AMPLIFY MUSIC SEIS 4 SERVICE INVESTMENT PRESENTATION 2015/16 TAX - - PowerPoint PPT Presentation

AMPLIFY MUSIC SEIS 4 SERVICE INVESTMENT PRESENTATION

2015/16 TAX YEAR

REGULATORY NOTICE

This presentation is for Professional Intermediaries only.

This presenta,on is exempt from sec,on 21 of the Financial Services and Markets Act 2000 and is not required to be and has not been approved for the purposes of the sec,on because it is only being communicated to selected Investment Professionals (as defined under ar,cle 19 of the Financial Services and Markets Act 2000 (Financial Promo,on) Order 2005). If this presenta,on is forwarded to any other person, you must ensure that you have taken responsibility for the presenta,on under the financial promo,ons rules and iden,fied yourself as the issuer. The value of investments and the income from them may fall as well as rise and is not guaranteed. The returns on opportuni,es described in this presenta,on may increase or decrease. Fluctua,on may be par,cularly marked in the case of a higher vola,lity fund and the value of an investment may fall suddenly and substan,ally. Past performance is not a reliable indicator of future results. Levels and basis of taxa,on may change from ,me to ,me. The tax treatment depends on the individual circumstances of each client and may be subject to change in the future. No assurance or guarantee is given that any targeted returns will be achieved. Forecasts of poten,al future results are not a reliable indicator of actual future results. This presenta,on is for informa,on purposes only and does not cons,tute an offer or invita,on to purchase any Interests in the

• pportuni,es contained herein and has not been prepared in connec,on with any such offer. Applica,ons to invest in the opportuni,es can only be

made on the basis of the Informa,on Memoranda. There can be no assurance that the offers’ investment objec,ves will be achieved and investment results may vary substan,ally over ,me. Since the underlying investments in the offers consist, either directly or indirectly, wholly or substan,ally of unlisted companies, under certain market condi,ons, investors seeking to redeem their holdings may experience significant delays. Further, the value of the unlisted companies concerned will generally be a maRer of valuer’s opinion and may fluctuate up or down. There is no assurance that there will be a ready market for any unlisted company from a disposal perspec,ve. Hence, on a disposal, the funds and, therefore, Investors may receive less than the original amount invested. The tax consequences to the offers, the ability of the offers to invest and return capital, including any income and profit earned on those assets and other opera,ons of the offers are based on exis,ng regula,ons and are subject to change through legisla,ve, judicial or administra,ve ac,on in the various jurisdic,ons in which the offers may invest.

INVESTMENT OPPORTUNUTY

Amplify Music SEIS 4 provides investors with the opportunity to invest in a diversified portfolio of ten pre-identified SEIS qualifying music companies.

INVESTEE COMPANY STRUCTURE

Through the Service, Investors subscribe for 100% of the share capital (except for one Subscriber Share) in each Investee Company. This share structure effectively gives Investors a priority position over the capital and assets of each of the Investee Companies.

• Un,l the Investors have earned 105p per 100p invested, they will receive 100% of capital.
• Only aWer 105p per 100p invested is earned by the Investors will the Directors par,cipate

by way of the Performance Fee of 35%.

• For example, with generalist SEIS funds it might be that investors only acquire 50% of the

issued share capital in a company, therefore it would be necessary for that company to generate 200p per 100p invested for the investors to recover the cost of their investment.

INVESTMENT STRATEGY

It is intended that each Investee Company will sign one Artist (or more) and that each Artist will be signed to both a Recording Company and a Publishing Company. Therefore, the Portfolio will contain five Artists (at least) that are each signed to two out

• f the ten Investee Companies contained in the Portfolio.

Artist Publishing Company Recording Company

Recording Agreement Ancillary Agreement Higher Risk Business Lower Risk Business

THE DIRECTORS

• Arcade Fire
• Arc,c Monkeys
• Bjork
• Keane
• Laura Marling
• Mr Scruff
• Mumford and Sons
• Nick Cave
• Paul McCartney
• Radiohead
• Robbie Williams
• Ka,e Melua
• Travis
• Yasmin Levy

The Investee Companies will be directed by internationally renowned artist managers (who are board members of the Music Managers Forum) and a music investment specialist, Amp Channel Music. Internationally renowned artists represented by MMF board members, amongst others, are:

MARKET OPPORTUNUTY

Amplify has identified a growing market opportunity to provide alternative forms of finance to artists to develop their careers across all revenue streams, including publishing, live performance, merchandising and sponsorship as well as recording. This market opportunity is based on:

• A funding gap leW by record companies in the wake of the decline in record sales, leaving

labels with less money to invest in ar,st development

• Overall music revenues growing in recent years*, despite record sales declines, but record

companies not benefi,ng from that growth in non-recording income

• Record revenues only represen,ng between 10% and 20% of very successful ar,sts’ total

income, meaning an investment in the wider business is commercially aRrac,ve

• Managers now having to fund the early stages of development of ar,st themselves, but not

always having sufficient funds for en,re development process

• The need for funding between £50,000 and £250,000 (£50,000 being more than managers

can risk themselves and £250,000 being a level beyond which major labels may compete) * UK music industry grew 5% in 2014 from £3.8n to £4.1bn (Source: UK Music)

