TIDMIMAC
RNS Number : 2686Q
Ingenious Media Active Capital Ltd
30 July 2010
30 July 2010
INGENIOUS media active capital limited
Final results for the year 1 April 2009 to 31 March 2010
Ingenious Media Active Capital Limited today announces its final results for the
year from 1 April 2009 to 31 March 2010.
CHAIRMAN'S STATEMENT
I am pleased to present the fourth Annual Report and Accounts in respect of
Ingenious Media Active Capital Limited (the Company) for the year ended 31 March
2010.
The Company was admitted to trading on AIM in April 2006 with the business
objective to make equity or equity-related investments in media and
entertainment companies in order to achieve capital growth for its Shareholders.
At the time of the Company's admission in 2006, the economic environment
presented opportunities to invest in a broad range of 'mid-stage', high growth
companies within the media sector, in particular a new class of media companies,
which we termed 'progressive media' companies. Our investment strategy on
admission anticipated that substantially all the funds raised on admission would
be invested or committed for investment within two years. However, due to market
conditions, it has not been feasible to invest all of the funds while at the
same time achieving a long-term return target of more than 15 per cent. per
annum.
As has been well documented, there was a serious adverse change to global
economic conditions throughout 2008 and most of 2009. The impact of the
recession and the dramatic decline in bank financing have hit the media sector
hard, which was itself already facing the challenges of structural shifts caused
by digitalisation and fragmentation of existing revenue models. This offered
fewer investment opportunities as well as resulting in longer timeframes to exit
investments. The Board was also conscious of the increased challenges faced by
the investee companies as their businesses had to make rapid adjustments to meet
the new trading conditions brought about by the recession.
On the recommendation of the Manager, the Company took the positive decision to
make no new investments from the summer of 2008, anticipating the economic
turbulence and with the aim of preserving investors' cash in the Company until
economic conditions and the outlook for the media sector had improved. This
resulted in the Company having a significant cash reserve and one which, in the
Manager's opinion, was greater than the current portfolio required. Given that
the conditions for the media sector remain very challenging, the Manager advised
the Board that it was in the Shareholders' interests to distribute the majority
of the Company's cash balance while retaining sufficient working capital to
provide an adequate follow-on capability to support the investment potential of
the investee companies along with meeting the Company's operating costs. The
return of capital to Shareholders of GBP50,108,962 was made on 28 May 2010,
following approval at the EGM on 12 May 2010.
Although the Company will make no new investments (other than follow-on
investments to existing investee companies), the Manager will continue to
actively manage the existing investee companies and the Company will continue to
invest in these companies where appropriate. The Manager will seek exits for the
portfolio at the appropriate time.
At the same time, the terms of the Manager's investment management agreement
with the Company were varied, reducing the Manager's fee to 1.25 per cent. of
the Company's investment NAV. The carried interest base value was also reset at
the NAV as at 31 December 2009 (being GBP41,849,918 in total) and the term of
the appointment of the Manager was extended by a further three years so that it
expires no earlier than 11 April 2014 (rather than 11 April 2011). The Board
feels that these arrangements are appropriate given the revised size and
investment strategy of the Company.
Investments
In the year ended 31 March 2010, the Company made no new investments but has
provided additional funding to Brand Events Holdings Limited at a total cost of
GBP2.1 million. The Company has subsequently provided a further GBP0.5 million
of funding to QobliQ Limited for the acquisition of Fulford PR in May 2010. Two
further investments of GBP0.4million and GBP0.3million were made to Trinity
Universal Holdings Limited in April and June 2009, respectively.
This brings the total funds committed as at the date of this report to GBP94.7
million in 16 entities. The Company's net asset value per share as at 31 March
2010 was 62.64 pence, compared to 68.83 pence at 31 March 2009.
A description of the market and the Company's investment activities to date can
be found in the Manager's Review which follows this statement.
Realisation of Investments
On 15 July 2010 the assets of Stage Three Music Limited were sold to BMG Rights
Management GmbH, subject to competition authority clearance.
Outlook
The UK economy is starting to recover, although trading conditions in the media
sector remain challenging. Given this, the investee companies are performing
satisfactorily, and although significant challenges remain, I believe they are
positioned to benefit from any further recovery in economic conditions.
Mike Luckwell
Chairman
30 July 2010
MANAGER'S REVIEW
Market Review and Prospects
The UK economy is showing some signs of improvement, and the media sector is
clearly dependent on this recovery in the broader economy being sustainable.
There have been some encouraging signs, in particular with a number of recent
press reports suggesting that marketing spend is picking up in the UK, but
conditions remain tough for companies operating throughout this sector.
Investment Activity
In the year ended 31 March 2010, the Company made no new investments but has
provided additional funding to Brand Events Holdings Limited at a total cost of
GBP2.1 million. The Company has subsequently provided a further GBP0.5 million
of funding to QobliQ Limited for the acquisition of Fulford PR in May 2010. Two
further investments of GBP0.4million and GBP0.3million were made to Trinity
Universal Holdings Limited in April and June 2009, respectively.
This brings the total funds committed as at the date of this report to GBP94.7
million in 16 entities.
As mentioned in the Chairman's Statement above, the Manager is no longer making
investments in new investee companies, but will continue to manage the existing
investee companies including making additional investments in these companies
where appropriate.
For further information, please visit: www.imaclimited.com or
contact:
Ingenious Ventures, a trading division of the Manager to
IMAC
Patrick McKenna / Patrick Bradley
020 7319
4000
Canaccord Genuity Limited (Nomad to IMAC)
Mark Williams /
Bhavesh Patel
020 7050 6500
Investments and Committed Funds
It should be noted that all outstanding funding commitments are at the
discretion of the Company and the Manager.
Portfolio Management
This Manager's Review contains only subsidiaries in which IMAC has a controlling
interest. There are no further undrawn commitments to other investments held by
IMAC.
Whizz Kid Entertainment Limited
June 2006, GBP2.25 million
February 2008, GBP2.00 million
Whizz Kid Entertainment Limited is an independent TV production company formed
by Malcolm Gerrie, former Chief Executive and co-founder of Initial, which was
sold in 1992 to what became Endemol. Whizz Kid Entertainment Limited creates and
produces audio-visual content across a range of genres including music, events
and entertainment. The company is able to exploit opportunities in digital
content through its digital arm, Tough Cookie, and in advertiser-funded content
through its investment in Precious Media with Peter Christiansen.
While the market conditions for independent TV production companies, especially
smaller companies, remain extremely tough, Whizz Kid Entertainment Limited has
been enjoying some success. In particular, its show, Let's Dance for BBC1,
received good ratings and was re-commissioned for this year.
The company also strengthened its online credentials by winning the commission
to produce coverage of the U2 concert in LA in October 2009. This was streamed
live on YouTube and attracted an online audience of over 10 million.
Whizz Kid Entertainment Limited currently has a strong pipeline of projects in
development across music, events and entertainment, including a number of
co-productions with international partners.
Digital Rights Group Limited
December 2006, GBP3.00 million
June 2007, GBP3.00 million
November 2007, GBP5.27 million
Digital Rights Group Limited ("DRG") is a TV sales and rights distribution group
which provides TV producers with international distribution for their rights and
programmes, independently of the major broadcasters or other TV-producer-owned
distributors. DRG is now the largest independent TV distributor in the UK having
acquired the following companies: Portman Film & Television Group; Zeal
Entertainment; i-Rights and iD Distribution; and Channel 4 International
("C4i").
Market conditions have been tough, with broadcasters' reduced budgets having a
corresponding impact on new programming being commissioned. Despite this, DRG
has been successful in acquiring the rights to leading programming including Doc
Martin, Collision, Underbelly and Sea Patrol.
The company has also completed a white-label distribution deal with Ovation in
the US, and has recently launched a catalogue of 3D programming ("3DRG"). The
management team is continuing to work on operational synergies within the
business and is also examining new investment opportunities in both TV and
digital rights.
Outside Line Limited
March 2007, GBP1.50 million
Founded by Ant Cauchi and Lloyd Salmons in 2000, Outside Line Limited is a
digital marketing and creative agency. The company has grown since IMAC's
investment, expanding its service offering from the design and development of
websites and mobile applications into other disciplines including online PR,
social-media marketing, and blogger outreach. A content division has also been
established to provide filming, editing, audio and copywriting services.
Since 2007, Outside Line Limited has also successfully broadened its client base
from mainly entertainment clients (including The Beatles, Robbie Williams and
Sega Games) to also include other sectors, including leading consumer brands
such as Playstation, Adidas, Lynx and LG.
Two Way Media Holdings Limited
May 2007, GBP4.34 million
January 2009, GBP0.60 million
Two Way Media Limited, the trading company, is a UK-based interactive television
company which has transitioned itself from being a supplier of red-button
technology and professional services to UK cable operators and channels to being
a multiplatform interactive TV production and distribution company.
Subsequent to IMAC's investment, Two Way Media Limited established a
cross-platform gambling production company with the delivery of the Challenge
Jackpot gambling channel on TV/online in partnership with Virgin Media. This
joint venture was sold to NetPlay TV plc in April 2009.
Two Way Media Limited is already the largest supplier of this type of red-button
gaming and content to the UK cable platform. It has a strong pipeline of
opportunities both to supply similar red-button content to IPTV operators across
Europe as well as to develop branded casual games content both online and for
TV. ITV red-button voting has recommenced and is surpassing expectations. Two
Way Media Limited has also created games for mobile phones, social networks and
won several commissions to create applications for connected televisions.
Brand Events Holdings Limited
June 2007, GBP7.02 million
March 2010, GBP2.06 million
A leader in the consumer exhibitions market, Brand Events Limited, the trading
company, has established a strong reputation within the UK for successfully
launching new consumer shows. The company's established operating model borrows
skills and techniques from the entertainment, media and leisure sectors and
combines them with traditional exhibition skills. The company 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. An international network has been built allowing Brand Events Limited to
license or run the shows with joint venture partners in Australia, South Africa,
The Netherlands, New Zealand, Ireland and Dubai.
A further working capital injection of GBP2.06 million was agreed with
management in order to expand the Top Gear Live shows into new territories such
as Dubai, two Scandinavian countries and other major cities in Australasia. A
new Golf Live show was launched in May 2010, adding to the portfolio of shows
that can then be licensed internationally through Brand Events Limited's
network.
QobliQ Limited
December 2007, GBP7.50 million
May 2008, GBP2.30 million
November 2008, GBP2.77 million
May 2010, GBP0.50 million
QobliQ Limited was formed with the aim of creating the leading international
innovative marketing services group, combining sponsorship, digital and
experiential marketing to provide brands with an integrated innovative marketing
solution. The company is exploiting a structural shift in spend away from
traditional above-the-line advertising into innovative below-the-line marketing
activities which enable brands to engage with their target audience on a more
personal level, whilst typically delivering higher return on investment for the
advertisers. The management team of QobliQ Limited is led by Xavier
Quattrocchi-Oubradous and Roland Giscard d'Estaing, who founded SponsorClick
France SAS, a Paris-based sponsorship consultancy, and who both have backgrounds
in investment banking.
In December 2007, QobliQ Limited completed its first acquisition of brandRapport
Limited, an independent sponsorship agency in the UK. In May 2008, IMAC invested
a further GBP2.3 million in QobliQ Limited allowing the company to acquire
Paris-based experiential marketing agency, Nouveau Jour SAS, and SponsorClick
France SAS, an independent sponsorship marketing consultancy based in Paris.
IMAC invested an additional GBP2.8 million in November 2008 in order for the
company to acquire Arena International Limited and Arena Sports Marketing
Limited together, ("Arena"), a UK sponsorship consultancy specialising in
football. The acquisition of Arena, which has been re-branded brandRapport
Arena, extended brandRapport's already impressive track record into football
partnerships through its work with the Barclaycard Premiership and FA Cup
("E.ON").
The business is expected to grow in FY10/11 on the back of the recovery in
marketing spend. In addition, the management of the QobliQ group is currently
reviewing its acquisition strategy in view of reduced prices in the market, and
is working with the existing group companies to extract synergies and develop
new business opportunities.
A further investment of GBP0.5 million in QobliQ Limited was made in May 2010 to
fund the acquisition of Fulford PR agency in Singapore.
Review Centre Limited
June 2008, GBP7.03 million
Review Centre Limited (www.reviewcentre.com), a leading consumer-generated
review site, was acquired in June 2008 by IMAC in a management buy-in (MBI)
deal.
The MBI team was led by Nick Hynes as non-executive chairman and Glen Collins as
Chief Executive Officer. Nick Hynes was previously Chief Executive Officer of
The Search Works, the search engine marketing provider sold to Tradedoubler in
July 2007 for GBP56 million, and prior to that headed Overture Europe, Yahoo's
search advertising business. Glen Collins is a career online marketer who
founded and ran pioneering online marketing and web development agency Digital
Outlook, until exiting the business in 2006.
Review Centre was established in 1999 to allow internet users to post their
product reviews on online bulletin boards. It now provides reviews across a very
broad base of different products and services, encompassing automotive,
electrical, entertainment, finance, lifestyle, sport and travel. In 2002 it
switched its business model to pay-per-click advertising, significantly
enhancing revenues. The business has grown steadily, primarily due to an
expanding database of consumer reviews, a booming e-commerce market and
increased consumer interest in researching purchases online.
Since investment, the MBI team has pressed ahead with redesigning the website
and enhancing the user experience for both writing and reading reviews. The new
site build has allowed Review Centre to generate several new revenue streams.
These include price comparison, voucher codes and cash back revenues, display
advertising as well as the ability to deliver more targeted commercial deals.
Ingenious Ventures LP
IMAC's investment in Cream and Stage Three Music is via its Limited Partnership
interest in the Ingenious Ventures LP ("IVLP") fund. This interest was purchased
from UBS (Jersey) Limited in August 2008. Ingenious Media Limited remains the
other (minority) partner in the limited partnership. No monitoring fees are
charged by the Manager to IMAC for management of its interest in IVLP.
Cream Holdings Limited
August 2008, GBP1.03 million
Cream Holdings Limited is a live events company based around the Cream dance
brand and is run by James Barton. Its main activities are festivals in the UK
and licensed shows overseas. The company also operates club nights in both
Liverpool and Ibiza and a compilation record label.
Its best known event, Creamfields, is held in August every year. The 2009
festival was very successful, selling out in advance. Management believe that
this success can be replicated in 2010 as many of the factors driving the
performance of 2009's event, including a change of venue and a move to a two-day
format, will be continued. It is fully expected that tickets will again sell out
in advance of this year's two-day event.
Stage Three Music Limited
August 2008, GBP5.03 million
Stage Three Music Limited is an independent music publishing company which
acquires and exploits existing music catalogues as well as signing writers in
the creation of new copyright in songs. Since its inception it has acquired the
rights to Aerosmith, ZZ Top, Gerry Rafferty and many other songwriters. The
Chief Executive Officer, Steve Lewis, formerly led Virgin Music Publishing and
then Chrysalis Music Publishing.
Stage Three Music Limited is provided with acquisition debt by Bank of Ireland,
as well as co-investment equity from Apax Partners, who are currently the
majority shareholder in the company. The Mike Oldfield catalogue was
successfully acquired in January 2010.
The company has performed well in the current market conditions, with weak synch
revenue being offset by better than expected performance and mechanical revenue,
in particular from the Duffy, James Morrison and Take That albums.
Ingenious Ventures LP sold the assets of Stage Three Music Limited to BMG Rights
Management GmbH on 15 July 2010, subject to competition authority clearance.
