Guinness AIM EIS 2014

Transcription

1 Effective from December 2013 Guinness AIM EIS 2014 Information Memorandum with Application Form Investing in AIM-listed companies Investing in new and secondary share issues from growth companies Liquidity from AIM listings 30% EIS income tax relief

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3 Guinness Asset Management Limited Guinness AIM EIS Letter to Investors December 2013 Dear Investor, We would like to introduce you to our first Guinness AIM EIS offering. We have launched this offering in response to the improved investment opportunity in AIM companies. The increase in size limits for EIS company investments has improved the quality and quantity of EIS-eligible companies raising new money on AIM. Investors can now hold AIM investments within their ISAs which should improve liquidity for AIM companies and re-ignite interest in AIM investing. By investing in AIM listed companies, we are able to realise the investments more easily than for unlisted investments. We are aiming to deliver investment returns to investors of in excess of 1.30 net of all fees (effectively 1.60 including EIS Income Tax Relief) per 1.00 invested. I am also pleased that we have secured the benefit of Andrew Martin Smith s investment management expertise for our first Guinness AIM EIS offering. He has 38 years of financial services experience and has made a large number of smaller company investments over that period. I have been making investments alongside Andrew into unquoted smaller companies since The offering is structured as an Approved EIS Fund, as defined by HMRC, with a final closing on 5 April You will therefore receive just one EIS tax certificate for claiming your EIS relief, rather than receiving individual EIS tax certificates for each investment. Investors will be eligible for EIS Income Tax Relief in the 2013/14 tax year. We are targeting having the Subscriptions fully invested within 12 months. As an innovation for EIS AIM investing, we will defer all our fees to be payable from the proceeds of investments, which will help maximise the amount on which Investors can claim EIS tax reliefs. We have an excellent team in place to deliver on the objectives of the Guinness AIM EIS 2014 offering and I shall be investing myself. Yours faithfully, Tim Guinness Chairman, Guinness Asset Management

4 2 Guinness Asset Management Limited Guinness AIM EIS 2014 Important Notice Please note that certain expressions used in this Notice are defined in the definitions list on pages 4 and 5. This Information Memorandum is issued for the purposes of section 21 of the Financial Services and Markets Act 2000 ( FSMA ) by Guinness Asset Management Limited, which is authorised and regulated by the Financial Conduct Authority and whose registered office is at 14 Queen Anne s Gate, London SW1H 9AA with FRN It is issued solely for the purpose of seeking Subscriptions from potential investors for an investment in the discretionary portfolio investment management service known as the Guinness AIM EIS This Information Memorandum is provided to you on a confidential basis. You may not copy, reproduce or further distribute this Information Memorandum or any of its content to any other person at any time, nor discuss with any other person the proposal in this Information Memorandum without the prior written consent of Guinness Asset Management otherwise than for the purpose of evaluating this investment opportunity. The Investment Manager has taken reasonable care to ensure that all facts stated in this Information Memorandum are true and accurate in all material respects at the date stated on this Information Memorandum and that there are no other material facts, or opinions, which have been omitted, which would make any part of this Information Memorandum misleading. The Investment Manager accepts responsibility accordingly. However, where information has been obtained from third party sources, the Investment Manager cannot accept responsibility for the completeness or accuracy of that information and potential investors must form their own opinion as to the reliance they place on that information. You will need and be expected to make your own independent assessment of Guinness AIM EIS 2014 and to rely on your own judgement (or that of your independent financial adviser) in respect of any Subscription you may make to the Fund and the legal, regulatory, tax and investment consequences and risks of doing so. Guinness AIM EIS 2014 will invest in AIM listed companies. An investment in these companies can be more risky than investments in larger companies listed on the main market of the London Stock Exchange, and market-makers may not be prepared to deal in them. Shares in AIM listed companies may be subject to transfer restrictions and may be difficult to sell. It may be difficult to obtain information as to how much an investment is worth or how risky it is at any given time. Investing in AIM listed companies may expose you to a significant risk of losing all the money invested. Before investing, you are strongly recommended to consult an authorised person specialising in advising on investments of the kind described in this Information Memorandum. You should not invest in Guinness AIM EIS 2014 unless you have taken appropriate independent advice. Guinness Asset Management, its directors and employees do not accept any liability for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any information or opinions contained herein or in any other communication in connection with an investment through Guinness AIM EIS However, this disclaimer does not affect any liability which Guinness Asset Management may have in relation to Guinness AIM EIS 2014 under the FSMA, regulations made under the FSMA or the FCA rules. The Investment Manager may promote Guinness AIM EIS 2014 outside the United Kingdom (although this Information Memorandum will not itself be considered to amount to an offer of Guinness AIM EIS 2014 or of the Investment Manager s portfolio management services in any jurisdiction in which the making of such an offer would for any reason be unlawful, either generally or in specified circumstances). However, any prospective investor outside the United Kingdom, prior to investing, is expected to assure him- or herself of the consequences under the law of his/her place of residence of an application to invest through Guinness AIM EIS Investors resident in overseas jurisdictions should note that representations in this Information Memorandum with respect to taxation and tax advantages are only intended to apply in relation to typical UK-resident individuals. No representation is made that these or any other such tax advantages apply for the benefit of Investors from overseas. Any application to invest through Guinness AIM EIS 2014 may only be made and will only be accepted subject to the terms and conditions of this Information Memorandum (which includes the Investor Agreement contained in this Information Memorandum). In compliance with the provisions of the FCA Rules that implement the EC Distance Marketing Directive, which will apply to you in circumstances where your subscription to Guinness AIM EIS 2014 has not resulted from a face-to-face meeting with either the Investment Manager or your own independent financial adviser, the Investment Manager specifically draws to your attention that you have a right to cancel your subscription. Your rights in this respect are more fully set out in the Investor s Agreement which can be found at page 27 of this Information Memorandum. By receiving this Information Memorandum you agree to be bound by the foregoing conditions and restrictions. Investing through Guinness AIM EIS 2014 is speculative and involves a significant degree of risk. The attention of prospective Investors is drawn to the contents of the section in this document entitled Risk Factors.

