Over the Edge

[127tolmers]

https://www.lse.co.uk/rns/EDGH/net-asse ... q93ka.html

12 October 2022

Edge Performance VCT plc (the "Company")

Net Asset Value

The Company's board of directors ("Board"), as advised by its Investment Manager, Edge Investments Limited, announces that due to a fair value review of the Company's unlisted investments together with market movements in the Company's listed shareholdings it estimates that, as at 31 August 2022, the unaudited net asset value per share of the Company was 67.45p (31 July 2022:113.40p).

The Board emphasises that the NAV per share as calculated above is unaudited and reflects the movements in both the Company's listed and unlisted shareholdings, in particular the £4.69 million write down of Festicket Limited as announced on 1 September 2022 together with an estimated movement in the Company's net current assets.

[127tolmers]

https://www.investegate.co.uk/edge-perf ... 15259144H/

Extracts:

Net asset value per Share

31 August 2022, 31 August 2021, 28 February 2022
Net assets £7.2m, £18.1m, £25.2m
H shares in issue 10,729,167, 11,595,682, 11,595,682
NAV per share 67.45p, 155.94p, 217.38p
Net asset total return per share 144.45p, 197.94p, 259.38p

During the six months ended 31 August 2022, the Company bought back 866,515 shares, being 7.5% of the issued share capital of the Company at the start of the period, at a price of 102.06 pence per share for cancellation

Company Strategy

As the Manager and Board consider the Company to be sub scale, they are together evaluating options for the Company. The Board will inform Shareholders once a proposal has been established. In the meantime, the Board has decided to suspend the share buy-back programme until further notice, whilst various potential routes are under consideration

Investment Performance

The Board announced that one of the Company's portfolio companies, Festicket, was experiencing trading headwinds in August; unfortunately, the business went into administration. The value has been written down to zero, a value movement of £4.79 million from the year end.
The listed portfolio companies, Audioboom, Mirriad and Unity have seen significant impacts on their share prices, reflecting stock market performance. During the half year, Audioboom’s share price has reduced by 69% (£4.31 million in portfolio value) from 28 February 2022; Unity’s share price has reduced by 54% (£356,000); Mirriad’s share price has reduced by 69% (£172,000)

Performance Incentive Fee

In accordance with the investment Management agreement put in place in 2020 the investment manager was paid a performance fee of approximately £2.6 million in July 2022

Fundraising

The Company undertook no fundraising activities in the period under review. The Investment Manager is continuing to evaluate overall options for the Company in the light of the state of the global economy, and we will be writing to Shareholders about these in the near future.

Dividends

The prior year adjustment relating to a reserve movement between realised and unrealised Capital Reserves as set out in the last year end accounts has had a knock-on effect of rendering the payment of the Company’s 2021 H & I class dividends illegal due to a lack of distributable reserves.

This issue was recognised in June 2022; by this time the reserves position had been regularised as a result of the March 2022 capital reorganisation referred to above. A resolution to release Shareholders and Directors of any liability in relation to these dividends will be put to Shareholders at a forthcoming General Meeting

Company Portfolio

Due to the drop in the Company’s portfolio valuation in the period coupled with the substantial cash outflows of dividends, share buy-back and Manager performance fee, the overall fund value at 31 August 2022 has fallen to £7.24 million which the Manager and Board consider to be sub-scale

Transactions with the Investment Manager

As a result of the new investment management agreement approved by Shareholders, the Investment Manager did not bear any of the Company’s running costs in respect of the financial year ending 28 February 2022. A cost cap of 3.5% of the year’s closing net asset value will be re-introduced in the Company’s financial year ending 28 February 2023

During the period, the Company has incurred investment management fees of £283,579 (exclusive of VAT) and a performance related incentive fee of £2,586,146 (exclusive of VAT).

[timbo003]

As the Manager and Board consider the Company to be sub scale, they are together evaluating options for the Company. The Board will inform Shareholders once a proposal has been established. In the meantime, the Board has decided to suspend the share buy-back programme until further notice, whilst various potential routes are under consideration

This comes as no surprise as a fund raise it is now totally out of the question given the dire performance so far this year. It’s a shame that there is no mechanism for a clawback of the controversial £2.6 million performance fee awarded to the manager in the previous year.

