David is also a director of Keydata AIM VCT PLC 

Stewart Owen Ford (aged 41) 

Stewart is the founder and managing director of Keydata Investment Services Limited and its parent company, 

Keydata UK Limited. Stewart’s experience of establishing new media, design, advertising, marketing and 

financial services organisations led to his creation of Keydata UK Limited in 1997. Keydata UK Limited 

acquired Keydata Investment Services in 2001 and under Stewart’s guidance the company is now established 

with assets under management of over £800 million (Source: Keydata UK Limited - this data is unaudited) 

Stewart is also a director of Keydata AIM VCT PLC. 

The Directors, members of the Investment Management Team and advisers together with their families 

invested a total of £184,000 under the Original Offers on the same terms as the Investors. 

9) Corporate Governance 

The Board is committed to the principles of sound corporate governance and each Company has taken 

appropriate steps, relevant to its size and operational complexity, to comply with The FRC 2003 Combined 

Code, published in July 2003. However, the companies do not comply fully with the corporate governance 

regime for UK listed companies. Due to the size of the Board and the fact that all members are independent 

of the Investment Manager the Boards have not set up separate audit, nomination and remuneration 

committees on the grounds that the Boards as a whole consider these matters. 

10) Financial Information 

Financial information relating to the Companies is set out in Parts VI and VII. 

15


The Offers 

Details of the Offers 

It is proposed to raise up to £20 million for each Company by means of an offer for subscription at 100p per Share 

in each Company, payable in full, by cheque or banker's draft, on subscription. The Offers will be open from 15 

December 2005 until the earlier of 11.00 a.m. on 5 April 2006 and the date on which the maximum subscription is 

reached (or until such time as the Directors may decide). The Offers are not underwritten. The maximum net 

proceeds of the Offers, assuming full subscription, will be £19 million for each Company. 

Applications will be accepted on a first come, first served basis (provided cheques are not post dated), subject 

always to the discretion of the Directors. Investors are encouraged to submit their Application Forms early in order 

to be confident that their subscriptions will be successful. 

The minimum investment per Investor under the Offers is £3,000. The full terms and conditions of application are 

set out in Part VIII of this document and an Application Form, together with details of the application procedure, is 

set out at the end of this document. 

Application for Shares under the Offer will be applied equally between Keydata Income VCT 1 and Keydata Income 

VCT 2, so that any investment in Shares under the Offers will be applied as to one half by way of subscription for 

Shares in Keydata Income VCT 1 and one-half by way of subscription for Shares in Keydata Income VCT 2. 

The Promoter 

Keydata Investment Services, an investment solutions firm, will act as promoter to the Offers, as it did in respect 

of the Original Offer. It has an established network of approximately 8,000 IFA contacts and a database of over 

52,000 investors (Source: unaudited data provided by Keydata Investment Services from its own unaudited 

internal records). It has raised and manages approximately £740 million of funds in its own investment products 

and also manages a further £250 million of funds in third party investments for organisations such as Credit Suisse 

First Boston, Morgan Stanley and Skandia (Source: unaudited data provided by Keydata Investment Services from 

its own unaudited internal records). Its directors are Stewart Ford (who is also a director of the Companies), Craig 

McNeil and Mark Owen. 

Allotment, Dealings and Settlement 

Application has been made to the UK Listing Authority for the Shares issued pursuant to the Offers to be admitted 

to the Official List of the UK Listing Authority and to the London Stock Exchange for the Shares to be admitted to 

trading on its market for listed securities. 

Dealings are expected to commence within 5 business days of allotment of the relevant Shares. Shares will be 

issued in registered form and bi-monthly from 31 January 2006. It is anticipated that definitive share certificates 

will be issued within ten business days of each allotment. 

Shares will be capable of being transferred by means of the CREST system. Investors who wish to take advantage 

of the ability to trade their Shares in uncertificated form (and who have access to a CREST account) may arrange 

through their professional adviser to convert their holding into dematerialised form. 

Management, Administration and Costs 

Investment Manager 

Green Power 1 and Green Power 2 have been appointed as the Investment Managers of the Companies for an 

initial period of three years, which can be terminated by not less than twelve months’ notice, given at any time by 

either party, after the third anniversary. Under the terms of this agreement the Companies pay to each of Green 

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 

relevant Company, payable quarterly in arrears. 

Management Services Agreements 

Each Investment Manager will enter into separate Management Services Agreements with each Qualifying 

Company and each non-qualifying investee company under which it will agree to provide technical and 

management services to such companies to enable them to perform their obligations in respect of the construction 

and operation of wind energy systems. The payment for provision of such services will be an annual payment 

made by the investee company, paid quarterly in arrears, of 0.25 per cent (plus any Value Added Tax) of the 

amount invested in such Qualifying Company or non-Qualifying Company by each Company of which it is the 

Investment Manager. Each Management Services Agreement will be co-terminous with the Investment 

Management Agreement so that if the Investment Management Agreement is terminated for any reason, the 

Management Services Agreement will be automatically terminated. 

16


Dividend Policy 

Generally, a VCT must distribute by way of dividend such amount as to ensure that it retains not more than 15 per 

cent. of its income from shares and securities. The Directors aim to maximise tax free distributions to Shareholders 

by way of dividends paid out of income and gains received from investments. The target is to distribute an annual 

tax-free dividend of 5 pence per Share (for an investor able to use the full VCT tax reliefs, this is equivalent to 

taxable income of 10.4 pence per Share for a basic rate taxpayer or 13.88 pence per Share on the net investment 

for higher rate taxpayers, based on current rates of taxation). 

Shareholders who wish to have dividends paid directly into a bank account, rather than by cheque to their 

registered address, should complete the dividend mandate form printed on the Application Form. Further dividend 

mandate forms can be obtained upon request from the Companies’ registered office. The Companies do not 

assume responsibility for withholding taxes at source on any dividends declared or paid. 

Buy Back Policy 

Although it is anticipated that the Shares issued pursuant to the Offers will be admitted to the Official List and to 

trading on the London Stock Exchange’s market for listed securities, there is a risk of an illiquid market for the 

Shares so that Shareholders may find it difficult to sell their Shares in the market. In contrast to VCTs focusing on 

capital growth, however, Shares in the Companies should be more realisable than shares in other VCTs because 

its investments are intended to be characterised by stable, long-term income. Nevertheless, in order to try to 

improve the liquidity in the Shares, the board of each Company intends, subject to the Listing Rules and 

companies and tax legislation, to establish a buy back policy whereby the Companies will purchase Shares for 

cancellation. As a guide and subject to the Board’s discretion and providing that, in the opinion of the Board, there 

is adequate surplus cash available, the Companies will consider buying back shares at a 10 per cent. discount to 

the last published NAV per Share, subject to a maximum of 105 per cent. of the middle market price per Share 

over the preceding 5 business days and a minimum of the nominal value of the Shares. The NAV will be published 

quarterly following quarterly accounts period to 31 May, 31 August, 30 November and 28 February. Shareholders 

are reminded that if they hold their Shares for less than three years they are likely to lose their income tax relief. 

Reporting to Shareholders 

The Directors believe that communication with Shareholders is important. Shareholders will receive a copy of the 

Companies annual report and accounts (expected to be published each May) and a copy of the Companies interim 

results (expected to be published each October). 

The Companies first interim accounts were published on 14 October 2005. The Companies first full year annual 

report and accounts are expected to be published in May 2006 and will be in respect of the period from 

incorporation to 28 February 2006. The first annual general meeting of each Company is expected to be held in 

July 2006. 

It is intended that all published information on the Companies will be available on www.keydataincomevct.co.uk, 

which will provide investors with relevant information on the portfolio and on the renewable power sector. 

All Qualifying Subscribers will automatically be provided with certificates enabling them to claim income tax relief. 

VCT Status Monitoring and HM Revenue and Customs Approval 

The Directors intend to manage the Companies’ affairs in order that they comply with the legislation applicable to 

VCTs. In this regard PricewaterhouseCoopers has been appointed to advise on tax matters generally and, in 

particular, on VCT status. HM Revenue and Customs has granted each Company provisional approval as a VCT, 

effective from the date of Admission. Full approval will be sought as soon as possible, but will only be granted by 

HM Revenue and Customs once 70 per cent. of the Companies investments are represented by Qualifying 

Investments and the Companies have complied with the other requirements relating to VCT qualification. 

PricewaterhouseCoopers will assist Green Power 1 and Green Power 2 (but report directly to the relevant Board) 

in establishing the status of each investment as a Qualifying Investment and will monitor progress towards 

achieving full VCT approval. Once full approval has been given the Companies must continue to satisfy the 

requirements of HM Revenue and Customs in relation to VCTs, or they are likely to lose full approval. 

Life of the Companies 

It is intended that each of the Companies should have an unlimited life, but the Directors consider that it is 

desirable for Shareholders to have the opportunity to review the future of each of the Companies at appropriate 

intervals. The Companies’ articles of association each require the Directors to put a proposal to Shareholders 

concerning the continuation of the Companies at the annual general meeting in 2009 and, if passed, at every fifth 

anniversary thereafter. 

17


Cancellation of the Companies’ Share Premium Account 

The Companies propose (subject to Court approval) to cancel their share premium account, thereby creating a 

special reserve, which may be treated as a distributable reserve for all purposes, including making purchases of 

Shares. A special resolution was passed by Shareholders at the Extraordinary General Meeting authorising the 

cancellation of the share premium account of the Companies following the issue of Shares pursuant to the Offers. 

No purchases of Shares can be made by the Companies until cancellation of the share premium account has been 

approved by the Court and the terms of any undertaking required by the Court for protection of the creditors of the 

Companies has been complied with. 

Launch Costs 

The initial costs of the Offers (including irrecoverable VAT) will be 5 per cent. of the gross proceeds raised for each 

Company. 

Introducers Commissions 

Introducers who stamp the Application Form will be entitled to receive commission on the amount invested by their 

client on one of the following bases: 

i) 3 per cent. initial commission of the amount invested by their client (and no trail commission); or 

ii) 2.25 per cent. of the amount invested by their client plus an annual trail. The trail commission will be paid 

annually on each anniversary of the date of allotment of the Shares (provided that the financial intermediary 

continues to act for the client and the client continues to hold the Shares) at the rate of 0.375 per cent. per 

annum of the Net Asset Value of the Shares invested in by the client, subject to a maximum of 2.25 per cent. 

Introducers may waive their commission in return for more Shares for themselves or their clients (see page 59 for 

further information). Introducers must indicate on the Application Form the basis on which they wish to receive their 

commission. 

Annual Fees and Expenses 

Each Investment Manager is paid an annual investment management fee of 0.4 per cent. (exclusive of any VAT) 

of the Net Asset Value of the Companies. The fee is payable quarterly in arrears. 

Keydata receives from the Companies an annual payment for broking services of 0.9 per cent. of the Net Assets 

Value of the Companies (plus VAT, if applicable), payable quarterly in arrears, out of which it will pay trail 

commission due to intermediaries. In addition, under an agreement dated 23 February 2005, Keydata will provide 

administrative services to each Company for an annual fee of £25,000 (plus VAT), payable quarterly in arrears. 

This agreement is for a fixed period of 3 years and thereafter is terminable on 12 months’ notice. 

The Directors estimate that in the period from incorporation until 28 February 2006 (fees payable to them by each 

Company will not exceed £30,000 (excluding any VAT or national insurance contributions). 

Craig McNeil CA, a director of Keydata, is Company Secretary to each Company and is paid a fee of £12,000 per 

annum (plus any applicable VAT), payable quarterly in arrears. This appointment is for a fixed period of 3 years 

and thereafter is terminable on 12 months’ notice. 

Assuming full subscription under the Offers, the Directors estimate that the annual running costs of each Company 

will be no more than 1.75 per cent. of the Net Asset Value of the Company (excluding VAT). The running costs of 

each Company will include the annual fees described above, accounting, legal and administration fees, as well as 

fees for Directors, the auditors, taxation advisers, Sponsor, registrar and the costs of communicating with 

Shareholders. Total annual running costs will be capped at 2.0 per cent. of the Net Asset Value (excluding any 

irrecoverable VAT). The Promoter has agreed to indemnify the Company in respect of any excess. 

A maximum of 75 per cent. of the Company’s management expenses will be capable of being charged against 

capital reserves with the balance charged against revenue. 

18


PART II 

Directors and Advisers 

Directors (all non-executive) 

Stephen Richard Oxenbridge (Chairman) 

David Hurst-Brown 

Stewart Owen Ford 

Secretary 

Craig McNeil CA 

all of: 

Registered Office 



Promoter 


One Angel Court 

London EC2R 7HJ 

Receiving Agent and Administrator 


Floor 8, Fountain House 

2 Queens Walk 

Reading RG1 7QF 

Investment Managers 

Green Power 1 Limited 

109 Baker Street 

London W1U 6RP 

Sponsor and Solicitors 

Howard Kennedy 



Legal Advisers on Energy Matters 

Watson, Farley & Williams 

15 Appold Street 

London EC2A 2HB 

Bankers 

Royal Bank of Scotland plc 

62/63 Threadneedle Street 

London EC2R 8LA 

Registrars 

Lloyds TSB Registrars 

The Causeway 

Worthing 

West Sussex BN99 6DA 

Auditors 

Ernst & Young LLP 

George House 

50 George Square 

Glasgow G2 1RR 

Green Power 2 Limited 

109 Baker Street 

London W1U 6RP 

VCT Tax Adviser 

PricewaterhouseCoopers LLP 

1 Embankment Place 

London WC2N 6RH 

19


PART III 

Definitions 

The following definitions are used throughout this document and, except where the context requires otherwise, 

have the following meanings. 

Act 

the Companies Act 1985 (as amended) 

Admission 

admission of the Shares to the Official List of the UK 

Listing Authority and to trading on the London Stock 

Exchange's market for listed securities 

AIM 

the Alternative Investment Market of the London Stock 

Exchange 

Application Form 

the application form for use in respect of the Offers set 

out at the end of this document 

BVCA 

British Venture Capital Association 

Company 

Keydata Income VCT 1 and/or Keydata Income VCT 2 

(as appropriate) 

Directors, Board of Directors or Board 

the directors of the Companies whose names appear 

on page 23 of this document 

Green Power 1 

Green Power 1 Limited, the manager of the Qualifying 

Investments 

Green Power 2 

Green Power 2 Limited, the manager of the Qualifying 

Investments 

Group 

Keydata Income VCT 1 and Green Power 1 and/or 

Keydata Income VCT 2 and Green Power 2, as 

appropriate. 

Howard Kennedy or Sponsor 

Howard Kennedy, which is authorised and regulated by 

the Financial Services Authority 

ICTA 

Income and Corporation Taxes Act 1988 (as amended) 

Introducers 

Persons authorised and regulated by the Financial 

Services Authority who introduce Investors to the 

Company in connection with the Offers. 

Investment Management Team 

William Heller, Achille Colombo, Gerry Jewson and 

Hans Schenk, each of whom have been seconded by 

Renewables Management to each Investment Manager 

pursuant to a Secondment Agreement, further details of 

which are set out in paragraph 4.3 of Part V. 