5 Guinness Asset Management Limited Guinness AIM EIS Contents Letter to Investors... 1 Important Notice... 2 Contents Definitions... 4 Investor Factsheet... 7 Investment Opportunity Investment Strategy... 9 EIS Tax Reliefs The AIM Market The Investment Manager The Guinness AIM EIS Team Guinness AIM Investment Committee Approved fund for EIS purposes Investment Process Investor Information Frequently Asked Questions Directory Risk Factors Investor s Agreement Schedule 1 Investment Objective and Restrictions Schedule 2 Fees and Expenses Application Form and Suitability Questionnaire Name of EIS Guinness AIM EIS 2014 Investment Focus AIM-listed companies that qualify for EIS Relief Target Size 5 million Closing Date 5 April 2014 Target Investment Period Targeting full investment of subscriptions in the 2014/15 tax year. EIS Income Tax Relief can be claimed in the 2013/14 tax year Minimum Individual Subscription 10,000 Investment Manager Guinness Asset Management Limited Expected Life up to 4 years Regulatory The Board of HMRC has approved Guinness AIM EIS 2014 as an approved investment fund within the terms of section 251 of the Income Tax Act Please see page 19 for further details Guinness Asset Management Limited T: Queen Anne s Gate F: London SW1H 9AA E: eis@guinnessfunds.com United Kingdom W: Phone calls may be recorded

6 4 Guinness Asset Management Limited Guinness AIM EIS 2014 Definitions Administrator AIM Applicable Laws Application Form Associate Associated Parties Business Property Relief or Inheritance Tax Relief Capital Gains Tax Deferral Relief or CGT Deferral Relief CGT Closing Date EIS EIS Advance Assurance EIS Income Tax Relief EIS Qualifying Company EIS Relief EIS Three Year Period Fees and Expenses The Share Centre Limited, in its capacity as a provider of administration services and certain other services in relation to the Service the alternative investment market operated by the London Stock Exchange plc relevant UK laws and regulations, including the FCA Rules an application form to participate in the Service to be completed by a prospective Investor in the form set out at the end of this document any person or entity that controls or is controlled by the Investment Manager. Control refers to the ability to exercise significant influence over the operating or financial policies of any person or entity relatives, business partners and trustees of certain settlements where the Investor or his relative is a settlor or beneficiary. Relatives are spouses and civil partners, lineal ancestors and descendents (e.g. parent, grandparent, great grandparent, child). Brothers and sisters are not counted as Associated Parties relief from IHT pursuant to sections Inheritance Tax Act 1984 relief by way of deferral of CGT (Section 150C and Schedule 5B of the Taxation of Chargeable Gains Act 1992) capital gains tax a date by which Subscriptions may be accepted by the Investment Manager for the creation of Portfolios Enterprise Investment Scheme, as set out in sections 156 to 257 of the Income Tax Act a letter from HMRC addressed to the relevant Investee Company confirming that, on the basis of the information provided, HMRC would be able to authorise the Investee Company to issue compliance certificates under section 204(1) ITA in respect of the shares to be issued following receipt of a form EIS1 satisfactorily completed relief from income tax available under the EIS on subscription for shares a company that meets the requirements for EIS Relief and Capital Gains Deferral Relief as set out in section 180 Income Tax Act 2007 relief from income tax available under EIS, related CGT relief on disposal and Loss Relief; the period commencing when a subscription for shares is made in an Investee Company, and ending three years after that date, or three years from the commencement of the Investee Company s trade, whichever is later; the fees and expenses set out in Schedule 2 to the Investor s Agreement on page 34 of this Information Memorandum; Financial Intermediary a firm authorised under the Financial Services and Markets Act 2000 who promotes and markets the Service to its clients and/or arranges the Subscription for the Investor