Ingenious Ventures
30 July 2010
Company Statement of Comprehensive Income
for the year ended 31 March 2010
+-------------+--------+---------+----------+
| | | Year | Year |
| | | ended | ended |
| | | 31 | 31 |
| | | March | March |
| | | 2010 | 2009 |
+-------------+--------+---------+----------+
| | Note | GBP | GBP |
| | | '000 | '000 |
+-------------+--------+---------+----------+
| | | | |
+-------------+--------+---------+----------+
| Revenue | 1f | 277 | 432 |
+-------------+--------+---------+----------+
| Other | 1g | (1,361) | (1,311) |
| operating | | | |
| expenses | | | |
+-------------+--------+---------+----------+
| Investment | 1f | 341 | 2,758 |
| revenue | | | |
+-------------+--------+---------+----------+
| Losses | 1d | (6,476) | (32,332) |
| on | | | |
| investments | | | |
| at fair | | | |
| value | | | |
| through | | | |
| profit or | | | |
| loss | | | |
+-------------+--------+---------+----------+
| Gain | | 43 | - |
| on | | | |
| disposal | | | |
| of | | | |
| investment | | | |
+-------------+--------+---------+----------+
| Investment | 27 | (1,793) | (1,977) |
| management | | | |
| fees | | | |
+-------------+--------+---------+----------+
| | | | |
+-------------+--------+---------+----------+
| | | | |
+-------------+--------+---------+----------+
| Loss | 2 | (8,969) | (32,430) |
| before | | | |
| taxation | | | |
+-------------+--------+---------+----------+
| Income | 4 | - | - |
| tax | | | |
| expense | | | |
+-------------+--------+---------+----------+
| | | | |
+-------------+--------+---------+----------+
| Loss | | (8,969) | (32,430) |
| for | | | |
| the | | | |
| year | | | |
+-------------+--------+---------+----------+
| | | | |
+-------------+--------+---------+----------+
| Loss | 5 | (6.26) | (23.04) |
| per | | | |
| share | | | |
| (basic | | | |
| and | | | |
| diluted | | | |
| pence | | | |
| per | | | |
| share) | | | |
+-------------+--------+---------+----------+
All income is attributable to the Ordinary Shareholders of the Company unless
otherwise stated.
All revenue and expenses are derived from continuing operations unless otherwise
stated.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2010
+----------------+--------+----------+----------+
| | | Year | Year |
| | | ended | ended |
| | | 31 | 31 |
| | | March | March |
| | | 2010 | 2009 |
+----------------+--------+----------+----------+
| | Note | GBP | GBP |
| | | '000 | '000 |
+----------------+--------+----------+----------+
| | | | |
+----------------+--------+----------+----------+
| Continuing | | | |
| operations | | | |
+----------------+--------+----------+----------+
| Revenue | 1f | 44,274 | 46,590 |
+----------------+--------+----------+----------+
| Cost | 1g | (26,992) | (31,112) |
| of | | | |
| sales | | | |
+----------------+--------+----------+----------+
| Other | 1g | (20,433) | (22,254) |
| operating | | | |
| expenses | | | |
+----------------+--------+----------+----------+
| Investment | 1f | 369 | 3,517 |
| revenue | | | |
+----------------+--------+----------+----------+
| Income | | 1,275 | 740 |
| from | | | |
| associates | | | |
+----------------+--------+----------+----------+
| Gains/(losses) | 14 | 599 | (20,430) |
| on investments | | | |
| at fair value | | | |
| through profit | | | |
| or loss | | | |
+----------------+--------+----------+----------+
| Gain | | 43 | - |
| on | | | |
| disposal | | | |
| of | | | |
| investment | | | |
+----------------+--------+----------+----------+
| Impairment | 6 | (3,203) | (7,916) |
| of | | | |
| goodwill | | | |
+----------------+--------+----------+----------+
| Impairment | 7 | (1,904) | (1,693) |
| of | | | |
| intangible | | | |
| assets | | | |
+----------------+--------+----------+----------+
| Investment | 27 | (1,793) | (1,977) |
| management | | | |
| fees | | | |
+----------------+--------+----------+----------+
| Finance | | (640) | (222) |
| costs | | | |
+----------------+--------+----------+----------+
| | | | |
+----------------+--------+----------+----------+
| | | | |
+----------------+--------+----------+----------+
| Loss | 2 | (8,405) | (34,757) |
| before | | | |
| taxation | | | |
+----------------+--------+----------+----------+
| Income | 4 | (709) | (77) |
| tax | | | |
| expense | | | |
+----------------+--------+----------+----------+
| Loss | | (9,114) | (34,834) |
| for | | | |
| the | | | |
| year | | | |
| from | | | |
| continuing | | | |
| operations | | | |
+----------------+--------+----------+----------+
| Discontinued | | | |
| operations | | | |
+----------------+--------+----------+----------+
| Profit | 12,13 | 81 | 2,629 |
| for | | | |
| the | | | |
| year | | | |
| from | | | |
| discontinued | | | |
| operations | | | |
+----------------+--------+----------+----------+
| | | | |
+----------------+--------+----------+----------+
| Minority | 25 | (296) | 2,187 |
| interests | | | |
+----------------+--------+----------+----------+
| Loss | | (9,329) | (30,018) |
| for | | | |
| the | | | |
| year | | | |
+----------------+--------+----------+----------+
| | | | |
+----------------+--------+----------+----------+
| Loss | 5 | (6.58) | (24.74) |
| per | | | |
| share | | | |
| on | | | |
| continuing | | | |
| operations | | | |
| (basic and | | | |
| diluted | | | |
| pence per | | | |
| share) | | | |
+----------------+--------+----------+----------+
| Earnings | 5 | 0.06 | 1.87 |
| per | | | |
| share on | | | |
| discontinued | | | |
| operations | | | |
| (basic and | | | |
| diluted | | | |
| pence per | | | |
| share) | | | |
+----------------+--------+----------+----------+
| Loss | 5 | (6.52) | (22.87) |
| per | | | |
| share | | | |
| (basic | | | |
| and | | | |
| diluted | | | |
| pence | | | |
| per | | | |
| share) | | | |
+----------------+--------+----------+----------+
All income is attributable to the Ordinary Shareholders of the Company unless
otherwise stated.
All revenue and expenses are derived from continuing operations unless otherwise
stated.
Company Statement of Financial Position
as at 31 March 2010
+--------------------------------------+------+----------+----------+
| | | 31 March | 31 March |
| | | 2010 | 2009 |
+--------------------------------------+------+----------+----------+
| | Note | GBP '000 | GBP '000 |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| Non current assets | | | |
+--------------------------------------+------+----------+----------+
| Investment in subsidiaries | 9 | 32,898 | 38,416 |
+--------------------------------------+------+----------+----------+
| Financial assets at fair value | 14 | 1,109 | - |
| through profit or loss | | | |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| | | 34,007 | 38,416 |
+--------------------------------------+------+----------+----------+
| Current assets | | | |
+--------------------------------------+------+----------+----------+
| Trade and other receivables | 15 | 231 | 795 |
+--------------------------------------+------+----------+----------+
| Cash and cash equivalents | 16 | 55,768 | 60,460 |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| | | 55,999 | 61,255 |
+--------------------------------------+------+----------+----------+
| Current liabilities | | | |
+--------------------------------------+------+----------+----------+
| Trade and other payables | 17 | (325) | (1,129) |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| Net current assets | | 55,674 | 60,126 |
+--------------------------------------+------+----------+----------+
| Net assets | | 89,681 | 98,542 |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| Equity | | | |
+--------------------------------------+------+----------+----------+
| Share premium account | 22 | 71,275 | 71,275 |
+--------------------------------------+------+----------+----------+
| Distributable reserve | 23 | 70,663 | 70,663 |
+--------------------------------------+------+----------+----------+
| Shares held in treasury | 21 | (515) | (515) |
+--------------------------------------+------+----------+----------+
| Retained earnings | | (51,742) | (42,881) |
+--------------------------------------+------+----------+----------+
| Total equity | | 89,681 | 98,542 |
+--------------------------------------+------+----------+----------+
| | | | |
+--------------------------------------+------+----------+----------+
| Net asset value (basic and diluted | 24 | 62.64 | 68.83 |
| pence per share) | | | |
+--------------------------------------+------+----------+----------+
The financial statements were approved by the Board and authorised for issue on
30 July 2010.
Signed on behalf of the Board:
David Jeffreys
Serena Tremlett
Director
Director
Consolidated Statement of Financial Position
as at 31 March 2010
+---------------+--------+----------+----------+
| | | 31 | 31 |
| | | March | March |
| | | 2010 | 2009 |
+---------------+--------+----------+----------+
| | Note | GBP | GBP |
| | | '000 | '000 |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Non | | | |
| current | | | |
| assets | | | |
+---------------+--------+----------+----------+
| Goodwill | 6 | 13,930 | 18,197 |
+---------------+--------+----------+----------+
| Other | 7 | 8,662 | 9,099 |
| intangible | | | |
| assets | | | |
+---------------+--------+----------+----------+
| Fixtures, | 8 | 466 | 784 |
| fittings | | | |
| and | | | |
| equipment | | | |
+---------------+--------+----------+----------+
| Financial | 14 | 7,251 | 5,233 |
| assets at | | | |
| fair | | | |
| value | | | |
| through | | | |
| profit or | | | |
| loss | | | |
+---------------+--------+----------+----------+
| Investments | 11 | 32 | (1,008) |
| in | | | |
| associates | | | |
+---------------+--------+----------+----------+
| Deferred | | - | 3 |
| tax | | | |
| assets | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| | | 30,341 | 32,308 |
+---------------+--------+----------+----------+
| Current | | | |
| assets | | | |
+---------------+--------+----------+----------+
| Inventories | | 681 | 638 |
+---------------+--------+----------+----------+
| Trade | 15 | 23,882 | 30,139 |
| and | | | |
| other | | | |
| receivables | | | |
+---------------+--------+----------+----------+
| Cash | 16 | 68,888 | 74,217 |
| and | | | |
| cash | | | |
| equivalents | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| | | 93,451 | 104,994 |
+---------------+--------+----------+----------+
| Current | | | |
| liabilities | | | |
+---------------+--------+----------+----------+
| Trade | 17 | (33,752) | (35,168) |
| and | | | |
| other | | | |
| payables | | | |
+---------------+--------+----------+----------+
| Current | | (58) | (454) |
| tax | | | |
| liabilities | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| | | (33,810) | (35,622) |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Net | | 59,641 | 69,372 |
| current | | | |
| assets | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Non | | | |
| current | | | |
| liabilities | | | |
+---------------+--------+----------+----------+
| Long | 18 | (2,701) | (4,050) |
| term | | | |
| third | | | |
| party | | | |
| loans | | | |
+---------------+--------+----------+----------+
| Deferred | | (4) | (4) |
| tax | | | |
+---------------+--------+----------+----------+
| Deferred | 19 | (2,959) | (4,135) |
| consideration | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Net | | 84,318 | 93,491 |
| assets | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Equity | | | |
+---------------+--------+----------+----------+
| Share | 22 | 71,275 | 71,275 |
| premium | | | |
| account | | | |
+---------------+--------+----------+----------+
| Distributable | 23 | 70,663 | 70,663 |
| reserve | | | |
+---------------+--------+----------+----------+
| Shares | 21 | (515) | (515) |
| held | | | |
| in | | | |
| treasury | | | |
+---------------+--------+----------+----------+
| Retained | | (60,812) | (51,414) |
| earnings | | | |
+---------------+--------+----------+----------+
| Foreign | | 39 | 110 |
| currency | | | |
| translation | | | |
| reserve | | | |
+---------------+--------+----------+----------+
| Equity | | 80,650 | 90,119 |
| attributable | | | |
| to equity | | | |
| holders of | | | |
| the parent | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Minority | 25 | 3,668 | 3,372 |
| interests | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Total | | 84,318 | 93,491 |
