TIDMIE1C
INGENIOUS ENTERTAINMENT VCT 1 PLC
23 August 2011
Half-yearly results for the six months to 30 June 2011
INTERIM MANAGEMENT REPORT
We are delighted to present the half-yearly financial report of
Ingenious Entertainment VCT 1 plc (the Company) covering the six
months ended 30 June 2011 (the Reporting Period).
Overview of Activities
The Company continues to actively source and review investment
opportunities. Two investments were made during the Reporting
Period across the C Share and D Share classes. The first of these
supported two new music festivals based in Bristol (We, The People
- June 2011) and Brighton (Shakedown - September 2011), while the
second investment backs a new sporting event, Titans of Cricket,
which will take place in October 2011. These were the first deals
entered into through a co-investment of the funds raised by both
the C Shares and the D Shares.
The Company has now completed the investment strategy for its
Ordinary Share class and is fully invested under VCT regulations in
respect of these shares. The management team will now focus upon
maximising the returns from the investments made.
Fund Raising
In October 2010, the Ingenious Entertainment VCTs launched the E
and F Share offers for subscription. When the fundraising closed on
29 July 2011, a combined total of GBP8.8m across Entertainment VCT
1 and Entertainment VCT 2 had been raised. The Ingenious
Entertainment VCTs have now raised in excess of GBP48 million
through all share classes.
Results
The Ordinary Shares, C Shares, D Shares, E Shares and F Shares
are accounted for as separate pools of funds necessitating separate
reporting.
The Ordinary Shares made a loss on ordinary activities of
GBP106,000 (31 December 2010: GBP105,000, 30 June 2010:
GBP111,000). The C Shares made a loss of GBP34,000 (31 December
2010: GBP66,000, 30 June 2010: GBP34,000). The D Shares made a loss
of GBP64,000 (31 December 2010: GBP163,000, 30 June 2010:
GBP95,000). The E Shares made a loss of GBP44,000 (31 December
2010: GBPNil, 30 June 2010: GBPNil). The F Shares made a loss of
GBP22,000 (31 December 2010: GBPNil, 30 June 2010: GBPNil).
The net asset value per Ordinary Share is 81.6 pence (31
December 2010: 87.6 pence; 30 June 2010: 87.5 pence) although this
is after the deduction of the interim dividend of 5.0 pence per
share in the Reporting Period and the deduction of a 5.0 pence per
share interim dividend in the 6 months to 30 June 2010.
The net asset value per C Share is 78.2 pence (31 December 2010:
84.4 pence; 30 June 2010: 85.6 pence) although this is after the
deduction of the interim dividend of 5.0 pence per share in the
Reporting Period and the deduction of a 5.0 pence per share interim
dividend in the 6 months to 30 June 2010.
The net asset value per D Share is 91.9 pence (31 December 2010:
92.9 pence; 30 June 2010: 93.6 pence).
The net asset value per E Share is 94.0 pence (31 December 2010:
Nil pence; 30 June 2010: Nil pence).
The net asset value per F Share is 94.1 pence (31 December 2010:
Nil pence; 30 June 2010: Nil pence).
Investment Objective
The Company's main objective is to invest in companies
established to create and bring to market live events and premium
entertainment content which will provide shareholders with an
attractive return. This strategy will aim to maximise the
opportunities for making tax-free dividends to shareholders from
both the actual income received and capital profits on the sale of
the Investee Companies or their assets.
Festivals
Rewind Festival & Rewind North
Entertainment VCT 1 Investment amount (Rewind Festival):
GBP272,598
(GBP545,196 across the Ingenious Entertainment VCTs)
(GBP693,196 across the Ingenious Live VCTs)
Entertainment VCT 1 Investment amount (Rewind North):
GBP500,000
(GBP1,000,000 across the Ingenious Entertainment VCTs)
In December 2008, the Company, alongside The Rival Organisation,
co-promoted Rewind Festival, a two-day music event in
Henley-Upon-Thames. The 2010 event held in August experienced an
impressive increase in both attendance figures and, consequently,
profitability with a total audience of over 35,000 across both
days. Highlights included performances by Boy George and Tony
Hadley.
This year's event was held between 19 and 21 August and was a
complete sell out (20,000 per day capacity). Highlights this year
included Village People and The Human League and we are delighted
that Rewind has very quickly established itself as the country's
leading celebration of 80s music.
The enormous success of Rewind in the South of England has given
rise to the opportunity to create a second festival and in October
2010, the Entertainment VCTs made a fresh investment in order to
co-promote Rewind North, which has taken place for the first time
between 29 and 31 July 2011 at Scone Palace in Perthshire,
Scotland. The event had a star studded line up including The Human
League and Tony Hadley among the twenty plus acts appearing across
the weekend. Tickets for this event have sold in a similar manner
to the pattern established by the Henley event in its first year
and we believe that this was a good opportunity to strengthen the
Rewind brand within the UK.