There is now no chance that shareholders can get out at anywhere close to NAV given that the share buy backs are suspended, so all shareholders can now hope for is that the directors now do the right thing for shareholders (their record is not good in this respect). My preferred option would be for an orderly wind up (the quoted investments should be easy to sell), second option would be to secure a deal with another manager along the lines of Seneca taking over as manager for Hygea VCT, or Edition taking over as manager at the Oxford VCTs.

[Kidman]

I have not invested in any Edge funds so my knowledge of them is poor, but based on what I read the only serious option is solvent liquidation.

A new manager would still have an uphill battle to raise any funds.
A merger would be too costly as a proportion of the assets in question.

[timbo003]

A new manager would still have an uphill battle to raise any funds.
A merger would be too costly as a proportion of the assets in question.

Indeed, although the Manager might be motivated to pay the merger costs and the ongoing fees for a number of years as it would enable them to pay dividends from year 1 from their new pool of cash raised from a new class of shares they would raise to invest in the managers own speciality sector (as happened with Seneca taking over at Hygea).

Investors who invest in new shares of established VCTs have become accustomed to tax free dividends from Year 1, so they are likely to completely shun any VCT from a new entrant mamager which cannot offer this instant gratification, so any wannabe new manager might be prepared to offer generous merger terms in order to tempt new investors in through early dividends.

Just going back to the Edge VCT interim results (6m ending August 31st last week)
https://www.investegate.co.uk/edge-perf ... 57199566W/
I see there is no further mention or signs of the manager making a contribution to Edge VCT shareholders to compensate them for their recent loses when they stated:
https://www.rns-pdf.londonstockexchange ... -11-29.pdf
The Investment Manager recognises the potential impact of this situation on Shareholders and to demonstrate its alignment with Shareholders, the Investment Manager has volunteered and intends to make a contribution to the Company.

Perhaps they have already made the contribtion and it is just an oversight that they failed to mention it in the half year report last week which seems odd, but if that is the case, I look forward to reading about it in their next statement. Should this payment be forthcoming I wonder how it will compare to the £2.6m (22.4p/share) the manager was awarded as a performance fee in July this year.

[127tolmers]

https://www.investegate.co.uk/edge-perf ... 20347252J/

Proposed members' voluntary solvent liquidation

As Shareholders will be aware, the Company's net asset value has significantly reduced in recent months, with, among other things, market-related reductions in the portfolio valuation, a dividend paid on 6 May 2022, share buy-backs and the payment of advisers' fees having substantially depleted the Company's cash. As a result, the Board and the Investment Manager are of the opinion that the Company is sub-scale and that the Company's ongoing charges ratio will be too high at approximately 14.89 per cent.

Following lengthy discussions with the Investment Manager as to the Company's current position and the overall market outlook, the Board does not foresee any reasonable opportunity for the Company to grow in the short term. Accordingly, after careful consideration the Board believes that it is in Shareholders' best interests that the Company be placed into a members' solvent voluntary liquidation, with the intention that there will be an orderly winding down of the Company, realisation for cash of the Company's assets and a return of that cash to Shareholders in a manner which will be intended to preserve VCT tax-reliefs.

The Board expects to provide Shareholders with further details about the process in January 2023, which will lead to a general meeting in late January/early February 2023, at which Shareholders will be invited to vote on the Company entering into a members' solvent voluntary liquidation. In addition, the Board has resolved to put to Shareholders at that general meeting a resolution to pay a dividend of 5 pence per Share before the proposed members' solvent voluntary liquidation of the Company.