| equity | | | |
+---------------+--------+----------+----------+
| | | | |
+---------------+--------+----------+----------+
| Net | 24 | 56.33 | 65.30 |
| asset | | | |
| value | | | |
| (basic | | | |
| and | | | |
| diluted | | | |
| pence | | | |
| per | | | |
| share) | | | |
+---------------+--------+----------+----------+
The financial statements were approved by the Board and authorised for issue on
30 July 2010.
Signed on behalf of the Board:
David Jeffreys
Serena Tremlett
Director
Director
Company Statement of Changes in Equity
for the year ended 31 March 2010
+----------------------------+------+---------+----------------+----------+----------+---------+
| | Note | Share | Distribut-able | Shares | Retained | Total |
| | | premium | reserves | held | earnings | equity |
| | | account | GBP '000 | in | GBP | GBP |
| | | GBP | | treasury | '000 | '000 |
| | | '000 | | GBP | | |
| | | | | '000 | | |
+----------------------------+------+---------+----------------+----------+----------+---------+
| Balance at 31 March 2009 | | 71,275 | 70,663 | (515) | (42,881) | 98,542 |
+----------------------------+------+---------+----------------+----------+----------+---------+
| Recognition in respect of | 1r | - | - | - | 108 | 108 |
| share-based payments | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+---------+
| Retained losses for the | | - | - | - | (8,969) | (8,969) |
| year | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+---------+
| | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+---------+
| Balance at 31 March 2010 | | 71,275 | 70,663 | (515) | (51,742) | 89,681 |
+----------------------------+------+---------+----------------+----------+----------+---------+
| | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+---------+
for the year ended 31 March 2009
+----------------------------+------+---------+----------------+----------+----------+----------+
| | Note | Share | Distribut-able | Shares | Retained | Total |
| | | premium | reserves | held | earnings | equity |
| | | account | GBP '000 | in | GBP | GBP |
| | | GBP | | treasury | '000 | '000 |
| | | '000 | | GBP | | |
| | | | | '000 | | |
+----------------------------+------+---------+----------------+----------+----------+----------+
| Balance at 31 March 2008 | | 71,275 | 73,092 | - | (10,559) | 133,808 |
+----------------------------+------+---------+----------------+----------+----------+----------+
| Share purchases | 23 | - | (2,429) | (515) | - | (2,944) |
+----------------------------+------+---------+----------------+----------+----------+----------+
| Recognition in respect of | 1r | - | - | - | 108 | 108 |
| share-based payments | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+----------+
| Retained losses for the | | - | - | - | (32,430) | (32,430) |
| year | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+----------+
| | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+----------+
| Balance at 31 March 2009 | | 71,275 | 70,663 | (515) | (42,881) | 98,542 |
+----------------------------+------+---------+----------------+----------+----------+----------+
| | | | | | | |
+----------------------------+------+---------+----------------+----------+----------+----------+
Consoldiated Statement of Changes in Equity
for the year ended 31 March 2010
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| | Note | Share | Distribut-able | Transla-tion | Shares | Retained | Minority | Total |
| | | premium | reserves | reserve | held | earnings | interest | equity |
| | | account | GBP '000 | GBP '000 | in | GBP | GBP | GBP |
| | | GBP | | | treasury | '000 | '000 | '000 |
| | | '000 | | | GBP | | | |
| | | | | | '000 | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| Balance at 31 | | 71,275 | 70,663 | 110 | (515) | (51,414) | 3,372 | 93,491 |
| March 2009 | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| Recognition in | 1r | - | - | - | - | 108 | - | 108 |
| respect of | | | | | | | | |
| share-based | | | | | | | | |
| payments | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| Other reserve | | - | - | (71) | - | (177) | - | (248) |
| movements | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| Retained | | - | - | - | - | (9,329) | 296 | (9,033) |
| losses for the | | | | | | | | |
| year | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| Balance at 31 | | 71,275 | 70,663 | 39 | (515) | (60,812) | 3,668 | 84,318 |
| March 2010 | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
| | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+---------+
for the year ended 31 March 2009
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| | Note | Share | Distribut-able | Transla-tion | Shares | Retained | Minority | Total |
| | | premium | reserves | reserveGBP | held | earnings | interest | equity |
| | | account | GBP '000 | '000 | in | GBP | GBP | GBP |
| | | GBP | | | treasury | '000 | '000 | '000 |
| | | '000 | | | GBP | | | |
| | | | | | '000 | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| Balance at 31 | | 71,275 | 73,092 | - | - | (21,681) | 1,349 | 124,035 |
| March 2008 | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| Share | 23 | - | (2,429) | - | (515) | - | - | (2,944) |
| purchases | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| Recognition in | 1r | - | - | - | - | 108 | - | 108 |
| respect of | | | | | | | | |
| share-based | | | | | | | | |
| payments | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| Minority | 25 | - | - | - | - | - | 4,210 | 4,210 |
| interest on | | | | | | | | |
| acquisition of | | | | | | | | |
| subsidiary | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| Other reserve | | - | - | 110 | - | 177 | - | 287 |
| movements | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| Retained | | - | - | - | - | (30,018) | (2,187) | (32,205) |
| losses for the | | | | | | | | |
| year | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| Balance at 31 | | 71,275 | 70,663 | 110 | (515) | (51,414) | 3,372 | 93,491 |
| March 2009 | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
| | | | | | | | | |
+----------------+------+---------+----------------+--------------+----------+----------+----------+----------+
Company Statement of Cash Flows
for the year ended 31 March 2010
+--------------+--------+---------+----------+
| | | Year | Year |
| | | ended | ended |
| | | 2010 | 2009 |
+--------------+--------+---------+----------+
| | Note | GBP | GBP |
| | | '000 | '000 |
+--------------+--------+---------+----------+
| Net | | (2,625) | 431 |
| cash | | | |
| flow | | | |
| from | | | |
| operating | | | |
| activities | | | |
+--------------+--------+---------+----------+
| | | | |
+--------------+--------+---------+----------+
| Investing | | | |
| activities | | | |
+--------------+--------+---------+----------+
| Purchase | | (408) | (600) |
| of | | | |
| investments | | | |
| (net of | | | |
| arrangement | | | |
| fees) | | | |
+--------------+--------+---------+----------+
| Acquisition | | (2,146) | (19,434) |
| of | | | |
| subsidiary | | | |
| undertakings | | | |
| (net of | | | |
| arrangement | | | |
| fees) | | | |
+--------------+--------+---------+----------+
| Sale | 9 | 487 | 1,788 |
| of | | | |
| investment | | | |
+--------------+--------+---------+----------+
| | | | |
+--------------+--------+---------+----------+
| Net | | (2,067) | (18,246) |
| cash | | | |
| flow | | | |
| used | | | |
| in | | | |
| investing | | | |
| activities | | | |
+--------------+--------+---------+----------+
| | | | |
+--------------+--------+---------+----------+
| Financing | | | |
| activities | | | |
+--------------+--------+---------+----------+
| Share | 23 | - | (2,429) |
| purchases | | | |
+--------------+--------+---------+----------+
| Purchase | 21 | - | (515) |
| of own | | | |
| shares | | | |
| to hold | | | |
| in | | | |
| treasury | | | |
+--------------+--------+---------+----------+
| | | | |
+--------------+--------+---------+----------+
| Net | | - | (2,944) |
| cash | | | |
| flow | | | |
| used | | | |
| in | | | |
| financing | | | |
| activities | | | |
+--------------+--------+---------+----------+
| Net | | (4,692) | (20,759) |
| decrease | | | |
| in cash | | | |
| and cash | | | |
| equivalents | | | |
+--------------+--------+---------+----------+
| Cash | | 60,460 | 81,219 |
| and | | | |
| cash | | | |
| equivalents | | | |
| at | | | |
| beginning | | | |
| of year | | | |
+--------------+--------+---------+----------+
| Cash | | 55,768 | 60,460 |
| and | | | |
| cash | | | |
| equivalents | | | |
| at end of | | | |
| year | | | |
+--------------+--------+---------+----------+
Cash flow from operating activities
+------------------------------------+-----+----------+----------+
| | | | |
+------------------------------------+-----+----------+----------+
| Loss before taxation | | (8,969) | (32,430) |
+------------------------------------+-----+----------+----------+
| Fair value loss on financial | | 6,476 | 32,332 |
| assets | | | |
+------------------------------------+-----+----------+----------+
| Recognition of share based payment | | 108 | 108 |
+------------------------------------+-----+----------+----------+
| Decrease/(increase) in amounts | | 564 | (305) |
| receivable | | | |
+------------------------------------+-----+----------+----------+
| (Decrease)/increase in amounts | | (804) | 726 |
| payable | | | |
+------------------------------------+-----+----------+----------+
| | | | |
+------------------------------------+-----+----------+----------+
| Net cash flow from operating | | (2,625) | 431 |
| activities | | | |
+------------------------------------+-----+----------+----------+
Consolidated Statement of Cash Flows
for the year ended 31 March 2010
+-------------------------------------+------+-----------+-----------+
| | | Year | Year |
| | | ended | ended |
| | | 2010 | 2009 |
+-------------------------------------+------+-----------+-----------+
| | Note | GBP '000 | GBP '000 |
+-------------------------------------+------+-----------+-----------+
| Net cash flow from operating | | (4,640) | (1,152) |
| activities | | | |
+-------------------------------------+------+-----------+-----------+
| | | | |
+-------------------------------------+------+-----------+-----------+
| Investing activities | | | |
+-------------------------------------+------+-----------+-----------+
| Purchase of investments (net of | | (408) | (599) |
| arrangement fees) | | | |
+-------------------------------------+------+-----------+-----------+
| Acquisition of subsidiary | 10 | (114) | (13,711) |
| undertakings | | | |
+-------------------------------------+------+-----------+-----------+
| Sale of investment | | 487 | 1,788 |
+-------------------------------------+------+-----------+-----------+
| Acquisition of intangibles | 7 | (377) | (226) |
+-------------------------------------+------+-----------+-----------+
| Disposal of non current assets | | - | 1,382 |
+-------------------------------------+------+-----------+-----------+
| Purchases of fixtures, fittings and | 8 | (161) | (784) |
| equipment | | | |
+-------------------------------------+------+-----------+-----------+
| Cash deconsolidated on disposal of | 13 | (57) | (189) |
| discontinued operations | | | |
+-------------------------------------+------+-----------+-----------+
| | | | |
+-------------------------------------+------+-----------+-----------+
| Net cash flow used in investing | | (630) | (12,339) |
| activities | | | |
+-------------------------------------+------+-----------+-----------+
| | | | |
+-------------------------------------+------+-----------+-----------+
| Financing activities | | | |
+-------------------------------------+------+-----------+-----------+
| Share purchases | 23 | - | (2,429) |
+-------------------------------------+------+-----------+-----------+
| Purchase of own shares to hold in | | - | (515) |
| treasury | | | |
+-------------------------------------+------+-----------+-----------+
| Dividends received from associates | | - | 934 |
+-------------------------------------+------+-----------+-----------+
| Third party borrowings | | - | 1,165 |
+-------------------------------------+------+-----------+-----------+
| | | | |
+-------------------------------------+------+-----------+-----------+
| Net cash flow used in financing | | - | (845) |
| activities | | | |
+-------------------------------------+------+-----------+-----------+
| Net decrease in cash and cash | | (5,270) | (14,336) |
| equivalents | | | |
+-------------------------------------+------+-----------+-----------+
| Cash and cash equivalents at | | 74,217 | 88,404 |
| beginning of year | | | |
+-------------------------------------+------+-----------+-----------+
| Effect of foreign exchange rate | | (59) | 149 |
| changes | | | |
+-------------------------------------+------+-----------+-----------+
| Cash and cash equivalents at end of | | 68,888 | 74,217 |
| year | | | |
+-------------------------------------+------+-----------+-----------+
| | | | |
| Cash flow from operating activities | | | |
| | | | |
+-------------------------------------+------+-----------+-----------+
| Loss before taxation | | (8,405) | (32,218) |
+-------------------------------------+------+-----------+-----------+
| Fair value (gain)/loss on financial | | (599) | 20,430 |
| assets | | | |
+-------------------------------------+------+-----------+-----------+
| Recognition of share based payment | | 108 | 108 |
+-------------------------------------+------+-----------+-----------+
| Impairment of goodwill | 6 | 3,203 | 7,916 |
+-------------------------------------+------+-----------+-----------+
| Impairment of intangible assets | 7 | 1,904 | 1,693 |
+-------------------------------------+------+-----------+-----------+
| Amortisation of intangible assets | 7 | 304 | 127 |
+-------------------------------------+------+-----------+-----------+
| Decrease in amounts receivable | | 2,235 | 196 |
+-------------------------------------+------+-----------+-----------+
| Decrease in amounts payable | | (3,478) | (830) |
+-------------------------------------+------+-----------+-----------+
| (Increase)/decrease in inventories | | (43) | 655 |
+-------------------------------------+------+-----------+-----------+
| Depreciation of fixtures, fittings | 8 | 288 | 823 |
| and equipment | | | |
+-------------------------------------+------+-----------+-----------+
| Other | | (157) | (52) |
+-------------------------------------+------+-----------+-----------+
| | | | |
+-------------------------------------+------+-----------+-----------+
| Net cash flow from operating | | (4,640) | (1,152) |
| activities | | | |
+-------------------------------------+------+-----------+-----------+
Notes to the Financial Statements
for the year to 31 March 2010
1. Summary of significant accounting policies
Reporting entity
Ingenious Media Active Capital Limited (the Company) is a closed-end investment
company with limited liability formed under the Companies Law of Guernsey, and
its shares are admitted to trading on AIM. The Company was incorporated and
registered in Guernsey on 11 April 2006. The Company's registered office is
Isabelle Chambers, Route Isabelle, St Peter Port, Guernsey. The Group is defined
as the Company and its subsidiaries.
Basis of preparation
The financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards (IFRS), which comprise standards and
interpretations approved by the International Accounting Standards Board (the
IASB), and International Accounting Standards and Standing Interpretations
Committee interpretations approved by the International Accounting Standards
Committee (IASC) that remain in effect, together with applicable legal and
regulatory requirements of Guernsey Law and the Listing Rules of the UK Listing
Authority.
These financial statements have been prepared on the historical cost basis, as
modified by the measurement at fair value of investments and financial
instruments.
There have been no material changes in accounting policies during the year.
Going concern
The financial statements have been prepared on the going concern basis. IMAC
currently holds adequate cash balances to meet the payment of funds committed to
its investee companies as they fall due. Following the distribution of the
returned capital to Shareholders on 28 May 2010, the Company had approximately
GBP5.5 million of cash. The estimated future operating costs of the Company over
the next three years are GBP3.8 million. These costs are expected to be funded
from a combination of the Company's post distribution cash balance, as well as
cash retained from future realisations, if required. In the unlikely scenario
that insufficient realisations are made over this period, the Company will have
sufficient cash to meet its operating costs.
All outstanding funding commitments are, however, at the discretion of the
Company and the Manager. If the Company and Manager were to approve draw down of
these outstanding commitments, the commitments to the investee companies would
be funded from a combination of the post-distribution cash balance of the
Company, as well as from additional cash retained from future realisations, if
required. Shareholders should note that the return of capital also attracts
inherent risks to the Company, such as the Company not being able to realise or
realising less than expected for the investee companies. However, in such a
case, with respect to its current funding commitments, the Company will retain
the flexibility of choosing in which investee companies it will continue to
invest, with a view to maximising Shareholder value. Furthermore, in such a case
where the Company is unable to pay fees owing to the Manager due to having
insufficient cash, the Manager has agreed to defer such payments until such time
as the Company has sufficient cash following the realisation of investee
companies. The Board is therefore of the opinion that the going concern basis
should be adopted in the preparation of the financial statements.
Use of estimates
The preparation of the Group's financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and contingencies at the date of the Group's financial statements,
and revenue and expenses during the reporting period. Actual results could
differ from those estimated. Significant estimates in the Group's financial
statements include the amounts recorded for the fair value of the investments
and recoverable value of goodwill and other intangible assets. By their nature,
these estimates and assumptions are subject to measurement uncertainty and the
effect on the Group's financial statements of changes in estimates in future
periods could be significant. In the current economic conditions the number of
transactions and market prices are depressed. In these circumstances the fair
value of the Company's investments and recoverable value of goodwill and other
intangible assets cannot be estimated as easily as when there are greater levels
of market activity.
The current market conditions are such that many of the Group's investments are
loss making and some may require further cash injection in the future. In each
case, the Manager has implemented measures to reduce operating costs and
stimulate revenue growth for these investments in order to limit future funding
requirements and increase investment value with a view to realisation in an
orderly fashion over an extended period. As explained in note 6, the valuations
undertaken by the Company are based upon a mixture of bases using revenue,
contribution and earnings multiples in light of the measures noted above.
As noted in the Directors' Report the decision was taken by the Board post
year-end to make a capital distribution to Shareholders of GBP50.1 million and
to change the Company's investment policy to limit any further commitments to
funding and developing existing investments. Post distribution, the Company has
much reduced available cash resources which could limit its ability to fund its
investments going forward.
Financial instruments
Financial assets
Financial assets are divided into the following categories:
· loans and receivables, including cash and cash equivalents;
· fair value through profit or loss.
Financial assets are assigned to the different categories on initial recognition
depending on the characteristics of the instrument and its purpose. A financial
instrument's category is relevant for the way it is measured and whether
resulting income and expenses are recognised in the Consolidated Statement of
Comprehensive Income or charged directly against equity. All income and expenses
in respect of financial assets held by the Group in the year under review are
recognised in the Consolidated Statement of Comprehensive Income. Generally the
Group recognises all financial assets using trade date accounting. An assessment
of whether a financial asset is impaired is made at least at each reporting
date. All income relating to financial assets is recognised in the Consolidated
Statement of Comprehensive Income under the heading "revenue" and interest
payable is recognised under the heading "finance costs".
The Group's loans and receivables comprise trade and other receivables and cash
and cash equivalents in the consolidated statement of financial position.
Cash and cash equivalents include cash in hand and deposits held at call with
banks.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
The Group's trade and other receivables fall into this category of financial
asset and are initially recognised at fair value and subsequently measured at
amortised cost, using the effective interest method. Discounting is omitted
where its effect is immaterial. Individual receivables are considered for
impairment when they are overdue or when there is objective evidence that the
debtor will default.
Financial assets at fair value through profit or loss include financial assets
that are classified as held for trading. The Group's financial assets fall into
this category. Fair values of securities listed in active markets are determined
by the current bid prices. Where independent prices are not available, fair
values have been determined with reference to financial information available at
the time of the original investment updated to reflect all relevant changes to
that information at the reporting date. This may include, among other factors,
changes in the business outlook affecting a particular investment, performance
of the underlying business against original projections and valuations of
similar quoted companies.
Financial liabilities
Financial liabilities are divided into the following categories:
· other financial liabilities;
· fair value through profit or loss.
Other financial liabilities include the Group's trade and other payables and are
initially recognised at fair value and subsequently measured at amortised cost,
using the effective interest method.
Financial liabilities at fair value through profit or loss include
"out-of-money" commodity futures. They are carried on the consolidated statement
of financial position at fair value determined by current market prices.
Fair value measurement hierarchy
IFRS 7 requires certain disclosures which require a classification of financial
assets and liabilities measured at fair value using a fair value hierarchy that
reflects the significance of the inputs used in making the fair value
measurement. The fair value hierarchy has the following levels:
· level 1 - quoted prices (unadjusted) in active markets for identical
assets or liabilities;
· level 2 - inputs other than quoted prices included within level 1 that
are observable for the asset or liability either directly (i.e. as prices) or
indirectly (i.e. derived from prices);
· level 3 - inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The level in the fair value hierarchy within which the financial asset or
liability is categorised is determined on the basis of the lowest level input
that is significant to the fair value measured. Financial assets and liabilities
are classified in their entirety into only one of the three levels.
+---------------------------+---------+---------+---------+---------+
| | Company | Consolidated |
+---------------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 |
+---------------------------+---------+---------+---------+---------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+---------------------------+---------+---------+---------+---------+
| Level 1 | 1,109 | - | 1,109 | - |
+---------------------------+---------+---------+---------+---------+
| Level 2 | - | - | - | - |
+---------------------------+---------+---------+---------+---------+
| Level 3 | 32,898 | 38,416 | 6,142 | 5,233 |
+---------------------------+---------+---------+---------+---------+
| | 34,007 | 38,416 | 7,251 | 5,233 |
+---------------------------+---------+---------+---------+---------+
Adoption of new and revised standards
The following new standards and amendments to standards are mandatory for the
first time for annual periods beginning on or after 1 January 2009:
· The revised IAS 1, "Presentation of Financial Statements" prohibits the
presentation of items of income and expenses (that are "non-owner changes in
equity") in the statement of changes in equity, requiring "non-owner changes in
equity" to be presented separately from "owner changes in equity". All
"non-owner changes in equity" are required to be shown in a performance
statement.