7 Guinness Asset Management Limited Guinness AIM EIS Financial Intermediary Fee FCA FCA Rules Guinness AIM EIS 2014 Guinness Asset Management or Investment Manager HMRC IHT a fee agreed by an Investor that is payable to a Financial Intermediary. This fee could be for: a. provision of a personal recommendation to subscribe to the Service; and/or b. arranging a Subscription for the Investor. The Financial Conduct Authority the FCA s rules made under powers given to the FCA by the Financial Services and Markets Act 2000 and the regulations made thereunder the Service Guinness Asset Management Limited, which is authorised and regulated by the FCA HM Revenue & Customs Inheritance Tax Income Tax Act or ITA Income Tax Act 2007 Information Memorandum Investee Company Investment Investment Management Team Investor Investor s Agreement ISDX Growth Market this information memorandum issued in relation to the Service a Company in which the Service invests on behalf of Investors investments made through the Service on behalf of Investors Andrew Martin Smith, Shane Gallwey, Hugo Vaux and selected other employees of Guinness Asset Management any client who is accepted by the Investment Manager and enters into an Investor s Agreement and invests through the Service an Investor s Agreement to be entered into by each Investor, on the terms set out on pages 27 to 35 of this Information Memorandum the growth company market operated by ICAP Securities & Derivatives Exchange Limited Loss Relief relief in respect of income tax for allowable losses pursuant to section 131 of the Income Tax Act Nominee Performance Fee Portfolio Proceeds of Investments Share Nominees Limited or such other nominee or other agent as the Investment Manager or Administrator may appoint from time to time to be the registered holder of Investments on behalf of Investors the Performance Fee payable to the Investment Manager as described on page 35 of this Information Memorandum in respect of an Investor, the Investments made through the Service which are allocated to him or her in consideration for his or her Subscription (together with any uninvested cash from time to time constituting a part of that Subscription) and which shall at all material times be registered in the name of the Nominee on his or her behalf includes any dividends and capital returns, or realisations from sale of Investments

8 6 Guinness Asset Management Limited Guinness AIM EIS 2014 Qualifying Investors Service Shares Subscription Total Return UK taxpayers eligible to claim EIS Relief Guinness AIM EIS 2014 is a discretionary managed service set up to enable Investors to invest in EIS Qualifying Companies shares in an Investee Company subscribed for by the Service on behalf of Investors a subscription made to the Service, net of any Financial Intermediary Fee, on the terms set out in this Information Memorandum the aggregate value of an Investment or collection of Investments comprising net asset value, plus the aggregate of all distributions (both revenue and capital) and return of capital made

9 Guinness Asset Management Limited Guinness AIM EIS Investor Factsheet Guinness AIM EIS 2014 (the Service ) has been established to make investments in AIM-listed companies that are eligible for EIS tax reliefs. Investment objective: tax-free investment returns of over 1.30 per 1.00 invested, net of all fees, in addition to 0.30 of EIS Income Tax Relief. AIM Market The London Stock Exchange s market for small and growing companies since 1995 has helped more than 3,000 companies raise over 80 billion. Investment drivers include: Regulatory: Recent changes in EIS legislation increased the size of companies that qualify for EIS reliefs, and expanded the number of AIM companies that qualify under EIS Transparency: required to publish annual audited and half-yearly unaudited accounts Liquidity: being listed on AIM provides access to liquidity, providing a means to sell shares and exit Access: Guinness has access to AIM share offerings that private investors may not be granted Investment Team Investment Manager Andrew Martin Smith Shane Gallwey Hugo Vaux Tax Reliefs 30% EIS Income Tax Relief CGT Free Disposal CGT Deferral Loss Relief Inheritance Tax ( IHT ) Relief Investment Committee Lord Flight Tim Guinness Edward Guinness Investment Strategy Key points: Investment Period: Commences on 6 April Intended that all Subscriptions will be fully invested within 12 months. Investments will be held for EIS three year holding period Diversification: Targeting a portfolio of 6 to 10 investments Sector and Stage: investing across a range of sectors, and from early stage to more mature businesses EIS relief: all investee companies must have received EIS Advance Assurance Exit: AIM-listing facilitates exiting investments. Targeting being fully exited by April 2018, subject to market conditions. Charges Initial Fee of 2.0% Annual management fee of 1.75% Performance Fee of 20% on returns over 1 per 1 invested. All fees are deferred until they can be paid from the Proceeds of Investments, to ensure EIS relief is maximised for Investors. Guinness Asset Management will facilitate the payment of fees to advisers if so instructed. Name of EIS Guinness AIM EIS 2014 Investment Focus AIM-listed companies that qualify for EIS Relief Target Size 5 million Closing Date 5 April 2014 Target Investment Period Targeting full investment of Subscriptions in the 2014/15 tax year. EIS Income Tax Relief can be claimed in the 2013/14 tax year Minimum Individual Subscription 10,000 Expected Life Up to 4 years Regulatory The Board of HMRC has approved Guinness AIM EIS 2014 as an approved investment fund within the terms of section 251 of the Income Tax Act 2007