Investment Manager or Manager 

Green Power 1 and/or Green Power 2 (as appropriate) 

Investor 

an individual who subscribes for Shares under the 

Offers 

Keydata, Keydata Investment Services or KIS 


Keydata Income VCT 1, Keydata Income VCT 2 

Keydata Income VCT 1 plc or Keydata Income VCT 2 

plc (as appropriate) 

London Stock Exchange 

London Stock Exchange plc 

MW 

megawatts 

Net Asset Value or NAV or Net Assets 

the aggregate of the gross assets of a Company less 

its gross liabilities 

Non-Qualifying Investments Portfolio or 

Non-Qualifying Investments 

that part of the net proceeds of the Offers that will be 

invested in investments other than Qualifying Holdings 

Offers 

the Offers for subscription of up to 20,000,000 Shares 

in each Company described in this document 

Offer Agreement 

the agreement dated the date of this document 

between, inter alia, each Company, its Directors, 

Keydata and Howard Kennedy relating to the Offers, a 

summary of which is set out in Part V of this document 

Offer Price 

100p per Share 

Official List 

the Official List of the UK Listing Authority 

20


Original Offers 

the offers for subscription of up to 25,000,000 Shares 

issued by each of the Companies on 23 February 2005 

PPA 

a purchase power agreement for the sale of electricity 

and environmental credits such as ROCs (see definition 

below) between a power company and a purchaser of 

electricity 

Promoter and Administrator 


Qualifying Company 

a company satisfying the conditions of Schedule 28B 

ICTA as described in Part IV of this document 

Qualifying Holding 

shares in, or securities of, a Qualifying Company, which 

satisfy the conditions of Schedule 28B ICTA as 

described in Part IV of this document 

Qualifying Investment 

an investment in an AIM listed or unquoted company 

which satisfies the requirements of Schedule 28B ICTA, 

as described in Part IV of this document 

Qualifying Limit 

a total amount of £200,000 per individual invested in the 

Companies in any one tax year 

Qualifying Purchaser 

an individual who purchases Shares from an existing 

Shareholder and is aged 18 or over and satisfies the 

conditions of eligibility for tax relief available to investors 

in a Company 

Qualifying Subscriber 

an individual who subscribes for Shares under the 

Offers and is aged 18 or over and satisfies the 

conditions of eligibility for tax relief available to investors 

in a Company 

Renewables Management 

Renewables Management Limited, a limited liability 

company incorporated in Jersey 

Renewables Obligation or RO 

the obligation of licensed electricity suppliers to supply 

a specified and growing proportion of their electricity 

sales from renewable sources, as set out in The 

Renewables Obligation Order 2002 (S.I. 914/2002) in 

respect of England and Wales and The Renewables 

Obligation (Scotland) Order 2002 (Scottish S.I. 

163/2002) in respect of Scotland 

ROC or Renewables Obligation Certificate 

Suppliers are required to produce evidence of their 

compliance with the RO to the Office of Gas and 

Electricity Markets (OFGEM). Evidence can be via 

certificates, referred to as Renewable Obligations 

Certificates (ROCs). Each ROC represents one 

megawatt hour (1,000,000 units) of electricity 

generated from eligible sources (landfill gas, co-firing of 

biomass with fossil fuel, biomass, sewage gas, wind 

and some hydro-electric facilities) 

Shares 

ordinary shares of 1p each in the capital of Keydata 

Income VCT 1 and/or Keydata Income VCT 2 (as 

appropriate) 

Shareholders 

holders of Shares 

UK Listing Authority 

the Financial Services Authority acting in its capacity as 

the competent authority for the purposes of Part VI of 

the Financial Services and Markets Act 2000 

VCT, Venture Capital Trust or Company 

a company approved as a venture capital trust under 

Section 842AA ICTA by HM Revenue and Customs. 

Qualifying Subsidiary 

a subsidiary company which falls within the definition of 

Qualifying Subsidiary contained in paragraph 10 of 

Schedule 28B ICTA, as described in Part IV of this 

document 

Qualifying Trade 

a trade complying with the requirements of Schedule 

28B ICTA 

Renewable Energy 

energy derived from wind, biomass (e.g. wood chip, 

agricultural waste etc) and waste-to-energy 

21


PART IV 

Tax Position of the Fund 

(a) 

Qualifying as a VCT 

In order to qualify as a VCT, a Company must satisfy the following conditions in each accounting period: 

(a) it must be approved as a VCT by HM Revenue and Customs; 

(b) it must not be a close company; 

(c) throughout the period, each class of its ordinary share capital must be quoted on the Official List; 

(d) it must derive its income in the period wholly or mainly from shares or securities; 

(e) it must have at least 70 per cent. by value of its investments throughout the period in newly issued shares 

or securities (where the securities are not redeemable within 5 years of issue) comprised in Qualifying 

Holdings, of which at least 30 per cent. by value must be ordinary shares which carry no preferential rights; 

(f) it must have at least 10 per cent. by value of its total investments in any Qualifying Company in ordinary 

shares which carry no preferential rights; 

(g) it must have not more than 15 per cent. by value of its investments throughout the period in a single 

company or group (other than a VCT, or other similar company); and 

(h) it must generally not retain more than 15 per cent. of the income which it derives from shares and 

securities in the period. 

In order, however, to facilitate the launch of the Companies, there is a relaxation of some of these tests during 

the Company's first and, in the case of test (e), up to the third accounting period (see below under the 

heading, "Approval as a VCT''). 

(b) 

(c) 

Qualifying Holdings 

In order for an investment to qualify as an investment in a Qualifying Holding, not more than £1 million may 

be invested in the same company in any tax year. Where investments are made in two consecutive tax years 

up to this limit, there must be at least a 6 month gap between them. The £1 million limit is restricted further 

if the trade in which the money invested is applied is carried on through a partnership or joint venture. 

The company in which either Company makes its investment must satisfy the following tests: 

(a) it must be unquoted (which will, in the case of a company which was unquoted at the time of the 

Company's investment, be deemed to be the case for a further five years after the company ceases to 

be unquoted). Companies whose shares are traded on AIM are treated as unquoted; 

(b) it must be a Qualifying Company (see below under the heading "Qualifying Companies''); 

(c) it must have gross assets of £15 million or less immediately pre-investment and £16 million or less 

immediately post-investment (in the case of companies which have Qualifying Subsidiaries (see below), 

the test is applied on a group basis); 

(d) it (or a relevant Qualifying Subsidiary of the company) must apply the money invested for the purposes 

of a qualifying trade, which is carried out wholly or mainly in the UK, (see below under the heading, 

“Qualifying Companies”) within certain time periods; 

(e) it must not be able to control (whether on its own or together with a connected person) any company 

which is not a Qualifying Subsidiary; 

(f) it must not be controlled by another company (on its own or together with a connected person); and 

(g) it must not have any property managing subsidiaries which do not fall into the definition of relevant 

Qualifying Subsidiaries (see below). 

In certain circumstances, a holding can be split into part-Qualifying Holdings and part-non-Qualifying Holdings. 

A Qualifying Company is a company which exists to carry on one or more qualifying trades (see below) or is 

the parent of a trading group, where all of its subsidiaries are qualifying subsidiaries and the group as a whole 

is not engaged in non-qualifying activities (see below). 

For the purposes of the Qualifying Holdings test in (d) above, a subsidiary will be a relevant Qualifying 

Subsidiary if at least 90 per cent. of its issued share capital and its voting power is owned by the Qualifying 

Company. Certain other tests as to the distribution of the subsidiary's profits and assets on a winding-up must 

also be satisfied. 

22


In the case of the Qualifying Holdings test in (e) above, a subsidiary will be a Qualifying Subsidiary if the 

majority of its issued share capital is owned by the Qualifying Company and the other tests are also satisfied. 

A trade will be a qualifying trade only if it does not to a substantial extent include non-qualifying activities 

(non-qualifying activities include dealing in land or shares, providing financial services or activities which are 

largely land-based, such as farming, hotels and nursing homes). In the case of a company which is preparing 

to carry on a qualifying trade, the qualifying trade must begin within two years of the issue to the VCT of the 

shares or securities, and must continue thereafter. 

(d) 

Approval as a VCT 

A VCT must be approved as such at all times by HM Revenue and Customs. Approval has effect from 

the time specified in the approval, which cannot be earlier than the time at which the application for approval 

is made. 

A VCT cannot be approved until the relevant tests (see above under the heading, “Qualifying as a VCT”) 

have been satisfied throughout the most recent complete accounting period of the Company and HM 

Revenue and Customs is satisfied that the tests will be satisfied in relation to the accounting period of the 

Company which is current at the time the application is made. 

However, in order to facilitate the launch of the Companies, HM Revenue and Customs may grant provisional 

approval to a Company, notwithstanding that not all the relevant tests are satisfied at the time of the 

application, provided that HM Revenue and Customs is satisfied that the tests will be satisfied within a certain 

period. In particular, HM Revenue and Customs may grant provisional approval if it is satisfied that: 

(a) the relevant tests in (c), (d), (g) and (h) under the heading, “Qualifying as a VCT” above will either be 

satisfied in the accounting period current when the application for approval is made or the following 

accounting period; 

(b) the relevant test in (e) under the heading, “Qualifying as a VCT” above, will be satisfied in relation to any 

accounting period beginning not more than three years after the time when approval is given, or if earlier, 

when it has effect; and 

(c) the relevant tests in (c), (d), (e), (g) and (h) under the heading, “Qualifying as a VCT” above, will continue 

to be satisfied in all subsequent accounting periods. 

The Company has applied for approval as a VCT, effective from Admission. 

(e) 

Withdrawal of approval 

Approval as a VCT may be withdrawn by HM Revenue and Customs if the relevant tests (see above under 

the heading, “Approval as a VCT”) are not satisfied. Withdrawal of approval generally has effect from the time 

when notice of withdrawal is given to the Company but, in relation to capital gains of the Company only, can 

be backdated to not earlier than the first day of the accounting period commencing immediately after the last 

accounting period of the Company in which all the tests were satisfied. 

Where provisional approval is withdrawn, approval is deemed to have never been given. The taxation 

consequences of approval being deemed to have never been given are set out below under the heading 

“Loss of VCT status”. 

Tax Considerations for Shareholders 

(a) Individual Shareholders 

The following is a summary of the tax benefits available to VCTs and their individual shareholders who are either 

Qualifying Subscribers or Qualifying Purchasers. It assumes that the VCT has one class of shares only. 

Investors who are in any doubt as to their tax position are recommended to take professional advice. 

For each accounting period in respect of which a company is approved by the Inland Revenue as a VCT, the 

company is exempt from corporation tax on chargeable gains. The company continues to be liable to 

corporation tax on income in the usual way. 

A number of tax benefits are available to individuals, aged 18 or over, who invest in shares in a VCT. The tax 

benefits available to those individuals are different, depending on whether the individual subscribes for 

shares or acquires shares otherwise than by way of subscription. There is also a limit (the Qualifying Limit) 

on the amount which, in any tax year, an individual may invest in VCTs which will qualify for any tax benefits. 

The current limit is £200,000. Investments in ordinary shares in VCTs in excess of the Qualifying Limit 

will not be eligible for any tax benefits. 

23


Set out below is a summary of the tax benefits available to Qualifying Subscribers and Qualifying 

Purchasers. 

(b) 

Qualifying Subscribers (not Qualifying Purchasers) 

The tax relief is available on aggregate investments in VCTs of up to £200,000 in any one tax year. Where 

advantage is taken of this relief, a Qualifying Subscriber will be able to obtain total initial tax relief of up to 40 

per cent. of the amount of his investment providing the subscription is made pre 6 April 2006, as shown in 

the table below. 

Example of initial tax relief 

No VCT tax relief 

VCT tax relief 

Initial Investment £100,000 £100,000 

40 per cent. income tax relief - (£40,000) 

Effective net cost of the investment £100,000 £60,000 

Whereas the above reliefs are only available on subscription, for Qualifying Subscribers and Qualifying 

Purchasers on investments up to a maximum of £200,000 in VCTs in any one tax year, dividends will be 

exempt from income tax; and any profits on the disposal of the shares will be exempt from capital gains tax. 

Relief from income tax up to the higher rate (40 per cent.) will be available on subscriptions for shares in a 

VCT made before 6 April 2006, subject to the Qualifying Limit (currently £200,000 in each tax year). The 

relief, which will be available in the year of subscription, cannot exceed the amount which reduces the 

income tax liability of the Qualifying Subscriber in that year to nil. Relief may not be available if there is a loan 

linked with the investment. 

Relief will not be available, or, where given, will be withdrawn, either in whole or in part, where there is any 

disposal (except on death) of the shares (or of an interest in them or right over them) before the end of the 

period of three years beginning with the date on which the shares were issued to the Qualifying Subscriber. 

To obtain relief, a Qualifying Subscriber must subscribe for the shares in his own name, and not through a 

nominee, although the shares may subsequently be transferred into the name of a nominee. Where a 

Qualifying Subscriber has acquired shares in the same VCT on more than one occasion, he, or she, will be 

treated as disposing of the shares which he or she acquires on an earlier date, in priority to those which he 

acquires on a later date. Where he, or she, has acquired shares on the same occasion, some of which qualify 

for relief and some of which do not, he, or she, will be treated as disposing of the shares which do not qualify 

for relief in priority to those which qualify. 

(c) 

Qualifying Subscribers and Qualifying Purchasers 

(i) Exemption from capital gains tax 

Any gain or loss accruing to Qualifying Subscribers or Qualifying Purchasers on a disposal of shares in 

a company which was a VCT at the time he, or she, acquired the shares, and remained a VCT throughout 

his, or her, period of ownership, will neither be a chargeable gain, nor an allowable loss, for the purposes 

of capital gains tax. 

(ii) Exempt dividend income 

Dividend income will be exempt from tax. No tax credits will be repayable in respect of dividends paid. 

(iii) Procedure for obtaining income tax reliefs available to Qualifying Subscribers 

All Qualifying Subscribers will automatically be provided with certificates enabling them to claim income 

tax relief. The certificate will specify details of the shareholder, the date on which the shares were issued 

and the amount paid for the shares, and also will certify that the shares have been issued to a Qualifying 

Subscriber, and that certain other conditions are met to the best of the VCT’s knowledge and belief. The 

relief may not be available unless the Qualifying Subscriber holds such a certificate. 

The investor may use the certificate to claim income tax relief either by obtaining from HM Revenue and 

Customs an adjustment to his tax coding under the PAYE system or by waiting until the end of the tax 

year and using a Self Assessment Tax Return to claim the relief. 

Dividends received on shares acquired in VCTs up to the qualifying maximum value of £200,000 per tax 

year need not be shown in the investor’s Self Assessment Tax Return. 

24


(d) 

Loss of VCT status 

The following is a summary of the tax consequences for VCTs and their shareholders resulting from a loss 

of VCT status. 

(i) VCTs 

Exemption from corporation tax on chargeable gains will not be available in relation to any gain realised 

after the VCT status is lost (and if approval is deemed never to have been given). 

(ii) Qualifying Subscribers 

Income tax relief on investment 

Where VCT approval is treated as never having been given, or where it is withdrawn before the shares 

have been held for three years, the relief will be withdrawn in full, and the Qualifying Subscriber will be 

assessed to tax in the tax year in which the relief was given on an amount equal to that relief. Interest on 

overdue tax may arise. 

(iii) Qualifying Subscribers and Qualifying Purchasers 

1. Exempt dividend income 

Dividend income will not be exempt from tax if the dividend is paid in respect of profits or gains arising or 

accruing in any accounting period in which the VCT is not approved as such. 

2. Exemption from capital gains 

Where VCT approval is treated as never having been given, any gains and losses arising on a disposal 

of shares in the VCT will be taxable and allowable in the ordinary way. Where VCT approval is withdrawn 

at any time (whether or not the shares have been held for three years), the Qualifying Subscriber or the 

Qualifying Purchaser will be treated as having disposed of his shares immediately before the VCT ceased 

to be approved, for an amount equal to their market value at that time, and as having immediately 

reacquired them at that value. Thus, any capital gain up to that date will be exempt from tax, but any gains 

arising after that date will be taxable in the ordinary way. 

25


PART V 

Additional Information 

1 Incorporation, Registration and Share Capital 

1.1 The Companies were incorporated and registered in England and Wales on 16 February 2005 under 

the name Keydata Income VCT 1 plc with registered number 5366736 and Keydata Income VCT 2 plc 

with registered number 5366735 as public companies limited by shares under the Act. The principal 

legislation under which each Company operates is the Act. 

1.2 On 23 February 2005 the Registrar of Companies issued each Company with a certificate under 

section 117 of the Act. In February 2005 each Company gave notice to the Registrar of Companies of 

its intention to carry on business as an investment company under section 266 of the Act. 

