TIDMIMAC
RNS Number : 1452Y
Ingenious Media Active Capital Ltd
17 December 2010
17 December 2010
INGENIOUS MEDIA ACTIVE CAPITAL LIMITED
Unaudited half-yearly results for the period 1 April 2010 to 30
September 2010
Ingenious Media Active Capital Limited today announces its
half-yearly results for the period from 1 April 2010 to 30
September 2010.
CHAIRMAN'S STATEMENT
I am pleased to present the Half-Yearly Report and Accounts in
respect of the Company for the six month period ended 30 September
2010.
As I reported in the Annual Report and Accounts for the year
ended 31 March 2010, the Manager has been concentrating on actively
managing the remaining portfolio investee companies and seeking
exits at the appropriate time. Stage Three Music Limited was
successfully sold to BMG Rights Management GmbH in July 2010,
although certain deferred payments will not be received by the
Company until the end of this financial year.
The Board will continue to review the cash position of the
Company as realisations are made, to assess whether a distribution
to Shareholders would be appropriate, in line with our commitment
to return cash from exits to Shareholders, subject to the working
capital requirements of the Company. Follow-on investments may also
be made by the Manager where this is protective of or enhancing to
company valuations.
Mike Luckwell
Chairman
16 December 2010
MANAGER'S REVIEW
Market Review and Prospects
Market conditions, although improved, remain sensitive to
overall changes in the economy. However, certain sub-sectors of
media are beginning to show positive improvement, particularly in
marketing services. TV production is also showing promise as new
management at ITV and Channel 4, as well as increased buyer
interest from overseas, start to influence the sector. Live events
remain strong.
Investment Activity
The Manager is not considering new investments, only limited
follow-on investments into existing portfolio companies as referred
to in the Chairman's Statement.
The Company provided a further GBP0.5 million of funding to
QobliQ Limited for the acquisition of Fulford PR in May 2010.
Realisation of Investments
In July 2010 the assets of Stage Three Music Limited were sold
to BMG Rights Management GmbH.
Investments and Committed Funds
Whizz Kid Entertainment Limited
June 2006, GBP2.25 million
February 2008, GBP2.00 million
Whizz Kid Entertainment Limitedis 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 Let's Dance show for BBC1 has enjoyed two series
with excellent ratings, and a third series has recently been
commissioned. A new format, Being N--Dubz also aired during the
summer on Channel 4 to critical acclaim and exceeded ratings
expectations.
Whizz Kid Entertainment Limitedcurrently 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; 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. 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 Adidas, Lynx and
LG.
Two Way Media Holdings Limited (including NetPlay TV plc
shares)
May 2007, GBP5.34 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. Two Way is also beginning to push its
internet protocol across Facebook, and other online gaming
portals.
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 on 31 March 2010 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.
Taste of London and Dublinhave been successful events in the
first six months of this financial year, and the next six months
will include key events including taking Top Gear Live across four
countries, Taste of Christmas in two countries and the creation of
a new food based show in Australia using the Masterchef brand.
QobliQ Limited
December 2007, GBP7.30 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).
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. The Group was significantly impacted by the downturn in
marketing activity that accompanied the global recession, but is
seeing positive signs of recovery across all sectors of its
business.
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, prior to 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 will allow 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 2010 festival repeated the success of the previous year,
selling out in advance. Management are confident that this success
can again be replicated in 2011 as many of the factors driving the
performance of previous events, including a change of venue and a
move to a two-day format, will be continued.
The club nights business in Ibiza has also seen stronger than
expected performance.
Stage Three Music Limited
August 2008, GBP5.03 million
Ingenious Ventures LP sold the assets of Stage Three Music
Limited to BMG Rights Management GmbH in July 2010.
Ingenious Ventures
16 December 2010
Condensed Company Statement of Comprehensive Income
(unaudited)
for the six months ended 30 September 2010
Six months Six months ended Year ended
ended 30 30 September 31 March
September 2010 2009 2010
Note GBP '000 GBP '000 GBP '000
=================== ======= ================ ================= ===========
Revenue 1f 145 139 277
Other operating
expenses 1g (643) (816) (1,361)
Investment revenue 1f, 1e 97 185 341
Loss on investments
at fair value
through profit or
loss 1d (853) (3,148) (6,476)
(Loss)/gain on
disposal of
investments (353) - 43
Investment
management fees 17 (209) (980) (1,793)
Loss before
taxation (1,816) (4,620) (8,969)
Income tax expense 3 - - -
Loss for the
period/year (1,816) (4,620) (8,969)
=================== ======= ================ ================= ===========
Loss per share
(basic and diluted
pence per share) 4 (1.27) (3.23) (6.26)
=================== ======= ================ ================= ===========
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.