10 8 Guinness Asset Management Limited Guinness AIM EIS 2014 Investment Opportunity Guinness AIM EIS 2014 (the Service ) has been established to make investments in AIM-listed companies that are eligible for EIS tax reliefs. The investment objective of Guinness AIM EIS 2014 is to deliver tax-free investment returns of over 1.30 per 1.00 invested, net of all fees, in addition to 0.30 of EIS Income Tax Relief. The Alternative Investment Market ( AIM ) AIM is the most successful growth market in the world. It was launched in 1995 as the London Stock Exchange s market for smaller and growing companies, and since then has helped over 3,000 companies raise more than 80 billion through new and further capital raisings. AIM plays a vital role in the funding environment for small and medium-sized enterprises as they develop their businesses. It serves as a mechanism for companies seeking access to capital to realise their growth and innovation potential. Investment Drivers There are several factors that have made investing in AIM companies that qualify for EIS tax reliefs an attractive area: Regulatory Recent changes in EIS legislation has increased the size of companies that qualify for EIS Reliefs from under 50 employees to up to 250 employees, and from under 8 million gross assets post investment to under 16 million gross assets post investment. These changes have increased the number of AIM companies that qualify under the EIS, and also reduced the risk of EIS investing by allowing investment in larger companies. Transparency AIM-listed companies are more transparent than most EIS investment opportunities. This is in part due to the AIM-listing requirements to publish annual audited and half-yearly unaudited accounts, as well as making public any price sensitive information in a timely fashion. Liquidity Private equity investments can remain in an investor s portfolio long after the three year EIS holding period has expired. AIM-listed companies have the advantage of liquidity by virtue of their listing on AIM, providing the Investment Manager a means of selling shares and returning funds to investors. Access Many AIM share offerings and placings of new shares are only made available to institutional investors. It can be difficult as a private investor to gain access to investment opportunities. The Investment Manager is known to the majority of the Nominated Advisers on AIM.

11 Guinness Asset Management Limited Guinness AIM EIS Investment Strategy The Investment Manager will invest in a portfolio of AIM listed companies that it believes will offer capital gain underpinned by sound financial assumptions and robust management teams. Our investment strategy is summarised below: AIM Companies Investment Period Diversification Sector and Stage Capital Growth EIS Relief Exit The Service is focused on investing in companies that are listed on AIM and which will benefit from EIS tax reliefs. In exceptional circumstances companies listed on ISDX Growth Market or pre-ipo companies may be considered for investment, up to a maximum of 20% of Subscriptions in aggregate. The Investment Manager will commence investing from 6 April 2014 and it is intended that Subscriptions will be fully invested within 12 months. The Investment Manager intends to hold the Investments for the EIS Three Year Period. The Investment Manager is targeting a portfolio of approximately 10 investments to provide diversification to Investors. The Investment Manager will review potential investments across a range of EIS qualifying sectors and will look to have a balanced spread of investments. Investee companies are also likely to be at different development stages, with some early stage businesses with high growth potential and some more mature businesses with more predictable cashflows. The focus of the Service is on generating capital growth. It is not expected that many Investee Companies will pay dividends during the three year EIS holding period. This will help maximise tax reliefs for Investors as dividends are usually subject to income tax whereas a capital gain realised after the EIS Three Year Period will be exempt from capital gains tax. Investments will only be made into companies that have received EIS Advance Assurance from HMRC. On exit the Investment Manager intends to offer Investors a number of options to suit their requirements. This will include, but not be limited to, the sale of the Investments to return cash, continued management of the Investments to maintain Inheritance Tax Relief or sale and reinvestment into a follow-on Guinness AIM EIS fund.

12 10 Guinness Asset Management Limited Guinness AIM EIS 2014 EIS Tax Reliefs The main tax benefits that can be claimed by a Qualifying Investor (i.e. a UK tax-paying individual, and in some cases the trustee for such an individual) are as follows: 30% Income tax relief Following investment into Investee Companies, a Qualifying Investor will receive an income tax rebate of up to 30% from HMRC of the total invested. The relief is restricted to the amount that reduces his income tax liability to nil. An individual can invest a maximum of 1 million per tax year for EIS Income Tax Relief purposes. Investors can claim income tax relief in the 2013/14 tax year. Capital gains tax free disposal Capital Gains Deferral (deferral unlimited) Loss relief (up to 45%) Inheritance tax relief Investors will not pay capital gains tax on gains from the disposal of shares in EIS Qualifying Companies where the EIS Income Tax Relief is retained and the disposal occurs after the end of the EIS Three Year Period. Investors who meet the residence requirements can defer capital gains that have arisen within 36 months before or 12 months after an investment in an Investee Company. If shares in an EIS qualifying company are disposed of at any time at a loss (after taking into account EIS income tax relief), the loss can be set against either the investor s income tax or capital gains tax liability. Once an Investment has been held for at least two years, it should qualify for Business Property Relief, meaning that it will reduce the Investor s taxable estate for the purposes of inheritance tax. Notes Investors should be aware that the above reflects the current tax legislation and HMRC practice. This is subject to change at any time. Capital Gains Deferral is only a deferral of the original gain and a CGT liability will crystallise on a disposal of the Investment, at the CGT rate prevailing at that time. The information and examples in this section are generic in character, and do not represent advice to any Investor on his or her personal tax circumstances. Investors are recommended to seek their own tax advice before investing. The tax treatment depends on the individual circumstances of each Investor and may be subject to change in future.