· Entities can choose whether to present one performance statement (the
Statement of Comprehensive Income) or two statements (the Income Statement and
Statement of Comprehensive income). The Company has elected to present one
statement; a Statement of Comprehensive Income. The financial statements have
been prepared under the revised disclosure requirements. Since the change in
accounting policy only impacts presentation aspects, there is no impact on
earnings per share.
· On 30 November 2006, the International Accounting Standards Board issued
IFRS 8, "Operating Segments", which replaced IAS 14 "Segment Reporting". This
puts an emphasis on the "management approach" to reporting on operating
segments. Other than the additional disclosures, the adoption of this standard
has no impact on these financial statements.
· An amendment to IAS 32, "Financial Instruments: Presentation" clarifies
under which circumstances puttable financial instruments and obligations arising
on liquidation have to be treated as equity instruments. The adoption of the
amendment does not have any impact on these financial statements.
· An amendment to IFRS 7, "Financial Instruments: Disclosures" was issued
by the International Accounting Standards Board on 5 March 2009. The amendment
requires the inclusion of an explicit three-level fair value hierarchy which
groups fair value measurements based on their observability and requires
numerical disclosure of fair values recognised in tabular format organised by
the level within each hierarchy. The adoption of the amendment does not have any
impact on these financial statements.
At the date ofauthorisationof these financial statements, the following
Standards and Interpretations, which have not been applied in these financial
statements, were in issue but not yet effective:
· IFRS 1 (amended)/IAS 27 (amended) "Cost of an Investment in a Subsidiary,
Jointly Controlled Entity or Associate"
· IFRS 2 (amended) "Share-based Payment - Vesting Conditions and
Cancellations"
· IFRS 3 (revised 2008) "Business Combinations"
· IFRS 9 (revised 2009) "Financial Instruments: Classification and
Measurement"
· IAS 27 (revised 2008) "Consolidated and Separate Financial Statements"
The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the financial
statements of the Group except for:
· treatment of acquisitions of subsidiaries when IFRS 3 comes into effect
for the business combinations for which the acquisition date is on or after the
beginning of the first annual period on or after 1 July 2009;
· treatment of acquisition costs associated with subsidiaries when IFRS 3
comes into effect for the business combinations for which the acquisition date
is on or after the beginning of the first annual period on or after 1 July 2009;
and
· treatment of minority interest losses when IAS 27 comes into effect for
non-controlling interests for annual periods beginning on the first annual
period on or after 1 July 2009.
Principle Accounting Policies
a. Basis of consolidation
The Consolidated Financial Statements incorporate the financial statements of
the Company and the Group made up to 31 March each year. Control is achieved
where the Company has the power to govern the financial and operating policies
of an investee entity so as to obtain benefits from its activities.
Minority interests in the net assets of consolidated subsidiaries are identified
separately from the Group's equity therein. Minority interests consist of the
amount of those interests at the date of the original business combination and
the minority's share of changes in equity since the date of the combination.
Losses applicable to the minority in excess of the minority's interest in the
subsidiary's equity are allocated against the interests of the Group except to
the extent that the minority has a binding obligation and is able to make an
additional investment to cover the losses.
The results of subsidiaries acquired during the year are included in the
consolidated income statement from the effective date of acquisition.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the Group.
All intra-group transactions, balances, revenue and expenses are eliminated on
consolidation.
b. Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 are recognised at their fair value at
the acquisition date.
Goodwill arising on acquisition is recognised as an asset and initially measured
at cost, being the excess of the cost of the business combination over the
Group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in profit or loss. Goodwill is
reviewed for impairments annually.
The interest of minority shareholders in the acquiree is initially measured at
the minority's proportion of the net fair value of the assets, liabilities and
contingent liabilities recognised.
c. Functional currency
Items included in the financial statements of the Group and the Company are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in GBP (GBP), which is the Company's functional and
presentational currency.
Transactions in currencies other than sterling are translated at the foreign
exchange rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are
translated into sterling at the exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the Income
Statement. Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at
the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated into sterling at
foreign exchange rates ruling at the dates the fair value was determined.
On consolidation, the assets and liabilities of the Group's overseas operations
are translated at exchange rates prevailing on the balance sheet date. Income
and expenses are translated at the average exchange rates for the period unless
exchange rates fluctuate significantly. Where the average exchange rates
fluctuate significantly, material income and expenses must be translated at the
exchange rate prevailing on the date of the transaction. Exchange differences
arising, if any, are classified as equity and transferred to the Group's
translation reserve. Such translation differences are recognised as income or
expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the rate prevailing on the balance sheet date.
d. Financial assets at fair value through profit or loss
Investments, including equity and loan investments, in subsidiaries are
designated as fair value through profit or loss in accordance with International
Accounting Standard 39 (IAS 39) Financial Instruments: Recognition and
Measurement, as the Company is an investment company whose business is investing
in financial assets with a view to profiting from their total return in the form
of interest and changes in fair value. Investments are initially recognised at
cost. The investments are subsequently re-measured at fair value, as determined
by the Directors. Unrealised gains or losses arising from the revaluation of
investments are taken directly to the income statement.
Fair value is determined as follows:
Unquoted securities are valued based on the realisation value which is estimated
by the Directors with prudence and good faith. The Directors will take into
account the guidelines and principles for valuation of investee companies set
out by the International Private Equity and Venture Capital (IPEV) association,
with particular consideration of the following factors:
· 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 Company will apply a
methodology that is appropriate in light of the nature, facts and circumstances
of the investments 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.
· Cost of recent investment
· Earnings multiple
· Net assets
· Available market prices
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.
The Group has determined that the valuations are most sensitive to changes in
the following key assumptions:
· Annual budgets and cash flow projections for each individual investment.
These are based on actual budgets and cash flows and projections discussed with
and approved by management for a period of one year to five years depending on
the investment;
· Growth rates used to extrapolate cash flows beyond the budget period. The
rate used in each case represents the forecast rate which is in a range from 0
per cent. to 10 per cent.;
· The rates used in discounting cash flows. The rate used in each case
represents the approximate weighted cost of each investment based on current
financing and equity arrangements and ranged from 5 per cent. to 10 per cent.
depending on the investment;
· Comparable earnings multiples. A number of investments are valued using
comparable listed and other industry multiples which range from 2.2 to 8 times
earnings depending on the investment.
As a result of the above basis of valuation, there is significant judgement
associated with the valuation of investments.
e. Arrangement fees
Under the terms of the investment agreements between the Company and its
investee companies, the investee companies are required to pay to the Company an
arrangement fee in consideration for its services in arranging financing for the
investee company. In accordance with IAS 39, this arrangement fee is deducted
from the cost of the investment. A corresponding increase in the fair value of
the investment is then recorded so that the investment is valued at the gross
amount paid.
f. Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts, VAT and other sales-related
taxes. Where appropriate, revenue is recorded in the income statement on the
basis that there is a legally binding contract in place and there is virtual
certainty of fulfilment of any conditionality attached to the contract.
Interest income is included on an accruals basis using the effective interest
method.
Dividend income from investments is recognised when the Group's rights to
receive payments have been established.
g. Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
through the income statement except where they relate to capital expenditure or
the raising and maintenance of capital.
h. Other intangible assets
Acquired trademarks, licenses and customer relationship are initially recognised
at fair value. Trademarks and licenses have a finite useful life and are carried
at cost less accumulated amortisation. Amortisation is calculated using the
straight line method to allocate the cost of trademarks, licenses and customer
relations over their estimated useful lives (being a period of up to 10 years).
i. Fixtures, fittings and equipment
Fixtures and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets, over
their estimated useful lives, (being between two and five years) using the
straight-line method.
j. Investee company interests in joint ventures
Investee company interests in jointly controlled entities, whereby the venturers
have a contractual arrangement that establishes joint control over the economic
activities of the entity are recognised using the equity method of accounting.
The investment is initially recognised at cost under interests in associates,
and adjusted thereafter for the post-acquisition change in the investee
company's share of net assets of the joint venture. The investee company's share
of the profit or loss of the joint venture is included under 'other revenue and
expenses'.
This accounting policy differs from that applied by the Company in accounting
for its interests in associates, which are designated as financial assets at
fair value through profit or loss.
k. Investee company interests in associates
Investee company interests in associates are accounted for using the equity
method of accounting in the consolidated financial statements. Under the equity
method, investments in the associates are carried in the consolidated balance
sheet at cost plus post acquisition changes in the consolidated entity's share
of net assets of the associates.
When the consolidated entity's share of losses in an associate equals or exceeds
its interest in the associate, including any unsecured long-term receivables and
loans, the consolidated entity does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.
The reporting dates of the associates and the consolidated entity are identical
and the associates' accounting policies conform to those used by the
consolidated entity for like transactions and events in similar circumstances.
l. Trade and other receivables
Trade and other receivables are initially recognised at fair value. A provision
for impairment of trade receivables is established when there is objective
evidence the Group will not be able to collect all amounts due according to the
original terms of the receivables.
m. Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
n. Trade and other payables
Trade and other payables are initially recognised at fair value, and
subsequently where necessary re-measured at amortised cost using the effective
interest method.
o. Deferred consideration
A number of investee company acquisitions have been made on deferred payment
terms. These deferred payments are generally contingent on the future revenue
and/or profits achieved by the investee company. Amounts of deferred
consideration payable after one year, are discounted using discount rates that
reflect the current market assessment of the time value of money and, where
appropriate, the risks specific to the investee company. This contingent
deferred consideration is reassessed annually, and the difference between the
present value and the total amount payable at a future date gives rise to a
finance charge which is charged to the income statement and credited to the
liability over the period in which the consideration is deferred.
p. Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
q. Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
r. Share options
Share options have been granted as set out in note 20. The Company accounts for
the fair value of these options at grant date over the vesting period in the
income statement, with a corresponding increase to equity. The fair value has
been calculated based on the Black Scholes Model using the following inputs:
+----+--------------+------------+
| · | Share price | 97.50 |
| | | pence |
+----+--------------+------------+
| · | Exercise | 100.00 |
| | price | pence |
+----+--------------+------------+
| · | Expected | 11.55 % |
| | volatility | |
+----+--------------+------------+
| · | Expected | 10 years |
| | life | |
+----+--------------+------------+
| · | Risk free | 4.413 % |
| | rate | |
+----+--------------+------------+
| · | Expected | NIL |
| | dividends | |
+----+--------------+------------+
2. Loss before taxation
The loss before taxation has been arrived at after charging:
+--------------------------+---------+---------+---------+---------+
| | Company | Consolidated |
+--------------------------+-------------------+-------------------+
| | Year | Year | Year | Year |
| | ended | ended | ended | ended |
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------+---------+---------+---------+---------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+--------------------------+---------+---------+---------+---------+
| Staff costs | - | - | 12,590 | 14,805 |
+--------------------------+---------+---------+---------+---------+
| Directors' fees | 129 | 125 | 129 | 125 |
+--------------------------+---------+---------+---------+---------+
| Recognition of | 108 | 108 | 108 | 108 |
| share-based payment | | | | |
+--------------------------+---------+---------+---------+---------+
| Depreciation - fixtures, | - | - | 288 | 823 |
| fittings and equipment | | | | |
+--------------------------+---------+---------+---------+---------+
| Rental and lease | - | - | 1,169 | 824 |
| expenses | | | | |
+--------------------------+---------+---------+---------+---------+
| Bad debts - written off | - | - | 1 | - |
+--------------------------+---------+---------+---------+---------+
| Bad debts - increase in | - | 205 | - | 206 |
| estimated doubtful debts | | | | |
+--------------------------+---------+---------+---------+---------+
| Auditors' remuneration | 165 | 165 | 316 | 377 |
+--------------------------+---------+---------+---------+---------+
| Auditors - non audit | - | - | 2 | 24 |
| remuneration | | | | |
+--------------------------+---------+---------+---------+---------+
3. Operating segments
The information in this note has been prepared using the definition of an
operating segment in IFRS 8: Operating Segments. The Group determines and
presents the information that is provided internally to the Directors to enable
them to assess performance and allocate resources.
The chief operating decision-maker has been identified as the Board, which
reviews the Company's internal reporting in order to assess performance and
allocate resources. The Board has determined the operating segments based on
these reports.
As an investment company, the Group's primary focus is on the performance of its
investment portfolio. Whilst there are a number of individual investments
included in this portfolio, performance is reviewed for the portfolio as a whole
on the basis of its fair value.
The Directors believe that the Company and the Group are engaged in a single
segment of business of holding investments in media and entertainment companies,
operating solely from Guernsey and therefore the Directors only recognise a
single class of assets. The information reviewed by the Board does include
summarised financial information for each investment in the portfolio, however,
this is not sufficiently detailed to provide any segmental analysis and hence
only a single segment has been identified.
+--------------------------+---------+---------+----------+----------+
| | Segment revenue | Segment |
| | | profit/(loss) |
+--------------------------+-------------------+---------------------+
| Segment revenues and | Year | Year | Year | Year |
| results | ended | ended | ended | ended |
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------+---------+---------+----------+----------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+--------------------------+---------+---------+----------+----------+
| Investments portfolio | 44,274 | 46,590 | 8,192 | (23,139) |
+--------------------------+---------+---------+----------+----------+
| Total for continuing | 44,274 | 46,590 | 8,192 | (23,139) |
| operations | | | | |
+--------------------------+---------+---------+----------+----------+
| Share of profit of | | | 1,275 | 740 |
| associates | | | | |
+--------------------------+---------+---------+----------+----------+
| Central administration | | | (20,433) | (22,254) |
| costs and directors' | | | | |
| salaries | | | | |
+--------------------------+---------+---------+----------+----------+
| Finance costs | | | (640) | (222) |
+--------------------------+---------+---------+----------+----------+
| Consolidation | | | 3,201 | 10,118 |
| adjustments | | | | |
+--------------------------+---------+---------+----------+----------+
| Loss before tax | | | (8,405) | (34,757) |
+--------------------------+---------+---------+----------+----------+
To reconcile group profit and loss and total assets 'Consolidation adjustments'
comprise the difference between the aggregate fair value and the total assets of
subsidiaries and joint ventures and the investee company's liabilities.
+------------------------------------------------+---------+---------+
| Segment assets | Year | Year |
| | ended | ended |
| | 2010 | 2009 |
+------------------------------------------------+---------+---------+
| | GBP | GBP |
| | '000 | '000 |
+------------------------------------------------+---------+---------+
| Investments portfolio | 123,792 | 137,302 |
+------------------------------------------------+---------+---------+
| Total segment and consolidated assets | 123,792 | 137,302 |
+------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------+---------+---------+
| Segment liabilities | | |
+------------------------------------------------+---------+---------+
| Investments portfolio | 39,474 | 43,811 |
+------------------------------------------------+---------+---------+
| Total segment and consolidated liabilities | 39,474 | 43,811 |
+------------------------------------------------+---------+---------+
+--------------+--------+--------+--------+--------+
| | Revenue from | Non current |
| | external | assets |
| | customers | |
+--------------+-----------------+-----------------+
| Geographical | Year | Year | Year | Year |
| information | ended | ended | ended | ended |
| | 2010 | 2009 | 2010 | 2009 |
+--------------+--------+--------+--------+--------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+--------------+--------+--------+--------+--------+
| United | 21,685 | 26,307 | 29,592 | 31,650 |
| Kingdom | | | | |
+--------------+--------+--------+--------+--------+
| Europe | 13,168 | 10,547 | 58 | 358 |
| (excluding | | | | |
| UK) | | | | |
+--------------+--------+--------+--------+--------+
| Other | 9,421 | 9,736 | 691 | 300 |
+--------------+--------+--------+--------+--------+
| | 44,274 | 46,590 | 30,341 | 32,308 |
+--------------+--------+--------+--------+--------+
Major clients
The Group is not reliant on one major customer as no one customer accounts for
more than 10 per cent. of the Group's revenue.