Condensed Consolidated Statement of Comprehensive Income
(unaudited)
for the six months ended 30 September 2010
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2010 2009 2010
Note GBP '000 GBP '000 GBP '000
========================== ===== ============== ============== ===========
Continuing operations
Revenue 1f 21,526 17,200 44,274
Cost of sales 1g (13,459) (11,070) (26,992)
Other operating expenses 1g (10,058) (9,122) (20,433)
Investment revenue 1f 97 206 369
Income or share of results
from associates - - 1,275
(Loss)/gain on investments
at fair value through
profit or loss 10 (853) 2,070 599
(Loss)/gain on disposal of
investment (347) - 43
Impairment of goodwill 5 - (3,819) (3,203)
Impairment of intangible
assets 6 (75) - (1,904)
Investment management fees 17 (209) (980) (1,793)
Finance costs (319) (256) (640)
Loss before taxation (3,697) (5,771) (8,405)
Income tax
(expense)/credit 3 (281) 39 (709)
Loss for the period/year
from continuing
operations (3,978) (5,732) (9,114)
Discontinued operations
Profit for the period/year
from discontinued
operations - 54 81
Non-controlling interests 16 1,551 (231) (296)
========================== ===== ============== ============== ===========
Loss for the period/year (2,427) (5,909) (9,329)
Loss per share on
continuing operations
(basic and diluted pence
per share) 4 (1.70) (4.17) (6.58)
Earnings per share on
discontinued operations
(basic and diluted pence
per share) 4 0.00 0.04 0.06
Loss per share (basic and
diluted pence per share) 4 (1.70) (4.13) (6.52)
========================== ===== ============== ============== ===========
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.
Condensed Company Statement of Financial Position
(unaudited)
as at 30 September 2010
30 September 30 September 31 March
2010 2009 2010
Note GBP '000 GBP '000 GBP '000
Non current assets
Investment in subsidiaries 7 31,284 34,648 32,898
Financial assets at fair value
through profit or loss 10 256 1,280 1,109
31,540 35,928 34,007
Current assets
Trade and other receivables 157 307 231
Cash and cash equivalents 11 6,519 58,121 55,768
6,676 58,428 55,999
Current liabilities
Trade and other payables (406) (380) (325)
Net current assets 6,270 58,048 55,674
============================== ===== ============= ============= =========
Net assets 37,810 93,976 89,681
============================== ===== ============= ============= =========
Equity
Share premium account 14 21,166 71,275 71,275
Distributable reserve 70,663 70,663 70,663
Shares held in treasury 13 (515) (515) (515)
Retained earnings (53,504) (47,447) (51,742)
============================== ===== ============= ============= =========
Total equity 37,810 93,976 89,681
============================== ===== ============= ============= =========
Net asset value (basic and
diluted pence per share) 15 26.41 65.64 62.64
============================== ===== ============= ============= =========
The financial statements were approved by the Board and
authorised for issue on 16 December 2010.
Signed on behalf of the Board:
David Jeffreys Serena Tremlett
Director Director
Condensed Consolidated Statement of Financial Position
(unaudited)
as at 30 September 2010
30 September 30 September 31 March
2010 2009 2010
Note GBP '000 GBP '000 GBP '000
Non current assets
Goodwill 5 14,842 14,449 13,930
Other intangible assets 6 8,058 8,818 8,662
Fixtures, fittings and
equipment 568 649 466
Financial assets at fair value
through profit or loss 10 4,062 8,613 7,251
Investments in associates (13) (840) 32
27,517 31,689 30,341
Current assets
Inventories 1,329 1,357 681
Trade and other receivables 24,877 28,600 23,882
Cash and cash equivalents 11 14,668 70,955 68,888
40,874 100,912 93,451
Current liabilities
Trade and other payables (31,966) (36,773) (33,752)
Current tax liabilities (428) (34) (58)
(32,394) (36,807) (33,810)
============================== ===== ============= ============= =========
Net current assets 8,480 64,105 59,641
Non current liabilities
Long term third party loans (2,777) (4,273) (2,701)
Deferred tax (5) (4) (4)
Deferred consideration (3,187) (3,723) (2,959)
Net assets 30,028 87,794 84,318
============================== ===== ============= ============= =========
Equity
Share premium account 14 21,166 71,275 71,275
Distributable reserve 70,663 70,663 70,663
Shares held in treasury 13 (515) (515) (515)
Retained earnings (63,319) (57,269) (60,812)
Foreign currency translation
reserve (71) 37 39
============================== ===== ============= ============= =========
Equity attributable to equity
holders of the parent 27,924 84,191 80,650
Non-controlling interests 16 2,104 3,603 3,668
Total equity 30,028 87,794 84,318
============================== ===== ============= ============= =========
Net asset value (basic and
diluted pence per share) 15 19.50 58.81 56.33
============================== ===== ============= ============= =========
The financial statements were approved by the Board and
authorised for issue on 16 December 2010.