1.3 The registered office of each Company is 19 Cavendish Square, London W1A 2AW and its principal 

place of business is at One Angel Court, London EC2R 7HJ. The telephone number of each Company 

is 020 770 6906 

1.4 Each Company’s memorandum of association provides that its principal object is to carry on the 

business of a Venture Capital Trust. The objects of each Company are set out in full in Clause 4 of the 

memorandum of association, which is available for inspection at the address specified in paragraph 8. 

1.5 Share Capital 

1.5.1 Each Company was incorporated with an authorised share capital of £300,000 divided into 

25,000,000 ordinary shares of 1p each and 50,000 redeemable preference shares of £1 each 

(“the Redeemable Preference Shares”) of which two ordinary shares were issued nil paid to 

the subscribers to the memorandum of each Company (“the Subscriber Shares”). 

1.5.2 By ordinary and special resolutions passed on 22 February 2005 by each Company: 

(a) the Directors were generally and unconditionally authorised in accordance with section 

80 of the Act to exercise all the powers of each Company to allot relevant securities (as 

defined in that section). This power was limited to the allotment of relevant securities up 

to an aggregate nominal amount of £300,000. 

Such authority is to expire on 21 February 2010 (unless previously revoked, varied or 

extended by the Company in general meeting); 

(b) the Directors were empowered (pursuant to section 95(1) of the Act) to allot or make 

offers or agreements to allot equity securities (as defined in section 94(2) of the Act) for 

cash pursuant to the authority referred to in paragraph (a) above as if section 89(1) of the 

Act did not apply to any such allotment, such power to expire at the conclusion of the 

Company’s next annual general meeting, or on the expiry of fifteen months following the 

passing of the resolution, whichever is the later (unless previously renewed or extended 

by the Company in general meeting). This power was limited to the allotment of equity 

securities in connection with: 

(i) the issue of 50,000 Redeemable Preference Shares in each Company to Keydata 

UK Limited; 

(ii) the Original Offers; 

(iii) an offer of equity securities by way of rights; and 

(iv) otherwise than pursuant to sub-paragraphs (i)-(iii), an offer of equity securities up to 

an aggregate nominal amount of 10 per cent. of the issued ordinary share capital of 

each Company immediately following closing of the Offers. 

(c) subject to approval by the High Court of Justice, the amount standing to the credit of the 

share premium account of the Company immediately after the final closing date of the 

Original Offers be cancelled; 

(d) each Company was authorised to make one or more market purchases (within the 

meaning of section 163(3) of the Act) of Shares provided that: 

(i) the maximum aggregate number of Shares authorised to be purchased is an amount 

equal to 15 per cent. of the issued ordinary share capital following the Offers; 

(ii) the minimum price which may be paid for a Share is 1 pence; 

(iii) the maximum price which may be paid for a Share is an amount, exclusive of 

expenses, equal to 105 per cent. of the average of the middle market prices shown 

in the quotations for a Share in the Daily Official List of the London Stock Exchange 

for the five business days immediately preceding the day on which that Share is 

purchased; and 

26


(iv) unless renewed, the authority hereby conferred shall expire either at the conclusion 

of the next annual general meeting of the Company or on the expiry of 15 months 

from the passing of this resolution, whichever is the later to occur, save that the 

Company may, prior to such expiry, enter into a contract to purchase Shares which 

will or may be completed or executed wholly or partly after such expiry. 

1.6 On 22 February 2005, the 50,000 Redeemable Preference Shares in each Company were allotted and 

issued to Keydata UK Limited and paid up as to one-quarter so as to enable each Company to obtain 

a certificate under section 117 of the Act. The Redeemable Preference Shares were fully paid up on 

21 April 2005 and redeemed by the Company out of the proceeds of the Original Offers on 21 April 

2005. On redemption, each of the Redeemable Preference Shares was automatically redesignated as, 

and sub-divided into, 100 Shares in the authorised, but unissued, capital of the Company without any 

further resolution or consent. 

1.7 No share or loan capital of either Company is under option or has been agreed conditionally or 

unconditionally to be put under option. 

1.8 The Shares will be in registered form and temporary documents of title will not be issued. The ISIN of 

Keydata Income VCT 1 is GB00B07T4F29 and the ISIN of Keydata Income VCT 2 is 

GB00B07T4H443. 

1.9 At the date of this document and following admission of the Shares to be issued under the Offers to 

the Official List, the authorised and issued share capital of each Company, assuming full subscription 

under the Offers, will be as follows: 

At Date of this Document 

Authorised 

Issued 

Number Nominal Value Number Nominal Value 

Ordinary Shares (1p) 30,000,000 £300,000 4,513,626 £45,136.26 

After Admission 

Authorised 

Issued 

Number Nominal Value Number Nominal Value 

Ordinary Shares (1p) 30,000,000 £300,000 24,513,626 £245,136.26 

Of the above Shares which will be in issue if the Offers are fully subscribed, 24,513,626 will have 

been issued and fully paid in cash by each Company. The unissued share capital will be at least 

£54,863.74 comprising 5,486,374 Shares (equivalent to approximately 18.3 per cent. of the authorised 

share capital). 

1.10 Each Company will be subject to the continuing obligations of the UK Listing Authority with regard to 

the issue of securities for cash and the provisions of section 89 of the Act (which confers on 

shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to 

be, paid up in cash) will apply to the balance of the authorised but unissued share capital of each 

Company which is not subject to the proposed disapplication referred to in sub-paragraph 10(a) below. 

1.11 Keydata Income VCT 1 has only one subsidiary, namely Green Power 1, which it wholly owns. 

1.12 Keydata Income VCT 2 has only one subsidiary, namely Green Power 2, which is wholly owns. 

1.13 Green Power I is incorporated in England and Wales under company number 5374052 and is a wholly 

owned subsidiary of the Keydata Income VCT1. Green Power 2 is incorporated in England and Wales 

under company number 5374066 and is a wholly owned subsidiary of Keydata Income VCT 2. 

1.14 On 12 August 2005 each Company issued fully paid a further 407,013 Shares. 

1.15 Over the period 23 February 2005 to 30 June 2005 pursuant to the Original Offers each Company 

issued fully paid 4,106,613 Shares. 

1.16 Save for the Offer Agreement referred to in paragraph 4.8, no member of either Group has entered 

into any related party transaction since their respective dates of incorporation. 

27


2. Memorandum and Articles of Association 

The Company’s memorandum of association provides that its principal object is to carry on the business of 

a Venture Capital Trust. The objects of the Company are set out in full in Clause 4 of the memorandum of 

association, which is available for inspection at the address specified in paragraph 11 below. 

The articles of association of each Company contain, inter alia, provisions to the following effect: 

2.1 Voting Rights 

Subject to any disenfranchisement as provided in paragraph 2.5 below and subject to any special 

terms as to voting on which any Shares may be issued, on a show of hands every member present in 

person (or being a corporation, present by authorised representative) shall have one vote and, on a 

poll, every member who is present in person or by proxy shall have one vote for every Share of which 

he is the holder. The Shares shall rank pari passu as to rights to attend and vote at any general 

meeting of the Company. 

2.2 Rights Attaching to the Redeemable Preference Shares 

Each of the Redeemable Preference Shares carries the right to a fixed dividend of 0.1 per cent. per 

annum (exclusive of any imputed tax credit available to shareholders) on the nominal amount thereof, 

but confers no right to vote except as otherwise agreed by the holders of a majority of the Shares. On 

a winding-up the Redeemable Preference Shares confer the right to be paid the nominal amount paid 

on such shares. The Redeemable Preference Shares are redeemable at any time by the Company. 

Each Redeemable Preference Share which is redeemed, shall, thereafter, be redesignated as and 

sub-divided into 100 Shares in the authorised, but unissued capital of the Company, without further 

resolution or consent. 

2.3 Transfer of Shares 

The Shares are in registered form and will be freely transferable. All transfers of Shares must be 

effected by a transfer in writing in any usual form or any other form approved by the Directors. The 

instrument of transfer of a Share shall be executed by or on behalf of the transferor and, in the case 

of a partly paid share, by or on behalf of the transferee. The Directors may refuse to register any 

transfer of a partly paid Share, provided that such refusal does not prevent dealings taking place on 

an open and proper basis and may also refuse to register any instrument of transfer unless: 

(i) it is duly stamped (if so required), is lodged with the Company’s registrars or at such other 

place as the Directors may appoint and is accompanied by the certificate for the shares to 

which it relates and such other evidence as the Directors may reasonably require to show the 

right of the transferor to make the transfer; 

(ii) it is in respect of only one class of share; and 

(iii) the transferees do not exceed four in number 

2.4 Dividends 

The Company may in general meeting by ordinary resolution declare dividends in accordance with the 

respective rights of the members, provided that no dividend shall be payable in excess of the amount 

recommended by the Directors. The Directors may pay such interim dividends as appear to them to 

be justified. No dividend or other monies payable in respect of a Share shall bear interest as against 

the Company. There are no fixed dates on which entitlement to a dividend arises. 

All dividends unclaimed for a period of twelve years after being declared or becoming due for payment 

shall be forfeited and shall revert to the Company. 

2.5 Disclosure of Interest in Shares 

If any member or other person appearing to be interested in Shares of the Company is in default in 

supplying within 14 days after the date of service of a notice requiring such member or other person 

to supply to the Company in writing all or any such information as is referred to in section 212 of the 

Act, the Directors may, for such period as the default shall continue, impose restrictions upon the 

relevant shares. 

The only sanction available in the case of a shareholding of less than 0.25% of the relevant class 

(calculated exclusive of treasury shares) is a prohibition against attending at meetings and voting. 

Additional sanctions in the case of a shareholding of 0.25% or more of the relevant class (calculated 

exclusive of treasury shares), include the withholding of payment of dividends (including shares issued 

in lieu of dividend) on the shares concerned; and restrictions on the transfer of shares, provided that 

restrictions on transfer do not apply to a sale to a bona fide unconnected third party (such as a sale 

through a recognised investment exchange for the purposes of the Financial Services and Market Act 

2000 or an overseas exchange or by the acceptance of a takeover offer). 

Any sanctions imposed upon a shareholding in such circumstances will cease to apply after a period 

of 7 days after the earlier of receipt by the Company of notice that the shareholding has been sold to 

a third party in the manner described above and due compliance, to the satisfaction of the Company, 

with notice under section 212 of the Act. 

28


2.6 Distribution of Assets on Liquidation 

On a winding-up any surplus assets will be divided amongst the holders of the Shares in the Company 

according to the respective numbers of Shares held by them and in accordance with the provisions of 

the Act, subject to the rights of any shares which may be issued with special rights or privileges. The 

Articles provide that the liquidator may, with the sanction of an extraordinary resolution and any other 

sanction required by the Act, divide amongst the members in specie the whole or any part of the assets 

of the Company in such manner as he may determine. 

2.7 Changes in Share Capital 

(i) Without prejudice to any rights attaching to any existing shares, any share may be issued with 

such rights or restrictions as the Company may by ordinary resolution determine or in the 

absence of such determination, as the Directors may determine. Subject to the Act, the 

Company may issue shares, which are, or at the option of the Company or the holder are, 

liable to be redeemed. 

(ii) The Company may by ordinary resolution increase its share capital, consolidate and divide all 

or any of its share capital into shares of larger amount, sub-divide its shares or any of them 

into shares of smaller amounts, or cancel or reduce the nominal value of any shares which 

have not been taken or agreed to be taken by any person and diminish the amount of its share 

capital by the amount so cancelled or the amount of the reduction. 

(iii) Subject to the Act, the Company may by special resolution reduce its share capital, any capital 

redemption reserve and any share premium account, and may also, subject to the Act, 

purchase its own shares. 

2.8 Variation of Rights 

Whenever the capital of the Company is divided into different classes of shares, the rights attached to 

any class may (unless otherwise provided by the terms of issue of that class) be varied or abrogated 

either with the consent in writing of the holders of not less than three-fourths of the nominal amount of 

the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate 

meeting of such holders. 

2.9 Directors’ Interests 

2.9.1 A Director who is in any way, directly or indirectly, interested in a transaction or arrangement with the 

Company shall, at a meeting of the Directors, declare, in accordance with the Act, the nature of his 

interest. 

2.9.2 Provided that he has declared his interest in accordance with paragraph 2.9.1, a Director may be a 

party to or otherwise interested in any transaction or arrangement with the Company or in which the 

Company is otherwise interested and may be a director or other officer or otherwise interested in any 

body corporate promoted by the Company or in which the Company is otherwise interested. No 

Director so interested shall be accountable to the Company, by reason of his being a Director, for any 

benefit that he derives from such office or interest or any such transaction or arrangement. 

2.9.3 A Director shall not vote nor be counted in the quorum at a meeting of the Directors in respect of a 

matter in which he has any material interest otherwise than by virtue of his interest in shares, 

debentures or other securities of, or otherwise in or through the Company, unless his interest arises 

only because the case falls within one or more of the following paragraphs: 

(a) the giving to him of any guarantee, security or indemnity in respect of money lent or an 

obligation incurred by him at the request of or for the benefit of the Company or any of its 

subsidiary undertakings; 

(b) the giving to a third party of any guarantee, security or indemnity in respect of a debt or an 

obligation of the Company or any of its subsidiary undertakings for which he has assumed 

responsibility in whole or in part under a guarantee or indemnity or by the giving of security; 

(c) any proposal concerning the subscription by him of shares, debentures or other securities of 

the Company or any of its subsidiary undertakings or by virtue of his participating in the 

underwriting or sub-underwriting of an offer of such shares, debentures or other securities; 

(d) any proposal concerning any other company in which he is interested, directly or indirectly, 

whether as an officer or shareholder or otherwise, provided that he and any persons 

connected with him do not to his knowledge hold an interest in shares representing one per 

cent. or more of any class of the equity share capital of such company or of the voting rights 

available to members of the relevant company; 

(e) any proposal relating to an arrangement for the benefit of the employees of the Company or 

any subsidiary undertaking which does not award to any Director as such any privilege or 

advantage not generally awarded to the employees to whom such arrangement relates; and 

29


(f) any arrangement for purchasing or maintaining for any officer or auditor of the Company 

or any of its subsidiaries insurance against any liability which by virtue of any rule of law 

would otherwise attach to him in respect of any negligence, breach of duty or breach of 

trust for which he may be guilty in relation to the Company or any of its subsidiaries of 

which he is a director, officer or auditor. 

2.9.4 When proposals are under consideration concerning the appointment of two or more Directors 

to offices or employment with the Company or any company in which the Company is 

interested the proposals may be divided and considered in relation to each Director separately 

and (if not otherwise precluded from voting) each of the Directors concerned shall be entitled 

to vote and be counted in the quorum in respect of each resolution except that concerning his 

own appointment. 

2.10 Remuneration of Directors 

2.10.1 The ordinary remuneration of the Directors shall be such amount as the Directors shall from 

time to time determine (provided that unless otherwise approved by the Company in general 

meeting the aggregate ordinary remuneration of such Directors, including fees, shall not 

exceed £200,000 per year) to be divided among them in such proportion and manner as the 

Directors may determine. The Directors shall also be paid by the Company all reasonable 

travelling, hotel and other expenses they may incur in attending meetings of the Directors or 

general meetings or otherwise in connection with the discharge of their duties. 

2.10.2 Any Director who, by request of the Directors, performs special services for any purposes of 

the Company may be paid such reasonable extra remuneration as the Directors may 

determine. 

2.10.3 The emoluments and benefits of any executive director for his services as such shall be 

determined by the Directors and may be of any description, including membership of any 

pension or life assurance scheme for employees or their dependants or, apart from 

membership of any such scheme, the payment of a pension or other benefits to him or his 

dependants on or after retirement or death. 

2.11 Retirement of Directors 

At the annual general meeting of the Company next following the appointment of a Director he 

shall retire from office. A Director shall also retire from office at of before the third annual 

general meeting following the annual general meeting at which he last retired and was reelected. 

A retiring Director shall be eligible for re-election. A Director shall be capable of being 

appointed or re-appointed a Director despite having attained the age of 70 or any other age 

and shall not be required to retire by reason of his having attained any particular age, subject 

to the provisions of the Act. 

