Manager to waive future performance fees
Amati Global Investors Limited (the "Manager"), the manager of Amati VCT plc and Amati VCT 2 plc ("the Companies"), has approached the respective Boards indicating that it wishes to waive future performance fees which might become due to it under the investment management arrangements currently in place. Such waiver would have effect in respect of periods after 31 August 2014 in respect of Amati VCT plc and 31 July 2014 in respect of Amati VCT 2 plc. The Boards have accepted the Manager's offer. Nothing was sought by the Manager in return and no consideration or compensation was paid in relation to the waiver.
The reasons that the Manager has taken these steps are as follows:
- performance fees are something that some investors may find confusing and add complexity to VCTs as a product set. The removal of performance fees simplifies Amati's VCT offers;
- in forfeiting future entitlements to performance fees Amati is waiving a current accrual of £342k in Amati VCT 2, equivalent to 1.24p per share, which will be added back to increase the net asset value of the VCT;
- following strong stock market gains and a brighter outlook for the UK economy, there is perhaps a greater opportunity for performance fees to arise in future, which could have a major impact on long term returns, in particular when compounding is taken into account;
- Amati has been at the forefront of innovation and developments in the VCT industry; and
- Amati places a high priority on protecting the interests of its shareholders in its VCTs and this move demonstrates this.
The performance fee calculation as it stands requires that fees are only paid based on performance which is sustained for at least six months, meaning that any positive performance arising after the Company's accounting year end dates of 28 February 2014 (Amati VCT plc) and 31 January 2014 (Amati VCT 2 plc) will not give rise to any further performance fees being paid or accrued for. As a result, the accrual for performance fees in Amati VCT 2 plc based on the rise in the Net Asset Value ("NAV") Total Return since 31 January 2014 will now be released as detailed below. There is currently no accrual in respect of Amati VCT plc.
As at the year end of Amati VCT 2 plc, and in accordance with the currently contracted performance fee arrangements, a performance fee of £152,488 is due to be paid to the manager in respect of performance to 31 July 2013 which was sustained until 31 January 2014. In addition, a performance fee of £1,270,968 has been accrued in the reported unaudited Net Asset Value ("NAV") per share which only becomes payable if the performance is sustained until 31 July 2014, and the amount to be paid will decrease in relation to any fall in the NAV Total Return at that date. Both of these numbers remain subject to the formal audit process which the Company is currently undertaking in preparation for the publication of its year end accounts.
The last reported NAV per share of Amati VCT 2, being that for 13 March 2014, included an additional accrual for performance fees of £342,739, which will be written back into the NAV per share from 20 March 2014 onwards. No additional accruals for performance fees will be required in the future.
The manager believes that, by removing future performance fees, the Amati VCTs will be amongst the most compelling and straight forward VCT offerings available to investors.