Signed on behalf of the Board:
David Jeffreys Serena Tremlett
Director Director
Condensed Company Statement of Changes in Equity (unaudited)
for the six months ended 30 September 2010
Share Shares
premium held in Retained Total
account Distribut-able treasury earnings equity
GBP Reserves GBP GBP GBP
Note '000 GBP '000 '000 '000 '000
============== ====== ========= =============== ========= ========= =========
Balance at 1 April
2010 71,275 70,663 (515) (51,742) 89,681
Capital distribution (50,109) - - - (50,109)
Recognition
in respect
of
share-based
payments 1r - - - 54 54
Retained losses for
the period - - - (1,816) (1,816)
- - -
============== ====== ========= =============== ========= ========= =========
Balance at 30
September 2010 21,166 70,663 (515) (53,504) 37,810
====================== ========= =============== ========= ========= =========
for the six months ended 30 September 2009
Share Shares
premium held in Retained Total
account Distribut-able treasury earnings equity
GBP Reserves GBP GBP GBP
Note '000 GBP '000 '000 '000 '000
============= ====== ======== =============== ========= ========= ========
Balance at 1 April
2009 71,275 70,663 (515) (42,881) 98,542
Recognition
in respect
of
share-based
payments 1r - - - 54 54
Retained losses for
the period - - - (4,620) (4,620)
Balance at 30
September 2009 71,275 70,663 (515) (47,447) 93,976
===================== ======== =============== ========= ========= ========
for the year ended 31 March 2010
Share Shares
premium held in Retained Total
account Distribut-able treasury earnings equity
GBP Reserves GBP GBP GBP
Note '000 GBP '000 '000 '000 '000
============= ====== ======== =============== ========= ========= ========
Balance at 1 April
2009 71,275 70,663 (515) (42,881) 98,542
Recognition
in respect
of
share-based
payments 1r - - - 108 108
Retained losses for
the year - - - (8,969) (8,969)
Balance at 31 March
2010 71,275 70,663 (515) (51,742) 89,681
===================== ======== =============== ========= ========= ========
Condensed Consolidated Statement of Changes in Equity
(unaudited)
for the six months ended 30 September 2010
Share Shares
Premium Distribut- Transla-tion held in Retained Total
Account able Reserve treasury Earnings Non-controlling equity
GBP Reserves GBP GBP GBP Interest GBP
Note '000 GBP '000 '000 '000 '000 GBP '000 '000
============== ===== ========= =========== ============= ========= ========= ================ =========
Balance at 1
April 2010 71,275 70,663 39 (515) (60,812) 3,668 84,318
Capital
distribution 14 (50,109) - - - - - (50,109)
Recognition
in respect
of
share-based
payments 1r - - - - 54 - 54
Other reserve
movements - - (110) - (134) 33 (211)
Dividends - - - - - (46) (46)
Retained
losses for
the period - - - - (2,427) (1,551) (3,978)
Balance at 30
September 2010 21,166 70,663 (71) (515) (63,319) 2,104 30,028
===================== ========= =========== ============= ========= ========= ================ =========
for the six months ended 30 September 2009
Share Shares
Premium Distribut- Transla-tion held in Retained Total
Account able Reserve treasury Earnings Non-controlling equity
GBP Reserves GBP GBP GBP Interest GBP
Note '000 GBP '000 '000 '000 '000 GBP '000 '000
================== ====== ======== =========== ============= ========= ========= ================ ========
Balance at 1 April
2009 71,275 70,663 110 (515) (51,414) 3,372 93,491
Recognition in
respect of
share-based
payments 1r - - - - 54 - 54
Other reserve
movements - - (73) - - - (73)
Retained (losses)/profits
for the period - - - - (5,909) 231 (5,678)
Balance at 30 September
2009 71,275 70,663 37 (515) (57,269) 3,603 87,794
========================== ======== =========== ============= ========= ========= ================ ========
for the year ended 31 March 2010
Share Shares
Premium Distribut- Transla-tion held in Retained Total
Account able Reserve treasury Earnings Non-controlling equity
GBP Reserves GBP GBP GBP Interest GBP
Note '000 GBP '000 '000 '000 '000 GBP '000 '000
================== ====== ======== =========== ============= ========= ========= ================ ========
Balance at 1 April
2009 71,275 70,663 110 (515) (51,414) 3,372 93,491
Recognition in
respect of
share-based
payments 1r - - - - 108 - 108
Other reserve
movements - - (71) - (177) - (248)
Retained (losses)/profits
for the year - - - - (9,329) 296 (9,033)
Balance at 31
March 2010 71,275 70,663 39 (515) (60,812) 3,668 84,318
========================== ======== =========== ============= ========= ========= ================ ========
Condensed Company Statement of Cash Flows (unaudited)
for the six months ended 30 September 2010
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2010 2009 2010
Note GBP '000 GBP '000 GBP '000
========================== ===== ============== ============== ===========
Net cash flow from
operating activities (401) (1,679) (2,625)
========================== ===== ============== ============== ===========
Investing activities
Purchase of investments
(net of arrangement
fees) - (310) (408)
Acquisition of subsidiary
undertakings (500) (350) (2,146)
Sale of investment 7 1,761 - 487
Net cash flow used in
investing activities 1,261 (660) (2,067)
========================== ===== ============== ============== ===========
Financing activities
Capital distribution 14 (50,109) - -
Net cash flow used in
financing activities (50,109) - -
========================== ===== ============== ============== ===========
Net decrease in cash and
cash equivalents (49,249) (2,339) (4,692)
========================== ===== ============== ============== ===========
Cash and cash equivalents
at beginning of
period/year 55,768 60,460 60,460
========================== ===== ============== ============== ===========
Cash and cash equivalents
at end of period/year 6,519 58,121 55,768
========================== ===== ============== ============== ===========
Cash flow from operating
activities
Loss before taxation (1,816) (4,620) (8,969)
Fair value loss on
financial assets 853 3,148 6,476
Loss on disposal of
investment 353 - -
Recognition of share based
payment 54 54 108
Decrease in amounts
receivable 74 615 564
Increase/(decrease) in
amounts payable 81 (749) (804)
Gain on cash fund - (127) -
Net cash flow from
operating activities (401) (1,679) (2,625)
========================== ===== ============== ============== ===========
Condensed Consolidated Statement of Cash Flows (unaudited)
for the six months ended 30 September 2010
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2010 2009 2010
Note GBP '000 GBP '000 GBP '000
========================== ===== ============== ============== ===========
Net cash flow from
operating activities (6,763) (4,542) (4,640)
========================== ===== ============== ============== ===========
Investing activities
Purchase of investments
(net of arrangement
fees) - (310) (408)
Acquisition of subsidiary
undertakings 8 1,388 (71) (114)
Sale of investment 10 1,989 - 487
Acquisition of intangibles (132) (227) (377)
Disposal of non current
assets 69 - -
Purchases of fixtures,
fittings and equipment (264) (73) (161)