The brand creation strategy that the Manager very much focuses
upon is further underlined by the fact that in July 2011 a licence
was granted for a Rewind Festival to be held in Australia. This
event will take place in late October 2011.
London Electronic Dance Festival (L.E.D.)
Entertainment VCT 1 Investment amount: GBP500,000
(GBP1,000,000 across the Ingenious Entertainment VCTs)
In August 2010 the Ingenious Entertainment VCTs agreed to
co-promote the London Electronic Dance Festival (L.E.D.) in
partnership with AEG Live, Cream and Loudsound. This year the event
hosted performances by some of the world's top dance acts including
Deadmau5, Calvin Harris, Zane Lowe and many more.
This year's show attracted over 23,000 people and generated a
profit in excess of GBP200,000. The promoters feel that the L.E.D.
brand is now very well positioned and has quickly established
itself as London's leading dance festival.
The Apple Cart Festival
Entertainment VCT 1 Investment amount: GBPNil
(GBPNil across the Ingenious Entertainment VCTs)
In June 2010 an investment of GBP250,000 was made into a new
arts based event called The Apple Cart Festival. In light of
certain creative differences between the promoters, it was
ultimately decided not to back the 2011 event and these funds have
now been returned to the VCTs.
We, The People & Shakedown Festivals
Entertainment VCT 1 Investment amount: GBP750,000
(GBP1,500,000 across the Ingenious Entertainment VCTs)
In February 2011 the Ingenious Entertainment VCTs invested
GBP1,500,000 in Venn Music Limited to stage and promote two new
music festivals. These innovative events are managed by Venn
director Matt Priest, who worked as an executive at Radio One for
10 years.
The first Venn festival, We, The People, took place in the
centre of Bristol on 4 and 5 June 2011 and attracted nearly 15,000
attendees over the two days. The headliners included popular dance
acts Chase and Status and a final farewell performance from The
Streets as well as many other leading artists and local
favourites.
Shakedown festival will be taking place on 17 September in
Brighton. The event aims to sell around 10,000 tickets in its first
year. The show will play host to performances by Razorlight and
Example as well as many other popular acts.
The Manager is confident these events have the potential to
establish themselves a place in the festival calendar. Each event
has strong local partners and takes place in an area where there
are currently very few direct competitors.
Exhibitions
Golf Live
Entertainment VCT 1 Investment amount: GBP275,000
(GBP550,000 across the Ingenious Entertainment VCTs)
(GBP550,000 across the Ingenious Live VCTs)
Golf Live is a three day interactive golf event which was staged
at The London Golf Club between 18 and 20 May 2011. IMG, managers
to a large number of leading golfers, has also invested into the
event. The long term aim is to roll the event out to further
prestigious golf courses around the world and it has already
attracted sponsorship partners of the quality of O2, Jaguar,
Turkish Airlines and the European Golf Tour. The event represents a
highly creative way of bringing the sports and exhibition markets
closely together.
In 2011 Golf Live was hosted by last year's Ryder Cup captain,
Colin Montgomerie, alongside many other stars from within the world
of golf. The event was extremely well received by both the
corporate partners as well as the paying public and its audience
satisfaction rating was the highest that Brand Events had ever
received for one of their events.
The partners were delighted with the financial performance of
the event in year two in which it broke even and they feel very
confident that Golf Live is poised to move into profitability for
2012. The anticipated international roll-out of the brand is also
likely to commence next year.
Titans of Cricket
Entertainment VCT 1 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In June 2011 an investment of GBP2,000,000 was made by the
Ingenious Entertainment VCTs into This Is Cricket Limited to
promote a new sports event, Titans of Cricket, to be held in the
Autumn of 2011.
Titans of Cricket takes the best of Twenty20, the Indian Premier
League and World Cup Cricket and combines them in a new show that
demonstrates the skills of some of the world's top cricketing stars
both past and present including Freddie Flintoff and Virender
Sehwag. The first events will take place at the MEN Arena in
Manchester, the NIA in Birmingham and the O2 in London in October
2011.
The event has taken the old rivalries of cricket and has formed
four teams (India, Pakistan, Australia and England) comprised of
some of each country's top talent. The teams will be set against
each other in a series of challenges through which a winner will
eventually be crowned. The event has already received a lot of
interest in the national media and press and the Manager feels that
the format is one that will prove extremely popular in the longer
term.
