TIDMIEVC
INGENIOUS ENTERTAINMENT VCT 2 PLC ("the Company")
STATEMENT OF ANNUAL RESULTS
For the year ended 31 December 2011
CHAIRMAN'S STATEMENT
I am delighted to present the Company's fourth Annual Report and
Accounts covering the year to 31 December 2011 (the Reporting
Period).
Overview of Activities
The Company has now completed its investment strategy and is
fully invested under the VCT regulations for both its Ordinary and
C Share classes.
The Company continued to actively source and review investment
opportunities during this Reporting Period for the C, D, E and F
Share classes. In total the Company made three investments across
the C, D, E and F Share classes during the Reporting Period.
Details of all investments can be found in the Manager's
Review.
The highlight of the year was undoubtedly the Rewind Festival
held in Henley-on-Thames in late August, which sold out its full
capacity for the first time. The follow-on investment is Rewind
North which took place at Scone Palace in Perth for the first time.
The festival was also extremely well received and is no doubt set
to repeat the commercial success of the original Henley
festival.
A number of the Company's other investments such as the London
Electronic Dance Festival, Golf Live, the XOYO live venue and the
Let's Dance television format also made their mark in 2011 and all
appear set to become key contributors to the success of the
Company.
Fund Raising
In November 2011, the Ingenious Entertainment VCTs launched the
G Share Offer for subscription. As at 21 March 2012, the Ingenious
Entertainment VCTs received applications amounting to over GBP3
million of G Shares in respect of this Offer. No G Shares had been
allotted as at 31 December 2011. The Ingenious Entertainment VCTs
have now raised in excess of GBP54 million through their six share
classes. The G Share Offer may remain open for subscription until
31 August 2012.
The E and F Share Offers were open for subscription until 29
July 2011. During the year under review, GBP2.8 million worth of E
Shares and GBP1.6 million worth of F Shares were allotted in the
Company under the E and F Share Offers respectively.
Results
The Ordinary Shares, C Shares, D Shares, E Shares and F Shares
are accounted for as separate pools of funds necessitating separate
reporting.
The Company's losses arose mainly as a result of overheads
exceeding any investment income received during the year. The
Directors and the Manager believe that the commercial investment
portfolio remains robust. The Company's strategy of generating
venture capital style returns from the 'risk' element of each
investment should be realised in the longer term as the investments
mature. This will be achieved by retaining a strong level of
downside protection through contractual arrangements that guarantee
cash backed minimum revenues to commercially protect at least 70%
of each investment. The Directors and the Manager have taken a
prudent approach in the valuation of investments with the view that
it takes at least two to three years to build brand awareness. They
remain positive about the future performance and the long term
outlook of the Company.
The Ordinary Shares made a loss on ordinary activities of
GBP144,000 (31 December 2010: loss of GBP105,000). The C Shares
made a loss of GBP84,000 (31 December 2010: loss of GBP66,000). The
D Shares made a loss of GBP128,000 (31 December 2010: loss of
GBP163,000). The E Shares made a loss of GBP72,000 (31 December
2010: no E Shares allotted). The F Shares made a loss of GBP37,000
(31 December 2010: no F Shares allotted).
The net asset value per Ordinary Share at 31 December 2011 was
81.2 pence (31 December 2010: 87.6 pence) although this is after
the deduction of the dividend of 5.0 pence per share in the
Reporting Period and the deduction of a 5.0 pence per share
dividend in the year to 31 December 2010. The net asset value as at
31 December 2011 including distributions was therefore 91.2 pence
per Ordinary Share (31 December 2010: 92.6 pence).
The net asset value per C Share at 31 December 2011 was 76.4
pence (31 December 2010: 84.4 pence) although this is after the
deduction of the dividend of 5.0 pence per share in the Reporting
Period and the deduction of a 5.0 pence per share dividend in the
year to 31 December 2010. The net asset value as at 31 December
2011 including distributions was therefore 86.4 pence per C Share
(31 December 2010: 89.4 pence).
The net asset value per D Share at 31 December 2011 was 86.0
pence (31 December 2010: 92.9 pence) although this is after the
deduction of the dividend of 5.0 pence per share in the Reporting
Period (31 December 2010: Nil pence). The net asset value as at 31
December 2011 including distributions was therefore 91.0 pence per
D Share (31 December 2010: 92.9 pence).
The net asset value per E Share at 31 December 2011 was 93.1
pence (31 December 2010: no E Shares allotted). No dividends have
been paid to date.
The net asset value per F Share at 31 December 2011 was 93.3
pence (31 December 2010: no F Shares allotted). No dividends have
been paid to date.
Outlook
Clearly the economic environment remains as challenging as it
has been over the last few years. With the stock markets in a state
of flux, I am delighted to report that the live sector remains
robust in spite of the pressures that remain in terms of
discretionary spend.
The current investment portfolio shows positive signs of
delivering good upside across a number of its current
investments.
Paul Gregg
Chairman
28 March 2012
MANAGER'S REVIEW
Investment Objective
The Company's main objective is to invest in companies
established to create and bring to market live events and premium
entertainment content which will provide Shareholders with an
attractive return. This strategy will aim to maximise the
opportunities for making tax-free dividends to Shareholders from
both the actual income received and capital profits on the sale of
investments in Investee Companies or their assets.
Festivals
Rewind Festival & Rewind North (rebranded from 80s Rewind
Festival & 80s Rewind North)
Entertainment VCT 2 Investment amount (Rewind Festival):
GBP272,598
(GBP545,196 across the Ingenious Entertainment VCTs)
(GBP693,196 across the Ingenious Live VCTs)
Entertainment VCT 2 Investment amount (Rewind North):
GBP500,000
(GBP1,000,000 across the Ingenious Entertainment VCTs)
In December 2008, the Company, alongside The Rival Organisation,
co-promoted Rewind Festival, a two-day music festival in
Henley-on-Thames. The 2010 festival which was held in August 2010
experienced an impressive increase in both attendance figures and,
consequently, profitability with a total audience of over 35,000
across both days. Highlights included performances by Boy George
and Tony Hadley.
The 2011 festival was held between 19 and 21 August 2011 and was
a complete sell out (20,000 per day capacity). Highlights this year
included Village People and The Human League and we are delighted
that Rewind has very quickly established itself as the country's
leading celebration of 80s music.
The enormous success of Rewind in the South of England has given
rise to the opportunity to create a second festival and in October
2010, the Entertainment VCTs made a fresh investment in order to
co-promote Rewind North, which has taken place for the first time
between 29 and 31 July 2011 at Scone Palace in Perthshire,
Scotland. The festival had a star studded line up including The
Human League and Tony Hadley among the twenty plus acts appearing
across the weekend. Tickets for this event have sold in a similar
manner to the pattern established by the Henley festival in its
first year and we believe that this is a good opportunity to
strengthen the Rewind brand within the UK.
London Electronic Dance (LED) Festival
Entertainment VCT 2 Investment amount: GBP500,000
(GBP1,000,000 across the Ingenious Entertainment VCTs)
In August 2010 the Ingenious Entertainment VCTs agreed to
co-promote the LED Festival in partnership with AEG Live, Cream and
Loudsound.
This year the festival hosted performances by some of the
world's top dance acts including Deadmau5, Calvin Harris, Zane Lowe
and many more. The show attracted over 23,000 people and generated
a profit in excess of GBP200,000 for the Investee Company. The
promoters feel that the LED brand is now very well positioned and
has quickly established itself as London's leading electronic dance
festival.