2.12 Borrowing Powers 

Subject as provided below, the Directors may exercise all the powers of the Company to 

borrow money and to mortgage or charge its undertaking, property and uncalled capital. 

The Directors shall restrict the borrowings of the Company and exercise all voting and other 

rights or powers of control over its subsidiary undertakings (if any) so as to secure that the 

aggregate amount at any time outstanding in respect of money borrowed by the group, being 

the Company and its subsidiary undertakings for the time being (excluding intra-group 

borrowings), shall not without the previous sanction of an ordinary resolution of the Company 

exceed a sum equal to 15 per cent. of the aggregate total amount received from time to time 

on the subscription of shares of the Company, less the total amount paid by the Company to 

redeem or repurchase its shares, the aggregate of the amount paid up or credited as paid up 

on the allotted or issued share capital of the Company and the amount standing to the credit 

of the consolidated capital and revenue reserves of the group as shown by the latest audited 

consolidated balance sheet of the group adjusted as specified in the Articles. 

2.13 Distribution of Realised Capital Profits 

At any time when the Company has given notice in the prescribed form (which has not been 

revoked) to the Registrar of Companies of its intention to carry on business as an investment 

company (“a Relevant Period”) the distribution of the Company’s capital profits (within the 

meaning of section 266(2)(c) of the Act) shall be prohibited. The Board shall establish a 

reserve to be called the capital reserve. During a Relevant Period, all surpluses arising from 

the realisation or revaluation of investments and all other monies realised on or derived from 

the realisation, payment or other dealing with any capital asset in excess of the book value 

thereof and all other monies which are considered by the Board to be in the nature of accretion 

to capital shall be credited to the capital reserve. Subject to the Act, the Board may determine 

whether any amount received by the Company is to be dealt with as income or capital or partly 

one way and partly the other. During a Relevant Period, any loss realised on the realisation or 

30


payment or other dealing with investments, or other capital losses, and, subject to the Act, any 

expenses, loss or liability (or provision therefor) which the Board considers to relate to a capital 

item or which the Board otherwise considers appropriate to be debited to the capital reserve 

shall be carried to the debit of the capital reserve. During a Relevant Period, all sums carried 

and standing to the credit of the capital reserve may be applied for any of the purposes for 

which sums standing to any revenue reserve are applicable except and provided that during a 

Relevant Period no part of the capital reserve or any other money in the nature of accretion to 

capital shall be transferred to the revenue reserves of the Company or be regarded or treated 

as profits of the Company available for distribution (as defined in section 263(2) of the Act) 

except for the purpose of redeeming or purchasing its own shares in accordance with sections 

160 and 162 of the Act or applied in paying dividends on any shares in the Company. In 

periods other than a Relevant Period, any amount standing to the credit of the capital reserve 

may be transferred to the revenue reserves of the Company or be regarded or treated as 

profits of the Company available for distribution (as defined by section 263(2) of the Act) or 

applied in paying dividends on any shares in the Company. 

2.14 Duration of the Company 

The Directors shall put an ordinary resolution to the annual general meeting of the Company 

in 2009 and, if passed, to every fifth subsequent annual general meeting, proposing that the 

Company should continue as a Venture Capital Trust for a further five year period. If any such 

resolution is not passed, the Directors shall draw up proposals for the reorganisation, 

reconstruction or voluntary winding up of the Company for submission to the members of the 

Company at an extraordinary general meeting to be convened by the Directors on a date not 

more than 9 months after such annual general meeting. Implementation of the proposals will 

require the approval of members by ordinary resolution. For the purposes of this, an ordinary 

resolution will not have been carried only if those members in person or by proxy who vote 

against such resolution hold in aggregate not less than twenty five per cent. of the issued 

share capital of the Company at such time entitled to attend and vote at such a meeting. 

2.15 General Meetings 

Annual General Meetings shall be held at such time and place as may be determined by the 

Directors and not more than fifteen months shall elapse between the date of one Annual 

General Meeting and that of the next. 

The Directors may, whenever they think fit, convene an Extraordinary General Meeting of the 

Company, and Extraordinary General Meetings shall also be convened on such requisition or 

in default may be convened by such requisitionists as are approved by the Statutes. Any 

meeting convened under this Article by requisitionists shall be convened in the same manner 

as nearly as possible as that in which meetings are to be convened by the Directors. 

An Annual General Meeting and an Extraordinary General Meeting called for the passing of a 

special resolution shall be called by not less than twenty-one days notice in writing, and all 

other Extraordinary General Meetings of the Company shall be called by not less than fourteen 

days notice in writing. The notice shall be exclusive of the day on which it is given and of the 

day of the meeting and shall specify the place, the day and hour of meeting, and in case of 

special business the general nature of such business. The notice shall be given to the 

Members, other than those who, under the provisions of these Articles or the terms of issue of 

the shares they hold, are not entitled to receive notice from the Company, to the Directors and 

to the Auditors. A notice calling an Annual General Meeting shall specify the meeting as such 

and the notice convening a meeting to pass a special resolution or an extraordinary resolution 

as the case may be shall specify the intention to propose the resolution as such. 

In every notice calling a meeting of the Company or any class of the Members of the Company 

there shall appear with reasonable prominence a statement that a Member entitled to attend 

and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him, 

and that a proxy need not also be a Member. 

If within half an hour from the time appointed for the meeting a quorum is not present, the 

meeting, if convened by or upon the requisition of Members, shall be dissolved. In any other 

case it shall stand adjourned to such time (being not less than fourteen days and not more than 

twenty-eight days hence) and at such place as the Chairman shall appoint. At any such 

adjourned meeting the Member or Members present in person or by proxy and entitled to vote 

shall have power to decide upon all matters which could properly have been disposed of at the 

meeting from which the adjournment took place. The Company shall give not less than seven 

clear days notice of any meeting adjourned for the want of a quorum and the notice shall state 

that the Member or Members present as aforesaid shall form a quorum. 

31


The Chairman may, with the consent of the meeting (and shall, if so directed by the meeting) 

adjourn any meeting from time to time and from place to place. No business shall be 

transacted at any adjourned meeting other than the business left unfinished at the meeting 

from which the adjournment took place. 

2.16 Uncertificated Shares 

CREST, a paperless settlement system enabling securities to be evidenced otherwise than by 

a certificate and transferred otherwise than by a written instrument, was introduced in July 

1996. The articles of association are consistent with CREST membership and allow for the 

holding and transfer of shares in uncertificated form pursuant to the Regulations. The 

Company anticipates that it will enter the CREST system on admission of the Shares to the 

London Stock Exchange. 

3. Directors and Other Interests 

3.1 The Companies and the Directors are not aware of any person who, as at the date of this document 

or immediately after the Offers (assuming full subscription), directly or indirectly, jointly or severally, 

exercises or could exercise control over either Company. 

3.2 The interests of the Directors and their immediate families in the share capital of each Company, all of 

which are beneficial as they are at the date of this document and as they are expected to be following 

the Offers and of connected persons within the meaning of section 346 of the Act, which have been 

notified to each Company pursuant to section 324 or 328 of the Act or are required to be entered into 

the register of directors’ interests maintained under the provisions of section 325 of the Act, or are 

interests of a person connected with a Director which would, if the connected person were a Director, 

be required to be disclosed under this paragraph and the existence of which is known to, or could with 

reasonable diligence, be ascertained by that Director are and will be as set out below together with the 

percentages which such interests represent of the Shares in issue as at the date of this document and 

if the Offers are fully subscribed: 

Name Number of Shares and Percentage Number of Shares and Percentage 

at the date of this document 

assuming Offers fully subscribed 

VCT 1 plc % VCT 2 plc % VCT 1 plc % VCT 2 plc % 

Stephen Oxenbridge 2,000 0.04 2,000 0.04 2,000 0.01 2,000 0.01 

David Hurst-Brown 12,500 0.28 12,500 0.28 12,500 0.05 12,500 0.05 

Stewart Owen Ford 5,000 0.11 5,000 0.11 5,000 0.02 5,000 0.02 

3.3 Save as disclosed above, no Director has any interest in the share capital or loan capital of either 

Company or any of its subsidiaries, nor does any person connected with any of the Directors (within 

the meaning of section 346 of the Act) have any such interest, whether beneficial or non-beneficial. 

3.4 There are no service contracts in existence between any member of either Group and any of their 

directors nor are any such contracts proposed. The services of the Directors are provided to each 

Company pursuant to letters of appointment further details of which are set out in paragraph 4.5 below. 

All the Directors are non-executive. 

3.5 During the five years immediately prior to the date of this Prospectus, the Directors have been 

members of the administrative, management or supervisory bodies or partners of the companies and 

partnerships specified below (excluding subsidiaries of any company of which he is also a member of 

the administrative, management or supervisory) 

Name Current Directorships/Partnerships Past Directorships/Partnerships 

Stephen Oxenbridge 

King’s School, Bruton 

Elettra GP Limited. 

Oxenbridge & Co. Limited 

Darleyfield Limited 

Morgan Grenfell International 

Limited 

DB UK Bank Limited 

DSO Food Services Limited 

Information Software Solutions plc 

Riskfactor Solutions Limited 

50 Frome Road Management 

Company Limited 

Misys Eagleye Limited 

32



David Hurst-Brown 

Anite Group Plc 

Ffastfill PLC 

Grove House Publishing Limited 

Imagination Technologies Group Plc 

Keydata AIM VCT Plc 

MGHB Investments Limited 

Smart Approach Limited 

Smart Approach Group PLC 

Tante Marie Catering Company Limited 

Tante Marie Limited 

Tante Marie School of Cookery Limited 

Electra Kingsway VCT 3 plc 

Azlan Group Limited 

Keydata UK Limited 


Stewart Owen Ford 

Fundworks UK Limited 

Keydata AIM VCT plc 

Keydata Investment Products Nominees 

Limited 


Keydata Media Management Limited 

Keydata Media & Marketing 1 Limited 

Keydata Media Services Limited 

Keydata UK Limited 

Pension Products Services Limited 

Skyline Printing Company Limited 

SOF Services Limited 

Macrocom (391) Limited 

3.6 In the five years prior to the date of this Prospectus the Directors have not had: 

(i) any convictions in relation to fraudulent offences; 

(ii) any bankruptcies, receiverships or liquidations when acting in the capacity of a member of any 

administrative, management or supervisory bodies or as a partner, founder or senior manager; 

and 

(iii) any official public incriminations and/ or sanctions by statutory or regulatory authorities 

(including designated professional bodies) and have not been disqualified by a court from 

acting as a member of the administrative, management or supervisory bodies of any company 

or from acting in the management or conduct of the affairs of any company. 

3.7 No Shares are being reserved for allocation to existing Shareholders, Directors or employees. 

3.8 Each Company will take out directors’ and officers’ liability insurance for the benefit of the Directors. 

3.9 The estimated aggregate remuneration, including benefits in kind, to be paid to the Directors in the 

financial period ending 28 February 2006 is £29,250 in respect of each Company excluding any VAT 

or national insurance contributions, based on the arrangements currently in place with each Director. 

3.10 The Companies and the Directors are not aware of any person who, as at the date of this document 

or immediately after the Offers (assuming full subscription), could be or is interested directly or 

indirectly in 3 per cent or more of the issued share capital of either Company (calculated, exclusive of 

treasury shares). 

3.11 No Director has any conflict of interest between his duties to each Company and their private interests 

or other duties. 

3.12 From incorporation of each Company until the date of this Prospectus the amount of remuneration paid 

(including any contingent or deferred compensation) and benefits in kind granted to each of the 

Directors of each Company and its subsidiaries for services in all capacities to each Company and 

their subsidiaries were as follows: 

£ 

Stephen Oxenbridge 3,750 

David Hurst-Brown 3,000 

Stewart Ford 3,000 

33


3.13 There are no amounts set aside or accrued by either Company or its subsidiaries to provide pension, 

retirement or similar benefits to the Directors or director of either Investment Manager. 

3.14 None of the Directors or directors of either Investment Manager have any service contract with either 

Company or any of its subsidiaries providing for benefits upon termination of employment. 

3.15 Stewart Ford, a director of the Company, is interested in the Agreements referred to in paragraphs 4.1, 

4.7, 4.9 and 4.10 in his capacity as a director of Keydata Investment Services and a director and 

shareholder of its parent company. 

4. Material Contracts 

The following material contracts have been entered into by members of either Group other than contracts 

entered into in the ordinary course of business, since their respective dates of incorporation and there are no 

other contracts (not being contracts entered into in the ordinary course of business) which have been entered 

into by any member of either Group which contain a provision under which any member of either Group has 

any obligation or entitlement which is or may be material to the relevant Group as at the date of this 

document. 

4.1 Original Offer Agreement 

Under the Original Offers Agreement dated 23 February 2005 between, inter alia, each Company (1), 

its Directors (2), the Sponsor (3), Keydata Investment Services Limited (“KIS”) (4), and Falck 

Renewables Limited (5), the Sponsor agreed to act as sponsor to the Original Offers and KIS 

undertook as agent of the Companies to use its reasonable endeavours to procure subscribers under 

the Original Offers for up to 25,000,000 Shares. KIS was entitled to any interest earned on subscription 

monies prior to the allotment of Shares which will be applied to defray the costs of the Offers. Under 

the Original Offer Agreement, each Company paid to KIS a fee of 5 per cent. of the aggregate value 

of accepted applications for Shares received pursuant to the Offers. Each Company will also pays to 

KIS a broking commission of 0.9 per cent. per annum of the Net Asset Value of each Company 

payable quarterly in arrears, plus VAT (if any). 

Out of its fee, KIS paid all other costs and expenses of or incidental to the Original Offers and 

Admission including paying the Sponsor’s fee of £40,000. Authorised financial advisers were paid by 

KIS out of its capital raising fees. Total initial costs payable by each Company under the Original Offer 

Agreement were limited to 5 per cent of the gross proceeds of the Offers. 

KIS has agreed to indemnify each Company against annual running costs exceeding 2.0 per cent. of 

its Net Asset Value (excluding irrecoverable VAT). 

Under the Original Offer Agreement, which may be terminated by the Sponsor and KIS in certain 

circumstances of breach, the Investment Manager, KIS and the Directors have given certain 

warranties which are subject to certain limitations. Warranty claims must be made by no later than 3 

months after each Company’s first annual general meeting following the closing date of the Original 

Offers at which Shareholders approve that Company’s accounts. Each Company has also agreed to 

indemnify the Sponsor in respect of its role as Sponsor and under the Original Offer Agreement. The 

indemnities are standard for an agreement of this nature and without limit as to time and amount. The 

Original Offer Agreement may be terminated, inter alia, if any statement in the Prospectus is untrue, 

any material omission from the Prospectus arises or any breach of warranty occurs. 

4.2 Investment Management Agreement 

Agreements (“the Investment Management Agreements”) dated 23 February 2005 between each 

Company and the Investment Manager whereby the Investment Manager provides non-discretionary 

investment management and advisory services to that Company in respect of its portfolio of Qualifying 

Investments. 

The Investment Manager receives fees (exclusive of VAT) equal to 0.4 per cent. per annum of the Net 

Asset Value of each Company until the termination of the Investment Management Agreement, payable 

quarterly in arrears. The Investment Manager is not entitled to receive reimbursement of expenses 

incurred in performing its obligations, unless such expenses have been approved by the Company. 

Save in circumstances of losses and expenses arising due to an Investment Manager’s fraud, 

negligence or wilful default, each Company has agreed to indemnify the relevant Investment Manager 

and its employees and agents in respect of losses or expenses incurred in connection with the 

Investment Manager’s provision of services pursuant to the Investment Management Agreements or 

as a result of the Investment Managers acting on any instruction given by the relevant Company. 

These indemnities are standard for agreements of this nature and are unlimited as to time and amount. 

The appointment continues for a period of 3 years and thereafter and on each subsequent anniversary 

will be automatically renewed for a further 12 calendar months’ period provided that on such renewal 

date (save in respect of the first renewal date) and for the previous 12 months, at least 75 per cent of 

the Company’s investments are Qualifying Investments. Either party is entitled at any time to give 

notice of immediate termination should the other party be in material default and the Agreement will 

34


also be subject to earlier termination in certain other circumstances. Any action taken by the 

Investment Manager in the event of a breach of the Investment Management Agreement will be 

announced through the RNS. 