4. Income tax expense
The Company has been granted exemption from income tax in Guernsey under the
Income Tax (Exempt Bodies) (Bailiwick of Guernsey) Ordinance 1989, and is liable
to pay an annual fee (currently GBP600) under the provisions of the Ordinance.
As such it will not be liable to income tax in Guernsey other than on Guernsey
source income (excluding deposit interest on funds deposited with a Guernsey
bank). No withholding tax is applicable to distributions to Shareholders by the
Company.
The subsidiary companies are resident in the UK and liable to UK Corporation
Tax. Group relief on operating losses may be available between those United
Kingdom resident investee companies in which the Company holds not less than 75
per cent. of the ordinary share capital.
+----------------------------------------+-------------+-------------+
| | Consolidated |
+----------------------------------------+---------------------------+
| | Year ended | Year ended |
| | 2010 | 2009 |
+----------------------------------------+-------------+-------------+
| | GBP '000 | GBP '000 |
+----------------------------------------+-------------+-------------+
| Loss before taxation | (8,405) | (32,218) |
+----------------------------------------+-------------+-------------+
| Tax rate in Guernsey 0% | - | - |
+----------------------------------------+-------------+-------------+
| | | |
+----------------------------------------+-------------+-------------+
| Adjustments: | | |
+----------------------------------------+-------------+-------------+
| For foreign tax rates | 572 | 3,100 |
+----------------------------------------+-------------+-------------+
| Non deductible expenses | 194 | (145) |
+----------------------------------------+-------------+-------------+
| Expenses from prior year allowed in | (48) | - |
| current year | | |
+----------------------------------------+-------------+-------------+
| Deferred tax not recognised | (1,147) | (3,225) |
+----------------------------------------+-------------+-------------+
| Depreciation in excess of capital | 8 | (7) |
| allowances | | |
+----------------------------------------+-------------+-------------+
| Prior year adjustment | (444) | - |
+----------------------------------------+-------------+-------------+
| Withholding tax charge | (397) | - |
+----------------------------------------+-------------+-------------+
| Utilisation of prior year losses | 280 | 196 |
+----------------------------------------+-------------+-------------+
| Lower rate of tax in subsidiary | - | 4 |
+----------------------------------------+-------------+-------------+
| Small companies relief | (4) | - |
+----------------------------------------+-------------+-------------+
| Consortium relief | 277 | - |
+----------------------------------------+-------------+-------------+
| | | |
+----------------------------------------+-------------+-------------+
| Tax expense | (709) | (77) |
+----------------------------------------+-------------+-------------+
| | | |
+----------------------------------------+-------------+-------------+
| Losses carried forward | (23,510) | (20,414) |
+----------------------------------------+-------------+-------------+
5. Loss per share
The calculation of basic and diluted return per share is based on the return on
ordinary activities and on 143,168,463 Ordinary Shares (2009: 140,784,642),
being the weighted average number of shares for the purpose of the earnings per
share calculation.
6. Goodwill
+----------------------------------------+-------------+-------------+
| | Consolidated |
+----------------------------------------+---------------------------+
| | 2010 | 2009 |
+----------------------------------------+-------------+-------------+
| | GBP '000 | GBP '000 |
+----------------------------------------+-------------+-------------+
| Cost | | |
+----------------------------------------+-------------+-------------+
| Balance at the beginning of the year | 37,505 | 28,217 |
+----------------------------------------+-------------+-------------+
| Recognised on acquisition of a | 149 | 15,103 |
| subsidiary | | |
+----------------------------------------+-------------+-------------+
| Purchased goodwill | 144 | - |
+----------------------------------------+-------------+-------------+
| Adjustment to brought forward cost | (32) | - |
+----------------------------------------+-------------+-------------+
| Reallocation to intangibles | (1,325) | (5,815) |
+----------------------------------------+-------------+-------------+
| Balance at the end of the year | 36,441 | 37,505 |
+----------------------------------------+-------------+-------------+
| | | |
+----------------------------------------+-------------+-------------+
| Accumulated impairment losses | | |
+----------------------------------------+-------------+-------------+
| Balance at the beginning of the year | (19,308) | (7,213) |
+----------------------------------------+-------------+-------------+
| Impairment losses for the year | | |
+----------------------------------------+-------------+-------------+
| Continuing operations | (3,203) | (7,916) |
+----------------------------------------+-------------+-------------+
| Discontinued operations | - | (4,179) |
+----------------------------------------+-------------+-------------+
| Balance at the end of the year | (22,511) | (19,308) |
+----------------------------------------+-------------+-------------+
| | | |
+----------------------------------------+-------------+-------------+
| Carrying amount at the end of the year | 13,930 | 18,197 |
+----------------------------------------+-------------+-------------+
The goodwill has arisen principally on the Company's subsidiary acquisitions by:
Two Way Media Holdings Limited of Two Way Media Limited; Brand Events Holdings
Limited of Brand Events Limited; Digital Rights Group Limited ("DRG") of Portman
Film and Television Limited; Review Centre Limited of Resource Team Limited; and
QobliQ Limited of Nouveau Jour SAS, SponsorClick SAS, Arena International
Limited and Arena Sports Marketing Limited.
Included within goodwill are other intangible assets which were not separately
identified at acquisition, the Company will review the treatment of these assets
over the next 12 months and make any appropriate adjustments to the
categorisation of these assets. In the current year DRG has recognised
intangible assets in the form of trademarks and licences.
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
The Group has invested in a broad range of high growth companies within the
media sector. The Directors view each investment as an individual cash
generating unit as this represents the lowest level within the Group at which
the goodwill is monitored for internal management purposes. Goodwill has been
allocated for impairment testing purposes to eight individual cash-generating
units.
The carrying amount of goodwill and intangible assets with indefinite useful
lives is as follows:
+-------------+----------+------------+
| | Goodwill | Intangible |
| | | assets |
| | | with |
| | | indefinite |
| | | useful |
| | | lives |
+-------------+----------+------------+
| | GBP | GBP |
| | '000 | '000 |
+-------------+----------+------------+
| | | |
+-------------+----------+------------+
| Investments | 13,930 | 6,395 |
+-------------+----------+------------+
During the year ended 31 March 2010, the Group has determined that there has
been an impairment of a number of its cash-generating units containing goodwill
or intangible assets with indefinite useful lives amounting to GBP4,241k (2009:
GBP12,095k). The impairment of goodwill and intangible assets has resulted from
the difficult market and trading conditions experienced by the investee
companies.
The recoverable amounts (i.e., the higher of value in use and fair value less
costs to sell) of those units and group of units are determined using either the
value in use or the fair value less cost to sell methodologies as the Directors
determine as appropriate.
+------------------------------+--------------+-----------------+
| | Goodwill | Intangible |
| | | assets with |
| | | indefinite |
| | | useful lives |
+------------------------------+--------------+-----------------+
| | GBP '000 | GBP '000 |
+------------------------------+--------------+-----------------+
| Value in use | - | - |
+------------------------------+--------------+-----------------+
| Fair value less costs to | 13,930 | 6,395 |
| sell | | |
+------------------------------+--------------+-----------------+
| Total | 13,930 | 6,395 |
+------------------------------+--------------+-----------------+
The Group has determined that the recoverable amount calculations are most
sensitive to changes in the following key assumptions:
a. Annual budgets and cash flow projections for each individual investment.
These are based on actual budgets and cash flows and projections discussed with
and approved by the Manager for a period of one year to five years depending on
the investment;
b. Growth rates used to extrapolate cash flows beyond the budget period. The
rate used in each case represents the forecast rate which is in a range from 0
per cent. to 10 per cent.;
c. The rates used in discounting cash flows. The rate used in each case
represents the approximate weighted cost of each investment based on current
financing and equity arrangements and ranged from 5 per cent. to 10 per cent.
depending on the investment;
d. Comparable earnings multiples. A number of investments are valued using
comparable listed and other industry multiples which range from 2.2 to 8 times
earnings depending on the investment.
The Directors have applied the accounting policy outlined in note 1d to
determine the recoverable amount of cash-generating units where the fair value
less cost to sell methodology applies.
7. Other intangible assets
+----------------------------------------+------------+------------+
| | Consolidated |
+----------------------------------------+-------------------------+
| | 2010 | 2009 |
+----------------------------------------+------------+------------+
| | GBP '000 | GBP '000 |
+----------------------------------------+------------+------------+
| Cost or valuation | | |
+----------------------------------------+------------+------------+
| Balance at the beginning of the year | 11,161 | 3,320 |
+----------------------------------------+------------+------------+
| Additions in year | 377 | 266 |
+----------------------------------------+------------+------------+
| Reclassification | 1,325 | 5,815 |
+----------------------------------------+------------+------------+
| Recognised on acquisition of a | 69 | 1,760 |
| subsidiary | | |
+----------------------------------------+------------+------------+
| Balance at the end of the year | 12,932 | 11,161 |
+----------------------------------------+------------+------------+
| | | |
+----------------------------------------+------------+------------+
| Amortisation | | |
+----------------------------------------+------------+------------+
| Balance at the beginning of the year | (369) | (242) |
+----------------------------------------+------------+------------+
| Charge for the year | (304) | (127) |
+----------------------------------------+------------+------------+
| Balance at the end of the year | (673) | (369) |
+----------------------------------------+------------+------------+
| | | |
+----------------------------------------+------------+------------+
| Impairment | | |
+----------------------------------------+------------+------------+
| Balance at the beginning of the year | (1,693) | - |
+----------------------------------------+------------+------------+
| Charge for the year | (1,904) | (1,693) |
+----------------------------------------+------------+------------+
| Balance at the end of the year | (3,597) | (1,693) |
+----------------------------------------+------------+------------+
| | | |
+----------------------------------------+------------+------------+
| Carrying amount at the end of the year | 8,662 | 9,099 |
+----------------------------------------+------------+------------+
Acquired trademarks, licenses and customer relationships are initially
recognised at fair value. Trademarks and customer relationships have a finite
useful life and are carried at cost less accumulated amortisation. Show formats
and some licenses have indefinite lives. Amortisation is calculated using the
straight line method to allocate the cost of trademarks, licenses and customer
relationships over their estimated useful lives (being a period of up to 10
years). The value of intangible assets with indefinite useful lives is disclosed
in note 6, above.
8. Fixtures, fittings and equipment
+----------------------------------------+------------+------------+
| | Consolidated |
+----------------------------------------+-------------------------+
| | 2010 | 2009 |
+----------------------------------------+------------+------------+
| | GBP '000 | GBP '000 |
+----------------------------------------+------------+------------+
| Cost or valuation | | |
+----------------------------------------+------------+------------+
| Balance at the beginning of the year | 1,786 | 1,519 |
+----------------------------------------+------------+------------+
| Additions in year | 161 | 784 |
+----------------------------------------+------------+------------+
| Cost value of disposals in year | (353) | (621) |
+----------------------------------------+------------+------------+
| Recognised on acquisition of a | - | 104 |
| subsidiary | | |
+----------------------------------------+------------+------------+
| Balance at the end of the year | 1,594 | 1,786 |
+----------------------------------------+------------+------------+
| | | |
+----------------------------------------+------------+------------+
| Accumulated depreciation | | |
+----------------------------------------+------------+------------+
| Balance at the beginning of the year | (1,002) | (476) |
+----------------------------------------+------------+------------+
| Accumulated depreciation on disposals | 162 | 297 |
| during the year | | |
+----------------------------------------+------------+------------+
| Charge for the year | (288) | (823) |
+----------------------------------------+------------+------------+
| Balance at the end of the year | (1,128) | (1,002) |
+----------------------------------------+------------+------------+
| | | |
+----------------------------------------+------------+------------+
| Carrying amount at the end of the year | 466 | 784 |
+----------------------------------------+------------+------------+
9. Investment in subsidiaries
+-----------------------------------------+------------+------------+
| | Company |
+-----------------------------------------+-------------------------+
| | 2010 | 2009 |
+-----------------------------------------+------------+------------+
| | GBP '000 | GBP '000 |
+-----------------------------------------+------------+------------+
| Opening fair value at the beginning of | 38,416 | 32,669 |
| the year | | |
+-----------------------------------------+------------+------------+
| Reclassifications | (1,000) | - |
+-----------------------------------------+------------+------------+
| Purchases at cost | 2,281 | 19,736 |
+-----------------------------------------+------------+------------+
| Investment repaid | (487) | (1,788) |
+-----------------------------------------+------------+------------+
| Fair value adjustment | (6,312) | (12,201) |
+-----------------------------------------+------------+------------+
| Closing fair value at the end of the | 32,898 | 38,416 |
| year | | |
+-----------------------------------------+------------+------------+
Reclassification includes the 4,266,667 shares received in NetPlay TV plc from
Two Way Media Holdings Limited as repayment of loan notes.
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Name of | Class | % | Country | Principal | Full | Paid | Paid |
| subsidiary | of | of | of | activity | commitment | as | as |
| undertaking | share | class | incorpo-ration | | (GBP'000) | at | at |
| | | held | | | | 31 | 31 |
| | | | | | | March | March |
| | | | | | | 2010 | 2009 |
| | | | | | | (GBP'000) | (GBP'000) |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Whizz | Ordinary | 47.1% | UK | Television | 4,250 | 2,750 | 2,750 |
| Kid | | | | production | | | |
| Entertainment | | | | | | | |
| Limited | | | | | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Digital | Ordinary | 84.7% | UK | Television | 11,270 | 8,274 | 8,274 |
| Rights | | | | distribution | | | |
| Group | | | | | | | |
| Limited | | | | | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Outside | Ordinary | 0.0% | UK | Digital | 1,500 | 1,000 | 1,000 |
| Line | | | | marketing | | | |
| Limited | | | | & creative | | | |
| | | | | agency | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Two Way | Ordinary | 84.3% | UK | Interactive | 4,935 | 4,655 | 4,435 |
| Media | | | | television | | | |
| Holdings | | | | company | | | |
| Limited | | | | | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Enigmas2 | Ordinary | 43.8% | UK | Video | 4,560 | 4,560 | 4,560 |
| Limited | | | | games | | | |
| (formerly | | | | business | | | |
| In2Games | | | | | | | |
| Limited) | | | | | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Brand | Ordinary | 67.0% | UK | Consumer | 9,080 | 8,583 | 6,620 |
| Events | | | | events | | | |
| Holdings | | | | business | | | |
| Limited | | | | | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| QobliQ | Preference | 73.4% | UK | Marketing | 12,567 | 12,367 | 12,367 |
| Limited | | | | services | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Review | Ordinary | 71.5% | UK | Internet/New | 7,034 | 7,034 | 7,034 |
| Centre | | | | media | | | |
| Limited | | | | | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| Ingenious | N/a | 90.0% | UK | Investment | 6,065 | 4,826 | 4,728 |
| Ventures | | | | vehicle | | | |
| LP | | | | | | | |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
| | | | | Total | 61,261 | 54,049 | 51,768 |
+---------------+------------+-------+----------------+--------------+------------+-----------+-----------+
An investee company is classified as a subsidiary where the Company can achieve
control either:
· by obtaining more than 51 per cent. of the equity of the investee
company; or
· where there is sufficient power to govern the financial and operating
policies of the investee company so as to obtain the economic benefits from its
activities.
Ingenious Ventures LP holds the investment in Stage Three Music Limited, until
its liquidation following the sale of its assets, and continues to hold its
investment in Cream Holdings Limited.
Crystal Entertainment Limited
IMAC has reduced its commitment in Crystal Entertainment Limited (Crystal).