We, The People & Shakedown Festivals
Entertainment VCT 2 Investment amount: GBP750,000
(GBP1,500,000 across the Ingenious Entertainment VCTs)
In February 2011 the Ingenious Entertainment VCTs invested
GBP1,500,000 in Venn Music Limited to stage and promote two new
music festivals. These innovative festivals are managed by Venn
director Matt Priest, who worked as an executive at Radio One for
10 years.
The first Venn festival, We, The People, took place in the
centre of Bristol on 4 and 5 June 2011 and attracted nearly 15,000
attendees over the two days. The headliners included popular dance
acts Chase and Status and a final farewell performance from The
Streets as well as many other leading artists and local
favourites.
Shakedown festival was held in September 2011 and saw over
10,000 people attend what was a very well received festival. We
believe that Shakedown has every opportunity to become 'Brighton's
festival'.
The Manager is confident that at least one of these festivals
has the potential to establish itself a place in the festival
calendar. Each festival has strong local partners and takes place
in an area where there are currently very few direct
competitors.
Love Supreme Jazz Festival
Entertainment VCT 2 Investment amount GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In December 2011, the Entertainment VCTs teamed up with Jazz FM
and Neapolitan Music to co-promote what will be the UK's only
camping Jazz festival, the Love Supreme Jazz Festival. The event is
planned for July 2013.
Exhibitions
Golf Live
Entertainment VCT 2 Investment amount: GBP275,000
(GBP550,000 across the Ingenious Entertainment VCTs)
(GBP550,000 across the Ingenious Live VCTs)
Golf Live is a three day interactive golf event which was staged
at The London Golf Club between 18 and 20 May 2011. IMG, manager to
a large number of leading golfers, has also invested into the
event. The long term aim is to roll the event out to further
prestigious golf courses around the world and it has already
attracted sponsorship partners of the quality of O2, Jaguar,
Turkish Airlines and the European Golf Tour. The event represents a
highly creative way of bringing the sports and exhibition markets
closely together.
In 2011, Golf Live was hosted by the 2010 Ryder Cup captain,
Colin Montgomerie, alongside many other stars from within the world
of golf. The event was extremely well received by both the
corporate partners as well as the paying public. Its audience
satisfaction rating was the highest that Brand Events, our highly
experienced co-promotion partners, had ever received for one of
their events.
The partners were delighted with the financial performance of
the event in its second year whereby it broke even. They feel very
confident that Golf Live is poised to move into profitability
during the 2012 event which is to be held on 18 to 20 May 2012 and
will once again feature Colin Montgomerie, as well as Gary Player
and an array of golfing talent still to be announced. The
anticipated international roll-out of the brand is also likely to
commence next year.
Titans of Cricket
Entertainment VCT 2 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In June 2011 an investment of GBP2,000,000 was made by the
Ingenious Entertainment VCTs into This Is Cricket Limited to
promote a new sports event, Titans of Cricket.
Titans of Cricket takes the best of Twenty20, the Indian Premier
League and World Cup Cricket and combines them in a new show that
demonstrates the skills of some of the world's top cricketing stars
both past and present including Freddie Flintoff and Sanath
Jayasuriya. The first event took place at the O2 in London in
October 2011 and attracted 8,000 fans. Although it made a loss, the
Manager feels that the format is one that could well establish
itself firmly in the cricket calendar in a similar way to that
achieved by Golf Live in the world of golf.
Live Venues
XOYO
Entertainment VCT 2 Investment amount: GBP400,000
(GBP800,000 across the Ingenious Entertainment VCTs)
In March 2010, an investment of GBP800,000 was made with
Assorted Works Limited to open a new live venue in Shoreditch, East
London. XOYO is a 900 capacity live entertainment venue split over
two floors. It programs, books and promotes an exciting range of
live music, club nights, visual art and other creative media
events. XOYO has a prime location in Shoreditch, the hub of
London's music, art and party scene. Recent events included
performances by chart stars such as Miss Dynamite, Sophie Ellis
Bextor & Emeli Sandé.
Since its opening in late 2010, the venue has had extremely
positive cash flow and attendance figures. The shareholders are
extremely pleased with the progress of the venue and plan to extend
its daytime activities to allow the venue to act as a pop-up
gallery space displaying a range of contemporary art. It is also
hoped that the success of the first venue will lead to an extension
of the XOYO brand in due course.
Jetstream Live Events
Entertainment VCT 2 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
(GBP2,000,000 across the Ingenious Live VCTs)
In December 2010, the Ingenious Entertainment VCTs agreed with
the directors of Apollo Resorts and Leisure Limited (the Apollo
Group) to invest further funding into Jetstream Events Limited to
co-promote potential new projects in similar 'seaside'
opportunities to the Live VCTs' co-promotion of the Scarborough
Open Air Theatre. There are a number of potential ventures that are
currently under discussion in venues such as Yarmouth, Blackpool,
Brighton, as well as a variety of 2012 Olympics based
opportunities.
Jongleurs Comedy Live
Entertainment VCT 2 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In October 2010 an investment of GBP2,000,000 was made by the
Ingenious Entertainment VCTs into Jongleurs Comedy Live Limited to
promote a variety of comedy events.
In June 2011 it was agreed that the partners had differing views
as to the direction of the company and an agreement was entered
into that will ultimately see the Ingenious Entertainment VCTs
withdraw from the investment with the original capital fully
returned to them.
Television Format and Distribution
Let's Dance
Entertainment VCT 2 Investment amount: GBP500,000
(GBP1,000,000 across the Ingenious Entertainment VCTs)
(GBP1,000,000 across the Ingenious Live VCTs)
In January 2009, GBP2,000,000 was invested across both the
Ingenious Live and Entertainment VCTs to back the television dance
format Let's Dance. This was the second co-investment between the
Ingenious Live and Entertainment VCTs.
For the past three years BBC One has commissioned Whizz Kid
Entertainment to produce this hugely popular celebrity-led series
for both Comic Relief and Sports Relief. In 2011 the programme was
aired to over 8.3 million viewers and enjoyed the prime time
Saturday night slot on BBC One. Following the ratings success of
the UK series, the Let's Dance format has been sold and aired in a
number of different countries including Germany, the Netherlands,
Sweden, Russia, Slovakia and Indonesia.
The series has also been re-commissioned for a fourth UK series
to be aired in 2012 and, as a result of this success, the
international sales agents for both the US (William Morris) and the
Rest of the World (Fremantle) are continuing to push forward with
the international sale of the format. Our financial forecasts show
that the format revenues already generated will at least cover the
investment made and the Manager is hopeful that there will be some
upside in the investment in future years.
Digital Rights Group
Entertainment VCT 2 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In June 2009, the Ingenious Entertainment VCTs agreed with
independent television distributor Digital Rights Group Limited
(DRG or DRG Group) to jointly acquire, market and distribute a
series of television programmes.
DRG is the leading independent distributor of content in the UK
with various brands in the DRG Group supporting all genres
including drama, comedy, reality and other TV formats. DRG has
worked on shows as diverse as The Inbetweeners, Kingdom starring
Stephen Fry, the Martin Clunes drama Doc Martin, Australian series
Sea Patrol, a wide variety of children's programmes and factual
documentaries. The investment has generated a small positive return
for the Company.