4.3 Secondment Agreement 

Agreements (each a “Secondment Agreement”) both dated 23 February 2005, entered into between 

each Investment Manager and Renewables Management whereby Renewables Management will 

make available to the relevant Investment Manager the expert services of the members of Investment 

Management Team in such locations and for such periods of time as will enable the Investment 

Manager to perform its obligations under the Investment Management Agreement. 

Renewables Management receives annual fees (inclusive of any VAT) equal to 0.65 per cent of 

amounts invested by the Company less an amount equal to the Investment Manager’s quarterly 

running costs until the termination of a Secondment Agreement. Such amount will be payable quarterly 

in arrears. 

The Secondment Agreement is co-terminous with the Investment Management Agreement (ie if the 

Investment Management Agreement is terminated for any reason, the Secondment Agreement will be 

automatically terminated). 

4.4 Directors’ Letter of Appointment 

Each of the Directors has entered into an agreement with each Company dated 23 February 2005 as 

referred to in paragraph 3.4 above whereby he is required to devote such time to the affairs of each 

Company as the Board reasonably requires consistent with his role as a non-executive Director. Each 

Director is entitled to receive an annual fee of £12,000 and the Chairman £15,000. Either party can 

terminate the agreement by giving to the others at least three months’ notice in writing to expire at any 

time after the date 15 months from the respective commencement dates. 

4.5 Administration Agreement 

An Agreement (“the Administration Agreement”) dated 23 February 2005 between each Company and 

KIS, whereby KIS provides certain administration services to the Companies in respect of all the 

investments of the Companies, for an annual fee of £25,000 (plus VAT) per Company. 

The Administration Agreement continues for a period of 3 years from Admission and thereafter is 

terminable by either party giving 12 months’ written notice, such notice to expire no earlier than the 

period 3 years from Admission, subject to early termination in certain circumstances. 

4.6 Company Secretarial Agreement 

An Agreement (“the Company Secretarial Agreement”) dated 23 February 2005 between each 

Company and Keydata Investment Services Limited, whereby Craig McNeil provides certain company 

secretarial services to the Companies for an annual fee of £12,000 (plus any applicable VAT) per 

Company, payable direct to Craig McNeil. 

The Company Secretarial Agreement continues for a period of 3 years and thereafter is terminable by 

either party giving 12 months’ written notice, such notice to expire no earlier than the period 3 years 

from Admission, subject to early termination in certain circumstances. 

4.7 Trade Name License Agreement 

An agreement (“the Trade Name License Agreement”) dated 23 February 2005 between Keydata UK 

Limited and each Company, whereby Keydata UK Limited grants to the Companies a non-exclusive 

license at no cost to use the “Keydata” name in connection with the Companies activities. 

The Trade Name License Agreement commenced from the date of the agreement and is terminable 

by either party if the other party suffers certain events of insolvency and is terminable by Keydata UK 

Limited if any person or persons acting in concert (as defined in the City Code on Takeovers and 

Mergers) obtains control of the Company. 

4.8 Offer Agreement 

Under the Offer Agreement dated 15 December 2005 between, inter alia, each Company (1), its Directors 

(2), the Sponsor (3), Keydata Investment Services Limited (“KIS”) (4), and Falck Renewables Limited (5), 

the Sponsor has agreed to act as sponsor to the Offers and KIS undertakes as agent of the Companies 

to use its reasonable endeavours to procure subscribers under the Offers for up to 40,000,000 Shares. 

KIS is entitled to any interest earned on subscription monies prior to the allotment of Shares which will 

be applied to defray the costs of the Offers. Under the Offer Agreement, each Company will pay to KIS 

a fee of 5 per cent. of the aggregate value of accepted applications for Shares received pursuant to the 

Offers. Each Company will also pays to KIS a broking commission of 0.9 per cent. per annum of the Net 

Asset Value of each Company payable quarterly in arrears, plus VAT (if any). 

Out of its fee, KIS will pay all other costs and expenses of or incidental to the Offers, including paying 

the Sponsor’s fee of £17,500 per Company. Authorised financial advisers will be paid by KIS out of its 

capital raising fees. Total initial costs payable by each Company under the Offer Agreement are limited 

to 5 per cent. of the gross proceeds of the Offers. 

35


Under the Offer Agreement, which may be terminated by the Sponsor and KIS in certain circumstances of 

breach, the Investment Manager, KIS and the Directors have given certain warranties which are subject to 

certain limitations. Warranty claims must be made by no later than 90 days after publication of the Company’s 

accounts for the year ending 28 February 2007. Each Company has also agreed to indemnify the Sponsor 

in respect of its role as Sponsor and under the Offer Agreement. The indemnities are standard for an 

agreement of this nature and without limit as to time and amount. The Offer Agreement may be terminated, 

inter alia, if any statement in the Prospectus is untrue, any material omission from the Prospectus arises or 

any breach of warranty occurs. 

5. Litigation 

As at the date of this document, no member of either Group is or has been engaged in any governmental, 

legal or arbitration proceedings (including any such proceedings which are pending or threatened by or 

against any member of either Group of which they are aware) which may have, or has had during the period 

since its incorporation, a significant effect on the relevant Group’s financial position or profitability. 

6. General 

6.1 No member of either Group has or has had any employees since their respective dates of 

incorporation. 

6.2 Each Company’s accounting reference date is 28 February in each year. 

6.3 The Investment Managers are Green Power 1 Limited and Green Power 2 Limited, both of whose 

principal place of business is at One Angel Court, London EC2R 7HJ. 

6.4 The initial issue price of 100 pence per Share represents the nominal value of such Shares (1pence) 

plus a premium of 99 pence per Share and is payable in full on application. 

6.5 The Offers are not underwritten. The expenses of and incidental to the Offers and the listing of the 

Shares including registration and listing fees, printing, advertising and distribution costs, legal and 

accounting fees, expenses and commissions payable to Introducers will amount to 5 per cent. of the 

gross proceeds of the Offers (including irrevocable VAT) and are payable by the Promoter, in terms of 

the Offer Agreement. If the maximum of £20,000,000 for each Company is raised under the Offers the 

net proceeds for each Company will amount to £19,000,000. The net proceeds will be applied in 

accordance with the Companies’ investment strategy. In respect of each Company if the maximum 

subscription of £20,000,000 is raised under the Offer, Shares issued will represent 81.6 per cent. of 

each of the Company’s enlarged share capital. 

6.6 A typical Investor is expected by the Directors to be an individual (not a corporate), who is aged 18 or 

over. The individual should be willing to invest over the long term and be comfortable with higher risk 

investments, such as unquoted and smaller company shares. The Investor should either have 

experience of such investments and/or seek advice from an appropriate financial adviser. 

6.7 Ernst & Young LLP have been the only auditors of each Company since its incorporation and are 

members of the Institute of Chartered Accountants in England and Wales. 

6.8 Each Company has given notice to the Registrar of Companies, pursuant to section 266 of the Act, of 

its intention to carry on business as an investment company, which will enhance its ability to pay 

dividends out of income. Whilst it is an investment company, the Companies articles of association are 

required to preclude it from distributing capital profits (see paragraph 2.13 above). If and when capital 

profits are realised which the Directors consider it appropriate to distribute by way of dividend (for 

example on the disposal of a successful investment), the Directors would anticipate revoking this 

status, whereupon the prohibition in the Companies’ articles of association against distributing capital 

profits will automatically terminate. 

6.9 Green Power 1 and Green Power 2 have each given, and have not withdrawn, their written consent to 

the issue of this document with the inclusion of their name and their opinions in Part I in the form and 

context in which they are included. 

6.10 The Offers are sponsored by Howard Kennedy whose address is at 19 Cavendish Square, London 

W1A 2AW and which is authorised and regulated by the Financial Services Authority. The Sponsor has 

given, and has not withdrawn, its written consent to the issue of the document with the inclusion of its 

name in the form and context in which it is included. 

6.11 Keydata Investment Services has given, and has not withdrawn, its written consent to the issue of this 

document with the inclusion of its name in the form and context in which it is included. 

6.12 There are no family relationships between any of the Directors or between any directors of either 

Investment Manager, or between any of the Directors and the directors of the Investment Manager. 

6.13 No member of either Group has entered into any related party transactions. 

36


6.14 The accountant reports set out in Parts VI and VII prepared by Ernst & Young LLP of George House, 

50 George Square, Glasgow G2 1RR and the reference to their name in the form and context in which 

they appear are included with the consent of Ernst & Young LLP. 

6.17 In the opinion of the Directors, the Companies compete with other venture capital entities and investors 

for suitable investment opportunities. 

6.18 Each Company had available at 13 December 2005 cash at bank of £4,278,154, which should be 

supplemented by the net proceeds of the Offers. This figure is unaudited. (Source: unaudited records 

prepared by the Companies). 

6.19 In the opinion of the Directors, there are no trends, uncertainties, demands, commitments or events 

that are reasonably likely to have a material effect on either Company’s prospects for the period ending 

28 February 2006. 

6.20 The Companies confirm that information set out in this document which has been sourced from a third 

party has been accurately re-produced and, so far as the Companies are aware and they are able to 

ascertain from information published by those third parties, no facts have been omitted which would 

render such information inaccurate or misleading. 

6.21 The unaudited net asset value per Share as at 30 November 2005 was 94.87p . 

6.22 Neither Company is regulated in the operation of its activities. 

6.23 The results of the Offer will be announced through the RNS. 

6.24 There are no dividend restrictions or alternative procedures applicable to non-resident holders of 

the Shares. 

7. Working Captial 

7.1 Keydata Income VCT 1 is of the opinion that the Group has sufficient working capital for its present 

requirements, that is, for at least the next twelve months following the date of this document. 

7.2 Keydata Income VCT 2 is of the opinion that the Group has sufficient working capital for its present 

requirements, that is for at least the next 12 months following the date of this document. 

8. Capitalisation and indebtedness statement 

8.1 As extracted from its unaudited records as at 13 December 2005, being the last practical date prior to 

the publication of this document, the indebtedness of each Company comprised:- 

• Cash £4,278,154 

• Cash equivalent Nil 

• Total current debt Nil 

• Total non-current debt Nil 

Neither Company has any indirect or contingent indebtedness. 

8.2 The capitalisation of each Company comprised: 

• Share capital (including share premium) £4,287,945 

• Legal reserves Nil 

• Other reserves (£6,821) 

8.3 There has been no material change in the capitalisation of either Company since 31 August 2005. 

9. Significant Changes 

9.1 There has been no significant change in the financial or trading position of any member of either Group 

since 31 August 2005, the date to which the last audited interim financial statements of the Companies 

have been published. 

9.2 On the basis of full subscription under the Offers the gross assets of each Company will increase by 

£1 for each Ordinary Share subscribed under the Offers for that Company, the liabilities of each 

Company will increase by 5p for each Ordinary Share so subscribed and the Offers will be earning 

enhancing for each Company. 

37


10. Extraordinary General Meeting 

At an Extraordinary General Meeting of each Company held on 8 November 2005 the following Special and 

Ordinary Resolutions were passed: 

Special Resolutions 

(a) That, in substitution for any existing power under Section 95 of the Act, but without prejudice to the 

exercise of any such power prior to the date hereof, the Directors be and are hereby empowered, 

during the period commencing on the passing of this special resolution and expiring at the conclusion 

of the Company’s next annual general meeting, or on the expiry of 15 months following the passing of 

the resolution, whichever is the earlier (unless previously revoked, varied or extended by the Company 

in general meeting), pursuant to Section 95 of the Act, to allot equity securities (as defined in Section 

94(2) of the Act) for cash pursuant to the authority given in accordance with Section 80 of the Act as 

if Section 89(1) of the Act did not apply to any such allotment provided that this power shall be limited 

to the allotment of equity securities in connection with: 

i) the 2005/2006 Share Offer; 

ii) an offer of securities by way of rights; 

iii) the allotment for cash (otherwise than pursuant to sub-paragraph (i) and (ii) above) of equity 

securities up to an aggregate nominal amount of 10% of the issued share capital of the 

Company immediately following the final closing of the 2005/2006 Share Offer; 

(representing, at maximum subscription under the 2005/2006 Share Offer,81.6 per cent. in the 

case of (i) and 9.1 per cent. in the case of (iii) of the issued ordinary share capital of the 

Company. 

but so that this authority shall allow the Company to make offers or agreements before the expiry and 

the Directors may allot equity securities in pursuance of such offers or agreements as if the powers 

conferred hereby had not so expired; 

(b) That, subject to approval by the High Court of Justice, the amount standing to the credit of the share 

premium account of the Company immediately after the final closing date of the 2005/2006 Share Offer 

be cancelled. 

(c) That, the Company is and hereby is authorised to make one or more market purchases (within the 

meaning of section 163(3) of the Act) of Shares provided that: 

i) the maximum aggregate number of Shares that is purchased is an amount equal to 14.99% 

of the Shares in issue following the 2005/2006 Share Offer; 

ii) the minimum price paid for a Share is 1 pence; 

iii) the maximum price paid for a Share is an amount exclusive of expenses, equal to 105 per cent 

of the average of the middle market prices shown in the quotations for a Share in the Daily 

Official List of the London Stock Exchange for the five business days immediately preceding 

the day on which that Share is purchased; 

iv) the Company may validly make a contract to purchase Shares under the authority hereby 

conferred prior to the expiry of such authority which will or may be executed wholly or partly 

after the expiry of such authority, and may validly make a purchase of Shares in pursuance of 

any such contract; and 

Unless renewed, the authority conferred in resolution 3 above shall expire either at the conclusion of 

the next annual general meeting of the Company or on the expiry of fifteen months following the 

passing of this resolution, whichever is the later to occur, save that the Company may, prior to such 

expiry, enter into a contract to purchase Shares which will or may be completed or executed wholly or 

partly after such expiry. 

(d) Insofar as permitted under the Act and subject to the provisions of this Article, every Director or other 

officer (save for an officer who is employed as auditor of the Company) of the Company shall be 

indemnified out of the assets of the Company against all costs, charges, losses, expenses and 

liabilities which he may sustain or incur in or about the execution of his duties of his office or otherwise 

in relation thereto, in connection with any negligence, default, breach of duty or breach of trust by him 

in relation to the Company save that a Director of the Company shall not be entitled to be indemnified 

against any costs, charges, losses, expenses or liabilities incurred: 

i) to the Company or an associated company (as defined in section 309A(6) of the Act); 

ii) to pay a fine imposed in criminal proceedings;. 

iii) to pay a sum payable to a regulatory authority by way of a penalty in respect of noncompliance 

with any requirement of a regulatory nature, however arising; 

iv) in defending any criminal proceedings in which he is convicted; 

v) in connection with an application under section 144(3) or (4) of the Act in which the court 

refuses to grant him relief; or 

vi) in connection with an application under section 727 of the Act in which the court refuses to 

grant him relief. 

38


No officer of the Company other than a Director shall be liable for any loss, damage, or misfortune which may 

happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. 

The Company shall have power to purchase and maintain for any director or officer of the Company or any 

associated company (as defined in section 309A(6) of the Act) insurance against any liability referred to in 

section 309A(1) of the Act. 

The Company may provide any Director of the Company with funds to meet expenditure incurred or to be 

incurred by him: 

a) in defending any civil or criminal proceedings brought against him in connection with any alleged 

negligence, default, breach of duty or breach of trust by him in relation to the Company; or 

b) in connection with any application to the court for relief from liability under section 144(3) or (4) of the 

Act for negligence, default, breach of duty or breach of trust in relation to the affairs of the Company, 

and the Company shall be permitted to do anything which would otherwise be prohibited under section 330 

of the Act to enable a Director to avoid incurring such expenditure, provided that if the Director is convicted 

or judgment is given against him or if the court refuses to grant relief, and upon such conviction or judgement 

or refusal becoming final (within the meaning of the Act), the Director shall become liable to repay to the 

Company the full amount of any such funds provided to him and any liability incurred by the Company to 

avoid a Director incurring any such expenditure shall fall to be discharged. 