13 Guinness Asset Management Limited Guinness AIM EIS Illustrative Return The table below shows the benefits of EIS Tax Relief on an investment of In the example investment proceeds of 1.30 on a 1.00 investment give a return of 6.8% per annum over four years. This is enhanced by the 30p EIS Income Tax Relief, which increases the total proceeds to a tax-free return of 16.7% per annum over the investment period. Illustrative returns for an investment made under the EIS Investor proceeds pre EIS Relief 1 Rate of Return pre EIS Relief 2 Investor proceeds including EIS Relief Rate of Return including EIS Relief Write off % % % % % % % % % % % % % Assumptions made for table 1. Investor proceeds are after all fees have been deducted. 2. The Rate of Return is the annualised effective compounded return rate and is calculated assuming a four year investment period. 3. Investor proceeds for a write off assumes loss relief is received on the whole Investment at 40%. During due diligence the Investment Manager will confirm that potential Investee Companies have received EIS Advance Assurance from HMRC in respect of any Investment.

14 12 Guinness Asset Management Limited Guinness AIM EIS 2014 The AIM Market AIM is the most successful growth market in the world. It has helped over 3,000 companies raise more than 80 through new and further capital raisings. AIM plays a vital role in the funding environment for small and medium-sized enterprises as they develop their businesses. Not all AIM companies are EIS qualifying. There are certain criteria that need to be satisfied, for example: A company must have fewer than 250 full-time employees (or their equivalents) at the time the shares are issued. The gross assets of the company cannot exceed 15 million immediately before any share issue and 16 million immediately after that issue. The company is required to have a permanent establishment in the United Kingdom The Company must be undertaking a qualifying trade (certain trades are excluded such as leasing, farming, shipbuilding, managing hotels or nursing homes, producing coal or steel to name a few) AIM Key Statistics Total number of AIM 1086 Total market cap for all AIM 64.2bn Total new money raised on AIM since inception 82bn Total raised by new issues 36.1bn Total raised by secondary issues 45.9bn Share turnover value (2013 ytd) 16.4bn Number of bargains (2013 ytd) 2.67m Shares traded (2013) 142.6bn Source: AIM Statistics London Stock Exchange (October 2013)

15 Guinness Asset Management Limited Guinness AIM EIS AIM by Sector (% market capitalisation) Telecommunications: 3% Utilities: 1% Health Care: 6% Oil and Gas: 21% Consumer Goods: 7% Basic Materials: 9% Technology: 11% Financials: 18% Industrials: 12% Consumer Services: 13% Source: London Stock Exchange AIM Statistics October 2013 Distribution of Companies by Equity Market Value Number of companies Market value range m Source: London Stock Exchange AIM Statistics October ,000 7 Over 1,000

16 14 Guinness Asset Management Limited Guinness AIM EIS 2014 AIM 1 Year Index Change th October th October 2013 Source: London Stock Exchange AIM Sector Analysis for EIS qualifying companies The Investment Manager has analysed over 100 million of EIS and VCT qualifying investments into AIM quoted companies. The sector spread of these investments is as follows: Other 14% Aerospace and Defence 4% Software and Computer Services 26% Industrial Engineering 4% Media 4% Electronic and Electrical Equipment 5% General Financial 6% Pharmaceuticals and Biotechnology 18% Health Care Equipment and Services 9% Support Services 10% Source: Guinness Asset Management

17 Guinness Asset Management Limited Guinness AIM EIS The Investment Manager Guinness Asset Management is a London-based specialist fund management company. Together with its US sister company, Guinness Atkinson Asset Management, the firm currently manages over US$600 million. Guinness Asset Management manages EIS portfolios for a large number of clients invested across renewable energy companies. As well as its EIS offerings, Guinness Asset Management provides actively managed, long-only equity portfolios designed to deliver real returns for long-term investors. Company Established in 2003, Guinness is independent and is wholly owned by its employees. Investment process Specialist portfolios Guinness conducts all research in-house, and invests in accordance with its clearly articulated investment process, with high conviction and with no benchmark-led constraints. Guinness s portfolios give investors access to its specialist expertise in the energy sector, in Asian equities, in global dividend portfolios and global asset management companies. The Guinness equity fund range, accessible in a Dublin OEIC, is authorised for investment by UK private and professional investors. Guinness Asset Management is authorised and regulated by the Financial Conduct Authority. A snapshot of some of our non-eis funds Funds and managers A word from the managers (November 2013) Guinness Global Equity Income Fund Dr. Ian Mortimer, CFA and Matthew Page, CFA Guinness Global Energy Fund Tim Guinness, Will Riley and Jonathan Waghorn We don t chase yield, we want capital and dividend growth. Our aim is long-term capital growth and a steady rising dividend stream, balanced with a yield higher than the global market average. We expect the Fund to yield around 3-4%. Oil demand from emerging markets is outstripping supply growth, including North American shale oil. China s transition from investment-led to consumer-led growth will herald rapid growth in the mass adoption of transportation, and is positive for oil and gas. However, energy equities are under-owned and undervalued buy the market, and we believe there are opportunities to be exploited.