Live Venues
XOYO
Entertainment VCT 1 Investment amount: GBP400,000
(GBP800,000 across the Ingenious Entertainment VCTs)
In March 2010, an investment of GBP400,000 was made with
Assorted Works Limited to open a new live venue in Shoreditch, East
London. XOYO is a 900 capacity live entertainment venue split over
two floors. It programs, books and promotes an exciting range of
live music, club nights, visual art and other creative media
events. XOYO has a prime location in Shoreditch, the hub of
London's music, art and party scene. Recent events include
performances by chart stars such as Jessie J and The Ting
Tings.
Since its opening in late 2010, the venue has had extremely
positive cash flow and attendance figures. The partners are
extremely pleased with the progress of the venue and plan to extend
its daytime activities to allow the venue to act as a pop-up
gallery space displaying a range of contemporary art. It is also
hoped that the success of the first venue will lead to an extension
of the XOYO brand in due course.
Jetstream Live Events
Entertainment VCT 1 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
(GBP2,000,000 across the Ingenious Live VCTs)
In December 2010, Ingenious Entertainment VCTs agreed with the
directors of Apollo Resorts and Leisure Limited to invest further
funding into Jetstream Events Limited to co-promote potential new
projects in similar 'seaside' opportunities such as the Live VCTs'
co-promotion of the Scarborough Open Air Theatre. There are a
number of potential ventures that are currently under discussion in
venues such as Yarmouth, Blackpool, Brighton, as well as a variety
of 2012 Olympics based opportunities.
Our partner in the venture, the Apollo Group, have many years of
experience in the live entertainment sector and have already proved
the success of the Scarborough Open Air Theatre, hosting sell out
shows from stars such as Elton John, Dame Kiri Te Kanawa, and José
Carreras.
Jongleurs Comedy Live
Entertainment VCT 1 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In October 2010 an investment of GBP1,000,000 was made into
Jongleurs Comedy Live Limited to promote a variety of comedy
events.
In June 2011 it was agreed that the partners had differing views
as to the direction of the company and an agreement was entered
into that will ultimately see the Ingenious Entertainment VCTs
withdraw from the investment with the original capital fully
returned to them.
Television Format and Distribution
Let's Dance
Entertainment VCT 1 Investment amount: GBP500,000
(GBP1,000,000 across the Ingenious Entertainment VCTs)
(GBP1,000,000 across the Ingenious Live VCTs)
In January 2009, GBP2,000,000 was invested across both the Live
and Entertainment VCTs to back the television dance format Let's
Dance. This was the second co-investment between the Ingenious Live
and Entertainment VCTs.
For the past three years BBC One has commissioned Whizz Kid
Entertainment to produce this hugely popular celebrity-led series
for both Comic Relief and Sports Relief. In 2011 the programme was
aired to over 8.3 million viewers and enjoyed the prime time
Saturday night slot on BBC One. Following the ratings success of
the UK series, the Let's Dance format has been sold and aired in a
number of different countries including Germany, the Netherlands,
Sweden, Russia, Slovakia and Indonesia.
The series has also been re-commissioned for a fourth UK series
to be aired in 2012 and, as a result of this success, the
international sales agents for both the US (William Morris) and the
Rest of the World (Fremantle) are continuing to push forward with
the international sale of the format. Our financial forecasts show
that the format revenues already generated will at least cover the
investment made and the Manager fully expects that there will be
some significant upside in the investment in future years.
Digital Rights Group
Entertainment VCT 1 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In June 2009, the Ingenious Entertainment VCTs agreed with
independent television distributor Digital Rights Group Limited
(DRG) to jointly acquire, market and distribute a series of
television programmes.
DRG is the leading independent distributor of content in the UK
with various brands in the DRG Group supporting all genres from
drama to reality and formats to entertainment. DRG has worked on
shows as diverse as The Inbetweeners, Kingdom starring Stephen Fry,
the Martin Clunes drama Doc Martin, Australian series Sea Patrol, a
wide variety of children's programmes and factual documentaries.
The investment has generated a small positive return for the
Company.
SuperVision
Entertainment VCT 1 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In August 2010, an investment was made in SuperVision Media to
co-promote and co-distribute alternative content. SuperVision is
one of the leading owners and distributors of alternative content
for cinemas around the globe in both the sport and entertainment
fields. Their aim is to provide people with experiences that are
the next best thing to being at the event whilst screening live,
uninterrupted content mainly in 3D format, accompanied by surround
sound.
In July 2010 SuperVision distributed the Football World Cup in
3D and was also very involved in the screening of Wimbledon 2011 in
cinemas both in the UK and internationally. The company has more
recently secured the exclusive rights to screen Michael Flatley's
Lord of The Dance in 3D, which was screened in major cinema chains
across the US, UK, and Europe in March 2011.