Ordinary resolution 

(e) That, the proposed appointment by the Company of Keydata Investment Services Limited as the 

promoter in relation to the 2005/2006 Share Offer on the terms set out in the circular to Shareholders 

dated 10 October 2005 be and is hereby approved. 

11. Documents for Inspection 

Copies of the following documents are available for physical inspection at the offices of Howard Kennedy, 

19 Cavendish Square, London W1A 2AW, during normal business hours on any weekday (Saturdays, 

Sundays and public holidays excepted) during the life of this document. 

(a) the Memorandum and Articles of Association of each Company; 

(b) the material contracts referred to in paragraph 4 above; 

(c) the Directors’ letters of appointment referred to in paragraph 4.4 above; 

(d) the written consents referred to in paragraphs 6.9, 6.10, 6.11 and 6.14 above; and 

(e) the audited interim financial statements of each Company for the period ended 31 August 2005 

Dated: 15 December 2005 

39


PART VI 

Financial Information - Keydata Income VCT 1 plc 

Accountants Report on Financial Information 

George House 



The Directors, 





Dear Sirs 


We report on the financial information set out in pages 41 to 47. This financial information has been prepared for 

inclusion in the Prospectus dated 15 December 2005 relating to the Offer for Subscription of up to 20,000,000 

Ordinary Shares of Keydata Income VCT 1 plc on the basis of the accounting policies set out in Note 1 of 

paragraph 5. This report is required by Annex I item 20.1 of the Prospectus Regulation and is given for the 

purpose of complying with that paragraph and for no other purpose. 

Responsibilities 

The Directors of Keydata Income VCT 1 plc are responsible for preparing the financial information on the basis of 

preparation set out in Note 1 of paragraph 5, and in accordance with UK GAAP. 

It is our responsibility to form an opinion as to whether the financial information gives a true and fair view, for the 

purposes of the Prospectus and to report our opinion to you. 

Basis of opinion 

We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices 

Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and 

disclosures in the financial information. It also included an assessment of significant estimates and judgments 

made by those responsible for the preparation of the financial information and whether the accounting policies are 

appropriate to the entity's circumstances, consistently applied and adequately disclosed. 

We planned and performed our work so as to obtain all the information and explanations which we considered 

necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial 

information is free from material misstatement whether caused by fraud or other irregularity or error. 

Opinion 

In our opinion, the financial information gives, for the purposes of the Prospectus dated 15 December 2005, a true 

and fair view of the state of affairs of Keydata Income VCT 1 plc as at 31 August 2005 and of its net revenue and 

cash flows for the period 16 February 2005 to 31 August 2005 in accordance with the basis of preparation as set 

out in Note 1, paragraph 5 and in accordance with UK GAAP. 

Declaration 

For the purposes of Prospectus Rule 5.5.3R (2)(f) we are responsible for this report as part of the Prospectus and 

declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best 

of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration 

is included in the Prospectus in compliance with item 1.2 of Annex I of the Prospectus Regulation. 



40


Financial Information 

1. BASIS OF PREPARATION 

The financial information set out in paragraphs 2 to 5 is based on the interim financial statements of Keydata 

Income VCT 1 plc (“the Company”) for the period 16 February 2005 to 31 August 2005 and has been 

prepared on the basis set out in Note 1 of paragraph 5, to which no adjustments were considered necessary. 

2. STATEMENT OF TOTAL RETURN 

Notes For the period 16 February 2005 

to 31 August 2005 

Revenue Capital Total 

£000 £000 £000 

Gains on investments 7 - - - 

Income 2 37 - 37 

-------- -------- -------- 

37 - 37 

Management fees 3 - - - 

Other expenses 4 (44) - (44) 

-------- -------- -------- 

(44) - (44) 

-------- -------- -------- 

Return on ordinary activities before taxation (7) - (7) 

Tax on ordinary activities 5 - - - 

-------- -------- -------- 

Return for the period attributable to 

equity shareholders (7) - (7) 

-------- -------- -------- 

Return per share 6 (0.18)p - (0.18)p 

The total column of this statement is the profit and loss account of the Company. All revenue and capital 

items in the above statement derive from continuing operations. No operations were acquired or discontinued 

in the period. 

3. BALANCE SHEET 

As at 31 August 2005 

Notes £000 

Fixed assets 

Investments 7 - 

Current assets 

Debtors 9 31 

Cash at bank and in hand 4,254 

-------- 

4,285 

Creditors: amounts falling due within one year 10 (4) 

-------- 

Net current assets 4,281 

-------- 

Net assets 4,281 

-------- 

Capital and Reserves 

Called up share capital 11 45 

Share premium 12 4,243 

Capital reserve – realised 12 - 

Capital reserve – unrealised 12 - 

Revenue reserve 12 (7) 

-------- 

Equity shareholders’ funds 15 4,281 

-------- 

Net asset value per share 13 94.85p 

41


4. CASH FLOW STATEMENT 

Notes For the period 16 February 2005 to 

31 August 2005 

£000 

Net cash outflow from operating activities 14 (34) 

-------- 

Capital expenditure and financial investment 

Purchase of investments - 

-------- 

Net cash outflow before financing (34) 

-------- 

Financing 

Net proceeds from issue of ordinary share capital 4,288 

-------- 

Increase in cash 4,254 

-------- 

5. Notes to the Financial Information 

1 Accounting Policies 

Basis of Preparation 

The financial information has been prepared under the historical cost convention, modified to include the 

revaluation of fixed asset investments and in accordance with UK GAAP and applicable accounting 

standards and with the 2003 Statement of Recommended Practice (SORP) for “Financial Statements of 

Investment Trust Companies” issued by the Association of Investment Trust Companies. 

Keydata Income VCT 1 plc has a wholly owned subsidiary, Green Power 1 Limited established for the 

specific purpose of being the Company’s Investment Manager. Green Power 1 Limited has been excluded 

from consolidation on the basis that it is not material to the Group, having yet to register any transactions 

other than issuing share capital to the parent company, Keydata Income VCT 1 plc. 

Investments 

Unquoted investments are stated at Directors’ valuation in accordance with the British Venture Capital 

Association guidelines for the valuation of venture capital investments. In determining this valuation the 

Directors give consideration to the period of investment, the performance of the investment against plan, 

appropriately discounted comparative listed companies’ price earnings ratios and any recent transactions. 

Any capital gains or losses, whether realised or unrealised, arising on fixed asset investments are taken 

directly to capital reserves. 

Income 

Equity dividends are taken into account on the ex-dividend date, net of any associated tax credit. Fixed 

returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to 

reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course. 

All other income, including deposit interest receivable, is recognised on an accruals basis. 

Expenditure 

All expenditure is accounted for on an accruals basis. Investment management fees are allocated 75 per cent. 

to the capital reserve – realised and 25 per cent. to the revenue account in line with the Board’s expected long 

term split of investment returns in the form of capital gains and income respectively. Expenses incidental to the 

acquisition or disposal of an investment are included within the cost of the investment or deducted from the 

disposal proceeds as appropriate. All other expenditure is charged to the revenue account. 

Capital Reserves 

Realised profits and losses on the disposal of investments and 75 per cent. of investment management fees 

are accounted for in the Capital reserve - realised. 

Increases and decreases in the valuation of investments held at the year end are accounted for in the Capital 

reserve – unrealised. 

Taxation 

The tax effect of expenditure is allocated between capital and revenue on the same basis as the particular 

item to which it relates, using the Company’s effective rate of tax for the accounting period. Any liability to 

corporation tax is based on net revenue for the period. 

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at 

the balance sheet date where transactions or events that result in an obligation to pay more tax in the future 

or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are 

differences between the Company’s taxable profits and its results as stated in the accounts. Deferred tax 

assets are only recognised to the extent they are recoverable. 

42


Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing 

differences are expected to reverse, based on tax rates and laws that have been enacted or substantially 

enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis. 

2 Income 

For the period 16 February 2005 to 31 August 2005 

£000 

Income from listed investments: 

UK dividends - 

Unfranked investment income - 

------ 

- 

Other income: 

Deposit interest 37 

------ 

Total income 37 

------ 

3 Management Fees 



£000 £000 £000 

Management fees - - - 

Irrecoverable VAT thereon - - - 

------ ------ ------ 

- - - 

------ ------ ------ 

The Company’s Investment Manager is Green Power 1 Limited a wholly owned subsidiary company of 

Keydata Income VCT 1 plc. The investment management agreement dated 23 February 2005 will continue 

for a period of 3 years from 23 June 2005, the date of Admission, and thereafter and on each subsequent 

anniversary will be automatically renewed for a further 12 calendar months’ period provided that on such 

renewal date (save in respect of the first renewal date) and for the previous 12 months, at least 75% of the 

Company’s investments are qualifying investments. The agreement is subject to earlier termination in certain 

other circumstances. 

The Investment Manager receives an investment management fee of 0.4 per cent. per annum of the net 

asset value of the Company, calculated and payable quarterly in arrears. No investment fees were payable 

in respect of the period to 31 August 2005. 

4 Other Expenses 


£000 

General expenses 32 

Directors fees 10 

Auditors remuneration - for audit services 2 

----- 

44 

----- 

The maximum aggregate Directors emoluments authorised by the Articles of Association are £200,000 

per annum. 

43


5 Tax on ordinary activities 

The tax charge for the period is nil as allowable expenses exceed taxable income. 


£000 

Revenue on ordinary activities before taxation (7) 

----- 

UK Corporation Tax small company rate of 19 per cent. (1) 

Effects of: - expenses in excess of taxable income 1 

----- 

Actual current tax charge 

Nil 

---- 

There is no taxation in relation to capital gains or losses. No asset or liability has been recognised in relation 

to capital gains or losses on revaluing investments. The Company is exempt from such tax as a result of its 

intention to qualify as a Venture Capital Trust. 

There is an unrecognised deferred tax asset of £1,000. The directors believe that there will be no taxable profits 

in the future against which the deferred tax assets can be offset and therefore the asset has not been recognised. 

6 Return per ordinary share 



Return per ordinary share: - basic (0.18)p - (0.18)p 

--------- --------- --------- 

Basic return per ordinary share is based on the net loss on ordinary activities after taxation of £7,000 and on 

3,780,373 ordinary shares, being the weighted average number of ordinary shares in issue during the period. 

Capital return per ordinary share is based on a net capital profit of £Nil for the period and on 3,780,373 

ordinary shares, being the weighted average number of ordinary shares in issue during the period. 

7 Investments 


Investments 

£000 

Investments - 

------ 

Opening valuation - 

Movement in period: 

Purchases at cost - 

Sales - proceeds - 

- realised gains - 

Movements unrealised - 

------ 

Closing valuation - 

Closing book cost - 

------ 

Closing unrealised gain - 

------ 

On 22 February 2005, Keydata Income VCT 1 plc subscribed for 1 ordinary share of £1 in Green Power 1 

Limited, representing the entire issued share capital of that Company. 

8 Significant Interests 

Notwithstanding the investment in Green Power 1 Limited, at the period end the Company did not hold 3 per 

cent. or more of the issued share capital of any investment. 

9 Debtors 


£000 

Prepayments and accrued income 31 

----- 

44


10 Creditors 


£000 

Accruals and deferred income 4 

----- 

11 Called up share capital 


£000 

Authorised: 30,000,000 ordinary shares of 1p each 300 

----- 

Allotted, called-up and fully paid: 4,513,628 ordinary shares of 1p each 45 

----- 

During the financial period to 31 August 2005, ordinary shares of 1p each were issued as follows: 

Date of Issue Number of Issue Price Gross Proceeds 

Shares Issued (pence) £000 

16 February 2005 (on incorporation) 2 1p - 

1 April 2005 to 12 August 2005 4,513,626 100 4,514 

------------- -------- 

4,513,628 4,514 

------------- -------- 

The Company issued 50,000 Redeemable Preference Shares of £1 on 22 February 2005 for a consideration 

of £50,000. On 21 April 2005, the Company redeemed in full the 50,000 Redeemable Preference Shares for 

a consideration of £50,000. On redemption the authorised share capital of £50,000 was converted into an 

additional 5,000,000 ordinary shares of 1p each. The authorised ordinary share capital increased from 

25,000,000 to 30,000,000 ordinary shares of 1p each. 

12 Reserves 


Date of Issue Share Capital Capital Revenue 

Premium reserve reserve reserve 

realised unrealised 

£000 £000 £000 £000 

Proceeds from issue of shares 4,469 - - - 

Costs related to issue of shares (226) - - - 

Net revenue return for period - - - (7) 

------ ------ ------ ------ 

At 31 August 2005 4,243 - - (7) 

------ ------ ------ ------ 

13 Net asset value per ordinary share 

Net asset value As at 31 August 2005 

per share Net assets attributable 

(pence) £000 

Ordinary shares - Basic 94.85p 4,281 

--------- --------- 

Net asset value per ordinary share is based on net assets at the period end and on 4,513,628 ordinary 

shares, being the number of shares in issue at period end. 

45


14 Reconciliation of net revenue to net cash inflow from operating activities 


£000 

Net revenue return on ordinary activities before taxation (7) 

Investment management fee charged to capital - 

Increase in debtors (31) 

Increase in creditors 4 

----- 

Net cash outflow from operating activities (34) 

----- 

15 Reconciliation of movement in shareholders’ funds 


£000 

Revenue return for period (7) 

Capital return for the period - 

----- 

(7) 

Issue of ordinary shares 4,288 

----- 

Closing shareholders’ funds 4,281 

----- 

16 Contingencies, guarantees and financial commitments 

There were no contingencies, guarantees or financial commitments of the Company at the period end. 

17 Related party transactions 

One of the Directors of the Company, Mr S Ford, is a director of Keydata Investment Services Limited 

(“KISL”) and has an interest in excess of 20% in that company. As such, KISL is considered to be a related 

party to the Company. KISL acts as Promoter and Administrator to the Company. KISL, in its capacity as 

Promoter of the Offer for Subscription, receives annual commission of 0.9% per annum of the net asset value 

of the Company, calculated and payable quarterly in arrears. KISL is responsible for payment of all trail 

commission due to intermediaries. KISL also receives a fee of £25,000 per annum for administration 

services. In total, KISL earned fees of £22,000 during the period. Of those fees, £nil was still owing at the 

period end. 

KISL has agreed to indemnify the Company against annual running costs (excluding VAT) exceeding 2.0% 

of its net asset value. 

46


18 Financial instruments 

The Company’s financial instruments comprise cash balances, debtors and creditors that arise directly from 

its operations and, in due course, securities and other investments. These financial instruments expose the 

Company to certain inherent risks, the most predominant of which are market price risk, liquidity risk and 

interest rate risk. Market price risk arises from fluctuations in the value of any investments held by the 

Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type 

of security or issuer. Due to their nature, unlisted investments may not be readily realisable. Therefore, the 

Company holds sufficient cash and other assets which are readily realiseable to meet any funding 

requirements that may arise. It seeks to minimise interest rate risk by using equity (as opposed to debt) 

funding to grow its investment portfolio. 

The Company’s financial assets and liabilities are denominated in Sterling as follows: 


Floating Rate Non-interest bearing Total 

£000 £000 £000 

Investments - - - 

Cash 4,254 - 4,254 

------- ------- ------- 

4,254 - 4,254 

Other net short term liabilities - 27 27 

------- ------- ------- 

Net assets 4,254 27 4,281 

------- ------- ------- 

Interest received on cash balances is variable and is dependent on UK bank base rates. 

The Company had no uncommitted borrowing facilities at the period end. 

The fair value of financial assets and liabilities is represented by their carrying value in the balance sheet. 

19 Post balance sheet events 

The Company obtained shareholder approval on 8 November 2005 to raise up to £20 million in additional 

funds through a further ordinary share issue. 