Cash deconsolidated on
disposal of discontinued
operations - (57) (57)
Net cash flow used in
investing activities 3,050 (738) (630)
========================== ===== ============== ============== ===========
Financing activities
Capital distribution 14 (50,109) - -
Third party borrowings (47) 2,000 -
Amounts paid to
non-controlling
interests (241) - -
Net cash flow used in
financing activities (50,397) 2,000 -
========================== ===== ============== ============== ===========
Net decrease in cash and
cash equivalents (54,110) (3,280) (5,270)
========================== ===== ============== ============== ===========
Cash and cash equivalents
at beginning of
period/year 68,888 74,217 74,217
========================== ===== ============== ============== ===========
Effect of foreign exchange
rate changes (110) 18 (59)
========================== ===== ============== ============== ===========
Cash and cash equivalents
at end of period/year 14,668 70,955 68,888
========================== ===== ============== ============== ===========
Cash flow from operating
activities
Loss before taxation (3,697) (5,678) (8,405)
Fair value loss/(gain) on
financial assets 10 853 (2,070) (599)
Recognition of share based
payment 54 54 108
Loss on disposal of
investment 347 - -
Impairment of goodwill 5 - 3,819 3,203
Impairment of intangible
assets 6 75 - 1,904
Amortisation of intangible
assets 6 907 508 304
(Increase)/decrease in
amounts receivable (995) 1,666 2,235
Decrease in amounts
payable (3,798) (2,143) (3,478)
Increase in inventories (648) (719) (43)
Depreciation of fixtures,
fittings and equipment 161 208 288
Gain on cash fund - (127) -
Other (22) (60) (157)
Net cash flow from
operating activities (6,763) (4,542) (4,640)
========================== ===== ============== ============== ===========
Notes to the Condensed Interim Financial Statements
(Unaudited)
for the six months ended 30 September 2010
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 condensed set of 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.
The condensed set including the Half-Yearly Report and Accounts
have been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting".
The 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 period.
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 of GBP50.1
million 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 5, 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 on page 17 the decision was taken by the Board during
the period 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 Condensed 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 period under review are recognised in the Condensed
Consolidated Statement of Comprehensive Income. Generally the Group
recognises all financial assets using trade date accounting. An
assessment of whether the value of a financial asset is impaired is
made at least at each reporting date. All income relating to
financial assets is recognised in the Condensed 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 Condensed
Consolidated Statement of Financial Position.
Cash and cash equivalents include cash in hand and deposits held
on 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
Condensed Consolidated Statement of Financial Position at fair
value determined by current market prices.
Fair value measurement hierarchy
IFRS 7, "Financial Instruments: Disclosures", 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 of the financial asset or
liability 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
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2010 2009 2010
GBP '000 GBP '000 GBP '000
========= ============== ============== ===========
Level 1 256 1,280 1,109
Level 2 - - -
Level 3 31,284 34,648 32,898
========= ============== ============== ===========
31,540 35,928 34,007
========= ============== ============== ===========
Consolidated
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2010 2009 2010
GBP '000 GBP '000 GBP '000
========= ============== ============== ===========
Level 1 256 1,280 1,109
Level 2 - - -
Level 3 3,806 7,333 6,142
========= ============== ============== ===========
4,062 8,613 7,251
========= ============== ============== ===========
Adoption of new and revised standards
At the date of authorisation of the financial statements, the
following Standards and Interpretations, which have not been
applied in the financial statements, were in issue but not yet
effective:
-- IFRS 3 "Business Combinations (Amended)" and IAS 27
"Consolidated and Separate Financial Statements (Amended)" -
amendments resulting from May 2010 Annual Improvements to IFRSs",
effective for periods beginning on or after 1 July 2010.
-- IFRS 7 "Financial Instruments: Disclosures" - amendments
resulting from May 2010 Annual Improvements to IFRSs, effective for
periods beginning on or after 1 January 2011.
-- IFRS 7 "Financial Instruments: Disclosures" - amendments
enhancing disclosures about transfers of financial assets,
effective for periods beginning on or after 1 July 2011.
-- IAS 1 "Presentation of Financial Statements" - amendments
resulting from May 2010 Annual Improvements to IFRSs, effective for
periods beginning on or after 1 January 2011.
-- IAS 24 "Related Party Disclosures" - revised definition of
related parties, effective for periods beginning on or after 1
January 2011.
-- IAS 34 "Interim Financial Reporting" - amendments resulting
from May 2010 Annual Improvements to IFRSs, effective for periods
beginning on or after 1 January 2011.
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.
Principal accounting policies
a. Basis of consolidation
The Condensed Interim Consolidated Financial Statements
incorporate the financial statements of the Company and the Group
made up to 30 September 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.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling 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.
The results of subsidiaries acquired during the year are
included in the Condensed Consolidated Statement of Comprehensive
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,
"Business Combinations (Amended)", 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 non-controlling Shareholders in the acquiree are initially
measured at the minority's proportion of the net fair value of the
assets, liabilities and contingent liabilities at the time of
acquisition.
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 condensed set of 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 investment and its materiality in
the context of the total investment portfolio and will use
reasonable assumptions and estimations.
-- An appropriate methodology incorporates available information
about all factors that are likely to materially affect the fair
value of the investment. The valuation methodologies are applied
consistently from period to period, except where a change would
result in a better estimate of fair value. Any changes in valuation
methodologies will be clearly disclosed in the financial
statements.