INDUSTRY GROWTH

The UK music industry’s GVA contribution to the UK economy has grown by £600,000,000 since the industry began measuring 3 years ago. (Source: UK Music)

ARTIST SELECTION PROCESS

The artist selection process of each Investee Company will be led by the MMF Director and will be fundamentally based on:

• the raw musical talent of the ar,st
• the capability of the ar,st manager
• the revenue poten,al of the ar,st

While the spread of ar,sts across the Porholio is intended to offer a breadth with regard to the music genres, the Directors’ focus will be first and foremost to iden,fy ‘second stage’ ar,sts with characteris,cs including:

• already genera,ng revenues (or with a clear path to revenue genera,on within 18 months)
• ability to secure Minimum Revenue Guarantees from suitable counterpar,es
• high growth poten,al with the possibility of realising a return of mul,ple ,mes the Investment
• external valida,on that an ar,st’s recordings or performances are innova,ve and have market poten,al
• led by inspiring, energe,c and ambi,ous ar,st manager(s) capable of delivering forecast returns

If a ‘first stage’ ar,st is signed, the ar,st must be able to secure Minimum Revenue Guarantees from suitable counterpar,es that will effec,vely act as our development partners on the ar,st and de-risk our investment

ARTISTS SIGNED TO AMPLIFY

Amplify 1 Amplify 2

ARTIST INVESTMENT EXAMPLE

The following example of Artist A (a real artist signed to Amplify Music SEIS 2 that cannot be named due to confidentiality) is based on the actual income from Artists A’s previous album and corresponding tour combined with the contractual investment terms agreed between Artist A and the relevant Investee Companies for Artist A’s forthcoming album.

EXIT STRATEGY

After the three-year SEIS Minimum Holding Period has expired, the Investee Companies will each, separately, consider whether it is appropriate to present shareholders with the opportunity to realise the value in that Investee Company. Such options to realise value may include:

• Sale of the Investee Company to a third party
• Buy-back of Shares by the Investee Company
• Sale of the Investee Company’s assets and liquida,on

While each of the above op,ons will be carefully considered at the relevant ,me, the most likely of these will be liquida,on as this does not depend on finding and/or successfully nego,a,ng with a buyer of the Shares.

ILLUSTRATIVE RETURNS

Base Case Assumes that none of the Investee Companies are successful (i.e. all 5 ar,sts fail) and shows either:

• 7% gain (including SEIS Income Tax Relief only) or
• 21% gain (including SEIS Income Tax Relief and CGT Reinvestment Relief)

Target Case Assumes that four of the Investee Companies are unsuccessful, two break even and four are successful to varying degrees (i.e. 2 of the ar,sts fail, 1 breaks even and 2 are successful) and shows either:

• 98% gain (including SEIS Income Tax Relief only) or
• 112% gain (including SEIS Income Tax Relief and CGT Reinvestment Relief)

ILLUSTRATIVE RETURNS (CNTD)

ILLUSTRATIVE RETURNS (CNTD)

PREVIOUS OFFER UPDATES

Amplify 1

• Shares alloRed in 2012/13 tax year, in accordance with associated Memorandum
• Ar,st signed to Investee Companies, as an,cipated in associated Memorandum
• SEIS3 cer,ficates issued within 6 months of Shares being alloRed, in line with expecta,ons of associated

Memorandum

• Ar,st was not successful, but investment currently expected to return more than 50% (i.e. over 100% of

Investors net costs of investment) in mid/late 2016

Amplify 2

• Shares alloRed in 2013/14 tax year, in accordance with associated Memorandum
• 5x Ar,sts signed to Investee Companies, as an,cipated in associated Memorandum
• SEIS3 cer,ficates issued within 6 months of Shares being alloRed, in line with expecta,ons of associated

Memorandum

• Too early to gauge success of Ar,sts, but more than 50% of investors capital (i.e. over 100% of Investors

net costs of investment) is underpinned and it is expected returns will be made in mid/late 2017

Amplify 3

• Shares alloRed in 2014/15 tax year, in accordance with associated Memorandum
• SEIS3 cer,ficates issued within 6 months of Shares being alloRed, in line with expecta,ons of associated

Memorandum

ADVANTAGES OF SEIS

Like its better known sibling, the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme comprises a variety of tax advantages available to UK tax paying individuals, subject to investments complying with the relevant conditions and requirements. SEIS is focused on smaller, earlier stage companies than EIS and hence the tax reliefs available are more

• attractive. Reliefs potentially available include:
• 50% SEIS Income Tax Relief on qualifying investments of up to £100,000 per annum
• 50% Capital Gains Re-Investment Relief (i.e. 14%) against gains relief realised in the

2015/16 tax year

• Ability to elect to carry back investment to the 2014/15 tax year, up to annual limit
• 100% Capital Gains Disposal Relief on gains realised on the disposal of the investment
• Loss Relief to offset any capital losses realised (on a per company basis) against income
• r gains
• 100% Inheritance Tax Relief, provided investments are held for a period of not less

than two years

FEES & EXPENSES

To ensure that Investors receive Tax Reliefs on the full amount of their investment in the Service, charges are made to the Investee Companies after the Administrator has executed the Investments rather than before.

