TIDMILV1
RNS Number : 3613R
Ingenious Live VCT 1 plc
20 August 2010
INGENIOUS LIVE VCT 1 PLC
20 August 2010
Half-yearly results for the six months to 30 June 2010
Interim management report
I am delighted to present the half-yearly financial report of Ingenious Live VCT
1 plc (the "Company") for the six months ended 30 June 2010 (the "Reporting
Period").
The Company has now fully committed its funds and is focused on driving
commercial returns from each investment.
Festivals
Creamfields
Investment amount: GBP850,000 (GBP1,700,000 across the Company and Ingenious
Live VCT 2 plc).
Creamfields was voted 'best festival' at the 2010 Music Week Awards in London
beating competitors such as the Glastonbury Festival and the Reading and Leeds
Festivals. This year sees the two-day dance music event expand in size to a
40,000 capacity and will take place on 28 and 29 August 2010. The Cheshire based
event boasts a line up that includes world famous DJs Tiesto, David Guetta,
Sasha, DeadMau5 and Calvin Harris playing alongside special guests and
electronic pioneers Leftfield.
Ticket sales for this year's event have exceeded all expectations and the
promoters have announced that both days have sold out in advance. This should
generate a good return to the Company, further information will be provided in
the full year accounts to 31 December 2010.
Underage and Field Day Festivals
Investment amount: GBP500,000 (GBP1,000,000 across the Company and Ingenious
Live VCT 2 plc).
The London based Underage and Field Day Festivals made strong returns for the
Company in both 2009 and 2010.
This year the Underage Festival continued to move from strength to strength with
2010 boasting an impressive lineup featuring artists such as M.I.A, Tinie
Tempah, Tinchy Stryder, Ellie Goulding and Crystal Castles. Following four
successful years the event has firmly established its market niche as the summer
music event for under 18 year olds.
Meanwhile, Field Day which is well established as the leading alternative music
festival in London, featured electric performances from Phoenix, Moderat and The
Fall. The 2010 events delivered a solid profit for the Company.
80s Rewind Festival
Investment amount: GBP346,848 (GBP693,696 across the Company and Ingenious Live
VCT 2 plc, and GBP545,196 across Ingenious Entertainment VCT 1 plc and Ingenious
Entertainment VCT 2 plc).
We are pleased to report that the 80s Rewind Festival, a two-day music festival
to be held in Henley-on- Thames between 20 and 22 August 2010, is proving very
popular with anticipated sales of over 35,000 tickets. The 2010 event hosts a
list of 80s stars including Rick Astley, Boy George, T'Pau, Marc Almond, Level
42, Tony Hadley with ABC and Go West. We also anticipate that this event will
generate a profit for the Company.
Powderham Castle/80s Rewind Tour
Investment amount: GBP328,350 (GBP656,700 across the Company and Ingenious Live
VCT 2 plc).
Following two years of losses, the investment underwent a thorough review and
the decision was taken not to proceed with future Powderham Castle concerts.
The funds have been reinvested in the Reporting Period into the 80s Rewind
Christmas Tour - an adjunct to the successful 80s Rewind Festival in
Henley-on-Thames. The tour takes place in 8 major venues starting in November
2010; London Wembley Arena, Manchester MEN Arena, Birmingham LG Arena,
Sheffield, Glasgow, Bournemouth, Cardiff and Newcastle.
Exhibitions
Brand Events - Taste of Christmas and the Taste Festivals
Investment amount (Taste of Christmas): GBP902,489 (GBP1,804,978 across the
Company and Ingenious Live VCT 2 plc).
Taste of Christmas, the festive food and drink event, returns to the ExCel
Centre in London during December 2010 after attracting over 20,000 people to a
well received show in 2009. The Company expects the event to generate a profit
for the first time in 2010.
Investment amount (Taste Festivals): GBP1,000,000 (GBP2,000,000 across the
Company and Ingenious Live VCT 2 plc).