SuperVision Media
Entertainment VCT 2 Investment amount: GBP1,000,000
(GBP2,000,000 across the Ingenious Entertainment VCTs)
In August 2010, an investment was made in SuperVision Media to
co-promote and co-distribute alternative content. SuperVision Media
is one of the leading owners and distributors of alternative
content for cinemas around the globe in both the sport and
entertainment fields. Their aim is to provide people with
experiences that are the next best thing to being at the event
whilst screening live, uninterrupted content, mainly in 3D format,
accompanied by surround sound.
In July 2010 SuperVision Media distributed the Football World
Cup in 3D and was also very involved in the screening of Wimbledon
2011 in cinemas both in the UK and internationally. The company has
also secured the exclusive rights to screen Michael Flatley's Lord
of The Dance in 3D, which was screened in major cinema chains
across the US, UK, and Europe in March 2011. In addition, the
company also distributed theatrical content during the autumn of
2011 and has a strong pipeline of opportunities in place as it
moves into 2012.
Supervision Media made a loss in its first period of trading
under this agreement, but the Manager believes that digital content
will begin to firmly establish itself in the theatrical marketplace
over the course of the next three years.
Saturn Explosion
Entertainment VCT 2 Investment amount: GBP1,000,000
(GBP2,000,000 across Ingenious Entertainment VCTs)
In December 2010, the Ingenious Entertainment VCTs agreed with
the directors of SuperVision Media to form a new company, Saturn
Explosion Limited, to carry on the trade of the production,
promotion and exploitation of alternative digital content
(including, but not limited to, event based entertainment and sport
content such as music concerts, festivals, theatrical productions
and live sporting events) across a range of media including
television and cinema.
The purpose of this funding was to acquire content that could be
exploited across the various platforms but whereby any investment
would be underpinned by minimum revenues through third party
advances from distributors as well as potential payments by
sponsorship partners wishing to be connected with the content.
The Manager has considered a number of potential investment
opportunities over the last 12 months, but has yet to agree
appropriate terms on any of these.
Contact
If you have any questions on this review or would like to speak
with a member of the management team, please do not hesitate to
contact us on 0207 319 4000.
Ingenious Ventures
28 March 2012
BUSINESS REVIEW
The purpose of this review is to provide Shareholders with a
summary setting out the business objectives of the Company, the
Board's strategy to achieve those objectives, the risks faced, the
regulatory environment and the key performance indicators (KPIs)
used to measure performance.
1. Strategy for Achieving Objectives
Ingenious Entertainment VCT 2 plc is a tax efficient company
listed on The London Stock Exchange.
The investment objective is to achieve a combination of a high
degree of downside protection in an otherwise potentially high risk
proposition and long-term capital growth, maximising distributions
in order to take advantage of tax-free dividends.
The Board has delegated day-to-day investment management and
administration of the Company to the Manager under the terms of a
management agreement.
The Manager's review provides a review of the investment
portfolio and the market outlook.
2. Investment Policy
The Company's investment policy is to focus on investing in
companies established to create and bring to market live events and
premium entertainment content. These investments should be
Qualifying Investments for the purposes of the VCT legislation.
Each Share class of each of the Ingenious Entertainment VCTs (the
VCTs) represents a separate pool of capital and each such pool has
its own separate performance record and dividend history.
For the Ordinary Shares, C Shares, D Shares and E Shares, the
Manager intends to balance the risk profile by investing no more
than 30% of the respective funds raised under the respective Offers
in a blend of low risk money market open ended investment companies
(OEICs) (which are Non-qualifying for the purposes of VCT
legislation) and at least 70% of funds raised in VCT qualifying
media content investments.
In respect of the F Shares, the Manager will deploy no more than
30% of the funds in a balanced multi-asset management portfolio
(which is Non-qualifying for the purposes of VCT legislation) and
at least 70% of funds raised in VCT qualifying media content
investments.
In respect of the G Shares, the Manager will deploy no more than
30% of the funds in a blend of low risk money market funds (which
are Non-qualifying for the purposes of VCT legislation) and at
least 70% of funds raised in VCT qualifying media content
investments.
The investment policy for VCT qualifying media content
investments is the same for all share classes, and is based upon a
rigorous selection process, together with a funding structure and
minimum revenue contractual arrangements specifically designed to
offer investors downside protection whilst preserving the
considerable upside potential of the live events and entertainment
content within the portfolio.
Asset Allocation
The Manager will focus on investing in companies producing live
events or creating branded entertainment content with a view to
achieving a broad allocation of the VCTs' assets across the
entertainment sector. Investments could include the production and
promotion of a theatrical show or the launch of a music festival,
the development and exploitation of new formats or the creation of
online or mobile games. The Manager's objective will be to identify
projects in which the VCTs can participate in the revenues and in
the capital value of the content once the market is
established.
Ordinary Shares, C Shares and D Shares
The Directors believe that pending deployment into Qualifying
Investments, funds should be deployed in a low risk, liquid
investment, which also provides moderate returns to VCT
Shareholders. The Manager intends to invest such capital raised in
the Ordinary Share Offer, the C Share Offer and the D Share Offer
and not deployed in Qualifying Investments in a number of low risk
money market OEICs with a rating of at least AAAm (S&P) or
Aaa/MR1+ (Moody's) or, where the fund is not rated by these
agencies, the average credit quality of the portfolio is not less
than AA+ (S&P).
E Shares
Of the funds raised from the E Share Offer, at least 70% will be
invested in Qualifying Investments (companies in the media and
entertainment sector). The remaining 30% of the funds raised by the
E Share Offer will be retained in a blend of low risk money market
OEICs throughout the life of the VCT, creating a lower risk profile
for the E Shares than for the F Shares.
F Shares
Of the funds raised from the F Share Offer, at least 70% will be
invested in Qualifying Investments (companies in the media and
entertainment sector). The remaining 30% of the funds raised by the
F Share Offer will be retained in a balanced multi-asset management
portfolio throughout the life of the VCT.
G Shares
Of the funds raised from the G Share Offer, at least 70% will be
invested in Qualifying Investments (companies in the media and
entertainment sector). The remaining 30% of the funds raised by the
G Share Offer will be retained in a blend of low risk money market
OEICs and other investments including, but not limited to, cash
deposits, money market funds, fixed interest securities, secured
loans, corporate bonds, and corporate bond funds throughout the
life of the VCT.
Diversification
The Manager will seek to diversify the risk of Qualifying
Investments through investment in media content and live events
chosen from a broad spectrum of opportunities in the media and
entertainment sector. However, the principal focus will be on the
quality of the proposition, the experience of the production
partner and the returns that can be generated. There is, therefore,
no limitation on investments in any specific segment of the
entertainment sector. There will, however, be restrictions on the
size of investments (both Qualifying Investments and other
investments) made by the VCTs as set out in the VCT Status and
Maximum Exposures paragraph below.
Risk Mitigation
The following risk mitigation strategies will be utilised by the
Investee Companies, and in common with industry practice:
-- Each Investee Company will be required to put into place pre-sales or
similar minimum revenue arrangements providing for the
Investee
Company to receive at least 70% of the VCTs' investment
(Base
Revenues).
-- Each Investee Company will engage the services of an experienced
producer or promoter with a proven track record in bringing
media
projects to market and delivering the returns targeted by the
VCTs.
-- Each Investee Company will be required, where appropriate, to obtain
relevant insurance policies in order to protect against
normal
industry risks. After completion of its first project, each
Investee
Company may seek to undertake further projects (with at least
the same
level of downside protection) from its existing cash-flows.