Saturn Explosion
Entertainment VCT 1 Investment amount: GBP1,000,000
(GBP2,000,000 across Ingenious Entertainment VCTs)
In December 2010, Ingenious Entertainment VCTs agreed with the
directors of SuperVision Media to form a new company, Saturn
Explosion Limited, to carry on the trade of the production,
promotion and exploitation of alternative digital content
(including but not limited to event based entertainment and sport
content such as music concerts, festivals, theatrical productions
and live sporting events) across a range of media including
television and cinema.
The purpose of this funding was to acquire content that could be
exploited across the various platforms but whereby any investment
would be underpinned by minimum revenues through third party
advances from distributors as well as potential payments by
sponsorship partners wishing to be connected with the content.
Outlook
The economic environment continues to display challenges for the
Company as a whole, however the Manager is extremely pleased to
report that its current portfolio is proving highly robust in the
current climate. We remain confident that we are developing a
number of brands that have strong international potential and which
will create significant asset values in addition to ongoing annual
trading profits.
Some of these event opportunities will take time to develop, but
we firmly believe that the Company will deliver strong shareholder
value within each five year investment cycle.
It appears that the industry's expectations in relation to the
pace of consumers' migration to the new digital platform are
progressing well ahead of what was originally expected. Changing
consumer behaviour is impacting on all segments of the
entertainment and media industry, and as a result the Company's
search for revenue positioning in the digital value chain is
extremely important. We are also expanding our remit to include
more sporting events such as Golf Live and Titans of Cricket as we
see this as another area where consumer engagement is particularly
strong at present.
The Manager's focus remains very firmly upon ensuring that each
investment is carefully sourced and structured in order to balance
potential upside against capital risk. We believe that the
investment portfolio already sourced readily supports that the
Company is already well advanced in achieving this requirement. In
addition, we believe that the Company's strategy, which aims to
successfully balance equity risk with a strong level of downside
protection through minimum revenue arrangements of at least 75% in
respect of each investment, is perfectly suited to the current
economic environment whereby shareholders are very much focused
upon capital preservation.
Ingenious Ventures
23 August 2011
For further information, please visit: www.ingeniousvcts.co.uk
or contact:
Ingenious Ventures
Paul Bedford
020 7319 4000
CONDENSED INCOME STATEMENT (UNAUDITED)
for the six months ended 30 June 2011
Six months ended Six months ended Year ended
30 June 2011 30 June 2010 31 December 2010
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain - 32 32 - 105 105 - 211 211
on
disposal
of
investments
Decrease - (132) (132) - (177) (177) - (244) (244)
in
fair
value
of
investments
held
Investment 128 - 128 98 - 98 208 - 208
income
Arrangement (47) - (47) (64) - (64) (74) - (74)
fees
Investment (83) (83) (166) (64) (64) (128) (140) (140) (280)
management
fees
Other (85) - (85) (74) - (74) (155) - (155)
expenses
Loss (87) (183) (270) (104) (136) (240) (161) (173) (334)
on
ordinary
activities
before
taxation
Tax - - - - - - - - -
on
ordinary
activities
Loss (87) (183) (270) (104) (136) (240) (161) (173) (334)
attributable
to
equity
shareholders
Basic
and
diluted
return
per
share
(pence)
Ordinary 2 0.4 (1.4) (1.0) 0.1 (1.2) (1.1) 0.3 (1.3) (1.0)
Share
C 2 (0.6) (0.6) (1.2) (1.0) (0.2) (1.2) (1.8) (0.5) (2.3)
Share
D 2 (0.7) (0.2) (0.9) (3.0) (0.3) (3.3) (3.0) (0.4) (3.4)
Share
E 2 (2.9) (0.2) (3.1) - - - - - -
Share
F 2 (3.0) 0.3 (2.7) - - - - - -
Share
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement of all Share Classes
for the period. The supplementary capital and revenue columns are
prepared following guidance published by the Association of
Investment Companies (AIC).
The accompanying notes form an integral part of these financial
statements.