The Taste Festivals are established and successful outdoor food and wine events
featuring a number of famous chefs including Gary Rhodes and Antony Worrall
Thompson who serve up their signature dishes for the public to taste. They are
currently held throughout the world in 18 different locations including Cape
Town, Sydney and Dubai. The London event took place in Regent's Park from 17 to
20 June 2010, whilst the Edinburgh event was held in Inverleith Park from 28 to
29 May 2010. The investment generated a small profit to the Company.
Golf Live
Investment amount: GBP275,000 (GBP1,100,000 across the Company, Ingenious Live
VCT 2 plc, Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2
plc).
In December 2009, the Company, Ingenious Live VCT 2 plc, Ingenious Entertainment
VCT 1 plc and Ingenious Entertainment VCT 2 plc invested alongside Brand Events
Limited to co-promote 02 Golf Live a new three-day interactive golf event which
was staged at Stoke Park in Buckinghamshire between 14 and 16 May 2010.
Brand Events Limited has established a strong reputation within the UK for
successfully launching new consumer shows. Brand Events Limited has now
established two key shows: the Taste Festivals, food festivals celebrating
different foods; and Top Gear Live, the Top Gear branded live motoring theatre
format.
The event represents a creative way of bringing the Sports and Exhibition
markets closely together, and the longer term aim is to role the event out to
further prestigious golf courses around the world. O2, Jaguar and the European
Tour were amongst the partners for the initial UK event.
The event made a loss in the first year, but was extremely well received by both
the corporate partners and the paying public. The audience satisfaction rating
was the highest that Brand Events Limited had ever received. Golf Live is
considered to have strong long term potential to build on the significant brand
awareness that it has created in its first year.
Live Venues
Scarborough Open Air Theatre
Investment amount: GBP1,000,000 (GBP2,000,000 across the Company and Ingenious
Live VCT 2 plc).
The Company co-promotes the Scarborough Open Air Theatre, the largest open air
theatre venue in Europe, with Apollo Resorts and Leisure Scarborough Ltd.
Originally opened in 1932, a major restoration has been taking place as part of
the North Bay Project to reinstate the theatre which opened on 23 July 2010. The
theatre, which seats up to 6,300 people, will become a major venue in the north
east of England for theatre, concerts, opera and dance.
Her Majesty the Queen visited Scarborough to open the venue and recent Grand
Gala show hosted performances from José Carreras and Dame Kiri Te Kanawa. This
summer's schedule has also included other major shows such as the 80s Rewind
Tour, The Doves/Newton Faulkner/The Futureheads and performances by Justin
Fletcher, the Bafta award winning children's presenter and star of Cbeebies'
Something Special, in Justin Live.
Theatre and Television Format
Let's Dance
Investment amount: GBP500,000 (GBP2,000,000 across the Company, Ingenious Live
VCT 2 plc, Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2
plc).
Let's Dance was commissioned by the BBC for Comic Relief in 2009 and proved to
be an instant hit, with audience ratings peaking at 8.6 million viewers for the
final on BBC 1.
The show was recommissioned as Let's Dance for Sports Relief in 2010 which aired
for four weeks in February to equally impressive audience figures. Following the
ratings success of both series the format has now been sold and aired in both
Germany and Holland. The Investment Manager is in discussions in a number of
other territories around the world regarding the licensing of this format and
the Company expects these sales to return a profit in the near future.
Annie Get Your Gun
Investment amount: GBP252,500 (GBP505,000 across the Company and Ingenious Live
VCT 2 plc).
In November 2009, the Company invested into the theatrical production of Annie
Get Your Gun (starring Jane Horrocks). It completed a successful season at the
Young Vic in London in January 2010, and delivered a small profit to the
Company. We are currently exploring further opportunities with regards to this
investment.
The Company is managed as a venture capital trust ("VCT"), enabling Shareholders
to benefit from both the income and capital gains tax relief available.