18 16 Guinness Asset Management Limited Guinness AIM EIS 2014 Funds and managers A word from the managers (November 2013) Guinness Global Alternative Energy Fund Edward Guinness Guinness Global Money Managers Fund Tim Guinness and Will Riley The outlook for the alternative energy sector continues to improve, reflected in continued new sources of finance for alternative energy projects. As one of the only funds that is investing in alternative energy as a pureplay strategy, we are well placed to capture the returns from an industry that is only now beginning to recover from Years of experience in the asset management industry have taught us that, in times of rising equity markets, companies in the sector can generate extraordinarily good returns for their shareholders. Asset management is a growing sector global assets under management continue to rise. With successful companies able to grow using relatively little capital, overall shareholder returns can be very high. For more information on Guinness s equity funds, including performance and portfolio reviews: Visit: guinnessfunds.com info@guinnessfunds.com Call:

19 Guinness Asset Management Limited Guinness AIM EIS The Guinness AIM EIS Team Guinness Asset Management has built a strong EIS business with a highly experienced team of professionals. The Guinness AIM EIS 2014 fund managers are Andrew Martin Smith and Shane Gallwey, supported by the Guinness AIM Investment Committee made up of Andrew Martin Smith, Shane Gallwey, Lord Flight, Tim Guinness and Edward Guinness. Andrew Martin Smith Lead Fund Manager Andrew Martin Smith began his career at Hambros Bank in 1975 as a graduate from Oxford University. He has over 30 years experience in the financial services industry and currently works as a senior adviser with Guinness Asset Management. He is Chairman of Parmenion Capital Management and a Director of Church House Investments and three quoted investment trusts. Andrew has spent the last 20 years specifically involved in the fund management industry firstly as Chief Executive of Hambros Fund Management. He joined Berkshire Capital Securities after Hambros successor fund management interests were acquired by Investec, and joined Guinness Asset Management in Shane Gallwey CFA Fund Manager Shane Gallwey has, over the last fifteen years, launched, advised, invested in and sold a large number of EIS businesses. He was previously a director of Northland Capital Partners, the AIM Nominated Adviser and Broker, where his focus was on advising growth companies on capital structuring, with an emphasis on tax-efficient funding through EIS and VCT for a range of small to mid-size technology and alternative energy companies. From 2002 to 2006 Shane was based in Gibraltar with Trafalgar Financial Futures. Prior to that he spent six years at HSBC Investment Bank. Shane holds an MA from the University of Edinburgh, and is a CFA Charterholder. Hugo Vaux Analyst Hugo joined the Guinness EIS investment management team in His role includes sourcing and assessing potential transactions, monitoring existing investments and assisting on marketing. Prior to joining Guinness Hugo gained experience at SandAire Wealth Management undertaking macro-economic analysis in the investment team. He has an MSc in Finance and Investment from the University of Bristol and a BA (Hons) in Economics from Exeter.

20 18 Guinness Asset Management Limited Guinness AIM EIS 2014 Guinness AIM Investment Committee Andrew Martin Smith and Shane Gallwey are joined by Lord Flight, Tim Guinness and Edward Guinness on the Guinness AIM Investment Committee: Lord Flight Tim Guinness Edward Guinness Howard Flight is Chairman of the EIS Association and a director of Flight and Partners, which manages the Flight & Partners Recovery Fund. Lord Flight was the co-founder of Guinness Flight, a highly successful fund manager which merged with Investec in He continues to be a director of Investec Asset Management and is also a director of Metro Bank. From 1997 to 2005 he served as a member of parliament and as a member of the Conservative Shadow Treasury Team. He is currently the director of businesses with over 50 billion of funds under management, and sits in the House of Lords. As founder and Chief Investment Officer of Guinness Atkinson Funds in the US and of Guinness Asset Management in the UK, Tim Guinness is a logicbased value investor with nearly 35 years of experience. From 1999 to November 2002, he was Joint Chairman of Guinness Flight Global Asset Management Ltd. (which merged with Investec in 1998), and was the CEO from 1997 to Tim graduated from Cambridge University with a degree in engineering. He then completed a Master s Degree in Management Science at the Sloan School M.I.T. in the United States. Edward Guinness is co-manager of the Guinness Alternative Energy Fund, having joined Guinness in January Prior to joining Guinness Asset Management, Edward worked from 2003 as a merger arbitrage analyst for the Arbitrage Associates Fund at the Tiedemann Investment Group in New York. In 1998 he joined HSBC Investment Bank, where he worked in the Corporate Finance Department in the Energy & Utilities Team and in the Telecoms & Technology Team. Edward graduated from Cambridge with an MA (Hons) in Engineering and Management Studies. Track Record The Guinness team has a strong investment track record. Since 2010, the Guinness EIS team has raised and invested 15 million in EIS qualifying companies. The Investment Management Team leverages the considerable EIS and investment expertise of Lord Flight, Chairman of the EIS Association, Tim Guinness, CEO of Guinness Asset Management, and Edward Guinness, Fund Manager of the Guinness Sustainable Energy EIS funds. The Investment Committee brings extensive UK investing experience to the Guinness EIS team.