However,
Investee Companies will not be permitted to undertake further
projects
which could reduce the Base Revenues generated from its first
project.
Each Investee Company will be expected to realise the capital
value of
its rights and goodwill after five years. This investment
policy
should ensure a high degree of downside protection whilst
preserving
the considerable upside potential of the premium media content
within
the portfolio.
Funding Structure, Gearing and Contractual Arrangements
Each Qualifying Company in which the VCTs invests will have been
formed for the purpose of engaging in the production and
exploitation of premium media content or a live event.
In respect of the funds raised by the Company prior to 6 April
2011 under the Ordinary Share Offer, the C Share Offer, the D Share
Offer, the E Share Offer and the F Share Offer, the VCTs' policy
has been to invest in Qualifying Companies by subscribing for a
minimum of 30% of its investment in share capital and the remaining
amount through loan stock instruments. However, changes introduced
by the Finance Act (No. 3) 2010 mean that for funds raised on or
after 6 April 2011 the VCT will instead invest a minimum of 70% of
its investment in share capital and the remaining amount through
loan stock instruments.
The VCTs will have a non-controlling interest in each Investee
Company and other shareholders may include, amongst others,
promoters, record labels, game developers and charities. It is
expected that the initial capital provided by the VCTs will be
sufficient to cover the Investee Company's budgeted costs of
creating and bringing to market the initial project.
The VCTs can invest, under current VCT legislation, up to GBP1
million each (and, therefore, GBP2 million in aggregate) per tax
year in any one Investee Company and will always co-invest on equal
terms pro rata to the capital in each VCT. This should have the
advantage of enabling the VCTs to co-invest in larger projects than
if one VCT was investing by itself. The VCTs will not borrow money
in relation to their activities.
Liquidity
As was the case with each of the Ordinary Share Offer, the C
Share Offer, the D Share Offer, the E Share Offer and the F Share
Offer, each of the VCTs intends to create a G Share reserve which
will enable it to make share buy-backs in the market, subject to
liquidity restraints. The VCTs will operate a discount policy for
repurchasing Shares, which will be determined by the Boards of the
VCTs at their discretion.
The VCTs intend to return funds to Shareholders after five years
if Shareholders so desire. In any event, the Articles of each of
the VCTs currently contain a provision requiring the Directors to
propose an ordinary resolution at the tenth AGM of the VCTs to
continue the life of the VCTs. If any such resolution is not
passed, the Directors will draw up proposals for the
re-organisation, reconstruction or voluntary winding up of the VCTs
for consideration of members at a general meeting on a date not
more than nine months after such general meeting. Implementation of
such proposals will require the approval of Shareholders by special
resolution.
VCT Status and Maximum Exposures
In order to obtain venture capital trust status, the VCTs must
be approved by HMRC. The conditions which must be satisfied to
obtain and retain such status include the following restrictions on
the maximum exposure of each VCT:
-- no holding in a company will represent more than 15% by value of each
VCT's total investments; and
-- each VCT is limited to investing up to GBP1 million per Investee Company
in any one tax year or in any six month period straddling two
tax
years.
The limits stated in the policy above in relation to the
percentage amount of the funds invested in Qualifying Investments
and Non-qualifying Investments will need to be met within the three
year VCT investment period in accordance with the VCT qualifying
rules. The Boards of the VCTs do not intend to vary the VCTs'
investment policy, however, should a material change in the
investment policy (including the conditions above) be deemed
appropriate this will be completed with Shareholders' approval and
in accordance with the Listing Rules.
3. Principal Risks, Risk Management and Regulatory
Environment
The Board believes that the principal risks faced by the Company
are:
-- Investment and strategic - the performance of an investment in an
event is tied to a certain degree to the fortunes of the
industry
generally. In particular, there is a risk that the Company will
not
identify opportunities where the commercial success of the live
event
or created branded content is sufficient to earn revenues over
and
above the minimum contractual income negotiated.
-- Loss of approved status as a Venture Capital Trust - the Company must
comply with section 274 of the ITA which allows it to be
exempted from
capital gains tax on investment gains realised by Shareholders.
Any
breach of these rules may lead to the Company losing its
approval as a
VCT, qualifying Shareholders who have not held their shares for
the
designated holding period would have to repay the income tax
relief
they obtained and future dividends paid by the Company would
become
subject to tax. The Company would also lose its exemption
from
corporation tax on capital gains.
-- Regulatory - the Company is required to comply with the Act, the rules
of the UK Listing Authority and United Kingdom Accounting
Standards.
Breach of any of these regulatory rules might lead to suspension
of
the Company's Stock Exchange listing, financial penalties or
a
qualified audit report.
-- Financial - inadequate internal controls might lead to
misappropriation of assets. Inappropriate accounting policies
might
lead to misreporting or breaches of regulations.
-- External inherent risks - the Company's investments will be in
unquoted companies which by their nature involve a higher degree
of
risk than investment in the main market due to the fact there is
no
liquid market and may, therefore, be difficult to realise.
Furthermore, there may be further constraints imposed on
realisations
because of the requirement to satisfy certain conditions
necessary for
the Company to maintain its VCT status (such as the obligation
to have
at least 70% by value of its investments in qualifying holdings
by the
beginning of the accounting period commencing three years
after
provisional VCT approval).
The Board seeks to mitigate the internal risks by setting clear
policies, including establishing a funding structure which provides
for minimum revenues equivalent to at least 70% of the investment,
regular reviews of performance, monitoring progress and compliance.
Details of the Company's internal controls are contained in the
Corporate Governance Report.
4. Key Performance Indicators (KPIs)
The primary key performance indicator on which the Board
assesses the performance of the Manager in meeting the Company's
objective is the change in net asset value per share.
A review of the Company's performance during the year, the
position of the Company at the year end and the outlook for the
coming year are contained within the Chairman's Statement and the
Manager's Review.
INCOME STATEMENT
for the year ended 31 December 2011
Year ended 31 December 2011 Year ended 31 December 2010
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain - 91 91 - 211 211
on disposal
of
investments
Decrease in - (282) (282) - (244) (244)
fair value
of
investments
held
Investment 2 297 - 297 208 - 208
income
Arrangement 3 (49) - (49) (74) - (74)
fees
Investment 4 (174) (174) (348) (140) (140) (280)
management
fees
Other 5 (174) - (174) (155) - (155)
expenses
Loss (100) (365) (465) (161) (173) (334)
on ordinary
activities
before
taxation
Tax 6 - - - - - -
on ordinary
activities
Loss (100) (365) (465) (161) (173) (334)
attributable
to
equity
shareholders
Basic and
diluted
return
per share
(pence)
Ordinary 7 1.2 (2.6) (1.4) 0.3 (1.3) (1.0)
Share
C Share 7 (1.0) (2.0) (3.0) (1.8) (0.5) (2.3)
D Share 7 (1.3) (0.6) (1.9) (3.0) (0.4) (3.4)
E Share 7 (3.1) (0.3) (3.4) - - -
F Share 7 (3.3) 0.2 (3.1) - - -
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement of the Company for the
year. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
All operations are considered to be continuing.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 December 2011
Year ended Year ended
31 December 31 December
2011 2010
GBP'000 GBP'000
Opening shareholders' funds 17,569 12,135
Capital subscribed 4,418 6,714
Issue costs (194) (295)
Dividends (988) (651)
Loss for the year (465) (334)
Closing shareholders' funds 20,340 17,569
The accompanying notes form an integral part of these financial
statements.