Shareholders will be aware that in order to qualify for this tax relief 70% of
net funds raised must be invested in VCT qualifying companies within three
years. The Company can confirm that over 70% of net funds had been fully
deployed in VCT qualifying companies in advance of the 31 December 2009
deadline.
The Company made a loss on ordinary activities of GBP137,000 in the period to 30
June 2010 (30 June 2009: GBP108,000 loss; 31 December 2009: GBP104,000 profit).
The Company paid its first interim dividend of 7 pence per share during the
reporting period (30 June 2009: GBPNil; 31 December 2009: GBPNil).
The net asset value of each share is 88.6 pence (31 December 2009: 97.1 pence;
30 June 2009: 94.8 pence), the 30 June 2010 net asset value reflects the payment
of 7.0 pence per share interim dividend.
The Company's assets consist of equities and interest bearing investments, cash
and realisable marketable securities. Its principal risks and uncertainties for
the remaining six months of the year are therefore market risk, interest rate
risk, credit risk and liquidity risk. Other risks faced by the Company include
investment and strategic risks, loss of approved status as a Venture Capital
Trust, regulatory, financial and other external risks. These risks, and the way
in which they are managed, are described in more detail in the Directors' Report
and Business Review in the Annual Report and Accounts for the year ended 31
December 2009. The Company's principal risks and uncertainties have not changed
materially since the date of that report.
It was noted in our review of the market in the 31 December 2009 Annual Report
and Accounts that the challenging economic environment would be likely to
adversely affect the live events sector as consumers became more cautious about
their discretionary spending. However, I am pleased to report that the live
events sector has performed resiliently in the downturn.
For example, a report from the Association of Independent Festivals released in
the reporting period demonstrates that the music festival business remains
strong and despite the economic downturn is contributing more than GBP1bn each
year to the UK economy.
Our investment strategy of underpinning investments with contractual minimum
guarantees, as well as working with only the very best event partners in the
industry, has ensured exposure to risks from the economic environment has been
minimised. In fact, the portfolio has performed strongly in the reporting period
with investments such as Let's Dance, Underage and Field Day and Creamfields
indicating that there continues to be a strong market for live events.
I intend to report further on such activity in my full statement to accompany
the Annual Report and Accounts for the year ending 31 December 2010.
Patrick McKenna
Chairman
19 August 2010
For further information, please visit: www.ingeniousvcts.com or contact:
Ingenious Ventures
Paul Bedford
020 7319 4000
directors' responsibility statement
The directors are responsible for preparing the half-yearly financial report and
the condensed set of financial statements in accordance with the Accounting
Standards Board's Statement 'Half-Yearly Financial Reports'.
In preparing these condensed financial statements, the directors are required
to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable United Kingdom accounting standards have been
followed; and
· prepare the condensed financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of the condensed
financial statements may differ from legislation in other jurisdictions.
To the best of my knowledge:
· the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
· the interim management report includes a fair review of the development
and performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties they face.
Patrick McKenna
Chairman
19 August 2010
income statement (unaudited)
for the six months ended 30 June 2010
+--------------------------------+------+---------+---------+---------+
| | | Six months ended |
| | | 30 June 2010 |
| | | (unaudited) |
+--------------------------------+------+-----------------------------+
| |Note | Revenue | Capital | Total |
| | | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+------+---------+---------+---------+
| Gain on disposal of | | - | 57 | 57 |
| investments | | | | |
+--------------------------------+------+---------+---------+---------+
| (Decrease)/increase in fair | | - | (214) | (214) |
| value of investments held | | | | |
+--------------------------------+------+---------+---------+---------+
| Investment income | | 162 | - | 162 |
+--------------------------------+------+---------+---------+---------+
| Investment management fees | | (45) | (45) | (90) |
+--------------------------------+------+---------+---------+---------+
| Other expenses | | (52) | - | (52) |
+--------------------------------+------+---------+---------+---------+
| (Loss)/profit on ordinary | | 65 | (202) | (137) |
| activities before taxation | | | | |
+--------------------------------+------+---------+---------+---------+
| Tax on ordinary activities | | - | - | - |
+--------------------------------+------+---------+---------+---------+
| (Loss)/profit attributable to | | 65 | (202) | (137) |
| equity shareholders | | | | |
+--------------------------------+------+---------+---------+---------+
| Basic and diluted return per | 2 | 0.7 | (2.2) | (1.5) |
| share (pence) | | | | |
+--------------------------------+------+---------+---------+---------+
The Company has no recognised gains and losses other than those disclosed above.