21 Guinness Asset Management Limited Guinness AIM EIS Approved Fund for EIS purposes Guinness AIM EIS 2014 is an Approved Fund for EIS purposes. Therefore, for Income Tax Relief purposes all the Investments will be deemed to have been made on the Closing Date provided 90% of the Subscriptions have been invested by the first anniversary of the Closing Date. Investors will be able to claim Income Tax Relief in the 2013/14 tax year. In addition, as an Approved Fund, the process of claiming EIS Income Tax Relief is greatly simplified. Rather than receiving an EIS 3 certificate for each investment made, Investors will be issued with a single EIS 5 Certificate with which EIS Income Tax Relief and other tax reliefs can be claimed. Once 90% of the Subscriptions have has been invested, the Investment Manager will apply to HMRC for permission to issue you with a EIS 5 Certificate, thereby enabling you to claim the Income Tax Relief. Investors can expect to receive their EIS 5 Certificate in spring The approval of a fund by the Board of HM Revenue & Customs is relevant only for the purpose of attracting certain tax advantages provided by section 251 Income Tax Act. Such approval covers only certain administrative matters. It in no way bears on the commercial viability of the investments to be made; neither does it guarantee the availability, amount or timing of relief from income tax or capital gains tax.

22 20 Guinness Asset Management Limited Guinness AIM EIS 2014 Investment Process Origination Due Diligence Transactions Monitoring Exit Relationships with key AIM advisers and brokers ensures access to relevant IPOs and secondary share offers Initial review of business plan and sector Management meetings; site visits if appropriate and detailed due diligence Investment committee review all investment proposals Regular company reports and half yearly financial statements Regular management meetings to monitor progress Realise each investment to optimise returns for investors Liquidity of AIM stocks maximises flexibility for investors i) Origination The Investment Manager sources Investments through its network of contacts with AIM Nominated Advisers and Brokers. Each AIM company is required to appoint a Nominated Adviser and Broker, selected from a list of advisers approved by the London Stock Exchange. Guinness Asset Management is an active investment manager in the UK quoted investment market and is well known to the London advisory community. In addition, the Investment Manager reviews the Stock Exchange announcements of upcoming share issues to ensure it reviews all relevant issues. ii) Due Diligence The first stage due diligence of a share issue by an AIM company entails a review of the documentation including any relevant admission document for an IPO, annual report and accounts, corporate literature and brokers research. This is set in the context of the sector and the market as a whole to provide the Investment Manager with an initial view of the attractiveness of the investment proposition. Companies that pass the first stage due diligence are invited to present to the Investment Manager and time is spent in meeting and understanding the management team and their approach. Where appropriate, references are taken and site visits made. iii) Transaction Where the Investment Manager wishes to proceed with an investment, a short form report is circulated to the Investment Committee to review and provide approval. The Investment Committee has the opportunity to question the Investment Manager on their approach and rationale for an investment, and further analysis will be undertaken if required. iv) Monitoring AIM companies are required to publish results half yearly. The Investment Manager will meet with each Investee Company regularly and question management on progress and performance. v) Exit As the Investee Companies are quoted this provides the Investment Manager with flexibility on exit. The Investment Manager intends to offer Investors a number of options to suit their requirements. This will include the sale of Investments to return cash, continued management of the Investments to maintain Inheritance Tax Relief or reinvestment into a follow-on Guinness EIS fund.

23 Guinness Asset Management Limited Guinness AIM EIS Investor Information How to Invest The Investor s Agreement and Application Form are included at the back of this document. The minimum individual Subscription is 10,000. An acceptance by Guinness Asset Management of an Application Form on or before the Closing Date will (subject to exercise of cancellation rights, if relevant) create a binding agreement between the Investor and Guinness Asset Management. Investors will be notified of an acceptance of their Application Form. Reporting to Investors The Investment Manager will provide Investors with statements and reports twice a year, with details of Investments made and performance of their Portfolios. In addition, Investors will receive an annual financial statement of their holdings. How to claim your EIS Reliefs As the Guinness AIM EIS 2014 is an Approved Fund as described on page 19, the process for claiming EIS tax reliefs is simplified because you will be issued with only one EIS tax certificate rather than one per Investee Company. If you have completed your tax return already and sent it to your Tax Office, you can make the claim by completing the claim section of the EIS5 certificates when you receive it and send it to your Tax Office. The EIS5 form can be sent to HMRC at any time to claim EIS Income Tax Relief and Capital Gains Tax Deferral Relief. For Capital Gains Tax Deferral Relief, you will need to specify the capital gain or gains against which the Subscription is to be set, with dates when the capital gain or gains were realised and amount of capital gain to be offset. The latest date on which an Investor can claim EIS Income Tax Relief is five years after the 31 January following the tax year to which the claim relates. Important notice for Investors deferring capital gains Investors should note that the EIS5 certificate may not be available prior to 31 January 2015 and, therefore, Capital Gains Tax for the year 2013/14 may need to be paid by Investors by 31 January 2015 and reclaimed following receipt of their EIS5 certificate. Trust investors The trustees of certain settlements are potentially eligible to claim CGT Deferral Relief only (they may not claim EIS Income Tax Relief) where, broadly, all the beneficiaries are individuals. Trustees should seek their own advice about their eligibility. Discretionary Managed Service Guinness AIM EIS 2014 is a discretionary managed service. It is structured so that Investments are made by the Investment Manager on behalf of each Investor. Each Investor has an account with the Administrator, and remains the beneficial owner of cash and Investments for both legal and taxation purposes at all times. Cash deposits are held in pooled client money accounts held under customer trust status, and so are separate from the Administrator s own accounts. Share certificates are held by the Administrator in the name of Share Nominees Ltd.