The Company had no E and F Shares in issue at 31 December 2010
or 30 June 2010.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E
AND F SHARE FUNDS
CONDENSED INCOME STATEMENT (UNAUDITED)
for the six months ended 30 June 2011
Ordinary Shares C Shares D Shares
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain - 20 20 - 7 7 - 5 5
on disposal
of investments
Increase/(decrease) - (131) (131) - (15) (15) - 7 7
in fair
value
of investments
held
Investment 113 - 113 10 - 10 5 - 5
income
Arrangement - - - - - - - - -
fees
Investment (38) (38) (76) (10) (10) (20) (27) (27) (54)
management
fees
Other (32) - (32) (16) - (16) (27) - (27)
expenses
Profit/(loss) 43 (149) (106) (16) (18) (34) (49) (15) (64)
on ordinary
activities
before
taxation
Tax - - - - - - - - -
on ordinary
activities
Profit/(loss) 43 (149) (106) (16) (18) (34) (49) (15) (64)
attributable
to
equity
shareholders
Basic and 0.4 (1.4) (1.0) (0.6) (0.6) (1.2) (0.7) (0.2) (0.9)
diluted
return
per share
(pence)
E Shares F Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - - - - - -
of investments
Increase in - 2 2 - 5 5
fair value
of investments held
Investment income - - - - - -
Arrangement fees (30) - (30) (17) - (17)
Investment management (5) (5) (10) (3) (3) (6)
fees
Other expenses (6) - (6) (4) - (4)
Profit/(loss) (41) (3) (44) (24) 2 (22)
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit/(loss) (41) (3) (44) (24) 2 (22)
attributable
to
equity shareholders
Basic and diluted (2.9) (0.2) (3.1) (3.0) 0.3 (2.7)
return
per share (pence)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share Class for the
period. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E
AND F SHARE FUNDS
CONDENSED INCOME STATEMENT (UNAUDITED)
for the six months ended 30 June 2010
Ordinary Shares C Shares D Shares
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain - 102 102 - 3 3 - - -
on disposal
of investments
Increase/(decrease) - (183) (183) - 3 3 - 3 3
in fair
value
of investments
held
Investment 98 - 98 - - - - - -
income
Arrangement - - - - - - (64) - (64)
fees
Investment (42) (42) (84) (11) (11) (22) (11) (11) (22)
management
fees
Other (44) - (44) (18) - (18) (12) - (12)
expenses
Profit/(loss) 12 (123) (111) (29) (5) (34) (87) (8) (95)
on ordinary
activities
before
taxation
Tax - - - - - - - - -
on ordinary
activities
Profit/(loss) 12 (123) (111) (29) (5) (34) (87) (8) (95)
attributable
to
equity
shareholders
Basic and 0.1 (1.2) (1.1) (1.0) (0.2) (1.2) (3.0) (0.3) (3.3)
diluted
return
per share
(pence)
E Shares F Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - - - - - -
of investments
Increase in - - - - - -
fair value
of investments held
Investment income - - - - - -
Arrangement fees - - - - - -
Investment management - - - - - -
fees
Other expenses - - - - - -
Profit on ordinary - - - - - -
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit attributable - - - - - -
to
equity shareholders
Basic and diluted - - - - - -
return
per share (pence)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share Class for the
period. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
The Company had no E and F Shares in issue at 30 June 2010.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E
AND F SHARE FUNDS
CONDENSED INCOME STATEMENT (UNAUDITED)
for the year ended 31 December 2010
Ordinary Shares C Shares D Shares
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain - 202 202 - 7 7 - 2 2
on disposal
of investments
Increase/(decrease) - (260) (260) - (1) (1) - 17 17
in fair
value
of investments
held
Investment 203 - 203 5 - 5 - - -
income
Arrangement - - - - - - (74) - (74)
fees
Investment (81) (81) (162) (22) (22) (44) (37) (37) (74)
management
fees
Other (88) - (88) (33) - (33) (34) - (34)
expenses
Profit/(loss) 34 (139) (105) (50) (16) (66) (145) (18) (163)
on ordinary
activities
before
taxation
Tax - - - - - - - - -
on ordinary
activities
Profit/(loss) 34 (139) (105) (50) (16) (66) (145) (18) (163)
attributable
to
equity
shareholders
Basic and 0.3 (1.3) (1.0) (1.8) (0.5) (2.3) (3.0) (0.4) (3.4)
diluted
return
per share
(pence)
E Shares F Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - - - - - -
of investments
Increase in - - - - - -
fair value
of investments held
Investment income - - - - - -
Arrangement fees - - - - - -
Investment management - - - - - -
fees
Other expenses - - - - - -
Profit on ordinary - - - - - -
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit attributable - - - - - -
to
equity shareholders
Basic and diluted - - - - - -
return
per share (pence)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share Class for the
period. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
The Company had no E and F Shares in issue at 31 December
2010.
CONDENSED BALANCE SHEET (UNAUDITED)
as at 30 June 2011
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Fixed assets
Qualifying investments 9,295 2,572 7,670
Current assets
Debtors 60 46 81
Non-qualifying investments 3 11,009 13,282 9,753
Cash at bank and in hand 360 958 149
11,429 14,286 9,983
Creditors: amounts falling (40) (39) (84)
due within one year
Net current assets 11,389 14,247 9,899
Net assets 20,684 16,819 17,569
Capital and reserves
Called-up share capital 240 189 198
Share premium account 3,994 5,516 6,351
Other reserve account 17,315 11,615 11,615
Capital reserve (171) 49 12
Revenue reserve (694) (550) (607)
Shareholders' funds 20,684 16,819 17,569
Net asset value per 4 81.6 87.5 87.6
Ordinary Share
Net asset value per C Share 4 78.2 85.6 84.4
Net asset value per D Share 4 91.9 93.6 92.9
Net asset value per E Share 4 94.0 - -
Net asset value per F Share 4 94.1 - -
The accompanying notes form an integral part of these financial
statements.