• Ini,al Fee: 7% of the amount invested
• Intermediary Fee: 3% (payable from the Ini,al Fee)
• Administra,on Fee: 0.5% per annum
• Performance Fee: 35% of all returns to an Investor above 105p per 100p invested

CLIENT SUITABILITY

Amplify Music SEIS 4 and the contents of the Memorandum thereof is directed at persons reasonably believed to be such persons as are referred to below and must not be passed on, directly or indirectly, to any other person in the United Kingdom:

1. Professional clients or eligible counterpar,es as defined in the Conduct of Business Sourcebook (“COBS”) of the FCA’s Handbook of Rules and Guidance; 2. Retail clients who confirm that they will receive advice on the investments referred to in this Memorandum from a financial adviser authorised and regulated by the FCA; 3. To the extent that the recipient is a retail client who does not fall within paragraph 2, only clients falling within the following categories and subject to the condi,on referred to below (the “Condi,on”): 3.1. cer,fied high net worth investor in terms of COBS 4.12.6R; 3.2. cer,fied sophis,cated investors in terms of COBS 4.12.7R; 3.3. self cer,fied sophis,cated investors in terms of COBS 4.12.8R; 3.4. cer,fied restricted investors in terms of COBS 4.7.10R; and 4. Any person to whom the communica,on may otherwise lawfully be made.

OFFER TRANSPARENCY

Intermediaries benefit from the extensive due diligence undertaken on Amplify Music SEIS 4 by the investment promoter, Portunus Investment Solutions Limited. Portunus has been given complete transparency, with sight

• f:
• Verifica,on documents rela,ng to the Memorandum
• Solicitors COBS 4 checklist rela,ng to the Memorandum
• All agreements with ar,sts signed by Amplify 1 & 2
• Sources and structures of minimum revenue streams

Amplify Music SEIS 4 seeks to provide Investors with:

• a diversified porholio of Investments in ten start-up companies opera,ng in the music industry
• companies that benefit from management teams that include world-class ar,st managers
• straight forward ar,st development strategy that benefits from a clear route to exit
• poten,al revenues from publishing, live performances, merchandising, sponsorship and recordings
• poten,al for companies to secure Minimum Revenue Guarantees to underpin returns
• investment oversight from a music investment specialist firm with EIS and SEIS experience
• provisional SEIS advance assurance from HMRC that all ten Investee Companies should qualify for tax relief
• priority over capital and assets of Investee Companies upon sale or winding-up thereof
• certainty of capital deployment in the Investee Companies in the 2015/16 tax year
• aRrac,ve, targeted, tax free returns of 145p for every 100p invested, excluding all Tax Reliefs

An opportunity to invest in a portfolio of ten pre-identified start-up music companies, each of which will be managed by a world-class artist manager, has already been granted provisional SEIS advance assurance from HMRC and has a clear strategy and route to exit

KEY HIGHLIGHTS

Issuer Sapphire Capital Partners LLP Administrator The Share Centre Limited Solicitor Maclay Murray & Spens LLP SEIS Advisor HarboRle & Lewis LLP Target Clients Retail clients (subject to suitability and appropriateness) Minimum Subscription £10,000 Maximum Subscription No maximum, but SEIS Income Tax Relief is capped at £100,000 Target Service Size £1,500,000 Minimum Service Size £500,000 Investment Horizon Intending to exit investments within three to four years from the Closing Date Closing Date Amplify Music SEIS 4 will close on or before Tuesday 29th March 2016

OFFER SUMMARY

INVESTMENT PROMOTER

Portunus Investment Solu,ons Limited provides an outsourced fundraising solu,on for select Asset Managers specialising in approved Tax Efficient Investments such as the VCT, EIS and SEIS, raising funds from financial intermediaries in the UK. In the last tax year, 2014-15, Portunus raised in excess of £70m for the proposi,ons it represented. www.portunusinvestments.co.uk Jeff Cornish - Director 07747 631467 jeffcornish@portunusinvestments.co.uk Kate Plaza Cornish 07769 173771 katecornish@portunusinvestments.co.uk Registered Office 52-54 Broadwick Street, London, W1F 7AH

Portunus Investment Solutions Limited is authorised and regulated by the Financial Conduct Authority FRN: 629943