24 22 Guinness Asset Management Limited Guinness AIM EIS 2014 The Administrator participates in the Financial Services Compensation Scheme, which provides compensation to eligible Investors in the event of a firm being unable to meet its customer liabilities. Guinness AIM EIS 2014 is not an unregulated collective investment scheme within the meaning of the Financial Services and Markets Act EIS Qualification Criteria The key criteria for qualification for EIS Relief and CGT Deferral Relief are as follows: Maximum individual investment of 1 million per tax year for EIS Income Tax Relief purposes; any individual, together with Associated Parties, may not hold over 30% in an Investee Company. The Investee Company must not be under the control of another company (or another company and persons connected with that company); Investment must be made as equity in ordinary shares; Investment must be held for at least the EIS Three Year Period; Maximum company gross assets of 15 million prior to subscription of EIS monies and 16 million immediately after; Maximum amount of investment money, that is deemed to be state aid, including from EIS and Venture Capital Trust investors, that can be received by an Investee Company is 5 million in any 12 month period; Maximum company employees of fewer than 250 full-time or equivalent at the time of investment; Carrying out a qualifying activity for at least four months before claim can be made for EIS tax reliefs; Trade must continue for at least three years in total from Subscription or its commencement, if later; Trade must commence within two years of the subscription for shares, so the longest minimum holding period would be five years; The shares must not be issued in consequence of disqualifying arrangements as set out in section 178A ITA.

25 Guinness Asset Management Limited Guinness AIM EIS Frequently Asked Questions Please call us on if you have any questions regarding the Guinness AIM EIS Below are some of the frequently asked questions in relation to the Service. Please note, however, that the Investment Manager is not in a position to offer any Investor specific advice on whether the Guinness AIM EIS 2014 is suitable for that person s individual circumstances, and no comments which the Investment Manager may make are to be interpreted as such specific advice. What is the minimum Subscription? The minimum individual Subscription is 10,000. There is no maximum Subscription, although, income tax relief is currently available only on the first 1 million invested for each tax year for which EIS Income Tax Relief is claimed. Neither Inheritance Tax Relief nor Capital Gains Tax Deferral Relief are capped. How do I invest in Guinness AIM EIS 2014? Please complete the Application Form and Suitability Questionnaire at the back of this Information Memorandum. The Application Form includes instructions on how to pay in funds and details on where to send the Application Form. The Administrator will acknowledge receipt of your Application Form and funds as soon as they are received. Where is my money held before being invested into Investee Companies? Your money is held by The Share Centre in a pooled client money account under customer trust status, and so it is separate from The Share Centre s own accounts. It may, subject to the level of interest rates, accrue interest which will be credited to your account. If interest is paid to your account then it will be shown on your statements and you may need to include this on your tax return. When an Investment is made, you are the beneficial owner of the shares and you have a direct interest in the Investee Company. The Share Centre s own Terms of Business are available from The Share Centre Limited, and online at What happens once I have invested? Within a week of accepting your application we will send you a welcome letter providing you with details of your account, and returning any identity verification documents you may have sent. When the underlying Investments are made from your account, you will be sent a contract note for each investment. How can I check the progress of my Investments? You will receive a report every six months, which will include a portfolio valuation statement, showing the acquisition price and latest valuation for each Investment in your portfolio, as well as your cash balance.

26 24 Guinness Asset Management Limited Guinness AIM EIS 2014 When can I claim EIS Income Tax Relief? Once Guinness AIM EIS 2014 is more than 90% invested we will apply to HMRC for an EIS 5 Certificate which will enable you to claim EIS Reliefs. We are targeting having Subscriptions fully invested within 12 months, so we will endeavour to send you your EIS 5 Certificate shortly after 5 April How do I claim CGT deferral? Once you have received your EIS5 certificate, you can make the claim by completing the claim sections on the certificate and sending them to your tax office (in accordance with the notes printed on the back of the certificate) either with your tax return or subsequently to amend your tax return. When you submit your claim you will need to specify the capital gain or gains against which the Investment is to be set, with dates when the capital gain or gains were realised and amount of capital gain to be offset. How long should I be prepared to invest for? In order for your Investment to qualify for EIS Income Tax Relief and Capital Gains Deferral, your money must be invested in an Investee Company for the EIS Three Year Period. The qualifying three year period starts with the subscription for shares in an Investee Company and ends after three years or three years from commencement of trade if that is later. Allowing for up to twelve months to fully invest the Subscriptions, you should be prepared to invest your money for four years. When can I expect to see a return? We will endeavour to realise investments soon after the EIS Three Year Period. As we are targeting having Subscriptions fully invested within 12 months, we expect to be able to return the majority of proceeds by 5 April 2018, subject to market conditions. But this cannot be guaranteed. Will Guinness Asset Management pay my Financial Intermediary Fees? Guinness Asset Management can apply a proportion of your total Subscription towards meeting Financial Intermediary Fees incurred by you in subscribing to the Service. Guinness Asset Management can also facilitate ongoing payments to your Financial Intermediary for up to three years. Please indicate in your Application Form (Section 5) what Financial Intermediary Fees you would like us to facilitate.