The total column is the income statement of the Company for the year. The
supplementary capital and revenue columns are prepared with guidance published
by the Association of Investment Companies (AIC).
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (UNAUDITED)
for the six months ended 30 June 2010
+---------------+-------------+-------------+-----------+
| | 30 | 30 | 31 |
| | June | June | December |
| | 2010 | 2009 | 2009 |
| | (unaudited) | (unaudited) | (audited) |
| | GBP'000 | GBP'000 | GBP'000 |
+---------------+-------------+-------------+-----------+
| Opening | 8,973 | 8,869 | 8,869 |
| shareholders' | | | |
| funds | | | |
+---------------+-------------+-------------+-----------+
| Dividends | (647) | - | - |
+---------------+-------------+-------------+-----------+
| (Loss)/profit | (137) | (108) | 104 |
| for the | | | |
| period | | | |
+---------------+-------------+-------------+-----------+
| Closing | 8,189 | 8,761 | 8,973 |
| shareholders' | | | |
| funds | | | |
+---------------+-------------+-------------+-----------+
The accompanying notes form an integral part of these financial statements.
+--------------------------------+------+---------+---------+---------+
| | | Six months ended |
| | | 30 June 2009 |
| | | (unaudited) |
+--------------------------------+------+-----------------------------+
| |Note | Revenue | Capital | Total |
| | | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+------+---------+---------+---------+
| Gain on disposal of | | - | 105 | 105 |
| investments | | | | |
+--------------------------------+------+---------+---------+---------+
| (Decrease)/increase in fair | | - | (69) | (69) |
| value of investments held | | | | |
+--------------------------------+------+---------+---------+---------+
| Investment income | | 4 | - | 4 |
+--------------------------------+------+---------+---------+---------+
| Investment management fees | | (44) | (44) | (88) |
+--------------------------------+------+---------+---------+---------+
| Other expenses | | (55) | (5) | (60) |
+--------------------------------+------+---------+---------+---------+
| (Loss)/profit on ordinary | | (95) | (13) | (108) |
| activities before taxation | | | | |
+--------------------------------+------+---------+---------+---------+
| Tax on ordinary activities | | - | - | - |
+--------------------------------+------+---------+---------+---------+
| (Loss)/profit attributable to | | (95) | (13) | (108) |
| equity shareholders | | | | |
+--------------------------------+------+---------+---------+---------+
| Basic and diluted return per | 2 | (1.0) | (0.1) | (1.1) |
| share (pence) | | | | |
+--------------------------------+------+---------+---------+---------+
| | | Six months ended |
| | | 31 December 2009 |
| | | (audited) |
+--------------------------------+------+-----------------------------+
| |Note | Revenue | Capital | Total |
| | | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+------+---------+---------+---------+
| Gain on disposal of | | - | 154 | 154 |
| investments | | | | |
+--------------------------------+------+---------+---------+---------+
| (Decrease)/increase in fair | | - | 178 | 178 |
| value of investments held | | | | |
+--------------------------------+------+---------+---------+---------+
| Investment income | | 68 | - | 68 |
+--------------------------------+------+---------+---------+---------+
| Investment management fees | | (89) | (89) | (178) |
+--------------------------------+------+---------+---------+---------+
| Other expenses | | (105) | (13) | (118) |