NON-STATUTORY ANALYSIS BETWEEN THE ORDINARY, C, D, E AND F SHARE
FUNDS (UNAUDITED)
INCOME STATEMENT
for the year ended 31 December 2011
Ordinary Shares C Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - 55 55 - 16 16
of investments
Decrease in - (245) (245) - (53) (53)
fair value
of investments held
Investment income 257 - 257 24 - 24
Arrangement fees - - - - - -
Investment management (74) (74) (148) (20) (20) (40)
fees
Other expenses (63) - (63) (31) - (31)
Profit/(loss) 120 (264) (144) (27) (57) (84)
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit/(loss) 120 (264) (144) (27) (57) (84)
attributable
to
equity shareholders
Basic and diluted 1.2 (2.6) (1.4) (1.0) (2.0) (3.0)
return
per share (pence)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share class for the
year. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
D Shares E Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - 18 18 - 2 2
of investments
(Decrease)/increase - (3) (3) - 8 8
in fair
value of investments
held
Investment income 16 - 16 - - -
Arrangement fees - - - (32) - (32)
Investment management (54) (54) (108) (17) (17) (34)
fees
Other expenses (51) - (51) (16) - (16)
Loss on ordinary (89) (39) (128) (65) (7) (72)
activities
before taxation
Tax on ordinary - - - - - -
activities
Loss attributable to (89) (39) (128) (65) (7) (72)
equity shareholders
Basic and diluted (1.3) (0.6) (1.9) (3.1) (0.3) (3.4)
return
per share (pence)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share class for the
year. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
F Shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gain on disposal of investments - - -
Increase in fair value of investments held - 11 11
Investment income - - -
Arrangement fees (17) - (17)
Investment management fees (9) (9) (18)
Other expenses (13) - (13)
(Loss)/profit on ordinary activities (39) 2 (37)
before taxation
Tax on ordinary activities - - -
(Loss)/profit attributable (39) 2 (37)
to equity shareholders
Basic and diluted return per share (pence) (3.3) 0.2 (3.1)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share class for the
year. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
(UNAUDITED)
for the year ended 31 December 2011
Ordinary Shares C Shares
GBP'000 GBP'000
Opening shareholders' funds 8,940 2,373
Capital subscribed - -
Issue costs - -
Dividends (510) (141)
Loss for the year (144) (84)
Closing shareholders' funds 8,286 2,148
D Shares E Shares
GBP'000 GBP'000
Opening shareholders' funds 6,256 -
Capital subscribed - 2,846
Issue costs - (125)
Dividends (337) -
Loss for the year (128) (72)
Closing shareholders' funds 5,791 2,649
F Shares
GBP'000
Opening shareholders' funds -
Capital subscribed 1,572
Issue costs (69)
Dividends -
Loss for the year (37)
Closing shareholders' funds 1,466
NON-STATUTORY ANALYSIS BETWEEN THE ORDINARY, C, D, E AND F SHARE
FUNDS (UNAUDITED)
INCOME STATEMENT
for the year ended 31 December 2010
Ordinary Shares C Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - 202 202 - 7 7
of investments
Decrease in - (260) (260) - (1) (1)
fair value
of investments held
Investment income 203 - 203 5 - 5
Arrangement fees - - - - - -
Investment management (81) (81) (162) (22) (22) (44)
fees
Other expenses (88) - (88) (33) - (33)
Profit/(loss) 34 (139) (105) (50) (16) (66)
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit/(loss) 34 (139) (105) (50) (16) (66)
attributable
to
equity shareholders
Basic and diluted 0.3 (1.3) (1.0) (1.8) (0.5) (2.3)
return
per share (pence)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share class for the
year. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
D Shares E Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - 2 2 - - -
of investments
Increase in - 17 17 - - -
fair value
of investments held
Investment income - - - - - -
Arrangement fees (74) - (74) - - -
Investment management (37) (37) (74) - - -
fees
Other expenses (34) - (34) - - -
- - -
- - -
Loss on ordinary (145) (18) (163) - - -
activities
before taxation
Tax on ordinary - - - - - -
activities
- - -
- - -
Loss attributable to (145) (18) (163) - - -
equity shareholders
- - -
- - -
Basic and diluted (3.0) (0.4) (3.4) - - -
return
per share (pence)
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share class for the
year. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
F Shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gain on disposal of investments - - -
(Decrease)/increase in fair - - -
value of investments held
Investment income - - -
Arrangement fees - - -
Investment management fees - - -
Other expenses - - -
- - -
- - -
Profit/(loss) on ordinary activities - - -
before taxation
Tax on ordinary activities - - -
- - -
- - -
Profit/(loss) attributable - - -
to equity shareholders
- - -
- - -
Basic and diluted return per share (pence) - - -
The Company has no recognised gains and losses other than those
disclosed above.
The total column is the Income Statement per Share class for the
year. The supplementary capital and revenue columns are prepared
following guidance published by the Association of Investment
Companies (AIC).
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
(UNAUDITED)
for the year ended 31 December 2010
Ordinary Shares C Shares
GBP'000 GBP'000
Opening shareholders' funds 9,555 2,580
Capital subscribed - -
Issue costs - -
Dividends (510) (141)
Loss for the year (105) (66)
Closing shareholders' funds 8,940 2,373
D Shares E Shares
GBP'000 GBP'000
Opening shareholders' funds - -
Capital subscribed 6,714 -
Issue costs (295) -
Dividends - -
Loss for the year (163) -
Closing shareholders' funds 6,256 -
F Shares
GBP'000
Opening shareholders' funds -
Capital subscribed -
Issue costs -
Dividends -
Loss for the year -
Closing shareholders' funds -
BALANCE SHEET
as at 31 December 2011
31 December 2011 31 December 2010
Note GBP'000 GBP'000
Fixed assets
Qualifying Investments 8 10,309 7,670
Current assets
Debtors 10 80 81
Non-qualifying Investments 11 9,823 9,753
Cash at bank and in hand 181 149
10,084 9,983
Creditors: amounts falling 12 (53) (84)
due within one year
Net current assets 10,031 9,899
Net assets 20,340 17,569
Capital and reserves
Called-up share capital 13 242 198
Share premium account 14 - 6,351
Other reserve account 14 21,158 11,615
Capital reserve 14 (353) 12
Revenue reserve 14 (707) (607)
Shareholders' funds 20,340 17,569
Net asset value per 15 81.2 87.6
Ordinary Share
Net asset value per C Share 15 76.4 84.4
Net asset value per D Share 15 86.0 92.9
Net asset value per E Share 15 93.1 -
Net asset value per F Share 15 93.3 -
The accompanying notes form an integral part of these financial
statements.
The financial statements were approved by the Board of Directors
on 28 March 2012.