Under the terms of the initial Subscription Agreement, IMAC's commitment was
GBP2.5 million. On 7 May 2009, under a new shareholder agreement, IMAC sold
57,500 shares in Crystal to Charles Garland. IMAC now holds 10 per cent. of the
equity of Crystal. No further advances are owed and the commitment has been
reduced to the value of the drawdown to 31 March 2009. IMAC will no longer
consolidate Crystal as a subsidiary.
Two Way Media Holdings Limited
Following the repayment of loan notes by way of the 4,266,667 shares received in
NetPlay TV plc, IMAC has reduced its commitment to Two Way Media Holdings
Limited to GBP4.9m.
Undrawn Commitments
All outstanding funding commitments are at the discretion of the Company and the
Manager.
10. Acquisition of subsidiaries
During the year the Group acquired a controlling interest in Taste of Christmas
Live Limited and has made an adjustment to the value of the acquisitions of
Arena International Limited and Arena Sports Marketing Limited ("Arena"), both
resulted in goodwill arising. The fair value of assets acquired and liabilities
assumed were as follows:
+------------------------------------------------+---------+---------+
| | 2010 | 2009 |
+------------------------------------------------+---------+---------+
| | GBP | GBP |
| | '000 | '000 |
+------------------------------------------------+---------+---------+
| Purchased goodwill | 144 | - |
+------------------------------------------------+---------+---------+
| Intangibles | 69 | 1,760 |
+------------------------------------------------+---------+---------+
| Fixtures and fittings | - | 104 |
+------------------------------------------------+---------+---------+
| Cash and cash equivalents | - | 2,302 |
+------------------------------------------------+---------+---------+
| Accounts receivable | 42 | 2,194 |
+------------------------------------------------+---------+---------+
| Trade payables | (191) | (3,332) |
+------------------------------------------------+---------+---------+
| Minority interest | - | (558) |
+------------------------------------------------+---------+---------+
| Interests in associates | - | 5,233 |
+------------------------------------------------+---------+---------+
| Net assets acquired | 64 | 7,703 |
+------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------+---------+---------+
| Goodwill on consolidation | 149 | 15,103 |
+------------------------------------------------+---------+---------+
| Total consideration | 213 | 22,806 |
+------------------------------------------------+---------+---------+
| | | |
+------------------------------------------------+---------+---------+
| Total consideration satisfied by: | | |
+------------------------------------------------+---------+---------+
| Cash | 114 | 16,013 |
+------------------------------------------------+---------+---------+
| Loan notes issued | - | - |
+------------------------------------------------+---------+---------+
| Consideration shares | - | 3,096 |
+------------------------------------------------+---------+---------+
| Deferred consideration | 50 | 2,890 |
+------------------------------------------------+---------+---------+
| Other | 49 | 807 |
+------------------------------------------------+---------+---------+
| | 213 | 22,806 |
+------------------------------------------------+---------+---------+
| Net cash outflow arising on acquisition: | | |
+------------------------------------------------+---------+---------+
| Cash consideration | 114 | 16,013 |
+------------------------------------------------+---------+---------+
| Cash and cash equivalents acquired | - | (2,302) |
+------------------------------------------------+---------+---------+
| | 114 | 13,711 |
+------------------------------------------------+---------+---------+
The goodwill arising on the acquisition and the acquisition adjustment is
attributable to the anticipated profitability of the Group's products and
services.
Included within the consolidated retained loss for the year is a loss of GBP0.1
million (2009: loss of GBP0.3 million) relating to acquired subsidiaries. Due to
the nature of the businesses acquired, financial performance is not comparable
pre to post investment. Therefore, for all business combinations that were
effected during the year, it is inappropriate to disclose the revenue and profit
and loss of the combined entities for the year as though the acquisition date
was the start of the financial year.
11. Investment in associates
+------------------------------------------------+----------+---------+
| | Year | Year |
| | ended | ended |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+------------------------------------------------+----------+---------+
| | GBP | GBP |
| | '000 | '000 |
| | | |
+------------------------------------------------+----------+---------+
| Aggregate amounts relating to associates | | |
+------------------------------------------------+----------+---------+
| Total assets | 13,504 | 2,711 |
+------------------------------------------------+----------+---------+
| Total liabilities | (10,795) | (6,574) |
+------------------------------------------------+----------+---------+
| | | |
+------------------------------------------------+----------+---------+
| Revenues | 27,458 | 27,366 |
+------------------------------------------------+----------+---------+
| Loss | (1,073) | (1,474) |
+------------------------------------------------+----------+---------+
A list of the significant investments in associates, including the name, country
of incorporation, proportion of ownership interest is given below.
+-----------------------------+--------------+------------+---------------+
| Name of associate | Class of | % of class | Country |
| | share | held | of |
| | | | incorporation |
+-----------------------------+--------------+------------+---------------+
| Taste Festivals Limited | Ordinary | 50.0% | UK |
+-----------------------------+--------------+------------+---------------+
| Grass Roots Football | Ordinary | 50.0% | UK |
| Limited | | | |
+-----------------------------+--------------+------------+---------------+
| Sub Zero Limited | Ordinary | 50.0% | UK |
+-----------------------------+--------------+------------+---------------+
| Brand Events Australia Pty | Ordinary | 50.0% | Australia |
| Limited | | | |
+-----------------------------+--------------+------------+---------------+
| Brand Events Live Limited | Ordinary | 50.0% | UK |
+-----------------------------+--------------+------------+---------------+
| Brand Events Management | Ordinary | 50.0% | Ireland |
| Ireland Limited | | | |
+-----------------------------+--------------+------------+---------------+
| Brand Events South Africa | Ordinary | 50.0% | South |
| Pty Limited | | | Africa |
+-----------------------------+--------------+------------+---------------+
| Two Way Gaming Limited | Ordinary | 50.0% | Alderney |
+-----------------------------+--------------+------------+---------------+
| Dance Floor Limited | Ordinary | 49.9% | UK |
+-----------------------------+--------------+------------+---------------+
| DRG Media Assets Limited | Ordinary | 49.9% | UK |
+-----------------------------+--------------+------------+---------------+
| Taste Xmas Live Limited | Ordinary | 49.9% | UK |
+-----------------------------+--------------+------------+---------------+
| Real Foods Limited | Ordinary | 20.0% | UK |
+-----------------------------+--------------+------------+---------------+
Brand Events Limited is required to fund its share of losses in its associates.
Two Way Media Limited is also required to fund its share of losses in Two Way
Gaming Limited and hence these have been accrued for in the financial
statements. Two Way Gaming Limited was voluntarily liquidated and the Alderney
Court advised that the final shareholders meeting was held on 26 May 2010 and
Two Way Gaming Limited is expected to be removed from the Alderney Register of
Companies on 30 August 2010. There are no other outstanding commitments. DRG
Limited is not required to fund the losses of its associate, DRG Media Assets
Limited.
12. Discontinued operations
The Group did not have any discontinued operations in the current year and
results of the discontinued operations included in the prior year Consolidated
Statement of Comprehensive Income are:
+--------------------------------------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
| | 31 March | 31 March |
| | 2010 | 2009 |
+--------------------------------------------+-----------+-----------+
| | GBP '000 | GBP '000 |
+--------------------------------------------+-----------+-----------+
| Revenue | - | 1,708 |
+--------------------------------------------+-----------+-----------+
| Expenses | - | (3,291) |
+--------------------------------------------+-----------+-----------+
| Gain on disposal of operations | - | 2,837 |
+--------------------------------------------+-----------+-----------+
| Gain on derecognition of subsidiary | 81 | 1,375 |
+--------------------------------------------+-----------+-----------+
| Profit before tax | 81 | 2,629 |
+--------------------------------------------+-----------+-----------+
| Attributable tax expense | - | - |
+--------------------------------------------+-----------+-----------+
| Profit for the year from discontinued | 81 | 2,629 |
| operations | | |
+--------------------------------------------+-----------+-----------+
13. Derecognition of subsidiaries
The Group no longer has a controlling interest in Crystal Entertainment Limited
(Crystal) as IMAC sold the majority of its shareholding in the year and now
holds 10 per cent. of the equity of Crystal. The fair value of assets and
liabilities no longer controlled by the Group are as follows:
+--------------------------------------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
| | 31 March | 31 March |
| | 2010 | 2009 |
+--------------------------------------------+-----------+-----------+
| | GBP '000 | GBP '000 |
| | | |
+--------------------------------------------+-----------+-----------+
| Fixtures and fittings | 29 | 275 |
+--------------------------------------------+-----------+-----------+
| Cash and cash equivalents | 57 | 189 |
+--------------------------------------------+-----------+-----------+
| Accounts receivable | 63 | 755 |
+--------------------------------------------+-----------+-----------+
| Inventories | - | 209 |
+--------------------------------------------+-----------+-----------+
| Trade payables | (230) | (6,453) |
+--------------------------------------------+-----------+-----------+
| Net liabilities deconsolidated | (81) | (5,025) |
+--------------------------------------------+-----------+-----------+
The Company did not receive any sales proceeds from the disposal of its
investment in Crystal and the gain results from the deconsolidation of the net
liabilities.
14. Financial assets at fair value through profit or loss
+---------------------------+---------+----------+---------+----------+
| | Company | Consolidated |
+---------------------------+--------------------+--------------------+
| | 2010 | 2009 | 2010 | 2009 |
+---------------------------+---------+----------+---------+----------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+---------------------------+---------+----------+---------+----------+
| Opening fair value at the | - | 19,831 | 5,233 | 19,831 |
| beginning of the year | | | | |
+---------------------------+---------+----------+---------+----------+
| Reclassifications | 1,000 | - | 1,000 | - |
+---------------------------+---------+----------+---------+----------+
| Purchases at cost | 310 | 599 | 419 | 5,832 |
+---------------------------+---------+----------+---------+----------+
| Fair value adjustment | (201) | (20,430) | 599 | (20,430) |
+---------------------------+---------+----------+---------+----------+
| Closing fair value at the | 1,109 | - | 7,251 | 5,233 |
| end of the year | | | | |
+---------------------------+---------+----------+---------+----------+
Reclassification includes the 4,266,667 shares received in NetPlay TV plc from
Two Way Media Holdings Limited as repayment of loan notes.
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
| Name of | Class | % | Country | Principal | Full | Paid | Paid |
| investment | of | of | of | activity | commit-ment | as | as |
| | share | class | incorporation | | (GBP'000) | at | at |
| | | held | | | | 31 | 31 |
| | | | | | | March | March |
| | | | | | | 2010 | 2009 |
| | | | | | | (GBP'000) | (GBP'000) |
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
| Incisive | Ordinary | 0.1% | UK | Business | 17,903 | 17,903 | 17,903 |
| Media | | | | publishing | | | |
| Limited | | | | | | | |
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
| Trinity | Ordinary | 0% | UK | Interactive | 5,710 | 5,710 | 5,400 |
| Universal | | | | media | | | |
| Holding | | | | marketing | | | |
| Limited | | | | | | | |
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
| Sportbuzz | Preference | 36% | British | Internet/new | 1,604 | 1,604 | 1,604 |
| Limited | | | Virgin | media | | | |
| | | | Islands | | | | |
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
| Crystal | Ordinary | 10% | UK | Talent | 1,311 | 1,311 | 1,311 |
| Entertainment | | | | relationships | | | |
| Limited | | | | | | | |
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
| NetPlay TV | Ordinary | 2.1% | UK | Gaming | - | - | - |
| plc | | | | and | | | |
| | | | | gambling | | | |
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
| | | | | Total | 26,528 | 26,528 | 26,218 |
+---------------+------------+-------+---------------+---------------+-------------+-----------+-----------+
Further commitments
IMAC committed a further GBP0.3 million to Trinity Universal Holdings Limited in
June 2009.
On 4 April 2009 Trinity Universal Holdings Limited was placed in Voluntary
Creditors Liquidation.
No commitment has been made to NetPlay and GBP1.0 million included in the
closing fair value for both the Company and consolidated financial assets at
fair value through profit or loss reflects the 4,266,667 shares in NetPlay
received from Two Way Media Holdings Limited as repayment of loan notes. The
terms of the business sales agreement required that the Company undertake to
NetPlay (in order to ensure an orderly market in the buyer's shares) that they
will not within 12 months of completion dispose of the legal or beneficial
ownership of or any other interest in any consideration shares without the prior
written consent of NetPlay.
Changes in shareholdings
The shareholding in Incisive Media Limited has been diluted following the debt
and capital restructuring in which IMAC has not participated.
Sportbuzz sold its assets to Tixdaq Limited (Tixdaq), an unlisted ticket
information business, in early April 2009 with the consideration being entirely
in shares of Tixdaq. Sportbuzz now holds a 22 per cent. stake in Tixdaq. IMAC
has waived its rights as a preferred shareholder and converted its shares to
ordinary shares and now holds a 45 per cent. stake in Sportbuzz. IMAC therefore
holds a 9.9 per cent. stake in Tixdaq through its holding in Sportbuzz.
15. Trade and other receivables
+----------------------------+---------+---------+---------+---------+
| | Company | Consolidated |
+----------------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 |
+----------------------------+---------+---------+---------+---------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+----------------------------+---------+---------+---------+---------+
| Trade receivables | 107 | 69 | 7,488 | 8,312 |
+----------------------------+---------+---------+---------+---------+
| Prepayments and accrued | 124 | 565 | 7,087 | 10,120 |
| income | | | | |
+----------------------------+---------+---------+---------+---------+
| Income receivable | - | 107 | 7,517 | 7,747 |
+----------------------------+---------+---------+---------+---------+
| Other receivables | - | 54 | 1,790 | 3,960 |
+----------------------------+---------+---------+---------+---------+
| | 231 | 795 | 23,882 | 30,139 |
+----------------------------+---------+---------+---------+---------+
16. Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less. The cash equivalents
are currently invested in quoted cash funds. The carrying amount of these assets
approximates to their fair value. Included within the Group's cash and cash
equivalents is a restricted cash amount of GBP4,096k (March 2009: GBP2,297k) in
relation to amounts that Whizz Kid Entertainment Limited is holding in programme
production trust accounts to fund specific programme production costs and which
are owed to Live VCT 1, Live VCT 2, Entertainment VCT 1 and Entertainment VCT 2
and for DRG Media Assets Limited to fund co-distribution costs and owed to
Entertainment VCT 1 and Entertainment VCT 2. Further information on the Live VCT
1, Live VCT 2, Entertainment VCT 1 and Entertainment VCT 2 investments can be
found in note 27 on related party transactions.
17. Trade and other payables
+----------------------------+---------+---------+---------+---------+
| | Company | Consolidated |
+----------------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 |
+----------------------------+---------+---------+---------+---------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+----------------------------+---------+---------+---------+---------+
| Trade payables | 43 | 172 | 8,358 | 4,823 |
+----------------------------+---------+---------+---------+---------+
| Third party loans | - | - | 1,815 | 523 |
+----------------------------+---------+---------+---------+---------+
| Other creditors | - | - | 3,432 | 5,343 |
+----------------------------+---------+---------+---------+---------+
| Accruals and deferred | 282 | 957 | 20,147 | 24,479 |
| income | | | | |
+----------------------------+---------+---------+---------+---------+
| | 325 | 1,129 | 33,752 | 35,168 |
+----------------------------+---------+---------+---------+---------+
18. Long term third party loans
+------------------------------------+------------+---------+---------+
| |Redemption | Consolidated |
| | date | |
+------------------------------------+------------+-------------------+
| | | 2010 | 2009 |
+------------------------------------+------------+---------+---------+
| | | GBP | GBP |
| | | '000 | '000 |
+------------------------------------+------------+---------+---------+
| Brand Events Holdings Limited | 26 April | 2,157 | 1,703 |
| | 2012 | | |
+------------------------------------+------------+---------+---------+
| Crystal Entertainment Limited | 27 April | - | 145 |
| | 2012 | | |
+------------------------------------+------------+---------+---------+
| Review Centre Limited | 6 June | 544 | 492 |
| | 2018 | | |
+------------------------------------+------------+---------+---------+
| Whizz Kid Entertainment Limited | 22 | - | 1,710 |
| | February | | |
| | 2011 | | |
+------------------------------------+------------+---------+---------+
| | | 2,701 | 4,050 |
+------------------------------------+------------+---------+---------+
Long term third party loans represents loan stock instruments held by other
investors in the Group's subsidiaries. The Whizz Kid Entertainment Limited loan
of GBP1,815k (2009: GBP1,710k) has been reclassified as a current liability in
the year.