47


PART VI 

Financial Information - Keydata Income VCT 2 plc 

Accountants Report on Financial Information 

George House 



The Directors, 





Dear Sirs 


We report on the financial information set out in pages 49 to 55. This financial information has been prepared for 

inclusion in the Prospectus dated 15 December 2005 relating to the Offer for Subscription of up to 20,000,000 

Ordinary Shares of Keydata Income VCT 2 plc on the basis of the accounting policies set out in Note 1 of 

paragraph 5. This report is required by Annex I item 20.1 of the Prospectus Regulation and is given for the purpose 

of complying with that paragraph and for no other purpose. 

Responsibilities 

The Directors of Keydata Income VCT 2 plc are responsible for preparing the financial information on the basis of 

preparation set out in Note 1 of paragraph 5, and in accordance with UK GAAP. 

It is our responsibility to form an opinion as to whether the financial information gives a true and fair view, for the 

purposes of the Prospectus and to report our opinion to you. 

Basis of opinion 

We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices 

Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and 

disclosures in the financial information. It also included an assessment of significant estimates and judgments 

made by those responsible for the preparation of the financial information and whether the accounting policies are 

appropriate to the entity's circumstances, consistently applied and adequately disclosed. 

We planned and performed our work so as to obtain all the information and explanations which we considered 

necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial 

information is free from material misstatement whether caused by fraud or other irregularity or error. 

Opinion 

In our opinion, the financial information gives, for the purposes of the Prospectus dated 15 December 2005, a true 

and fair view of the state of affairs of Keydata Income VCT 2 plc as at 31 August 2005 and of its net revenue and 

cash flows for the period 16 February 2005 to 31 August 2005 in accordance with the basis of preparation as set 

out in Note 1, paragraph 5 and in accordance with UK GAAP. 

Declaration 

For the purposes of Prospectus Rule 5.5.3R (2)(f) we are responsible for this report as part of the Prospectus and 

declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best 

of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration 

is included in the Prospectus in compliance with item 1.2 of Annex I of the Prospectus Regulation. 



48


Financial Information 

1. BASIS OF PREPARATION 

The financial information set out in paragraphs 2 to 5 is based on the interim financial statements of Keydata 

Income VCT 2 plc (“the Company”) for the period 16 February 2005 to 31 August 2005 and has been 

prepared on the basis set out in Note 1 of paragraph 5, to which no adjustments were considered necessary. 

2. STATEMENT OF TOTAL RETURN 

Notes For the period 16 February 2005 

to 31 August 2005 


£000 £000 £000 

Gains on investments 7 - - - 

Income 2 37 - 37 

-------- -------- -------- 

37 - 37 

Management fees 3 - - - 

Other expenses 4 (44) - (44) 

-------- -------- -------- 

(44) - (44) 

-------- -------- -------- 

Return on ordinary activities before taxation (7) - (7) 

Tax on ordinary activities 5 - - - 

-------- -------- -------- 

Return for the period attributable to 

equity shareholders (7) - (7) 

-------- -------- -------- 

Return per share 6 (0.18)p - (0.18)p 

The total column of this statement is the profit and loss account of the Company. All revenue and capital 

items in the above statement derive from continuing operations. No operations were acquired or discontinued 

in the period. 

3. BALANCE SHEET 


Notes £000 

Fixed assets 

Investments 7 - 

Current assets 

Debtors 9 31 

Cash at bank and in hand 4,254 

-------- 

4,285 

Creditors: amounts falling due within one year 10 (4) 

-------- 

Net current assets 4,281 

-------- 

Net assets 4,281 

-------- 

Capital and Reserves 

Called up share capital 11 45 

Share premium 12 4,243 

Capital reserve – realised 12 - 

Capital reserve – unrealised 12 - 

Revenue reserve 12 (7) 

-------- 

Equity shareholders’ funds 15 4,281 

-------- 

Net asset value per share 13 94.85p 

49


4. CASH FLOW STATEMENT 

Notes For the period 16 February 2005 to 

31 August 2005 

£000 

Net cash outflow from operating activities 14 (34) 

-------- 

Capital expenditure and financial investment 

Purchase of investments - 

-------- 

Net cash outflow before financing (34) 

-------- 

Financing 

Net proceeds from issue of ordinary share capital 4,288 

-------- 

Increase in cash 4,254 

-------- 

5. Notes to the Financial Information 

1 Accounting Policies 

Basis of Preparation 

The financial information has been prepared under the historical cost convention, modified to include the 

revaluation of fixed asset investments and in accordance with UK GAAP and applicable accounting 

standards and with the 2003 Statement of Recommended Practice (SORP) for “Financial Statements of 

Investment Trust Companies” issued by the Association of Investment Trust Companies. 

Keydata Income VCT 2 plc has a wholly owned subsidiary, Green Power 2 Limited established for the 

specific purpose of being the Company’s Investment Manager. Green Power 2 Limited has been excluded 

from consolidation on the basis that it is not material to the Group, having yet to register any transactions 

other than issuing share capital to the parent company, Keydata Income VCT 2 plc. 

Investments 

Unquoted investments are stated at Directors’ valuation in accordance with the British Venture Capital 

Association guidelines for the valuation of venture capital investments. In determining this valuation the 

Directors give consideration to the period of investment, the performance of the investment against plan, 

appropriately discounted comparative listed companies’ price earnings ratios and any recent transactions. 

Any capital gains or losses, whether realised or unrealised, arising on fixed asset investments are taken 

directly to capital reserves. 

Income 

Equity dividends are taken into account on the ex-dividend date, net of any associated tax credit. Fixed 

returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to 

reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course. 

All other income, including deposit interest receivable, is recognised on an accruals basis. 

Expenditure 

All expenditure is accounted for on an accruals basis. Investment management fees are allocated 75 per cent. 

to the capital reserve – realised and 25 per cent. to the revenue account in line with the Board’s expected long 

term split of investment returns in the form of capital gains and income respectively. Expenses incidental to the 

acquisition or disposal of an investment are included within the cost of the investment or deducted from the 

disposal proceeds as appropriate. All other expenditure is charged to the revenue account. 

Capital Reserves 

Realised profits and losses on the disposal of investments and 75 per cent. of investment management fees 

are accounted for in the Capital reserve - realised. 

Increases and decreases in the valuation of investments held at the year end are accounted for in the Capital 

reserve – unrealised. 

Taxation 

The tax effect of expenditure is allocated between capital and revenue on the same basis as the particular 

item to which it relates, using the Company’s effective rate of tax for the accounting period. Any liability to 

corporation tax is based on net revenue for the period. 

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at 

the balance sheet date where transactions or events that result in an obligation to pay more tax in the future 

or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are 

differences between the Company’s taxable profits and its results as stated in the accounts. Deferred tax 

assets are only recognised to the extent they are recoverable. 

50


Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing 

differences are expected to reverse, based on tax rates and laws that have been enacted or substantially 

enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis. 

2 Income 


£000 

Income from listed investments: 

UK dividends - 

Unfranked investment income - 

------ 

- 

Other income: 

Deposit interest 37 

------ 

Total income 37 

------ 

3 Management Fees 



£000 £000 £000 

Management fees - - - 

Irrecoverable VAT thereon - - - 

------ ------ ------ 

- - - 

------ ------ ------ 

The Company’s Investment Manager is Green Power 1 Limited a wholly owned subsidiary company of 

Keydata Income VCT 1 plc. The investment management agreement dated 23 February 2005 will continue 

for a period of 3 years from 23 June 2005, the date of Admission, and thereafter and on each subsequent 

anniversary will be automatically renewed for a further 12 calendar months’ period provided that on such 

renewal date (save in respect of the first renewal date) and for the previous 12 months, at least 75% of the 

Company’s investments are qualifying investments. The agreement is subject to earlier termination in certain 

other circumstances. 

The Investment Manager receives an investment management fee of 0.4 per cent. per annum of the net 

asset value of the Company, calculated and payable quarterly in arrears. No investment fees were payable 

in respect of the period to 31 August 2005. 

4 Other Expenses 


£000 

General expenses 32 

Directors fees 10 

Auditors remuneration - for audit services 2 

----- 

44 

----- 

The maximum aggregate Directors emoluments authorised by the Articles of Association are £200,000 

per annum. 

51


5 Tax on ordinary activities 

The tax charge for the period is nil as allowable expenses exceed taxable income. 


Revenue on ordinary activities before taxation (7) 

----- 

UK Corporation Tax small company rate of 19 per cent. (1) 

Effects of: - expenses in excess of taxable income 1 

----- 

Actual current tax charge 

Nil 

---- 

There is no taxation in relation to capital gains or losses. No asset or liability has been recognised in relation 

to capital gains or losses on revaluing investments. The Company is exempt from such tax as a result of its 

intention to qualify as a Venture Capital Trust. 

There is an unrecognised deferred tax asset of £1,000. The directors believe that there will be no taxable profits 

in the future against which the deferred tax assets can be offset and therefore the asset has not been recognised. 

£000 

6 Return per ordinary share 



Return per ordinary share: - basic (0.18)p - (0.18)p 

--------- --------- --------- 

Basic return per ordinary share is based on the net loss on ordinary activities after taxation of £7,000 and on 

3,780,373 ordinary shares, being the weighted average number of ordinary shares in issue during the period. 

Capital return per ordinary share is based on a net capital profit of £Nil for the period and on 3,780,373 

ordinary shares, being the weighted average number of ordinary shares in issue during the period. 

7 Investments 


Investments 

£000 

Investments - 

------ 

Opening valuation - 

Movement in period: 

Purchases at cost - 

Sales - proceeds - 

- realised gains - 

Movements unrealised - 

------ 

Closing valuation - 

Closing book cost - 

------ 

Closing unrealised gain - 

------ 

On 22 February 2005, Keydata Income VCT 2 plc subscribed for 1 ordinary share of £1 in Green Power 2 

Limited, representing the entire issued share capital of that Company. 

8 Significant Interests 

Notwithstanding the investment in Green Power 2 Limited, at the period end the Company did not hold 3 per 

cent. or more of the issued share capital of any investment. 

9 Debtors 


£000 

Prepayments and accrued income 31 

----- 

52


10 Creditors 


£000 

Accruals and deferred income 4 

----- 

11 Called up share capital 


£000 

Authorised: 30,000,000 ordinary shares of 1p each 300 

----- 

Allotted, called-up and fully paid: 4,513,628 ordinary shares of 1p each 45 

----- 

During the financial period to 31 August 2005, ordinary shares of 1p each were issued as follows: 

Date of Issue Number of Issue Price Gross Proceeds 

Shares Issued (pence) £000 

16 February 2005 (on incorporation) 2 1p - 

1 April 2005 to 12 August 2005 4,513,626 100 4,514 

------------- -------- 

4,513,628 4,514 

------------- -------- 

The Company issued 50,000 Redeemable Preference Shares of £1 on 22 February 2005 for a consideration 

of £50,000. On 21 April 2005, the Company redeemed in full the 50,000 Redeemable Preference Shares for 

a consideration of £50,000. On redemption the authorised share capital of £50,000 was converted into an 

additional 5,000,000 ordinary shares of 1p each. The authorised ordinary share capital increased from 

25,000,000 to 30,000,000 ordinary shares of 1p each. 

12 Reserves 


Date of Issue Share Capital Capital Revenue 

Premium reserve reserve reserve 

realised unrealised 

£000 £000 £000 £000 

Proceeds from issue of shares 4,469 - - - 

Costs related to issue of shares (226) - - - 

Net revenue return for period - - - (7) 

------ ------ ------ ------ 

At 31 August 2005 4,243 - - (7) 

------ ------ ------ ------ 

13 Net asset value per ordinary share 

Net asset value As at 31 August 2005 

per share Net assets attributable 

(pence) £000 

Ordinary shares - Basic 94.85p 4,281 

--------- --------- 

Net asset value per ordinary share is based on net assets at the period end and on 4,513,628 ordinary 

shares, being the number of shares in issue at period end. 

53


14 Reconciliation of net revenue to net cash inflow from operating activities 


£000 

Net revenue return on ordinary activities before taxation (7) 

Investment management fee charged to capital - 

Increase in debtors (31) 

Increase in creditors 4 

----- 

Net cash outflow from operating activities (34) 

----- 

15 Reconciliation of movement in shareholders’ funds 


£000 

Revenue return for period (7) 

Capital return for the period - 

----- 

(7) 

Issue of ordinary shares 4,288 

----- 

Closing shareholders’ funds 4,281 

----- 

16 Contingencies, guarantees and financial commitments 

There were no contingencies, guarantees or financial commitments of the Company at the period end. 

17 Related party transactions 

One of the Directors of the Company, Mr S Ford, is a director of Keydata Investment Services Limited 

(“KISL”) and has an interest in excess of 20% in that company. As such KISL is considered to be a related 

party to the Company. KISL acts as Promoter and Administrator to the Company. KISL, in its capacity as 

Promoter of the Offer for Subscription, receives annual commission of 0.9% per annum of the net asset value 

of the Company, calculated and payable quarterly in arrears. KISL is responsible for payment of all trail 

commission due to intermediaries. KISL also receives a fee of £25,000 per annum for administration 

services. In total, KISL earned fees of £22,000 during the period. Of those fees, £nil was still owing at the 

period end. 

KISL has agreed to indemnify the Company against annual running costs (excluding VAT) exceeding 2.0% 

of its net asset value. 

54


18 Financial instruments 

The Company’s financial instruments comprise cash balances, debtors and creditors that arise directly from 

its operations and, in due course, securities and other investments. These financial instruments expose the 

Company to certain inherent risks, the most predominant of which are market price risk, liquidity risk and 

interest rate risk. Market price risk arises from fluctuations in the value of any investments held by the 

Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type 

of security or issuer. Due to their nature, unlisted investments may not be readily realisable. Therefore, the 

Company holds sufficient cash and other assets which are readily realiseable to meet any funding 

requirements that may arise. It seeks to minimise interest rate risk by using equity (as opposed to debt) 

funding to grow its investment portfolio. 

The Company’s financial assets and liabilities are denominated in Sterling as follows: 


Floating Rate Non-interest bearing Total 

£000 £000 £000 

Investments - - - 

Cash 4,254 - 4,254 

------- ------- ------- 

4,254 - 4,254 

Other net short term liabilities - 27 27 

------- ------- ------- 

Net assets 4,254 27 4,281 

------- ------- ------- 

Interest received on cash balances is variable and is dependent on UK bank base rates. 

The Company had no uncommitted borrowing facilities at the period end. 

The fair value of financial assets and liabilities is represented by their carrying value in the balance sheet. 

19 Post balance sheet events 

The Company obtained shareholder approval on 8 November 2005 to raise up to £20 million in additional 

funds through a further ordinary share issue. 

55


PART VIII 

Terms and Conditions of Application 

1. In these terms and conditions which apply to the Offers, "Applicant" means a person whose name appears 

in an Application Form, "Application" means the offer by an Applicant completing an Application Form and 

posting (or delivering) it to Keydata Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk, 

Reading RG1 7QF ("the Receiving Agents") or as otherwise indicated in this document or the Prospectus; 

and "Prospectus" means the document dated 15 December 2005 issued in connection with the Offers. Save 

where the context otherwise requires, words and expressions defined in this document have the same 

meanings when used in the Application Form and explanatory notes in relation thereto. 

The section headed "Application Procedure" in this Part VIII forms part of these terms and conditions of 

Application. 

2. The contract created by the acceptance of an Application under the Offers will be conditional on: 

(i) Admission becoming effective; and 

(ii) the Offer Agreement between each Company, its Directors, Keydata, Renewables Management and 

Howard Kennedy becoming unconditional in all respects, and not being terminated in accordance with 

its terms before Admission becomes effective. 

3. The right is reserved by each Company to present all cheques and bankers' drafts for payment on receipt 

and to retain share certificates and application monies pending clearance of successful Applicants' cheques 

and bankers' drafts. Each Company may treat Applications as valid and binding even if not made in all 

respects in accordance with the prescribed instructions and each Company may, at its discretion, accept an 

Application in respect of which payment is not received by such Company prior to the closing of the Offers. 