+--------------------------------+------+---------+---------+---------+
| (Loss)/profit on ordinary | | (126) | 230 | 104 |
| activities before taxation | | | | |
+--------------------------------+------+---------+---------+---------+
| Tax on ordinary activities | | - | - | - |
+--------------------------------+------+---------+---------+---------+
| (Loss)/profit attributable to | | (126) | 230 | 104 |
| equity shareholders | | | | |
+--------------------------------+------+---------+---------+---------+
| Basic and diluted return per | 2 | (1.4) | 2.5 | 1.1 |
| share (pence) | | | | |
+--------------------------------+------+---------+---------+---------+
balance sheet (unaudited)
as at 30 June 2010
+------------------------------+------+-------------+-------------+-----------+
| |Note | 30 | 30 | 31 |
| | | June | June | December |
| | | 2010 | 2009 | 2009 |
| | | (unaudited) | (unaudited) | (audited) |
| | | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+------+-------------+-------------+-----------+
| Fixed assets | | | | |
+------------------------------+------+-------------+-------------+-----------+
| Qualifying investments | | 6,242 | 4,427 | 6,242 |
+------------------------------+------+-------------+-------------+-----------+
| Current assets | | | | |
+------------------------------+------+-------------+-------------+-----------+
| Debtors | | 68 | 9 | 68 |
+------------------------------+------+-------------+-------------+-----------+
| Non-qualifying investments | 3 | 1,776 | 4,286 | 2,598 |
+------------------------------+------+-------------+-------------+-----------+
| Cash at bank in hand | | 127 | 68 | 93 |
+------------------------------+------+-------------+-------------+-----------+
| | | 1,971 | 4,363 | 2,759 |
+------------------------------+------+-------------+-------------+-----------+
| | | | | |
+------------------------------+------+-------------+-------------+-----------+
| Creditors: amounts falling | | (24) | (29) | (28) |
| due within one year | | | | |
+------------------------------+------+-------------+-------------+-----------+
| Net current assets | | 1,947 | 4,334 | 2,731 |
+------------------------------+------+-------------+-------------+-----------+
| Net assets | | 8,189 | 8,761 | 8,973 |
+------------------------------+------+-------------+-------------+-----------+
| | | | | |
+------------------------------+------+-------------+-------------+-----------+
| Capital and reserves | | | | |
+------------------------------+------+-------------+-------------+-----------+
| Called-up share capital | | 92 | 92 | 92 |
+------------------------------+------+-------------+-------------+-----------+
| Share premium account | | 4,383 | 4,383 | 4,383 |
+------------------------------+------+-------------+-------------+-----------+
| Other reserves | | 3,735 | 4,382 | 4,382 |
+------------------------------+------+-------------+-------------+-----------+
| Capital reserve | | 414 | 373 | 616 |
+------------------------------+------+-------------+-------------+-----------+
| Revenue reserve | | (435) | (469) | (500) |
+------------------------------+------+-------------+-------------+-----------+
| Equity shareholders' funds | | 8,189 | 8,761 | 8,973 |
+------------------------------+------+-------------+-------------+-----------+
| Net asset value (pence per | 4 | 88.6 | 94.8 | 97.1 |
| share) | | | | |
+------------------------------+------+-------------+-------------+-----------+
The accompanying notes form an integral part of these financial statements.