Signed on behalf of the Board of Directors:
Paul Gregg
Chairman
NON-STATUTORY ANALYSIS BETWEEN THE ORDINARY, C, D, E AND F SHARE
FUNDS (UNAUDITED)
BALANCE SHEET
As at 31 December 2011
Ordinary C D E F
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Qualifying Investments 6,632 1,727 1,700 125 125
Current assets
Debtors 80 - - - -
Non-qualifying Investments 1,588 374 4,090 2,478 1,293
Cash at bank and in hand 21 51 8 51 50
1,689 425 4,098 2,529 1,343
Creditors: amounts falling (35) (4) (7) (5) (2)
due within one year
Net current assets 1,654 421 4,091 2,524 1,341
Net assets 8,286 2,148 5,791 2,649 1,466
Capital and reserves
Called-up share capital 102 28 68 28 16
Share premium account - - - - -
Other reserve account 8,611 2,353 6,014 2,693 1,487
Capital reserve (212) (79) (57) (7) 2
Revenue reserve (215) (154) (234) (65) (39)
Shareholders' funds 8,286 2,148 5,791 2,649 1,466
Net asset value excluding 81.2 76.4 86.0 93.1 93.3
distributions
to date (pence per share)
Net asset value including 91.2 86.4 91.0 93.1 93.3
distributions
to date (pence per share)
NON-STATUTORY ANALYSIS BETWEEN THE ORDINARY, C, D, E AND F SHARE
FUNDS (UNAUDITED)
BALANCE SHEET
As at 31 December 2010
Ordinary C D E F
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed
assets
Qualifying 6,698 972 - - -
Investments
Current
assets
Debtors 59 - 22 - -
Non-qualifying 2,135 1,369 6,249 - -
Investments
Cash at bank 73 35 41 - -
and in hand
2,267 1,404 6,312 - -
Creditors: amounts falling (25) (3) (56) - -
due within one year
Net current 2,242 1,401 6,256 - -
assets
Net 8,940 2,373 6,256 - -
assets
Capital and
reserves
Called-up share 102 28 68 - -
capital
Share premium - - 6,351 - -
account
Other reserve 9,121 2,494 - - -
account
Capital 52 (22) (18) - -
reserve
Revenue (335) (127) (145) - -
reserve
Shareholders' 8,940 2,373 6,256 - -
funds
Net asset value excluding 87.6 84.4 92.9 - -
distributions
to date (pence per share)
Net asset value including 92.6 89.4 92.9 - -
distributions
to date (pence per share)
The Company had no E Shares or F Shares in issue during the year
ended 31 December 2010.
CASH FLOW STATEMENT
for the year ended 31 December 2011
31 December 2011 31 December 2010
Note GBP'000 GBP'000
Net cash outflow from (477) (290)
operating activities
Financial investment
Purchase of Qualifying 8 (2,750) (5,525)
Investments
Return of Qualifying 8 119 -
Investments
Net cash outflow from (2,631) (5,525)
financial investment
Management of liquid
resources
Purchase of Non-qualifying 11 (6,999) (9,661)
Investments
Disposal of Non-qualifying 11 6,903 9,788
Investments
Net cash (outflow)/inflow (96) 127
from liquid resources
Financing
Issue of Shares 4,418 6,714
Issue costs of Shares 14 (194) (295)
Net cash inflow 4,224 6,419
from financing
Dividends
Payment of dividends 14 (988) (651)
Net cash outflow (988) (651)
from dividends
Increase in cash 32 80
Reconciliation of loss before taxation to net cash flow from
operating activities
2011 2010
GBP'000 GBP'000
Loss on ordinary activities before taxation (465) (334)
Decrease in fair value of investments held 282 244
Investment income (264) (192)
Decrease/(increase) in receivables 1 (50)
(Decrease)/increase in payables (31) 42
Net cash outflow from operating activities (477) (290)
Reconciliation of net cash flow to movement in net funds
2011 2010
GBP'000 GBP'000
Opening cash balances 149 69
Net cash inflow 32 80
Closing cash balances 181 149
Total net funds comprises cash of GBP181k (Ordinary Shares:
GBP21k; C Shares: GBP51k, D Shares GBP8k, E Shares GBP51k and F
Shares GBP50k) and Non-qualifying Investments of GBP9,823k
(Ordinary Shares: GBP1,588k; C Shares: GBP374k, D Shares:
GBP4,090k, E Shares: GBP2,478k and F Shares: GBP1,293k). The
accompanying notes form an integral part of these financial
statements.
NON-STATUTORY ANALYSIS BETWEEN THE ORDINARY, C, D, E AND F SHARE
FUNDS (UNAUDITED)
CASH FLOW STATEMENT
for the year ended 31 December 2011
Ordinary C D E F
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash outflow from (140) (48) (168) (75) (46)
operating activities
Financial investment
Purchase of Qualifying - (800) (1,700) (125) (125)
Investments
Return of Qualifying 97 22 - - -
Investments
Net cash inflow/(outflow) 97 (778) (1,700) (125) (125)
from
financial investment
Management of liquid
resources
Purchase of Non-qualifying (1,583) (372) (551) (2,846) (1,647)
Investments
Disposal of Non-qualifying 2,084 1,355 2,723 376 365
Investments
Net cash inflow/(outflow) 501 983 2,172 (2,470) (1,282)
from liquid resources
Financing
Issue of Shares - - - 2,846 1,572
Issue costs of Shares - - - (125) (69)
Net cash inflow - - - 2,721 1,503
from financing
Dividends
Payment of dividends (510) (141) (337) - -
Net cash outflow (510) (141) (337) - -
from dividends
(Decrease)/increase in cash (52) 16 (33) 51 50
Reconciliation of loss before taxation to net cash flow from
operating activities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on ordinary activities (144) (84) (128) (72) (37)
before taxation
Decrease/(increase) in fair 245 53 3 (8) (11)
value of investments held
Investment income (230) (18) (16) - -
(Increase)/decrease in receivables (21) - 22 - -
Increase/(decrease) in payables 10 1 (49) 5 2
Net cash outflow from (140) (48) (168) (75) (46)
operating activities
Reconciliation of net cash flow to movement in net funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening cash balances 73 35 41 - -
Net cash (outflow)/inflow (52) 16 (33) 51 50
Closing cash balances 21 51 8 51 50
NON-STATUTORY ANALYSIS BETWEEN THE ORDINARY, C, D, E AND F SHARE
FUNDS (UNAUDITED)
CASH FLOW STATEMENT
for the year ended 31 December 2010
Ordinary C D E F
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net cash outflow from (76) (68) (146) - -
operating activities
Financial investment
Purchase of Qualifying (4,553) (972) - - -
Investments
Return of Qualifying - - - - -
Investments
Net cash outflow from (4,553) (972) - - -
financial investment
Management of liquid
resources
Purchase of Non-qualifying (1,762) (564) (7,335) - -
Investments
Disposal of Non-qualifying 6,928 1,757 1,103 - -
Investments
Net cash inflow/(outflow) 5,166 1,193 (6,232) - -
from liquid resources
Financing
Issue of Shares - - 6,714 - -
Issue costs of Shares - - (295) - -
-
Net cash inflow - - 6,419 - -
from financing
Dividends
Payment of dividends (510) (141) - - -
Net cash outflow (510) (141) - - -
from dividends
Increase in cash 27 12 41 - -
Reconciliation of loss before taxation to net cash flow from
operating activities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on ordinary activities (105) (66) (163) - -
before taxation
Decrease/(increase) in fair 260 1 (17) - -
value of investments held
Investment income (187) (5) - - -
(Increase)/decrease in receivables (33) 5 (22) - -
(Decrease)/increase in payables (11) (3) 56 - -
Net cash outflow from (76) (68) (146) - -
operating activities
Reconciliation of net cash flow to movement in net funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening cash balances 46 23 - - -
Net cash inflow 27 12 41 - -
Closing cash balances 73 35 41 - -
The Company had no E Shares or F Shares in issue during the year
ended 31 December 2010.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2011
1. Accounting Policies
a) Basis of Accounting
The financial statements for the Reporting Period have been
prepared in compliance with UK Generally Accepted Accounting
Practice, and with the Statement of Recommended Practice (the SORP)
entitled "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" which was issued in January 2009.