The condensed set of financial statements were approved by the
Board of Directors on 22 August 2011 and signed on its behalf
by:
Patrick McKenna
Director
Company Registration Number: 6395011 (England & Wales)
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E
AND F SHARE FUNDS
CONDENSED BALANCE SHEET (UNAUDITED)
As at 30 June 2011 (unaudited)
Ordinary C D E F
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed
assets
Qualifying 6,600 1,370 1,325 - -
investments
Current
assets
Debtors 60 - - - -
Non-qualifying 1,628 682 4,766 2,529 1,404
investments
Cash at bank 58 150 110 24 18
and in hand
1,746 832 4,876 2,553 1,422
Creditors: amounts falling (22) (4) (9) (3) (2)
due within one year
Net current 1,724 828 4,867 2,550 1,420
assets
Net 8,324 2,198 6,192 2,550 1,420
assets
Capital and
reserves
Called-up share 102 28 68 27 15
capital
Share premium - - - 2,567 1,427
account
Other reserve 8,611 2,353 6,351 - -
account
Capital (97) (40) (33) (3) 2
reserve
Revenue (292) (143) (194) (41) (24)
reserve
Shareholders' 8,324 2,198 6,192 2,550 1,420
funds
Net asset value (pence 81.6 78.2 91.9 94.0 94.1
per share)
As at 30 June 2010 (unaudited)
Ordinary C D E F
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed
assets
Qualifying 2,460 112 - - -
investments
Current
assets
Debtors 46 - - - -
Non-qualifying 5,741 2,109 5,432 - -
investments
Cash at bank 711 192 55 - -
and in hand
6,498 2,301 5,487 - -
Creditors: amounts falling (24) (8) (7) - -
due within one year
Net current 6,474 2,293 5,480 - -
assets
Net 8,934 2,405 5,480 - -
assets
Capital and
reserves
Called-up share 102 28 59 - -
capital
Share premium - - 5,516 - -
account
Other reserve 9,121 2,494 - - -
account
Capital 68 (11) (8) - -
reserve
Revenue (357) (106) (87) - -
reserve
Shareholders' 8,934 2,405 5,480 - -
funds
Net asset value (pence 87.5 85.6 93.6 - -
per share)
The Company had no E or F Shares in issue in the period to 30
June 2010.
As at 31 December 2010 (audited)
Ordinary C D E F
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed
assets
Qualifying 6,698 972 - - -
investments
Current
assets
Debtors 59 - 22 - -
Non-qualifying 2,135 1,369 6,249 - -
investments
Cash at bank 73 35 41 - -
and in hand
2,267 1,404 6,312 - -
Creditors: amounts falling (25) (3) (56) - -
due within one year
Net current 2,242 1,401 6,256 - -
assets
Net 8,940 2,373 6,256 - -
assets
Capital and
reserves
Called-up share 102 28 68 - -
capital
Share premium - - 6,351 - -
account
Other reserve 9,121 2,494 - - -
account
Capital 52 (22) (18) - -
reserve
Revenue (335) (127) (145) - -
reserve
Shareholders' 8,940 2,373 6,256 - -
funds
Net asset value (pence 87.6 84.4 92.9 - -
per share)
The Company had no E or F Shares in issue in the period to 31
December 2010.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(UNAUDITED)
as at 30 June 2011
Six months ended Six months ended Year ended
30 June 30 June 2010 31 December 2010
2011 (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Opening 17,569 12,135 12,135
shareholders'
funds
Capital 4,221 5,831 6,714
subscribed
Issue costs (185) (256) (295)
Dividends (651) (651) (651)
Loss for the (270) (240) (334)
period
Closing 20,684 16,819 17,569
shareholders'
funds
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E
AND F SHARE FUNDS
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(UNAUDITED)
as at 30 June 2011
Ordinary C Shares D Shares E Shares F Shares
Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening 8,940 2,373 6,256 - -
shareholders'
funds
Capital - - - 2,713 1,508
subscribed
Issue costs - - - (119) (66)
Dividends (510) (141) - - -
Loss for the (106) (34) (64) (44) (22)
period
Closing 8,324 2,198 6,192 2,550 1,420
shareholders'
funds
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E
AND F SHARE FUNDS
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(UNAUDITED)
as at 30 June 2010
Ordinary C Shares D Shares E Shares F Shares
Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening 9,555 2,580 - - -
shareholders'
funds
Capital - - 5,831 - -
subscribed
Issue costs - - (256) - -
Dividends (510) (141) - - -
Loss for the (111) (34) (95) - -
period
Closing 8,934 2,405 5,480 - -
shareholders'
funds
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE ORDINARY, C, D, E
AND F SHARE FUNDS
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(UNAUDITED)
as at 31 December 2010
Ordinary C Shares D Shares E Shares F Shares
Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening 9,555 2,580 - - -
shareholders'
funds
Capital - - 6,714 - -
subscribed
Issue costs - - (295) - -
Dividends (510) (141) - - -
Loss for the (105) (66) (163) - -
period
Closing 8,940 2,373 6,256 - -
shareholders'
funds
CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 30 June 2011