The most widely used methodologies are listed below. In
assessing which methodology is appropriate, the Directors are
predisposed towards those methodologies that draw upon market-based
measures of risk and return.
-- 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
andservices 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 2 and 5
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 condensed set of financial
statements. Under the equity method, investments in the associates
are carried in the Condensed Consolidated Statement of Financial
Position 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
The Company accounts for the fair value of share options at the
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 price 100.00 pence
-- Expected volatility 11.55%
-- Expected life 10 years
-- Risk free rate 4.413%
-- Expected dividends NIL
2. 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 includes 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)
Six Six Year Six Six
months months ended months months
Segment ended 30 ended 30 31 ended 30 ended 30
revenues and September September March September September Year ended 31
results 2010 2009 2010 2010 2009 March 2010
GBP
GBP '000 GBP '000 '000 GBP '000 GBP '000 GBP '000
================ ========== ========== ======== ========== ========== ==============
Investments
portfolio 21,526 17,200 44,274 6,680 (212) 8,192
Total for
continuing
operations 21,526 17,200 44,274 6,680 (212) 8,192
Share of profit
of associates - - 1,275
Central
administration
costs and
directors'
salaries (10,058) (9,122) (20,433)
Finance costs (319) (256) (640)
Consolidation
adjustments - 3,819 3,201
================ ========== ========== ======== ========== ========== ==============
Loss before tax (3,697) (5,771) (8,405)
================ ========== ========== ======== ========== ========== ==============
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.
Six months ended Six months ended Year ended
Segment assets 30 September 2010 30 September 2009 31 March 2010
GBP '000 GBP '000 GBP '000
====================== ================== ================== ==============
Investments portfolio 68,391 132,601 123,792
====================== ================== ================== ==============
Total segment and
consolidated assets 68,391 132,601 123,792
====================== ================== ================== ==============
Segment liabilities
====================== ================== ================== ==============
Investments portfolio 38,363 44,807 39,474
====================== ================== ================== ==============
Total segment and
consolidated
liabilities 38,363 44,807 39,474
====================== ================== ================== ==============
Revenue from external customers Non current assets
Six Six Six Six Year
months months Year months months ended
ended 30 ended 30 ended 31 ended 30 ended 30 31
Geographical September September March September September March
information 2010 2009 2010 2010 2009 2010
GBP
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 '000
================ ========== ========== ========== ========== ========== ========
United Kingdom 9,707 7,229 21,685 27,517 31,641 29,592
================ ========== ========== ========== ========== ========== ========
Europe
(excluding
UK) 6,458 6,230 13,168 - 48 58
================ ========== ========== ========== ========== ========== ========
Other 5,361 3,741 9,421 - - 691
================ ========== ========== ========== ========== ========== ========
21,526 17,200 44,274 27,517 31,689 30,341
================ ========== ========== ========== ========== ========== ========
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.
3. 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.
4. 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 (six months ended 30 September 2009: 143,168,463; year ended
31 March 2010: 143,168,463), being the weighted average number of
shares for the purpose of the earnings per share calculation.
5. Goodwill
Consolidated
Six months Six months Year ended
ended ended 31 March
30 Sep 2010 30 Sep 2009 2010
GBP '000 GBP '000 GBP '000
====================================== ============ ============ ==========
Cost
Balance at the beginning of the
period/year 36,441 37,505 37,505
Recognised on acquisition of
subsidiaries 929 71 149
Purchased goodwill - - 144
Adjustment to brought forward
cost (17) - (32)
Reallocation to intangibles - (9,587) (1,325)
====================================== ============ ============ ==========
Balance at the end of the period/year 37,353 27,989 36,441
Accumulated impairment losses
Balance at the beginning of the
period/year (22,511) (19,308) (19,308)
Impairment losses for the period/year
Continuing operations - (3,819) (3,203)
Goodwill written off in the
period/year - 9,587 -
Balance at the end of the period/year (22,511) (13,540) (22,511)
Carrying amount at the end of
the period/year 14,842 14,449 13,930
====================================== ============ ============ ==========
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,
Brand Events Australia Limited and Taste of Dublin 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,
Arena Sports Marketing Limited and Fulford Public Relations
Consultancy PTE Ltd.
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 period 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:
Intangible assets with
Goodwill indefinite useful lives
GBP '000 GBP '000
============ ======== ========================
Investments 14,842 5,532
============ ======== ========================
During the period ended 30 September 2010, the Group has
determined that there has been no impairment on its
cash--generating units containing goodwill or intangible assets
with indefinite useful lives (six months ended 30 September 2009:
GBP3,819, year ended 31 March 2010: GBP3,203). The impairment of
goodwill and intangible assets in previous periods 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.
Intangible assets
with
indefinite useful
Goodwill lives
GBP '000 GBP '000
================================ ======== =================
Value in use - -
Fair value less costs to sell 14,842 5,532
================================ ======== =================
Total 14,842 5,532
================================ ======== =================
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.
6. Other intangible assets
Consolidated
Six months Six months Year
ended ended ended
30 Sep 2010 30 Sep 2009 31 March 2010
GBP '000 GBP '000 GBP '000
=================================== ============ ============ =============
Cost or valuation
Balance at the beginning of the
period/year 12,932 11,161 11,161
Additions in period/year 378 227 377
Reclassification - - 1,325
Recognised on acquisition of a
subsidiary - - 69
=================================== ============ ============ =============
Balance at the end of the
period/year 13,310 11,388 12,932
Amortisation
Balance at the beginning of the
period/year (673) (369) (369)
Charge for the period/year (907) (508) (304)
=================================== ============ ============ =============
Balance at the end of the
period/year (1,580) (877) (673)
Impairment
Balance at the beginning of the
period/year (3,597) (1,693) (1,693)
Charge for the period/year (75) - (1,904)
=================================== ============ ============ =============
Balance at the end of the
period/year (3,672) (1,693) (3,597)
Carrying amount at the end of the
period/year 8,058 8,818 8,662
=================================== ============ ============ =============
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 above.