cash flow statement (unaudited)
for the six months ended 30 June 2010
+---------------------+-------------+-------------+-----------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | |
+---------------------+-------------+-------------+-----------+
| | 30 | 30 | 31 |
| | June | June | December |
| | 2010 | 2009 | 2009 |
| | (unaudited) | (unaudited) | (audited) |
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+-------------+-------------+-----------+
| Net | (89) | (39) | (134) |
| cash | | | |
| outflow | | | |
| from | | | |
| operating | | | |
| activities | | | |
+---------------------+-------------+-------------+-----------+
| Capital | | | |
| expenditure | | | |
+---------------------+-------------+-------------+-----------+
| Purchase | (74) | (1,675) | (3,203) |
| of | | | |
| qualifying | | | |
| investments | | | |
+---------------------+-------------+-------------+-----------+
| Disposal | 74 | - | - |
| of | | | |
| qualifying | | | |
| investments | | | |
+---------------------+-------------+-------------+-----------+
| Net | - | (1,675) | (3,203) |
| cash | | | |
| outflow | | | |
| from | | | |
| capital | | | |
| expenditure | | | |
+---------------------+-------------+-------------+-----------+
| Management | | | |
| of liquid | | | |
| resources | | | |
+---------------------+-------------+-------------+-----------+
| Disposal | 770 | 1,690 | 3,338 |
| of | | | |
| non-qualifying | | | |
| investments | | | |
+---------------------+-------------+-------------+-----------+
| Net | 770 | 1,690 | 3,338 |
| cash | | | |
| inflow | | | |
| from | | | |
| liquid | | | |
| resources | | | |
+---------------------+-------------+-------------+-----------+
| Financing | | | |
+---------------------+-------------+-------------+-----------+
| Dividends | (647) | - | - |
+---------------------+-------------+-------------+-----------+
| Net | (647) | - | - |
| cash | | | |
| outflow | | | |
| from | | | |
| financing | | | |
+---------------------+-------------+-------------+-----------+
| Increase/(decrease) | 34 | (24) | 1 |
| in cash | | | |
+---------------------+-------------+-------------+-----------+
Reconciliation of (loss)/profit before taxation to net cash flow from operating
activities
+---------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------+---------+---------+
| (Loss)/profit | (137) | (108) | 104 |
| on ordinary | | | |
| activities | | | |
| before tax | | | |
+---------------------+---------+---------+---------+
| Decrease/(increase) | 214 | 69 | (178) |
| in fair value of | | | |
| investments held | | | |
+---------------------+---------+---------+---------+
| Investment | (162) | - | - |
| income | | | |
+---------------------+---------+---------+---------+
| Increase | - | (3) | (62) |
| in | | | |
| receivables | | | |
+---------------------+---------+---------+---------+
| (Decrease)/increase | (4) | 3 | 2 |
| in payables | | | |
+---------------------+---------+---------+---------+
| Net | (89) | (39) | (134) |
| cash | | | |
| outflow | | | |
| from | | | |
| operating | | | |
| activities | | | |
+---------------------+---------+---------+---------+
Reconciliation of net cash flow to movement in net funds
+------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------+---------+---------+---------+
| Opening | 93 | 92 | 92 |
| cash | | | |
| balances | | | |
+------------------+---------+---------+---------+
| Net | 34 | (24) | 1 |
| cash | | | |
| inflow/(outflow) | | | |
+------------------+---------+---------+---------+
| Closing | 127 | 68 | 93 |
| cash | | | |
| balances | | | |
+------------------+---------+---------+---------+
notes to the financial statements (unaudited)
for the six months ended 30 June 2010
1. Accounting Policies
a) Basis of Accounting
The financial statements for the Reporting Period have been prepared in
compliance with UK Generally Accepted Accounting Practice, and with the
Statement of Recommended Practice (the "SORP") entitled "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" which was issued in
January 2009.
These financial statements have been drawn up adopting the accounting policies
set out in the Annual Report and Accounts for the year to 31 December 2009, with
the exception of the accounting policy below on Investment Income. The adoption
of that policy has not led to an adjustment to the prior period financial
statements as the effect is not significant.
b) Valuation of Investments
The Company's business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth. As set out in
the prospectus all investments are designated at fair value.
Investee Companies
Unquoted investments including equity and loan investments are designated at
fair value and valued in accordance with the International Private Equity and
Venture Capital Guidelines and Financial Reporting Standard 26 "Financial
Instruments: Recognition and Measurement" ("FRS 26"). Investments are initially
recognised at fair value. The investments are subsequently re-measured at fair
value, as estimated by the Directors with prudence and good faith. Investment
holding gains or losses arising from the revaluation of investments are taken
directly to the income statement. Fair value is determined as follows:
· Fair value is the amount for which an asset could be exchanged between
knowledgeable, willing parties in an arm's length transaction.