30 June 2011 30 June 2010 31 December 2010
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net cash outflow from (289) (179) (290)
operating activities
Financial investment
Purchase of qualifying (1,625) (524) (5,525)
investments
Net cash outflow from (1,625) (524) (5,525)
financial investment
Management of liquid
resources
Purchase (3,926) (5,430) (9,661)
of non-qualifying
investments
Disposal 2,666 2,098 9,788
of non-qualifying
investments
Net (1,260) (3,332) 127
cash (outflow)/inflow
from liquid resources
Financing
Dividends (651) (651) (651)
Issue of shares 4,221 5,831 6,714
Expenses of the issue (185) (256) (295)
of shares
Net cash inflow 3,385 4,924 5,768
from financing
Increase in cash 211 889 80
Reconciliation of loss
before taxation to
net cash flow from
operating
activities
GBP'000 GBP'000 GBP'000
Loss on ordinary (270) (240) (334)
activities
before tax
Decrease in fair value 132 177 244
of investments held
Investment income (128) (98) (192)
Decrease/(increase) 21 (15) (50)
in receivables
(Decrease)/increase (44) (3) 42
in payables
Net cash outflow from (289) (179) (290)
operating activities
Reconciliation of
net cash flow
to movement in net funds
GBP'000 GBP'000 GBP'000
Opening cash balances 149 69 69
Net cash inflow 211 889 80
Closing cash balances 360 958 149
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
for the six months ended 30 June 2011
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 2010.
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.
International Private Equity and Venture Capital Valuation
Guidelines
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 or
entertainment content 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
will invest (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 or entertainment
content 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 which 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 premiums. Where those loan note premiums are charged in
lieu of higher interest then they should be 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 it is
declared by the Investee Companies.
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.
-- The management fee has been allocated 50% to revenue and 50% to
capital, which represents the split of the Company's long term
returns.
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.
g) Ordinary Shares, C Shares, D Shares, E Shares and F
Shares
The Company has five classes of shares; Ordinary Shares, C
Shares, D Shares, E Shares and F Shares. Each share class has a
separate pool of income and expenses as well as assets and
liabilities attributable to it. All Share classes rank pari passu
with each other in terms of voting and other rights.
2. Basic and Diluted Return per Share
The calculation of basic return per Ordinary Share is based on
the return on ordinary activities after tax for the period and on a
weighted average of 10,205,011 Ordinary Shares in issue for the six
months ended 30 June 2011 (31 December 2010: 10,205,011; 30 June
2010: 10,205,011). The basic return per C Share has been calculated
on a weighted average of 2,810,596 C Shares in issue for the six
months ended 30 June 2011 (31 December 2010: 2,810,596; 30 June
2010: 2,810,596). The basic return per D Share has been calculated
on a weighted average of 6,735,624 D Shares in issue for the six
months ended 30 June 2011 (31 December 2010: 4,773,028; 30 June
2010: 2,924,224). The basic return per E Share has been calculated
on a weighted average of 1,413,240 E Shares in issue for the six
months ended 30 June 2011 (31 December 2010: Nil; 30 June 2010:
Nil). The basic return per F Share has been calculated on a
weighted average of 802,213 F Shares in issue for the six months
ended 30 June 2011 (31 December 2010: Nil; 30 June 2010: Nil).
There are no dilutive potential Ordinary Shares, C Shares, D
Shares, E Shares or F Shares, including convertible instruments,
options or contingent share agreements in issue for the Company.
The basic return per share is therefore the same as the diluted
return per share.
In the prior year 6,785,624 D Shares were issued and allotted in
accordance with the terms of the relevant Prospectus of which
6,735,624 D Shares were fully paid at the period end.
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 Ordinary Share has been calculated based
on 10,205,011 Ordinary Shares being the number of Ordinary Shares
in issue as at 30 June 2011 (31 December 2010: 10,205,011; 30 June
2010: 10,205,011).
The net asset value per C Share has been calculated based on
2,810,596 C Shares being the number of C Shares in issue as at 30
June 2011 (31 December 2010: 2,810,596; 30 June 2010:
2,810,596).