7. Investment in subsidiaries
Company
Year
Six months Six months ended
ended ended 31 March
30 Sep 2010 30 Sep 2009 2010
GBP '000 GBP '000 GBP '000
===================================== ============= ============= =========
Opening fair value at the beginning
of the period/year 32,898 38,416 38,416
Reclassifications - 350 (1,000)
Purchases at cost 500 (1,000) 2,281
Disposal proceeds (1,761) - -
Investment repaid - - (487)
Fair value adjustment (353) (3,118) (6,312)
===================================== ============= ============= =========
Closing fair value at the end
of the period/year 31,284 34,648 32,898
===================================== ============= ============= =========
Reclassification in the year ended 31 March 2010 includes the
4,266,667 shares received in NetPlay TV plc from Two Way Media
Holdings Limited as repayment of loan notes.
Disposal proceeds in the six months ended 30 September 2010
relate to the disposal of IMAC's indirect share in Stage Three
Music to BMG in July 2010.
Paid as Paid as Paid as
at 30 at 30 at 31
Name of % of Full Sep Sep March
subsidiary Class class Country of Principal commitment 2010 2009 2010
undertaking of share held incorpo-ration activity GBP'000 GBP'000 GBP'000 GBP'000
=============== ============ ====== =============== ============= =========== ======== ======== ========
Whizz Kid
Entertainment Television
Limited Ordinary 47.1% UK production 4,250 2,750 2,750 2,750
=============== ============ ====== =============== ============= =========== ======== ======== ========
Digital
Rights Group Television
Limited Ordinary 79.9% UK distribution 11,270 8,274 8,274 8,274
=============== ============ ====== =============== ============= =========== ======== ======== ========
Digital
marketing &
Outside creative
Line Limited Ordinary 0.0% UK agency 1,500 1,000 1,000 1,000
=============== ============ ====== =============== ============= =========== ======== ======== ========
Two Way Media Interactive
Holdings television
Limited Ordinary 84.3% UK company 4,935 4,655 4,585 4,655
=============== ============ ====== =============== ============= =========== ======== ======== ========
Enigmas2
Limited
(formerly
In2Games Video games
Limited) Ordinary 43.8% UK business 4,560 4,560 4,560 4,560
=============== ============ ====== =============== ============= =========== ======== ======== ========
Brand Events Consumer
Holdings events
Limited Ordinary 67.0% UK business 9,080 8,583 6,820 8,583
=============== ============ ====== =============== ============= =========== ======== ======== ========
Marketing
QobliQ Limited Preference 73.4% UK services 12,867 12,867 12,367 12,367
=============== ============ ====== =============== ============= =========== ======== ======== ========
Review Centre Internet/new
Limited Ordinary 71.5% UK media 7,034 7,034 7,034 7,034
=============== ============ ====== =============== ============= =========== ======== ======== ========
Ingenious
Ventures Investment
LP N/a 90.0% UK vehicle 1,035 4,826 4,728 4,826
=============== ============ ====== =============== ============= =========== ======== ======== ========
Total 56,531 54,549 52,118 54,049
============================ ====== =============== ============= =========== ======== ======== ========
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 the completion of the liquidation of Stage Three
Limited's assets, and continues to hold its investment in Cream
Holdings Limited.
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 GBP4.9 million.
Undrawn commitments
All outstanding funding commitments are at the discretion of the
Company and the Manager.
8. Acquisition of subsidiaries
During the period the Group acquired a controlling interest in
Brand Events Australia Limited, Taste of Dublin Limited and Fulford
Public Relations Consultancy PTE Ltd which resulted in goodwill
arising. The fair value of assets acquired and liabilities assumed
were as follows:
Year
Six months ended Six months ended ended
30 Sep 2010 30 Sep 2009 31 March 2010
GBP '000 GBP '000 GBP '000
======================= ================= ================= ===============
Purchased goodwill - 71 144
Intangibles - - 69
Fixtures and fittings 20 - -
Cash and cash
equivalents 2,005 - -
Accounts receivable 560 - 42
Trade payables (2,141) - (191)
Minority interest (118) - -
Net assets acquired 326 71 64
Goodwill on
consolidation 1,084 - 149
======================= ================= ================= ===============
Total consideration 1,410 71 213
Total consideration
satisfied by:
Cash 617 71 114
Consideration shares 110 - -
Deferred
consideration 683 - 50
Other - - 49
======================= ================= ================= ===============
1,410 71 213
======================= ================= ================= ===============
Net cash
(inflow)/outflow
arising on
acquisition:
Cash consideration 617 71 114
Cash and cash
equivalents acquired (2,005) - -
======================= ================= ================= ===============
(1,388) 71 114
======================= ================= ================= ===============
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 period is
a profit of GBP0.1 million relating to acquired subsidiaries (year
ended 31 March 2010: loss of GBP0.1 million; six months ended 30
September 2009: GBPnil). 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 period, it is inappropriate to disclose the
revenue and profit and loss of the combined entities for the period
as though the acquisition date was the start of the financial
period.