19. Deferred consideration
Deferred consideration represents future amounts payable by Digital Rights Group
Limited for its acquisition of Channel 4 International and by Review Centre for
its acquisition of Resource Team Limited. These payments will be made as set out
in the sale and purchase agreements, which detail that the payments are to be
made on various dates before 31 December 2010 for DRG and on 12 June 2018 by
Review Centre Limited.
20. Share capital
+------------------------------------+---------+--------------+----------+--------------+
| | | 2010 | | 2009 |
+------------------------------------+---------+--------------+----------+--------------+
| | | Company & | | Company & |
| | | Consolidated | | Consolidated |
| | | | | |
+------------------------------------+---------+--------------+----------+--------------+
| Authorised share capital | | No. | | No. |
+------------------------------------+---------+--------------+----------+--------------+
| Ordinary shares of no par value | | Unlimited | | Unlimited |
+------------------------------------+---------+--------------+----------+--------------+
| | | | | |
+------------------------------------+---------+--------------+----------+--------------+
| Issued and fully paid | | No. | | No. |
+------------------------------------+---------+--------------+----------+--------------+
| | | | | |
+------------------------------------+---------+--------------+----------+--------------+
| Ordinary shares of no par value | | 144,402,402 | | 144,402,402 |
+------------------------------------+---------+--------------+----------+--------------+
Share purchases
The Company did not purchase shares during the year. The Company purchased
3,192,000 shares at an average price of 76.10p during the previous year for
cancellation.
Share options
On 4 April 2006, 750,000 share options were issued in respect of ongoing
services, granting rights to Neil Blackley to subscribe for 750,000 Ordinary
Shares. On 24 January 2008, Mike Luckwell was awarded 750,000 share options.
The share options have an exercise price equal to the placing price (GBP1) and
vest over five years, (with one fifth of the options vesting each year) or
immediately on the signing of a contract for the sale of the entire (or
substantially entire) issued share capital or business undertaking of the
Company or on their appointment as a director of the Company being terminated
without cause by the Company. The share options will expire ten years from each
date of grant unless there is an early expiration in accordance with the terms
of each grant.
21. Shares held in treasury
During the year the Directors approved an extension to the Company's share
re-purchase programme, that allows shares re-purchased to be held in treasury.
The Company held 1,233,939 ordinary shares at an average price of 41.72 pence
throughout the year.
+----------+--------------+--------------+
| | Company | Company |
| | & | & |
| | Consolidated | Consolidated |
+----------+--------------+--------------+
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+----------+--------------+--------------+
| Shares | No. | No. |
| held | | |
| in | | |
| treasury | | |
+----------+--------------+--------------+
| | | |
+----------+--------------+--------------+
| Ordinary | 1,233,939 | 1,233,939 |
| shares | | |
| of no | | |
| par | | |
| value | | |
+----------+--------------+--------------+
22. Share premium account
+-----------+--------------+--------------+
| | Company | Company |
| | & | & |
| | Consolidated | Consolidated |
+-----------+--------------+--------------+
| | 2010 | 2009 |
+-----------+--------------+--------------+
| | GBP | GBP |
| | '000 | '000 |
+-----------+--------------+--------------+
| | | |
+-----------+--------------+--------------+
| Balance | 71,275 | 71,275 |
| at the | | |
| beginning | | |
| and end | | |
| of the | | |
| year | | |
+-----------+--------------+--------------+
23. Distributable reserve
+-----------+--------------+--------------+
| | Company | Company |
| | & | & |
| | Consolidated | Consolidated |
+-----------+--------------+--------------+
| | 2010 | 2009 |
+-----------+--------------+--------------+
| | GBP | GBP |
| | '000 | '000 |
+-----------+--------------+--------------+
| | | |
+-----------+--------------+--------------+
| Balance | 70,663 | 73,092 |
| at the | | |
| beginning | | |
| of the | | |
| year | | |
+-----------+--------------+--------------+
| Share | - | (2,429) |
| purchases | | |
+-----------+--------------+--------------+
| Balance | 70,663 | 70,663 |
| at the | | |
| end of | | |
| the | | |
| year | | |
+-----------+--------------+--------------+
During the year nil (2009: 3,192,000) shares were purchased for cancellation at
an average price of nil (2009: 76.10) pence.
24. Net asset value per share
+----------+-------------+---------+--------------+
| | No. of | Company | Consolidated |
| | Shares | | |
+----------+-------------+---------+--------------+
| | | pence | pence |
+----------+-------------+---------+--------------+
| | | | |
+----------+-------------+---------+--------------+
| 31 | | | |
| March | | | |
| 2010 | | | |
+----------+-------------+---------+--------------+
| Ordinary | | | |
| shares | | | |
+----------+-------------+---------+--------------+
| Basic | 143,168,463 | 62.64 | 56.33 |
| and | | | |
| diluted | | | |
+----------+-------------+---------+--------------+
| 31 | | | |
| March | | | |
| 2009 | | | |
+----------+-------------+---------+--------------+
| Ordinary | | | |
| shares | | | |
+----------+-------------+---------+--------------+
| Basic | 143,168,463 | 68.83 | 65.30 |
| and | | | |
| diluted | | | |
+----------+-------------+---------+--------------+
25. Minority interests
+---------------+--------+---------+
| | Consolidated |
+---------------+------------------+
| | 2010 | 2009 |
+---------------+--------+---------+
| | GBP | GBP |
| | '000 | '000 |
+---------------+--------+---------+
| | | |
+---------------+--------+---------+
| Balance | 3,372 | 1,349 |
| at the | | |
| beginning | | |
| of the | | |
| year | | |
+---------------+--------+---------+
| Acquisitions | - | 4,210 |
+---------------+--------+---------+
| Profit/(loss) | 296 | (2,187) |
| for the year | | |
+---------------+--------+---------+
| Balance | 3,668 | 3,372 |
| at the | | |
| end of | | |
| the | | |
| year | | |
+---------------+--------+---------+
26. Financial risk factors
The investment strategy of the Company and Group is to make equity, debt or
convertible investments in a broad range of high growth companies within the
media sector, with a view to achieving a balanced portfolio covering a number of
subsectors and which is varied in terms of size and risk profile. Consistent
with that objective, the Company's financial instruments mainly comprise of
investments in unlisted companies. The Company will continue to make investments
only in existing investee companies. In addition the Company holds cash and cash
equivalents as well as having trade and other receivables and trade and other
creditors that arise directly from its operations.
The main risks arising from the Company's financial instruments are liquidity
risk, credit risk, market risk, interest rate risk and concentration risk.
Liquidity risk
The Company had yet to invest a proportion of the funds raised from its listing,
and as a result made a capital distribution to its Shareholders on 28 May 2010.
The cash and cash equivalents, at the balance sheet date and following the
capital distribution are placed with financial institutions on a range of terms,
from call to three months' notice.
The following table details the liquidity analysis for financial liabilities at
the balance sheet date:
+----------------------+--------+--------+--------+---------+--------+
| | Less | 1-3 | 3 | Greater | Total |
| | than | months | months | than 1 | |
| | 1 | | to 1 | year | |
| | month | | year | | |
+----------------------+--------+--------+--------+---------+--------+
| | GBP | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 | '000 |
+----------------------+--------+--------+--------+---------+--------+
| 2010 | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Company | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Trade payables | 43 | - | - | - | 43 |
+----------------------+--------+--------+--------+---------+--------+
| Accruals and | - | 148 | 134 | - | 282 |
| deferred income | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| | 43 | 148 | 134 | - | 325 |
+----------------------+--------+--------+--------+---------+--------+
| | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Group | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Trade payables | 2,170 | 3,826 | 2,362 | - | 8,358 |
+----------------------+--------+--------+--------+---------+--------+
| Accruals and | 3,124 | 7,126 | 9,897 | - | 20,147 |
| deferred income | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Other creditors | 767 | 948 | 1,775 | 2,963 | 6,453 |
+----------------------+--------+--------+--------+---------+--------+
| Third party loans | - | - | 1,815 | 2,701 | 4,516 |
+----------------------+--------+--------+--------+---------+--------+
| | 6,061 | 11,900 | 15,849 | 5,664 | 39,474 |
+----------------------+--------+--------+--------+---------+--------+
| | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| 2009 | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Company | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Trade payables | 142 | 30 | - | - | 172 |
+----------------------+--------+--------+--------+---------+--------+
| Accruals and | - | 823 | 134 | - | 957 |
| deferred income | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| | 142 | 853 | 134 | - | 1,129 |
+----------------------+--------+--------+--------+---------+--------+
| | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Group | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Trade payables | 1,808 | 2,873 | 142 | - | 4,823 |
+----------------------+--------+--------+--------+---------+--------+
| Accruals and | 1,530 | 3,975 | 18,974 | - | 24,479 |
| deferred income | | | | | |
+----------------------+--------+--------+--------+---------+--------+
| Other creditors | 229 | 893 | 4,221 | - | 5,343 |
+----------------------+--------+--------+--------+---------+--------+
| Third party loans | - | 523 | - | 4,050 | 4,573 |
+----------------------+--------+--------+--------+---------+--------+
| | 3,567 | 8,264 | 23,337 | 4,050 | 39,218 |
+----------------------+--------+--------+--------+---------+--------+
Credit risk
The Company is exposed to credit risk in respect of its cash and cash
equivalents, arising from possible default of the relevant counterparty, with a
maximum exposure equal to the carrying value of those assets. The credit risk on
liquid funds is limited because the counterparties are banks with high
credit-ratings assigned by international credit-rating agencies. The Company
monitors the placement of cash balances on an ongoing basis.
The Company is also exposed to credit risk in respect of the loans granted to
its investments, with a maximum exposure equal to the value of the loans
advanced.
The Group is exposed to credit risk in respect of its trade receivables, accrued
income and other receivables balances, with a maximum exposure equal to the
carrying value of those assets. Trade and other receivables are carried at
estimated recoverable value after providing against debtors where collection is
considered to be doubtful. In the current year the Group has provided for any
amounts payable which have exceeded normal payment terms and where there is an
expectation that the amounts may not be recoverable. The Group also recognises
that the quality of debt varies considerably across the investee companies and
that management regularly review the receivable balances.
Market risk
Market price risk arises principally from uncertainty concerning future values
of financial instruments used in the Company's and Group's operations. It
represents the potential loss the Group might suffer through holding interests
in unquoted private companies whose value may fluctuate and which may be
difficult to value and/or to realise. The Company seeks to mitigate such risk by
assessing such risks as part of the due diligence process related to all
potential investments, and by establishing a clear exit strategy for all
potential investments.
At the reporting date, if the inputs to the investment valuation model had been
10 per cent. higher/lower while all other variables were held constant, the net
profit would increase/decrease by GBP3,401k (2009: decrease/increase by
GBP3,842k) for the Company and increase/decrease by GBP111k (2009:
increase/decrease GBPnil) for the Group. The most significant variables in the
investment valuation are the forecast income of the investee companies and the
comparable multiples.
Interest rate risk
The Group is subject to risks associated with changes in interest rates in
respect of interest earned on its cash and cash equivalents balances. The Group
seeks to mitigate this risk by monitoring the placement of cash balances on an
ongoing basis in order to maximise the interest rates obtained.
The following table details interest rate risk exposure at the balance sheet
date:
+--------------------+--------+--------+--------+---------+---------+
| | Less | 1-3 | 3 | Greater | Total |
| | than | months | months | than 1 | |
| | 1 | | to 1 | year | |
| | month | | year | | |
+--------------------+--------+--------+--------+---------+---------+
| | GBP | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 | '000 |
+--------------------+--------+--------+--------+---------+---------+
| 2010 | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Assets | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Company | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 114 | 117 | - | 34,007 | 34,238 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Floating rate | 15,477 | 40,291 | - | - | 55,768 |
| instruments | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total assets | 15,591 | 40,408 | - | 34,007 | 90,006 |
+--------------------+--------+--------+--------+---------+---------+
| | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Group | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 5,229 | 9,063 | 10,271 | 30,341 | 54,904 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Floating rate | 28,597 | 40,291 | - | - | 68,888 |
| instruments | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total assets | 33,826 | 49,354 | 10,271 | 30,341 | 123,792 |
+--------------------+--------+--------+--------+---------+---------+
| | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Liabilities | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Company | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 43 | 148 | 134 | - | 325 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total liabilities | 43 | 148 | 134 | - | 325 |
+--------------------+--------+--------+--------+---------+---------+
| | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Group | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 6,061 | 11,900 | 14,034 | 2,963 | 34,958 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Fixed rate | - | - | 1,815 | 2,701 | 4,516 |
| instruments | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total liabilities | 6,061 | 11,900 | 15,849 | 5,664 | 39,474 |
+--------------------+--------+--------+--------+---------+---------+
+--------------------+--------+--------+--------+---------+---------+
| | Less | 1-3 | 3 | Greater | Total |
| | than | months | months | than 1 | |
| | 1 | | to 1 | year | |
| | month | | year | | |
+--------------------+--------+--------+--------+---------+---------+
| | GBP | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 | '000 |
+--------------------+--------+--------+--------+---------+---------+
| 2009 | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Assets | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Company | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 71 | 200 | 524 | 38,416 | 39,211 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Floating rate | 30,460 | 30,000 | - | - | 60,460 |
| instruments | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total assets | 30,531 | 30,200 | 524 | 38,416 | 99,671 |
+--------------------+--------+--------+--------+---------+---------+
| | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Group | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 4,489 | 10,284 | 16,004 | 32,308 | 63,085 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Floating rate | 44,217 | 30,000 | - | - | 74,217 |
| instruments | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total assets | 48,706 | 40,284 | 16,004 | 32,308 | 137,302 |
+--------------------+--------+--------+--------+---------+---------+
| | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Liabilities | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Company | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 142 | 853 | 134 | - | 1,129 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total liabilities | 142 | 853 | 134 | - | 1,129 |
+--------------------+--------+--------+--------+---------+---------+
| | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Group | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Non-interest | 4,026 | 7,740 | 23,337 | 4,135 | 39,238 |
| bearing | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Fixed rate | - | - | 523 | 4,050 | 4,573 |
| instruments | | | | | |
+--------------------+--------+--------+--------+---------+---------+
| Total liabilities | 4,026 | 7,740 | 23,860 | 8,185 | 43,811 |
+--------------------+--------+--------+--------+---------+---------+
The following table illustrates the sensitivity of the loss on ordinary
activities for the year before taxation and total equity to a change in interest
rates of 50 basis points, with effect from the beginning of the year. These
changes are considered to be reasonably possible based on observation of current
market conditions. The calculations are based on the Company's cash and cash
equivalent balances held at each balance date. All other variables are held
constant. The Group's third party loans are at fixed interest rates, thus any
change in interest rates will not effect profit.
+--------------------------+---------+---------+---------+---------+
| | Company | Consolidated |
+--------------------------+-------------------+-------------------+
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------+---------+---------+---------+---------+
| | GBP | GBP | GBP | GBP |
| | '000 | '000 | '000 | '000 |
+--------------------------+---------+---------+---------+---------+
| +/- 50 basis points | | | | |
+--------------------------+---------+---------+---------+---------+
| Loss on ordinary | 194 | 340 | 239 | 399 |
| activities before | | | | |
| taxation | | | | |
+--------------------------+---------+---------+---------+---------+
| Total equity | 194 | 340 | 239 | 399 |
+--------------------------+---------+---------+---------+---------+
Concentration risk
The Company is exposed to concentration risk in respect of its investments in
subsidiaries and financial assets at fair value through profit or loss, as these
investments are all in the media sector. The maximum exposure is equal to the
carrying value of those assets. The Company seeks to mitigate this risk by
investing in a range of subsectors within the media sector. To date the Company
has invested in the publishing, content, distribution, internet/new media, live
events and marketing services sub sectors.