The comparative figures are for the year 1 January 2010 to 31
December 2010.
The financial statements have been prepared on a going concern
basis under the historical cost convention, except for the
measurement at fair value for investments. The principal accounting
policies have remained unchanged from those set out in the
Company's 2010 Annual Report and Accounts.
b) Valuation of Investments
The Company's business is investing in financial assets with a
view to profiting from their total return in the form of income and
capital growth. As set out in the Prospectus all investments are
designated at fair value.
International Private Equity and Venture Capital Valuation
Guidelines
Unquoted investments, including equity and loan investments, are
designated at fair value and valued in accordance with the
International Private Equity and Venture Capital Guidelines and
Financial Reporting Standard 26 "Financial Instruments: Recognition
and Measurement" (FRS 26). Investments are initially recognised at
cost. The investments are subsequently re-measured at fair value,
as estimated by the Directors with prudence and good faith.
Investment holding gains or losses arising from the revaluation of
investments are taken directly to the Income Statement. Fair value
is determined as follows:
-- Fair value is the amount for which an asset could be exchanged between
knowledgeable, willing parties in an arm's length
transaction.
-- In estimating the fair value for an investment, the Manager will apply
a methodology that is appropriate in light of the nature, facts
and
circumstances of the investment and its materiality in the
context of
the total investment portfolio and will use reasonable
assumptions and
estimations.
-- An appropriate methodology incorporates available information about
all factors that are likely to materially affect the fair value
of the
investment. The valuation methodologies are applied consistently
from
period to period, except where a change would result in a
better
estimate of fair value. Any changes in valuation methodologies
will be
clearly disclosed in the financial statements.
The most widely used methodologies are listed below. In
assessing which methodology is appropriate, the Directors are
predisposed towards those methodologies that draw upon market-based
measures of risk and return.
-- Price of recent investment
-- Discounted cash flows/earnings multiple
-- Net assets
-- Available market prices
Of these the two methodologies most applicable to the Company's
investments are:
1 - Price of recent investment
Where the investment being valued was made recently, its cost
will generally provide a good indication of value. It is generally
considered that this would only apply for a limited period; in
practice a period up to the start of the first live event or
entertainment content which forms the investment is often applied
as the long stop date for such a valuation.
2 - Discounted cash flows/earnings of the underlying
business
Investments can be valued by calculating the net present value
of expected future cashflows of the Investee Companies. In relation
to the Company's investments, anticipating future cashflows in
excess of the guaranteed amounts would clearly require highly
subjective judgements to be made in the early stage of each
investment and therefore would not be an appropriate methodology to
apply in the early stage of the investment.
In the period prior to the second live event or entertainment
content it is considered appropriate to use the price paid for the
recent investment as the latest available information. Thereafter,
the portfolio of investments is fair valued on the discounted cash
flow/earnings basis using the latest available information on the
performance of the live event or entertainment content. Gains or
losses arising from changes in the fair value of the 'financial
assets at fair value through profit or loss' category are presented
in the Income Statement in the period in which they arise.
As a result of the above basis of valuation, there is
significant judgement associated with the valuation of
investments.
Non-qualifying Investments - OEICs
The Company's Non-qualifying Investments in interest bearing
money market OEICs are valued at fair value which is mid price.
They have been designated as fair value through profit and loss for
the purposes of FRS 26.
Gains and losses arising from changes in fair value of
Qualifying and Non-qualifying Investments are recognised as part of
the capital return within the Income Statement and allocated to the
realised or unrealised capital reserve as appropriate. Transaction
costs attributable to the acquisition or disposal of investments
are charged to capital within the Income Statement.
c) Investment Income
Interest income is recognised in the Income Statement under the
effective interest rate method. The effective interest rate is the
rate required to discount the expected future income streams over
the life of the loan to its initial carrying amount. The main
impact for the Company in that regard is the accounting treatment
of the loan note premiums. Where those loan note premiums are
charged in lieu of higher interest then they should be credited to
income over the life of the advance to the extent those premiums
are anticipated to be collected.
d) Dividend Income
Dividend income is recognised in the Income Statement once it is
declared by the Investee Companies.
e) Expenses
All expenses are accounted for on an accruals basis. Expenses
are charged to the revenue account within the Income Statement
except that:
-- expenses which are incidental to the acquisition or disposal of an
investment are charged to capital in the Income Statement as
incurred;
-- expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of
the
investments held can be demonstrated; and
-- the management fee has been allocated 50% to revenue and 50% to
capital, which represents the split of the Company's long term
returns.
f) Deferred Taxation
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the balance
sheet date where transactions or events that result in an
obligation to pay more, or a right to pay less, tax in the future
have occurred at the balance sheet date. This is subject to
deferred tax assets only being recognised if it is considered more
likely than not that there will be suitable profits from which the
future reversal of the underlying timing differences can be
deducted. Timing differences are differences arising between the
Company's taxable profits and its results as stated in the
financial statements which are capable of reversal in one or more
subsequent periods.
g) Ordinary Shares, C Shares, D Shares, E Shares, F Shares and G
Shares
The Company has six classes of Shares; Ordinary Shares, C
Shares, D Shares, E Shares, F Shares and G Shares. Each Share class
has a separate pool of income and expenses as well as assets and
liabilities attributable to it. All Share classes rank pari passu
with each other in terms of voting and other rights. No G Shares
had been allotted as at 31 December 2011.
2. Investment Income
2011 2010
GBP'000 GBP'000
Bank deposit interest 1 -
Dividend income from Qualifying Investments 10 8
Loan note interest from Qualifying Investments 286 200
297 208
3. Arrangement Fees
2011 2010
GBP'000 GBP'000
Arrangement fees 49 74
All costs arising out of the relevant E and F Share Offers
(included in 2011), and D Share Offer (included in 2010), including
listing expenses and commissions, were incurred by Ingenious Media
Investments Limited and a fee of 5.5% of the gross proceeds of the
relevant Offer was paid in consideration of the service provided.
The Directors believe that 80% of these fees relate directly to the
raising of capital and have classified this proportion as issue
costs. In accordance with Company law, the issue costs have been
deducted from the share premium account. The remaining 20%
reflected above has been taken to revenue.
4. Investment Management Fees
2011 2011 2011 2010 2010 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management 174 174 348 140 140 280
fees
For the purposes of the revenue and capital columns in the
Income Statement, the management fee has been allocated 50% to
revenue and 50% to capital, which represents the split of the
Company's long term returns.
5. Other Expenses
2011 2011 2011 2010 2010 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Directors' 38 - 38 38 - 38
remuneration
(excluding
employer's
national
insurance)
Auditors'
remuneration
- Audit fees 13 - 13 13 - 13
- Non-audit fees 4 - 4 - - -
Legal 10 - 10 16 - 16
and professional
fees
Other 108 - 108 85 - 85
administration
expense
Irrecoverable VAT 1 - 1 3 - 3
174 - 174 155 - 155
The Company is not registered for VAT. Fees payable to the
Company's auditor for the audit of the Company's financial
statements are GBP13k (31 December 2010: GBP13k) excluding VAT.