· In estimating fair value for an investment, the Investment Manager will
apply a methodology that is appropriate in light of the nature, facts and
circumstances of the investment and its materiality in the context of the total
investment portfolio and will use reasonable assumptions and estimations.
· An appropriate methodology incorporates available information about all
factors that are likely to materially affect the fair value of the investment.
The valuation methodologies are applied consistently from period to period,
except where a change would result in a better estimate of fair value. Any
changes in valuation methodologies will be clearly disclosed in the financial
statements.
The most widely used methodologies are listed below. In assessing which
methodology is appropriate, the Directors are predisposed towards those
methodologies that draw upon market-based measures of risk and return.
· Price of recent investment
· Earnings multiple
· Net assets
· Available market prices
Of these the two methodologies most applicable to the Company's investments are:
1 - Price of recent investment
Where the investment being valued was made recently, its cost will generally
provide a good indication of value. It is generally considered that this would
only apply for a limited period; in practice a period up to the start of the
first live event which forms the investment is often applied as the long stop
date for such a valuation.
2 - Discounted cash flows/earnings of the underlying business
Investments can be valued by calculating the net present value of expected
future cashflows of the companies in which the Company has invested (the
"Investee Companies"). In relation to the Company's investments, anticipating
future cashflows in excess of the guaranteed amounts would clearly require
highly subjective judgements to be made in the early stage of each investment
and therefore would not be an appropriate methodology to apply in the early
stage of the investment.
In the period prior to the first live event it is considered appropriate to use
the price paid for the recent investment as the latest available information.
Thereafter, the portfolio of investments is fair valued on the discounted cash
flow/earnings basis using the latest available information on the performance of
the live event or entertainment content. Gains or losses arising from changes in
the fair value of the 'financial assets at fair value through profit or loss'
category are presented in the income statement in the period in which they
arise.
As a result of the above basis of valuation, there is significant judgement
associated with the valuation of investments.
Non-qualifying Investments - Open Ended Investment Companies
The Company's non-qualifying investments in interest bearing money market open
ended investment companies ("OEICs") are valued at fair value, this is bid
price. They have been designated as fair value through profit and loss for the
purposes of FRS 26.
Gains and losses arising from changes in fair value of qualifying and
non-qualifying investments are recognised as part of the capital return within
the income statement and allocated to the realised or unrealised capital reserve
as appropriate. Transaction costs attributable to the acquisition or disposal of
investments are charged to capital within the income statement.
c) Investment Income
Interest income is recognised in the income statement under the effective
interest rate method. The effective interest rate is the rate required to
discount the expected future income streams over the life of the loan to its
initial carrying amount. The main impact for the Company in that regard is the
accounting treatment of the loan note premiums. Where those loan note premiums
are charged in lieu of higher interest then they are credited to income over the
life of the advance to the extent those premiums are anticipated to be
collected.
d) Dividend Income
Dividend income is recognised in the income statement once declared by any
investee company.
e) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to the
revenue account within the income statement except that:
· expenses which are incidental to the acquisition or disposal of an
investment are charged to capital in the income statement as incurred; and
· expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the investments
held can be demonstrated.
f) Deferred Taxation
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 or a right to pay less, tax in
the future have occurred at the balance sheet date. This is subject to deferred
tax assets only being recognised if it is considered more likely than not that
there will be suitable profits from which the future reversal of the underlying
timing differences can be deducted. Timing differences are differences arising
between the Company's taxable profits and its results as stated in the financial
statements which are capable of reversal in one or more subsequent periods.
2. Basic and Diluted Return per Share
The calculation of basic return per share is based on the return on ordinary
activities after tax for the period and on a weighted average of 9,242,845
ordinary shares in issue for the six months ended 30 June 2010 (31 December
2009: 9,242,845; 30 June 2009: 9,242,845).
There are no dilutive elements and therefore the basic return per share is the
same as the diluted return per share.