The Board has come to the conclusion that it is in Shareholders' best interests that the Company be wound up and its capital returned to Shareholders for the reasons set out above and intends to implement these proposals regardless of the outcome of the vote upon the Resolution.

https://edge.vc/wp-content/uploads/2022 ... rcular.pdf

Before declaring the December 2021 Dividend, your Board was advised that the Company had distributable reserves of
£2,509,000. Your Board wished to distribute to I shareholders the vast majority of the Company’s net asset value that
was attributable to its I shares and, accordingly, resolved to pay the December 2021 Dividend, the aggregate value of
which was £2,478,000. However, during the subsequent examination an error relating to movements between realised
capital profits and unrealised capital profits was uncovered which resulted in the need for a prior year adjustment. As a
consequence of this adjustment, the Company’s distributable reserves as at the date of the payment of the December
2021 Dividend were overstated by £253,000 and thus the Company did not have sufficient distributable reserves to cover
the aggregate value of the December 2021 Dividend when it was paid.

In July 2021, the Company completed the sale of its holding in Coolabi Group Limited for £8,366,000. Your Board wished
to pay out the sums realised from this sale to I shareholders and to pay H shareholders a special dividend. Your Board and
the Investment Manager received professional advice which stated that the Company had £8,572,000 of distributable reserves
and, accordingly, your Board paid dividends of £8,532,000, in aggregate, to I shareholders and H shareholders on 27 August
2021 (the “August 2021 Dividends”, and together with the December 2021 Dividend the “Relevant Dividends”).

Following the examination, the Company also considered the legality of the payment of the August 2021 Dividends. Whilst
the Company took steps to comply with the provisions of the Companies Act in paying the August 2021 Dividends,
following discussions with the Company’s advisers, the Board is concerned that the payment of the August 2021 Dividends
has resulted in a breach of the common law doctrine of capital maintenance as a result of the loss made on the sale of
Coolabi Group Limited after the Company’s financial year ended 28 February 2021 but before the payment of the August
2021 Dividends.

The Company has no intention of recovering the Relevant Dividends from, or making any claims against, the Recipient
Shareholders or the Relevant Directors (each as defined below) for the reasons set out below, and your Board does not
believe that it would be in Shareholders’ best interests to do so. Given that your Board had always intended to pay the
Relevant Dividends to Shareholders as the Company had the requisite cash to do so, your Board does not believe that
the Company has sustained any loss as a result of the Relevant Dividends having been paid otherwise than in accordance
with the Companies Act and the common law (as relevant).

The Company has been advised that as a consequence of the Relevant Dividends having been paid otherwise than in
accordance with the Companies Act and the common law (as relevant), the Company could make claims against the past
and present shareholders who received the Relevant Dividends (the “Recipient Shareholders”) and all past and present
directors of the Company who were directors at the time a Relevant Dividend was made, being: (a) the Company’s current
Directors, namely Terence Back, Sir Peter Bazalgette and Sir Aubrey Brocklebank

The maximum potential amount to which the Shareholders’ Deed of Release and the Directors’ Deed of Release will
relate is £11,010,496, being the aggregate amount of the Relevant Dividends paid to Recipient Shareholders, although
the aggregate shortfall of distributable reserves was only in the region of £7,396,000.

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https://www.investegate.co.uk/edge-perf ... 34129051O/

It is proposed that Paul Cooper and Asher Miller, both licensed insolvency practitioners of Begbies Traynor (London) LLP, 29th Floor, 40 Bank Street, London, E14 5NR be appointed as joint liquidators of the Company (the "Liquidators"), and that their remuneration shall be determined by the Company.

Assuming Resolution 2 is passed, the Liquidators expect to make an initial capital distribution to Shareholders in May 2023 (the "Initial Distribution"). It is estimated that the value of the Initial Distribution will be not less than 5 pence per Share and this is in place of the previously announced intention pay a dividend of 5 pence per Share prior to the Company's entry into liquidation.