If any Application is not accepted in full or if any contract created by acceptance does not become 

unconditional, the application monies or, as the case may be, the balance thereof will be returned (without 

interest) by returning each relevant Applicant's cheque or bankers’ draft or by crossed cheque in favour of 

the Applicant, through the post at the risk of the person(s) entitled thereto. In the meantime, application 

monies will be retained by the Receiving Agents in a separate account. All Applications will be applied as to 

one-half for investment in Keydata Income VCT 1 and one-half for investment in Keydata Income VCT 2. 

Applications for an odd number of Shares will be rounded down and the excess subscription monies retained 

by the Promoter. Multiple applications are not permitted. 

4. By completing and delivering an Application Form, you: 

(i) offer to subscribe for the number of Shares specified in your Application Form (or such lesser number 

for which your Application is accepted) at the Offers Price on the terms of and subject to this document, 

including these terms and conditions, and subject to the memorandum and articles of association of 

each Company; 

(ii) agree that, in consideration of each Company agreeing that it will not on or prior to the Offers closing 

issue or allot any Shares the subject of the Offers to any person other than by means of the procedures 

referred to in this document, your Application may not be revoked and that this paragraph shall 

constitute a collateral contract between you and each Company which will become binding upon 

despatch by post to, or (in the case of delivery by hand) on receipt by, the Receiving Agents of your 

Application Form; 

(iii) agree and warrant that your cheque or banker's draft may be presented for payment on receipt and 

will be honoured on first presentation and agree that if it is not so honoured you will not be entitled to 

receive a certificate in respect of the Shares until you make payment in cleared funds for such Shares 

and such payment is accepted by each Company in its absolute discretion (which acceptance shall be 

on the basis that you indemnify it, the Sponsor, and the Receiving Agents against all costs, damages, 

losses, expenses and liabilities arising out of or in connection with the failure of your remittance to be 

honoured on first presentation) and you agree that, at any time prior to the unconditional acceptance 

by each Company of such late payment, each Company may (without prejudice to its other rights) 

avoid the agreement to subscribe such Shares and may issue or allot such Shares to some other 

person, in which case you will not be entitled to any payment in respect of such Shares, other than the 

refund to you, at your risk, of the proceeds (if any) of the cheque or bankers’ draft accompanying your 

Application, without interest; 

56


(iv) agree that, in respect of those Shares for which your Application has been received and is not rejected, 

your Application may be accepted at the election of each Company either by notification to the London 

Stock Exchange of the basis of allocation or by notification of acceptance thereof to the Receiving 

Agents; 

(v) agree that any monies refundable to you may be retained by the Receiving Agents pending clearance 

of your remittance and any verification of identity which is, or which each Company or the Receiving 

Agents may consider to be, required for the purposes of the Money Laundering Regulations 2003 and 

that such monies will not bear interest; 

(vi) authorise the Receiving Agents to send share certificate(s) in respect of the number of Shares for 

which your Application is accepted (or any lesser number for which your Application is accepted) 

and/or a crossed cheque for any monies returnable, by post, without interest, to your address set out 

in the Application Form and to procure that your name is placed on the register of members of each 

Company in respect of such Shares; 

(vii) agree that all Applications, acceptances of Applications and contracts resulting therefrom shall be 

governed in accordance with English law, and that you submit to the jurisdiction of the English courts 

and agree that nothing shall limit the right of each Company or the Sponsor to bring any action, suit or 

proceeding arising out of or in connection with any such Applications, acceptances of Applications and 

contracts in any other manner permitted by law or any court of competent jurisdiction; 

(viii) confirm that, in making such Application, you are not relying on any information or representation in 

relation to each Company other than the information contained in this document or the Prospectus and 

accordingly you agree that no person responsible solely or jointly for this document, or any part thereof 

or involved in the preparation thereof shall have any liability for such information or representation; 

(ix) irrevocably authorise the Receiving Agents and/or the Sponsor or any person authorised by either of 

them, as your agent, to do all things necessary to effect registration of any Shares subscribed by or 

issued to you into your name and authorise any representative of the Receiving Agents or of the 

Sponsor to execute any document required therefore; 

(x) agree that, having had the opportunity to read this document, you shall be deemed to have had notice 

of all information and statements concerning each Company and the Shares contained therein; 

(xi) confirm that you have reviewed the restrictions contained in paragraph 6 below and warrant that you 

are not a "US Person" as defined in the United States Securities Act of 1933 ("Securities Act") (as 

amended), nor a resident of Canada and that you are not applying for any Shares with a view to their 

offer, sale or delivery to or for the benefit of any US Person or a resident of Canada; 

(xii) declare that you are an individual aged 18 or over; 

(xiii) agree that all documents and cheques sent by post to, by or on behalf of each Company or the 

Receiving Agents will be sent at the risk of the person entitled thereto; 

(xiv) agree, on request by each Company, or the Sponsor on behalf of each Company, to disclose promptly 

in writing to each Company, any information which each Company or the Sponsor may reasonably 

request in connection with your Application including, without limitation, satisfactory evidence of 

identity to ensure compliance with the Money Laundering Regulations 2003 and authorise each 

Company and the Sponsor to disclose any information relating to your Application as it considers 

appropriate; 

(xv) agree that the Sponsor will not treat you as its customer by virtue of your Application being accepted 

or owe you any duties or responsibilities concerning the price of the Shares or the suitability for you of 

Shares or be responsible to you for providing the protections afforded to its customers; 

(xvi) where applicable, authorise each Company to make on your behalf any claim to relief from income tax 

in respect of any dividends paid by each Company; 

(xvii) declare that the Application Form has been completed to the best of your knowledge; 

(xviii) undertake that you will notify each Company if you are not or cease to be either a Qualifying 

Subscriber or beneficially entitled to the Shares; and 

(xix) declare that a loan has not been made to you or any associate, which would not have been made or 

not have been made on the same terms, but for you offering to subscribe for, or acquiring, Shares and 

that the Shares are being acquired for bona fide commercial purposes and not as part of a scheme or 

arrangement the main purpose of which is the avoidance of tax. 

57


5. No person receiving a copy of this document or an Application Form in any territory other than the UK may 

treat the same as constituting an invitation or offer to him, nor should he in any event use such Application 

Form unless, in the relevant territory, such an invitation or offer could lawfully be made to him or such 

Application Form could lawfully be used without contravention of any regulations or other legal requirements. 

It is the responsibility of any person outside the UK wishing to make an Application to satisfy himself as to 

full observance of the laws of any relevant territory in connection therewith, including obtaining any requisite 

governmental or other consents, observing any other formalities requiring to be observed in such territory 

and paying any issue, transfer or other taxes required to be paid by such territory. 

6. The Shares have not been and will not be registered under the Securities Act, as amended, and may not be 

offered or sold in the United States of America, its territories or possessions or other areas subject to its 

jurisdiction ("the USA"). In addition, each Company has not been and will not be registered under the United 

States Investment Company Act of 1940, as amended. The Investment Manager will not be registered under 

the United States Investment Advisers Act of 1940, as amended. No application will be accepted if it bears 

an address in the USA. 

7. The basis of allocation will be determined by the Company in its absolute discretion after consultation with 

the Sponsor. The right is reserved to reject in whole or in part and/or scale down and/or ballot any Application 

or any part thereof including, without limitation Applications in respect of which any verification of identity 

which each Company or the Receiving Agents consider may be required for the purposes of the Money 

Laundering Regulations 2003 has not been satisfactorily supplied. Dealings prior to the issue of certificates 

for Shares will be at the risk of Applicants. Dealings may commence before an applicant has been notified 

as to the amount allotted to him under the Offers. A person so dealing must recognise the risk that an 

Application may not have been accepted to the extent anticipated or at all. 

8. Money Laundering Regulations 2003 

Investors should be aware of the following requirements in respect of the above law. 

Money Laundering Regulations 2003 - Important note for applications of £9,000 or more. If the value of the 

Shares applied for is between £3,000 and £9,000 but is drawn on your own UK clearing bank account or on 

a building society cheque or bankers’ draft that has been endorsed with the client's name and address and 

stamped with a branch stamp then no further money laundering documents are required. However, if the 

value of the Shares applied for is £9,000 or more, or if the value of the Shares applied for is between £5,000 

and £9,000 but is drawn on a third party cheque, please supply either an Identity Verification Certificate from 

your financial intermediary or, if you do not have an adviser, one of the following: 

a) a copy of your passport or driving licence certified by a bank or solicitor stating that it is a "true copy 

of the original and a true likeness of the client" followed by your name. 

b) a recent bank or building society statement or utility bill showing your name and address. Your 

cheque or bankers' draft must be drawn in sterling on a account at a branch (which must be in the 

United Kingdom, the Channel Islands or the Isle of Man) of a bank which is either a member of the 

Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited, a member 

of the Scottish Clearing Banks Committee or the Belfast Clearing Committee or which has arranged 

for its cheques or bankers' drafts to be cleared through facilities provided for members of any of those 

companies or associations and must bear the appropriate sorting code in the top right hand corner. 

The right is reserved to reject any Application Form in respect of which the cheque or bankers' draft 

has not been cleared on first presentation. In the event that the offer does not reach its minimum 

subscription any monies returned will be sent by cheque crossed "A/C Payee only" in favour of the 

person named in Section 1 ("the Applicant"). 

Dated 15 December 2005 

58


APPLICATION PROCEDURE 

Please send the completed Application Form together with your cheque or bankers draft to: 

Keydata Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk, Reading RG1 7QF. 

If you have any questions on how to complete the Application Form please contact Keydata Investment Services 

Limited on 020 7710 6900. 

Section 1 

Please insert your full name, permanent address, daytime telephone number, date of birth and national insurance 

number in Section 1. Your national insurance number, which you will find on your pay slip, is required to ensure you 

obtain your income tax relief. Joint applications are not permitted, but husbands and wives may apply separately. 

Section 2 

Please note that the minimum investment is £3,000. The maximum investment on which tax reliefs on investments 

in the Companies are available is £200,000 per individual per tax year. Attach your cheque or bankers' draft to the 

Application Form for the total amount of your investment. You should apply for an even number of Shares as your 

investment will be split equally between the Companies. 

Make cheques payable to "KEYDATA INCOME VCT" and crossed "A/C Payee only". Cheques must be from a 

recognised UK bank account and your payment must relate solely to this application. No receipt will be issued. 

Section 3 

Read the declaration below and sign and date the Application Form. 

If this form is completed and signed by the investor named in Section 1: 

By signing this form I HEREBY DECLARE THAT: 

(i) I have received the Prospectus dated 15 December 2005 and have read the terms and conditions of 

application therein and agree to be bound by them; 

(ii) I will be the beneficial owner of the Shares in Keydata Income VCT 1 PLC and Keydata Income VCT 2 PLC 

(as appropriate) issued to me under these Offers; and 

(iii) To the best of my knowledge and belief, the personal details I have given are correct. 

If this form is completed and signed by an authorised financial intermediary or any other person apart from 

the investor: 

By signing this form on behalf of the individual whose details are shown above, I make a declaration (on behalf of 

such individual) on the terms of sub-paragraphs (i) to (iii) above. 

Section 4 

Please complete the mandate instruction if you wish to have dividends paid directly into your bank or building 

society account. 

Section 5 

Authorised financial intermediaries who are entitled to receive commission should stamp and complete Section 5, 

giving their full name and address, telephone number and details of their authorisation under the Financial Services 

and Markets Act 2000. The right is reserved to withhold payment of commission if Keydata Income VCT 1 or Keydata 

Income VCT 2 plc (as appropriate) are not, in their sole discretion, satisfied that the authorised financial intermediary 

is authorised. 

Please tick the appropriate box to indicate which commission structure you would prefer. Alternatively, if you wish to 

waive some or all of your commission, please insert the number of Shares in respect of which you wish commission 

to be waived. 

Frequently asked questions 

Q: Who should I make the cheque payable to? 

A: Cheques should be made payable to "Keydata Income VCT ". 

Q: Where should I send my application? 

A: Your application form and cheque should be sent to Keydata Investment Services Limited, Floor 8, Fountain 

House, 2 Queens Walk, Reading RG1 7QF. 

Q: What happens after I invest? 

A: We will send you confirmation that we have received your application by return of post. You should expect to 

receive your share certificate and tax certificate within a few weeks of making your investment. 

Please call us if you have any questions on 020 7710 6900 

59


NOTES 

60


APPLICATION FORM 

Before completing this Application Form you should read the Terms and Conditions of Application and Application Procedure. This Offer 

opens on 15 December 2005 and the closing date will be 5 April 2006 (or earlier if the maximum subscription has been reached before 

then). The final closing date will be determined by the Directors and may be extended at their absolute discretion. 

Please complete in block capitals 

Section 1 

Title (Mr/Mrs/Miss/Ms/Other) 

Surname 

Forename(s) in full 

Date of Birth 

National Insurance Number 

(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) 

Permanent residential address 

Postcode 

E-mail 

Telephone (work) 

Telephone (home) 

Section 2 

I offer to subscribe for the following number of Ordinary Shares on the Terms and Conditions of Application set out in the Prospectus dated 15 December 

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 

between Keydata Income VCT 1 plc and Keydata Income VCT 2 plc. 

I ENCLOSE A CHEQUE(S) OR BANKERS’ DRAFT(S) DRAWN ON A UK CLEARING BANK, MADE PAYABLE TO “KEYDATA INCOME VCT ”. 

Number of shares at 100p per share £ 

Section 3 

Signature 

Date 

Section 4 

Dividends on Ordinary Shares held in Keydata Income VCT 1 plc and Keydata Income VCT 2 plc may be paid directly into bank and building society 

accounts. In order to facilitate this, please complete the mandate instruction form below. 

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 

details of the dividend as well as the dates and amounts paid. 

Please forward until further notice, all dividends that may from time to time become due on any Ordinary Shares now standing, or which may hereafter 

stand, in my name in the register of members of Keydata Income VCT 1 plc and Keydata Income VCT 2 plc to: 

Bank or Building Society reference number and details: 

Sort Code Number 

Name of Bank/Building Society 

Title of Branch 

Address of Branch 

Account Number 

Postcode 

Signature 

Date 

61


Section 5 

Regulatory Introducer Certificate For Financial Adviser completion 

Date of commencement of business relationship 

I certify that: (please tick as appropriate) 

1. I have verified the identity of the Applicant in accordance with the Money Laundering 

Regulations 2003 and confirm that documentary evidence has been obtained and 

identity checks have been undertaken to confirm that the Applicant name and address 

as shown on the Application Form is correct: 

AND the details of the underlying records of identity are as described below (document name + 

detail + date, e.g. Driving licence SMITH625082JT4EG, Gas bill 30.11.05 cus 

ref 12345678) and copies are available for inspection if required: 

proof(s) of identity: 

3. I confirm that the Applicant is applying on his/her own behalf and not as nominee, 

trustee, or in a fiduciary capacity for any other person. 

Signature 

X 

Date 

X 

Financial Adviser details 

proof(s) of residency: 

any additional check(s) or relevant customer information: 

FSA No. 

Any additional instructions 

OR 

2. I have not verified the identity of the Applicant for the following reason: 

Select commission structure by ticking the 

appropriate box: 3 per cent. 2.25 per cent 

Insert ‘ALL’ or the number of Shares in respect of which you wish initial commission to be 

waived and reinvested in Shares 

KEYDATA INCOME VCT 1 PLC, KEYDATA INCOME VCT 2 PLC and KEYDATA INVESTMENT SERVICES LIMITED cannot accept 

responsibility if any details quoted by you are incorrect. 

62







Section 1 


Surname 


Date of Birth 




Postcode 

E-mail 



Section 2 






Section 3 

Signature 

Date 

Section 4 













Postcode 

Signature 

Date 

63


Section 5 














Signature 

X 

Date 

X 




FSA No. 


OR 








64







Section 1 


Surname 


Date of Birth 




Postcode 

E-mail 



Section 2 






Section 3 

Signature 

Date 

Section 4 













Postcode 

Signature 

Date 

65


Section 5 














Signature 

X 

Date 

X 




FSA No. 


OR 








66

Income VCT Prospectus - The Tax Shelter Report

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