3. Non-qualifying Investments
In order to safeguard the capital available for investment in VCT qualifying
investments and balance this with the need to provide good returns to investors,
available funds from the net proceeds are invested in appropriate securities
(money market securities and cash funds) until required for Qualifying
Investment purposes.
4. Net Asset Value per Share
The net asset value per share has been calculated based on 9,242,845 ordinary
shares being the number of ordinary shares in issue as at 30 June 2010 (31
December 2009: 9,242,845; 30 June 2009: 9,242,845).
5. Related Party Transactions
a) Ingenious Ventures Limited was the investment manager until 28 February
2008, when the investment management agreement was novated to Ingenious Asset
Management Limited, and Ingenious Ventures became a trading division of
Ingenious Asset Management Limited. Patrick McKenna is a director of Ingenious
Asset Management Limited and was a director of Ingenious Ventures Limited until
1 June 2009, which are both wholly-owned subsidiaries within the Ingenious Media
Holdings plc group of companies (the "Ingenious Group"), which is controlled by
Patrick McKenna.
Ingenious Ventures (the "Manager"), as per the management agreement, receives a
management fee of 0.5% of the net asset value payable quarterly in advance. The
Manager also charges an administration fee of GBP19k per annum and irrecoverable
VAT.
b) The funds invested in OEICs are managed by Ingenious Asset Management
Limited, a company of which Patrick McKenna is a director. Ingenious Asset
Management Limited is a wholly-owned subsidiary of the Ingenious Group, which is
controlled by Patrick McKenna. There is no fee associated with this transaction.
During the period the Company has entered into transactions with the
above-mentioned related parties in the normal course of business and on an arm's
length basis:
+------------------+--------+---------+---------+----------+---------+---------+----------+
| | | Expenditure Paid | Amounts Due |
+------------------+--------+------------------------------+------------------------------+
| Entity | Note | 30 | 30 | 31 | 30 | 30 | 31 |
| | | June | June | December | June | June | December |
| | | 2010 | 2009 | 2009 | 2010 | 2009 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+--------+---------+---------+----------+---------+---------+----------+
| Ingenious Asset | | | | | | |
| Management Limited | | | | | | |
+---------------------------+---------+---------+----------+---------+---------+----------+
| Investment | a | 90 | 88 | 178 | - | - | - |
| management fee | | | | | | | |
+------------------+--------+---------+---------+----------+---------+---------+----------+
| Administration | a | 10 | 9 | 18 | - | - | - |
| fee | | | | | | | |
+------------------+--------+---------+---------+----------+---------+---------+----------+
| Irrecoverable | a | - | 10 | 8 | 4 | 10 | 3 |
| VAT | | | | | | | |
+------------------+--------+---------+---------+----------+---------+---------+----------+
Transactions between Related Parties
Ingenious Media Consulting Limited, a company which is a wholly-owned subsidiary
in the Ingenious Group, which is controlled by Patrick McKenna, has entered into
consultancy agreements with each of the Company's investee companies to provide
management services. For the provision of such services, consulting fees
totalling GBP110k excluding VAT (31 December 2009: GBP242k; 30 June 2009:
GBP108k), have been invoiced in the period, no amounts remain outstanding as at
30 June 2010 (31 December 2009: GBP39k; 30 June 2009: GBP8k).
6. Comparative Information
The unaudited half-yearly financial report for the period ended 30 June 2010
does not constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006 and has not been delivered to the Registrar of Companies.
The Company's statutory financial statements for the year ended 31 December 2009
have been delivered to the Registrar of Companies. The auditor's report on those
financial statements was unqualified and did not contain statements under
Section 498 (2) or section 498 (3) of the Companies Act 2006.
7. Availability of the Half-Yearly Financial Report
Copies of the half-yearly financial report are being sent or made available
electronically to all Shareholders. Further copies can be downloaded from the
Company's website: www.ingeniousvcts.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUUGRUPUGAB
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