The net asset value per D Share has been calculated based on
6,735,624 D Shares being the number of D Shares in issue as at 30
June 2011 (31 December 2010: 6,735,624; 30 June 2010:
5,852,814).
In the prior year 6,785,624 D Shares were issued and allotted in
accordance with the terms of the relevant Prospectus of which
6,735,624 D Shares were fully paid at the period end.
The net asset value per E Share has been calculated based on
2,712,935 E Shares being the number of E Shares in issue as at 30
June 2011 (31 December 2010: Nil; 30 June 2010: Nil).
The net asset value per F Share has been calculated based on
1,508,434 F Shares being the number of F Shares in issue as at 30
June 2011 (31 December 2010: Nil; 30 June 2010: Nil).
5. Related Party Transactions
a) The Company has appointed Ingenious Media Investments
Limited, a company of which Patrick McKenna is a director, to be
its promoter. Ingenious Media Investments Limited is a wholly owned
subsidiary within the Ingenious Media Holdings plc group of
companies (the Ingenious Group) which is controlled by Patrick
McKenna. The Company paid the promoter (Ingenious Media Investments
Limited) a fee of 5.5% of the gross proceeds of the offers for the
E Shares and the F Shares which was paid in consideration of the
service provided.
b) Ingenious Ventures Limited was the 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 subsidiaries within the Ingenious Group, which is
controlled by Patrick McKenna.
Ingenious Ventures (the Manager), as per the management
agreement, receives a management fee of 0.4375% of the net asset
value payable quarterly in advance (1.75% annualised). The Manager
also charges an administration fee of GBP71k per annum and
irrecoverable VAT.
c) 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 subsidiary of the
Ingenious Group, which is controlled by Patrick McKenna. There is
no fee associated with this transaction.
d) Patrick McKenna is a director and a shareholder of Ingenious
Entertainment VCT 2 plc. The Company and Ingenious Entertainment
VCT 2 plc have jointly agreed to form a new company, Venn Music
Limited, to co-promote a new festival called We, The People in
Bristol. In February 2011 the Company invested GBP750k for a total
of 15% of the equity in Venn Music Limited. Ingenious Entertainment
VCT 2 plc also invested GBP750k for 15% of the equity in Venn Music
Limited.
The investment of GBP750k in Venn Music Limited is the first
joint investment between the C Shares (GBP225k) and the D Shares
(GBP525k).
e) Patrick McKenna is a director and a shareholder of Ingenious
Entertainment VCT 2 plc. The Company and Ingenious Entertainment
VCT 2 plc have jointly agreed to form a new company, This Is
Cricket Limited, to co-promote a live cricket event in London
called Titans of Cricket. In June 2011 the Company invested
GBP1,000k for a total of 15% of the equity in This Is Cricket
Limited. Ingenious Entertainment VCT 2 plc also invested GBP1,000k
for 15% of the equity in This Is Cricket Limited.
The investment of GBP1,000k in This Is Cricket Limited is the
second joint investment between the C Shares (GBP200k) and the D
Shares (GBP800k).
f) Patrick McKenna is a director and a shareholder of Ingenious
Entertainment VCT 2 plc. In June 2011, an existing investee
company, The Apple Cart Festival Limited which promotes The Apple
Cart Festival, repaid GBP120,000 loan notes and equity to the
Company. This reduced the Company's total investment in The Apple
Cart Festival Limited, across the Ordinary Shares and C Shares to
nil. The Apple Cart Festival Limited also repaid GBP120,000 loan
notes and equity to Ingenious Entertainment VCT 2 plc reducing its
total investment in The Apple Cart Festival Limited to nil.
During the period the Company has carried out a number of
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 June 2011 30 June 2010 31 December 2010 30 June 2011 30 June 2010 31 December 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
Ingenious
Asset
Management
Limited
- b 166 128 280 - - -
Investment
management
fee
- b 32 23 53 - - -
Administration
fee
- b 2 1 - 2 2 3
Irrecoverable
VAT
Ingenious
Media
Investments
Limited
- a 232 320 369 - - -
Arrangement
fee
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 GBP68k excluding VAT (31 December 2010: GBP89k; 30 June
2010: GBP22k), have been invoiced for the period, GBP7k remains
outstanding as at 30 June 2011 (31 December 2010: GBPNil; 30 June
2010: GBPNil).
6. The unaudited half-yearly financial report for the period
ended 30 June 2011 has been properly prepared as defined in section
838(4) of the Companies Act 2006, for the purpose of the proposed
payment of a D Share dividend in August 2011. The half-yearly
financial report has been delivered to the Registrar of
Companies.
The Company's statutory financial statements for the year ended
31 December 2010 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. 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
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