Capital risk management
The capital structure of the Company consists of the proceeds raised from the
issue of ordinary shares.
The Manager manages the capital of the Company in accordance with the discount
management and borrowing policy provisions of the Admissions document. The
discount management provisions give the Company the ability to buy back ordinary
shares in the market, if they are trading at a discount to the prevailing net
asset value, and they believe it to be in the Shareholders' interests. Under the
borrowing policy provisions, the Company has the ability to borrow up to 25 per
cent. of its Net Asset Value. The Company is yet to make any borrowings.
27. Related party transactions
a. The Company has appointed Ingenious Ventures (a trading division of
Ingenious Asset Management Limited) to provide investment management services.
Ingenious Ventures Limited was the Manager up until 29 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 Group, which is
controlled by Patrick McKenna. William Simpson is also a non-executive director
of Ingenious Asset Management International Limited and FP Holdings Limited
which are Guernsey registered companies, wholly-owned within the Ingenious
Group. Ogier, of which William Simpson is a partner, has provided legal advice
in connection with these entities.
The Company has a receivable balance with Ingenious Ventures at 31 March 2010.
As per the Admissions document a management fee of 0.5 per cent. of the
Company's net asset value was payable quarterly in advance, and then an annual
adjustment was made so the Manager receives a total fee in one year equal to 2.0
per cent. of the Company's net asset value shown in the audited accounts for
that year. In the current year the quarterly invoices paid in advance, totalling
GBP1,385,000, have exceeded the annual amount due by GBP116,000. If the Company
were to be unable to pay fees owing to the Manager due to having insufficient
cash, the Manager has agreed to defer such payments until such time as the
Company has sufficient cash following the realisation of investee companies.
b. Ingenious Ventures (a trading division of Ingenious Asset Management
Limited) provides administrative support to the Company which is outside the
scope of the Investment Management Agreement. The recharge is made at cost and
has been approved by the Board at a value of GBP171,000 for the current
financial year. Ingenious Ventures invoices for this quarterly in arrears.
Ingenious Asset Management Limited is a wholly-owned subsidiary within the
Ingenious Group which is controlled by Patrick McKenna.
c. Serena Tremlett is the Managing Director of Morgan Sharpe Administration
Limited which receives fees for providing secretarial and administrative
services to the Company with effect from 14 April 2009. In the period from 14
April 2009 to 31 March 2010, Morgan Sharpe has received GBP83,400 in fees for
company secretarial, administration, accounting and directorship services.
d. William Simpson is a partner of Ogier, which may receive fees for
providing legal advice from time to time to the Company. In the current year,
fees of GBP9,251 have been incurred with Ogier for legal advice. He is also a
partner in the Ogier Group Limited Partnership, which is the beneficial owner of
Ogier Fiduciary Services (Guernsey) Limited, of which Ogier Fund Administration
(Guernsey) Limited is a wholly-owned subsidiary which provided company
secretarial and administration services to the Company until 14 April 2009 for
which IMAC has incurred GBP800 of costs in the current year. Ogier also received
a fee of GBP15,000 for directorship services during the year.
e. The Company has delegated discretionary treasury management
responsibilities to Ingenious Asset Management International Limited (IAMI), a
company of which William Simpson is a non-executive director, to manage the
uninvested funds of the Company. As at 31 March 2010 IAMI held GBP55,058,164 (31
March 2009: GBP60,460,000) on behalf of the Company. IAMI is a wholly-owned
subsidiary within the Ingenious Group, which is controlled by Patrick McKenna.
The fees for the services provided by IAMI to the Company are met by Ingenious
Ventures.
f. Ingenious Asset Management International Limited has further delegated
its treasury management responsibilities to Ingenious Asset Management Limited
which is a wholly-owned subsidiary within the Ingenious Group, which is
controlled by Patrick McKenna.
g. Entities within the Group appointed Ingenious Corporate Finance Limited
(ICF), a company of which Patrick McKenna is a director, to provide corporate
finance services. ICF is a wholly-owned subsidiary within the Ingenious Group,
which is controlled by Patrick McKenna. Two Way Media Holdings Limited engaged
ICF to provide corporate finance advice on the sale of Two Way Gaming Limited to
NetPlay TV plc for a fee of GBP75,000 which was invoiced in May 2009. Stage
Three Music Limited engaged ICF to provide corporate finance advice on the sale
of the assets of Stage Three Music Limited to BMG Rights Management GmbH. The
fee will be determined upon completion of the transaction and is anticipated to
be in the region of GBP325,000.
h. In prior periods, the Company appointed Ingenious Consulting Associates
Limited (ICA), a company of which Patrick McKenna is a director, to provide
consulting services in relation to a possible acquisition target. ICA is a
wholly-owned subsidiary within the Ingenious Group, which is controlled by
Patrick McKenna. No fees have been paid in the current year (2009: GBP18,000).
i. In prior periods, the Company appointed Ingenious Consulting Network
Limited (ICN), a company of which Patrick McKenna is a director, to provide
consulting services in relation to a possible acquisition target. ICN is a
wholly-owned subsidiary within the Ingenious Group, which is controlled by
Patrick McKenna. No fees have been paid in the current year (2009: GBP8,000).
j. Patrick McKenna is a director and a shareholder of both Ingenious Live
VCT 1 plc (Live VCT 1) and Ingenious Live VCT 2 plc (Live VCT 2). Live VCT 1 and
Live VCT 2 have jointly agreed with Brand Events Limited to form a new company,
Brand Events Live Limited, to co-promote a number of Taste events throughout the
UK. On 21 April 2009, Live VCT 1 and Live VCT 2 each invested GBP1,000,000
through a combination of equity and loan notes for a total of 49.9 per cent. of
the equity of Brand Events Live Limited. The Young Vic Theatre Company (a
registered charity) holds 0.2 per cent. of the equity of Brand Events Live
Limited. Patrick McKenna is the chairman of the Young Vic Theatre Company. Brand
Events Limited holds the balance of the equity in Brand Events Live Limited for
which it invested GBP499. Andrew Morris is a director and a shareholder of Brand
Events Holdings Limited, which is the parent company of Brand Events Limited.
Andrew Morris is also a director of both Ingenious Live VCT 1 plc and Ingenious
Live VCT 2 plc and is a shareholder in Ingenious Live VCT 1 plc and Ingenious
Live VCT 2 plc. Neil Blackley is a shareholder of both Ingenious Live VCT 1 plc
and Ingenious Live VCT 2 plc and is a non-executive director of Ingenious Media
Holdings plc, the ultimate parent company of the Ingenious Group, which is
controlled by Patrick McKenna. Mike Luckwell is a shareholder of both Ingenious
Live VCT 1 plc and Ingenious Live VCT 2 plc.
k. Patrick McKenna is a director and a shareholder of both Ingenious
Entertainment VCT 1 plc (Entertainment VCT 1) and Ingenious Entertainment VCT 2
plc (Entertainment VCT 2). The Ingenious Group holds shares in both Ingenious
Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc. Entertainment VCT
1 and Entertainment VCT 2 have jointly agreed with Digital Rights Group Limited
(DRG) to form a new company, DRG Media Assets Limited, to co-distribute digital
media content. In June 2009, Entertainment VCT 1 and Entertainment VCT 2 each
invested GBP1,000,000 through a combination of equity and loan notes for a total
of 49.9 per cent. of the equity of DRG Media Assets Limited. The Young Vic
Theatre Company (a registered charity) holds 0.2 per cent. of the equity in DRG
Media Assets Limited. Patrick McKenna is the chairman of the Young Vic Theatre
Company. DRG holds the balance of the equity in DRG Media Assets Limited for
which it invested GBP499.
l. Ingenious Live VCT 1 plc, Ingenious Live VCT 2 plc, Ingenious
Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc have jointly
agreed with Brand Events Limited to form a new company, Golfmania Limited, to
co-promote a new event. On 1 December 2009, Ingenious Live VCT 1 plc, Ingenious
Live VCT 2 plc, Ingenious Entertainment VCT 1 plc and Ingenious Entertainment
VCT 2 plc each invested GBP275,000 through a combination of equity and loan
notes for a total of 49.9 per cent. of the equity of Golfmania Limited. The
Young Vic Theatre Company (a registered charity) holds 0.2 per cent. of the
equity of Golfmania Limited. Patrick McKenna is the chairman of the Young Vic
Theatre Company. Andrew Morris is a director and a shareholder of Brand Events
Holdings Limited, which is the parent company of Brand Events Limited. Brand
Events Limited holds the balance of the equity in Golfmania Limited for which it
invested GBP499. Andrew Morris is also a director of both Ingenious Live VCT 1
plc and Ingenious Live VCT 2 plc and is a shareholder in Ingenious Live VCT 1
plc and Ingenious Live VCT 2 plc. Neil Blackley is a shareholder of both
Ingenious Live VCT 1 plc and Ingenious Live VCT 2 plc and is a non-executive
director of Ingenious Media Holdings plc, the ultimate parent company of the
Ingenious Group, which is controlled by Patrick McKenna. Mike Luckwell is a
shareholder of both Ingenious Live VCT 1 plc and Ingenious Live VCT 2 plc.
During the year, the Group 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 as listed in the table below.
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | Expenditure | Amounts |
| | | | | paid |due/(receivable) |
+------------------------+-----------+--+-----------+-----------------+------------------+
| | | | | 2010 | 2009 | 2010 | 2009 |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | GBP | GBP | GBP | GBP |
| | | | | '000 | '000 | '000 | '000 |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| Ingenious Ventures | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| - Investment | | | a | 1,385 | 2,501 | (116) | (524) |
| management fee | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| - Administrative | | | b | 171 | 171 | 43 | 43 |
| support | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| Morgan Sharpe Administration Limited | | | | | |
+---------------------------------------+-----------+--------+--------+---------+--------+
| - Company secretarial, | | 83 | - | - | - |
| administration, accounting & | c | | | | |
| directorship services | | | | | |
+---------------------------------------+-----------+--------+--------+---------+--------+
| | | | | | |
+---------------------------------------+-----------+--------+--------+---------+--------+
| Ogier Fund Administration (Guernsey) | | | | | |
| Limited | | | | | |
+---------------------------------------+-----------+--------+--------+---------+--------+
| - Company secretarial, | | 62 | 130 | - | 46 |
| administration, accounting & | d | | | | |
| directorship services | | | | | |
+---------------------------------------+-----------+--------+--------+---------+--------+
| | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| Ogier Group Limited | | | | | | | |
| Partnership | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| - Legal advice | | | d | 9 | 3 | - | - |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| Ingenious Corporate | | | | | | | |
| Finance Limited | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| - Corporate Finance | | | g | 79 | - | 26 | 30 |
| advice | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| Ingenious Consulting | | | | | | | |
| Associates Limited | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| - Consulting advice | | | h | - | 18 | - | - |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| Ingenious Consulting | | | | | | | |
| Network Limited | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| - Consulting advice | | | i | - | 8 | - | - |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
| | | | | | | | |
+------------------------+-----------+--+-----------+--------+--------+---------+--------+
Transactions between related parties
The following arrangements between related parties of the Company were agreed in
the period from 2001 to 2004 prior to IMAC acquiring its 90 per cent.
shareholding in Ingenious Ventures LP (IVLP) in 2008. IVLP holds the Company's
interest in Cream Holdings Limited and Stage Three Music Limited. At the time
that these arrangements were entered into the entities were not related to the
Company. There has been no variation of the terms of the arrangements since they
were originally entered into. Following the sale of the assets of Stage Three
Music Limited to BMG Rights Management GmbH, Stage Three Music Limited will
remain owned by IVLP until its liquidation is completed. This means the board of
Stage Three Music Limited will remain in place, but under the control of the
liquidator.
a. Patrick McKenna is a director of Cream Holdings Limited and receives a
salary of GBP11,627 per annum and a consultancy fee of GBP110,000 per annum.
b. Patrick McKenna is a director of Stage Three Music Limited and received a
salary of GBP11,627 per annum and a consultancy fee of GBP110,000 per annum
through to completion of the sale of the assets of Stage Three Music Limited to
BMG Rights Management GmbH.
c. Neil Blackley is a director of Stage Three Music Limited and received a
salary of GBP11,627 per annum through to completion of the sale of the assets of
Stage Three Music Limited to BMG Rights Management GmbH.
d. Patrick McKenna receives a consultancy fee of GBP45,000 per annum from iD
Distribution Limited, a subsidiary of Digital Rights Group Limited. This
arrangement was made prior to Digital Rights Group Limited acquiring iD
Distribution Limited in June 2007.
e. Ingenious Media Consulting Limited, a wholly-owned subsidiary within the
Ingenious Group, which is controlled by Patrick McKenna, receives a fee of
GBP120,000 per annum for the provision of finance director and financial
controller support to Cream Holdings Limited.
28. Events after the balance sheet date
a. Following a strategic review of the Company, the Board proposed changes
to the Company's investing policy, the Investment Management Agreement, its
Articles, and a reduction of capital. The proposed changes were approved by the
Shareholders at an EGM on 12 May 2010.
The new Articles of Incorporation of the Company were adopted in order to extend
the duration of the life of the Company to at least the eighth anniversary
following Admission; and to allow greater freedom for the Company to distribute
both income and capital to Shareholders. The term of the Investment Management
Agreement was extended for a further three years so that it expires no earlier
than 11 April 2014 (rather than 11 April 2011). The Investment Management
Agreement was also changed to permit the Manager (and its subsidiaries and
associated companies) to make investments for itself, or on behalf of its
clients or other funds it may manage that would otherwise be caught within the
current investing policy.
The investing policy was amended to halt any new investments, other than
investments relating to the investee companies and to remove the investment
restriction which prevents more than 15 per cent. of the Company's net assets
being invested in any one investee company at the time of that investment.
Subject to Guernsey company law and the Company's ongoing working capital
requirements, the revised investing policy permits the Company to make
distributions to Shareholders as and when the appropriate situations arise
following the realisation of its investee companies.
It was agreed to return cash to Shareholders of GBP50,108,962, by way of a
reduction of the Company's share capital (the "Returned Capital"). The Returned
Capital was distributed to Shareholders on 28 May 2010. Following this
distribution the Company had approximately GBP5.5 million of cash.
The Investment Management Agreement, has also been amended to reduce the annual
management fee from 2.0 per cent. of the Company's total net asset value to 1.25
per cent. of the Company's total net asset value minus the cash held by IMAC.
The incentive fee payable by the Company to the Manager is also reset by fixing
the base value at net asset value as at 31 December 2009 minus the Returned
Capital (being GBP41,849,918 in total).
b. A further investment of GBP0.5 million was made on 10 May 2010 in QobliQ
Limited. The investment has been used to finance the acquisition of
Singapore-based consumer, corporate and sports PR agency, Fulford PR.
c. On 15 July 2010 the assets of Stage Three Music Limited were acquired by
BMG Rights Management GmbH, subject to competition authority clearance.
SHAREHOLDER INFORMATION
1. Share price
All of the issued shares have been admitted to trading on AIM. Share price
information can be obtained from many financial websites including
www.londonstockexchange.com
2. Share trading
Shares can be bought and sold in the same way as any other AIM admitted company
via a stockbroker. The primary market maker for the shares is Canaccord Genuity
Limited.
Selling your shares may have tax consequences. You should contact your financial
adviser if you are in any doubt as to such potential consequences.
3. Change of Shareholder address
Communications with Shareholders are sent to the registered address held on the
register of members. In the event of a change of address or any other relevant
amendments, please notify the Company's registrar, Capita Registrars, under the
signature of the registered holder of the shares in question.
4. Investor relations
The Company and the Manager are committed to maintaining excellent investor
relations. If you have any questions about the Company's progress please
contact:
Patrick McKenna/Patrick Bradley Ingenious
020 7319 4000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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