9. Investment in associates
Six months ended Six months ended Year ended 31
30 Sep 2010 30 Sep 2009 March 2010
GBP '000 GBP '000 GBP '000
=================== ================= ================= ===================
Aggregate amounts
relating to
associates
Total assets 9,473 2,601 13,504
Total liabilities (9,871) (6,871) (10,795)
Revenues 9,702 2,117 27,458
Loss (2,126) 2,038 (1,073)
=================== ================= ================= ===================
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 share % of class Country of
held incorporation
=============================== =============== =========== ===============
Taste Festivals Limited Ordinary 50.0% UK
Sub Zero Limited Ordinary 50.0% UK
Brand Events Management Ordinary 50.0% Ireland
Ireland Limited
Brand Events South Africa Ordinary 50.0% South Africa
Pty Limited
Brand Events Italy Ordinary 50.0% Italy
Brand Events Beneolux Ordinary 50.0% Holland
Brand Events Live Limited Ordinary 49.9% UK
Golfmania Limited Ordinary 49.9% UK
Dance Floor Limited Ordinary 49.9% UK
DRG Media Assets Limited Ordinary 49.9% UK
Taste Xmas Live Limited Ordinary 49.9% 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, the final shareholders meeting was held on
26 May 2010 and Two Way Gaming Limited was 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.
10. Financial assets at fair value through profit or loss
Company
Six months ended Six months ended Year ended
30 Sep 2010 30 Sep 2009 31 March 2010
GBP '000 GBP '000 GBP '000
====================== ================ ================ =============
Opening fair value 1,109 - -
Reclassification - 1,000 1,000
Purchases at cost - 310 310
Fair value adjustment (853) (30) (201)
---------------------- ---------------- ---------------- -------------
Closing fair value 256 1,280 1,109
====================== ================ ================ =============
Consolidated
Six months ended Six months ended Year ended
30 Sep 2010 30 Sep 2009 31 March 2010
GBP '000 GBP '000 GBP '000
=========================== ================ ================ =============
Opening fair value 7,251 5,233 5,233
Reclassification - 1,000 1,000
Purchases at cost - 310 419
Disposal proceeds (1,989) - -
Fair value adjustment (853) 2,070 599
Loss on disposal of
investment (347) - -
--------------------------- ---------------- ---------------- -------------
Closing fair value 4,062 8,613 7,251
=========================== ================ ================ =============
Reclassification in the year ended 31 March 2010 and six months
ended 30 September 2009 includes the 4,266,667 shares received in
NetPlay TV plc from Two Way Media Holdings Limited as repayment of
loan notes.
The disposal proceeds of GBP1,989,000 relates to the sale of
Stage Three Music Limited to BMG Rights Management GmbH in July
2010.
Paid as Paid as Paid as
at 30 at 30 at 31
% of Full Sep Sep March
Name of Class class Country of Principal commit-ment 2010 2009 2010
investment of share held incorporation activity GBP'000 GBP'000 GBP'000 GBP'000
=============== ============ ====== ============== ============== ============ ======== ======== ========
Incisive Business
Media Limited Ordinary 0.1% UK publishing 17,903 17,903 17,903 17,903
=============== ============ ====== ============== ============== ============ ======== ======== ========
Trinity
Universal Interactive
Holding media
Limited Ordinary 0% UK marketing 5,710 5,710 5,710 5,710
=============== ============ ====== ============== ============== ============ ======== ======== ========
British
Sportbuzz Virgin Internet/new
Limited Preference 36% Islands media 1,604 1,604 1,604 1,604
=============== ============ ====== ============== ============== ============ ======== ======== ========
Crystal
Entertainment Talent
Limited Ordinary 10% UK relationships 1,311 1,311 1,311 1,311
=============== ============ ====== ============== ============== ============ ======== ======== ========
NetPlay Gaming and
TV plc Ordinary 2.1% UK gambling - - - -
=============== ============ ====== ============== ============== ============ ======== ======== ========
Total 26,528 26,528 26,528 26,528
============================ ====== ============== ============== ============ ======== ======== ========
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
which is still ongoing.
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.
11. 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 GBP2,101k (six months ended 30
September 2009: GBP3,306k; year ended 31 March 2010: GBP4,096k) 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 17 on related party
transactions.
12. Share capital
Company and Consolidated
30 Sep 2010 30 Sep 2009 31 March 2010
Authorised share capital No. No. No.
-------------------------------- ----------- ----------- -------------
Ordinary shares of no par value Unlimited Unlimited Unlimited
-------------------------------- ----------- ----------- -------------
Issued and fully paid No. No. No.
-------------------------------- ----------- ----------- -------------
Ordinary shares of no par value 144,402,402 144,402,402 144,402,402
-------------------------------- ----------- ----------- -------------
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.
13. Shares held in treasury
During the period 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
period.
Company and Consolidated
30 Sep 2010 30 Sep 2009 31 March 2010
Shares held in treasury No. No. No.
-------------------------------- ----------- ----------- -------------
Ordinary shares of no par value 1,233,939 1,233,939 1,233,939
-------------------------------- ----------- ----------- -------------
14. Share premium account
Company and Consolidated
30 Sep 2010 30 Sep 2009 31 March 2010
GBP '000 GBP '000 GBP '000
===================================== =========== =========== =============
Balance at the beginning of
the period/year 71,275 71,275 71,275
Capital distribution (50,109) - -
------------------------------------- ----------- ----------- -------------
Balance at the end of the period/year 21,166 71,275 71,275
===================================== =========== =========== =============
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
extraordinary general meeting 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 in an amount of
GBP50.1 million, 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.