Under the terms of the EIL Advisory Services Agreement and in consideration for providing such services, the Investment Manager will be entitled to the following fees, payable by the Company:

1. a fixed management fee of £150,000 per annum payable for each of the first two years following the Company's entering liquidation; and

2. a performance incentive fee of 20 per cent. of any increase in cash realised for the Company, from realisations of the Company's Qualifying Portfolio which are completed or legally committed to during the Investment Manager's appointment, over the Net Asset Value of the Company's Qualifying Portfolio as at 24 February 2023, subject to a 6 per cent. annual hurdle. For the avoidance of doubt, no performance incentive fee will be paid to the Investment Manager until the Company has received, in cash, an amount equal to the NAV of the Qualifying Portfolio as at 24 February 2023 plus the hurdle amount and any such amount will be calculated on total Qualifying Portfolio returns and not on an asset by asset basis.


https://www.lse.co.uk/rns/EDGH/net-asse ... z487f.html

The Company's board of directors ("Board"), as advised by its Investment Manager, Edge Investments Limited, announces that due to that due to a fair value review of the Company's unlisted investments together with recent market movements in the Company's listed shareholdings it estimates that, as at 30 January 2023, the unaudited net asset value per share of the Company was 51.95p (31 December 2022: 56.73p).

The Board emphasises that the NAV per share as calculated above is unaudited and reflects the movements in both the Company's listed and unlisted shareholdings together with an estimated movement in the Company's net current assets.

[127tolmers]

Wind up EGM today

https://www.investegate.co.uk/official- ... 30011434R/

TEMPORARY SUSPENSION

EDGE PERFORMANCE VCT PLC

The Financial Conduct Authority ("the FCA") temporarily suspends the securities set out below from the Official List effective from 28/02/2023 07:30 at the request of the company:

This notice has been issued by Issuer Management - 020 7066 8352.

[127tolmers]

https://www.investegate.co.uk/ArticlePr ... 400003735R

Result of General Meeting

Further to the circular (the "Circular") and notice of general meeting (the "Notice") to shareholders published on 3 February 2023 by Edge Performance VCT Public Limited Company (the "Company"), the Board of the Company announces that the ordinary resolution to approve the Related Party Transaction (as defined in the Circular) and the special resolution to place the Company into members' voluntary liquidation, as set out in the Notice, were each voted on by way of a poll and approved by the Company's shareholders at the General Meeting held earlier today. Accordingly, Paul Cooper and Asher Miller of Begbies Traynor LLP have been appointed as joint Liquidators of the Company.

Suspension and Cancellation of Shares

As set out in the Circular, the Shares were suspended from listing on the Official List of the Financial Conduct Authority and from trading on the London Stock Exchange at 7.30 a.m. this morning, 28 February 2023, in anticipation of the General Meeting.

Applications have been made to the Financial Conduct Authority and to the London Stock Exchange for the cancellation of the listing and admission to trading of the Shares with effect from 8.00 a.m. on 1 March 2023.

Initial Distribution

As set out in the Circular, the Liquidators expect to make an initial distribution to shareholders in May 2023 (the "Initial Distribution").

It is expected that the Initial Distribution will be not less than 5 pence per Share.

[127tolmers]

https://www.frc.org.uk/accountants/corp ... -reporting

Edge Performance VCT plc 28 February 2021 Yes Full March 2023 Hide Case Summary

Distributable reserves and lawfulness of dividend payments

We observed that the distributable reserves presented in accounts filed by the company prior to its August and December 2021 dividend payments appeared to exclude certain losses realised on the disposal of investments. We asked the company to comment on our observations and to explain how it was satisfied that it had complied with the requirements of the Companies Act 2006 in respect of dividends. We also recommended that the company consider whether certain of its earlier distributions were consistent with Companies Act requirements.

We closed our enquiries after the company acknowledged that there were errors in its accounts and satisfactorily explained the legal steps it proposed to take to address the unlawful December 2021 dividend, as well as the potentially unlawful August 2021 dividend. In closing our queries, we noted that the rectification of unlawful dividends is primarily a legal matter, and that the company had obtained relevant advice from its solicitors.

Other matters

Narrative comments in the accounts included a definition of distributable reserves, and disclosed the monetary amount. We asked the company to clarify how the amount was calculated as it differed from the sum of the relevant reserves presented on its balance sheet.

We closed our query after the company explained its calculation, and agreed to update its definition when it prepares its future accounts.

[127tolmers]

AJ Bell sent a message that they had received an update regarding the liquidation and that the first distribution event would be 7p/share around 26 May.