15. Net asset value per share
Company Consolidated
No. of Shares pence pence
================== ============= ======= ============
30 September 2010
Ordinary shares
Basic and diluted 143,168,463 26.41 19.50
================== ============= ======= ============
30 September 2009
Ordinary shares
Basic and diluted 143,168,463 65.64 58.81
================== ============= ======= ============
31 March 2010
Ordinary shares
Basic and diluted 143,168,463 62.64 56.33
================== ============= ======= ============
16. Non-controlling interests
Consolidated
30 Sep 30 Sep 31 March
2010 2009 2010
GBP '000 GBP '000 GBP '000
====================================== ======== ======== ========
Balance at the beginning of
the period/year 3,668 3,372 3,372
Post acquisition capital loss (101) - -
Prior year adjustment 134 - -
Dividends (46) - -
(Loss)/profit for the period/year (1,551) 231 296
====================================== ======== ======== ========
Balance at the end of the period/year 2,104 3,603 3,668
====================================== ======== ======== ========
17. Related party transactions
a. The Company has appointed Ingenious Ventures (a trading
division of Ingenious Asset Management Limited) to provide
investment management services. Patrick McKenna is a director of
Ingenious Asset Management Limited which is a wholly-owned
subsidiary 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 incurred a management fee of GBP209,000, of
which GBP116 000 was already paid on account to Ingenious Ventures,
for the six months ended 30 September 2010. As per the Admissions
Document (amended 1 April 2010), a management fee of 1.25 per cent.
of the Company's net asset value minus the cash held by the Company
is payable monthly in arrears. 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 financial year ended 31 March 2011.
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. For the six
months ended 30 September 2010, Morgan Sharpe has received
GBP30,000 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 period, fees of GBP18,000 have been incurred with Ogier for
legal advice.
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 30 September 2010 IAMI held GBP6,436,000 (six months
ended 30 September 2009: GBP57,932 000; year ended 31 March 2010:
GBP55,058,000) 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. 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 in July
2010. A fee of GBP328,000 was paid to ICF upon completion of the
transaction in August 2010.
h. 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. In August 2010,
Entertainment VCT 1 and Entertainment VCT 2 invested GBP1,000,000
through a combination of equity and loan notes into CLS Concerts
Limited (CLS) in return for a 33 per cent. share of the equity.
Cream Holdings Limited also owns 33 per cent. of the equity of CLS.
Patrick McKenna is a director of Cream Holdings Limited.
i. Patrick McKenna is a director and a shareholder of both
Entertainment VCT 1 and Entertainment VCT 2. Entertainment VCT 1
and Entertainment VCT 2 jointly agreed with Digital Rights Group
Limited 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 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. DRG paid an
amount of GBP2,000,000 to DRG Media Assets Limited in July 2010 in
relation to distribution monies received through the venture.
j. Ingenious Ventures received Non-Executive Directors fees of
GBP3,876 and monitoring fees of GBP7,689 from Stage Three Music
Limited for the six months ended 30 September 2010.
During the period/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
paid/(reclaimed) Amounts due/(receivable)
30 Sep 30 Sep 31 March 30 Sep 30 Sep 31 March
2010 2009 2010 2010 2009 2010
GBP GBP GBP GBP
'000 '000 GBP '000 '000 '000 GBP '000
------------------ ------ ------- --------- ------- ------- --------
Ingenious Ventures
================== ====== ======= ========= ======= ======= ========
- Investment
management fee a (116) 456 1,385 93 - (116)
================== ====== ======= ========= ======= ======= ========
- Administrative
support b 86 86 171 43 43 43
================== ====== ======= ========= ======= ======= ========
Morgan Sharpe
Administration
Limited
================== ====== ======= ========= ======= ======= ========
- Company
secretarial,
administration,
accounting &
directorship c 30 39 83 12 - -
================== ====== ======= ========= ======= ======= ========
Ogier Fund
Administration
(Guernsey)
Limited
================== ====== ======= ========= ======= ======= ========
- Company
secretarial,
administration,
accounting &
directorship d - 47 62 5 - -
================== ====== ======= ========= ======= ======= ========
Ogier
================== ====== ======= ========= ======= ======= ========
- Legal advice d 13 5 9 - - -
================== ====== ======= ========= ======= ======= ========
Ingenious
Corporate Finance
Limited
================== ====== ======= ========= ======= ======= ========
- Corporate
finance g 325 49 79 - 56 26
================== ====== ======= ========= ======= ======= ========
Transactions between related parties
The arrangements detailed at notes a to c below 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 was a director of Stage Three Music Limited
and received a pro rata salary of GBP3,876, a pro rata consultancy
fee of GBP36,667 and received a final termination fee of GBP110,000
on the completion of the sale of the assets of Stage Three Music
Limited to BMG Rights Management GmbH in July 2010.
c. Neil Blackley is a director of Stage Three Music Limited and
received a pro rata salary of GBP3,876 up to completion of the sale
of the assets of Stage Three Music Limited to BMG Rights Management
GmbH in July 2010.
d. Patrick McKenna receives a consultancy fee of GBP45,000 per
annum from iD Distribution Limited, a subsidiary of Digital Rights
Group Limited. He was paid GBP22,500 in the period to 30 September
2010. 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.
18. Events after the balance sheet date
a. In November 2010, the Company disposed of its holding of
4,266,667 shares in NetPlay Plc resulting in proceeds of
GBP171,000.
For further information:
Patrick McKenna/Patrick Bradley Ingenious 020 7319 4000
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGGCAPUPUGMQ
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