Further details on the Directors' fee disclosures are given in the
Directors' Remuneration Report.
6. Tax Charge on Ordinary Activities
2011 2011 2011 2010 2010 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on ordinary (100) (365) (465) (161) (173) (334)
activities
before tax
Loss on ordinary (27) (97) (124) (45) (48) (93)
activities
by tax
rate 26.5% (31
December
2010: 28%)
Adjustments:
Non taxable losses - 51 51 - 9 9
on investments
Disallowed expenses 1 46 47 1 42 43
Unutilised losses for 29 - 29 46 (3) 43
the current year
UK dividends (3) - (3) (2) - (2)
not taxable
- - - - - -
As the Company is a VCT its capital gains are not taxable.
At 31 December 2011 the Company had surplus management expenses
of GBP710k (31 December 2010: GBP602k). A deferred tax asset has
not been recognised in respect of these surplus management expenses
as the future taxable income of the Company can not be predicted
with reasonable certainty. Due to the Company's status as a VCT,
and the intention to continue meeting the conditions required to
obtain approval in the foreseeable future the Company does not
recognise deferred tax on any capital gains or losses which arise
on the revaluation of investments.
7. Basic and Diluted Return per Share
Ordinary 2011 2011 2011 2010 2010 2010
Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) 120 (264) (144) 34 (139) (105)
on
ordinary
activities
after
taxation
Weighted 10,205,011 10,205,011 10,205,011 10,205,011 10,205,011 10,205,011
average
shares
in issue
(number)
Profit/(loss) 1.2 (2.6) (1.4) 0.3 (1.3) (1.0)
attributable
per
share
(pence)
C Shares 2011 2011 2011 2010 2010 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss (27) (57) (84) (50) (16) (66)
on
ordinary
activities
after
taxation
Weighted 2,810,596 2,810,596 2,810,596 2,810,596 2,810,596 2,810,596
average
shares
in issue
(number)
Loss (1.0) (2.0) (3.0) (1.8) (0.5) (2.3)
attributable
per
share
(pence)
D Shares 2011 2011 2011 2010 2010 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss (89) (39) (128) (145) (18) (163)
on
ordinary
activities
after
taxation
Weighted 6,735,624 6,735,624 6,735,624 4,773,028 4,773,028 4,773,028
average
shares
in issue
(number)
Loss (1.3) (0.6) (1.9) (3.0) (0.4) (3.4)
attributable
per
share
(pence)
E Shares 2011 2011 2011 2010 2010 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss (65) (7) (72) - - -
on
ordinary
activities
after
taxation
Weighted 2,123,163 2,123,163 2,123,163 - - -
average
shares
in issue
(number)
Loss (3.1) (0.3) (3.4) - - -
attributable
per
share
(pence)
F Shares 2011 2011 2011 2010 2010 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/profit (39) 2 (37) - - -
on
ordinary
activities
after
taxation
Weighted 1,184,388 1,184,388 1,184,388 - - -
average
shares
in issue
(number)
(Loss)/profit (3.3) 0.2 (3.1) - - -
attributable
per
share
(pence)
There are no dilutive potential Ordinary, C, D, E or F Shares,
including convertible instruments, options or contingent share
agreements in issue for the Company. The basic return per Share is
therefore the same as the diluted return per Share.
8. Fixed Asset Investments
2011 2010
GBP'000 GBP'000
Unquoted investments 10,309 7,670
Equity shares 2,733 2,177
Unsecured loan notes 7,576 5,493
10,309 7,670
Qualifying Investments
2011 2010
GBP'000 GBP'000
Opening valuation 7,670 2,048
Purchases at cost 2,750 5,525
Return of investment (119) -
Fair value adjustment 8 97
Closing valuation 10,309 7,670
Included in the valuation above is an equal and opposite fair
value gain and fair value loss amounting to GBP269k (31 December
2010: GBP192k). This represents the accounting treatment of the
guaranteed loan note premium. The GBP269k is included in the Income
Statement under Investment Income (refer to note 2).
9. Significant Interests
The Company has interests of 10% or greater than 10% of the
nominal value of the allotted shares in the following Investee
Companies incorporated in the United Kingdom as at 31 December
2011:
Trading Companies % class and share type % voting rights
Jetstream Events Limited 24.95% A Ordinary 24.95%
Essential Experience Limited 24.95% A Ordinary 24.95%
Crystal Star Limited 24.95% A Ordinary 24.95%
Saturn Explosion Limited 16.66% A Ordinary 16.66%
DRG Media Assets Limited 24.95% A Ordinary 24.95%
Dance Floor Limited 12.48% A Ordinary 12.48%
Golfmania Limited 12.48% A Ordinary 12.48%
Into The Groove Limited 10.99% A Ordinary 10.99%
CLS Concerts Limited 16.67% A Ordinary 16.67%
Supervision Media 10.00% A Ordinary 10.00%
Holdings Limited
Jongleurs Comedy Live Limited 20.00% A Ordinary 20.00%
Venn Music Limited 15.00% A Ordinary 15.00%
This is Cricket Limited 15.00% A Ordinary 15.00%
Love Supreme Festival Limited 12.50% A Ordinary 12.50%
It is considered that, as permitted by FRS 9, "Associates and
Joint Ventures", the above investments are held as part of an
investment portfolio, and that, accordingly, their value to the
Company lies in their marketable value as part of that portfolio.
In view of this, it is not considered that any of the above
represents investments in associated undertakings.
Dormant Companies % class and share type % voting rights
Tremor Events Limited 100% A Ordinary 100%
Jam Festival Limited 100% A Ordinary 100%
(formerly
Electric Venues Limited)
Diamond Ventures Limited 100% A Ordinary 100%
Callisto Moon Limited 100% A Ordinary 100%
Mercury Events Limited 100% A Ordinary 100%
Moda Events Limited 100% A Ordinary 100%
Neptune Nine Limited 100% A Ordinary 100%
Oscar Moment Limited 100% A Ordinary 100%
Saturn Six Limited 100% A Ordinary 100%
Solar Experience Limited 100% A Ordinary 100%
Total Definition Limited 100% A Ordinary 100%
The investments made by the Company are part of its portfolio of
investments and the table above includes all portfolio
investments.
The Company is not required to prepare consolidated accounts as
any remaining amounts in the above dormant companies are
immaterial.
10. Debtors
2011 2010
GBP'000 GBP'000
Trade debtors 19 22
Prepayments and accrued income 61 59
80 81
11. Current Asset Investments
2011 2010
GBP'000 GBP'000
Funds held in listed money market OEICs 9,823 9,753
Non-Qualifying Investments
2011 2010
GBP'000 GBP'000
Opening valuation 9,753 10,029
Purchases at cost 6,999 9,661
Disposal proceeds (6,903) (9,788)
Unrealised change in value of investment (26) (149)
Closing valuation 9,823 9,753
In order to safeguard the capital available for investment in
Qualifying Investments and balance this with the need to provide
good returns to investors, available funds from the net proceeds
are invested in appropriate securities (money market OEICs) until
required for Qualifying Investment purposes.
12. Creditors: Amounts Falling Due Within One Year
2011 2010
GBP'000 GBP'000
Trade creditors 24 10
Accruals and deferred income 29 74
53 84
13. Called-up Share Capital
2011 2010
Allotted, called-up and fully paid GBP'000 GBP'000
10,205,011 Ordinary Shares 1p each 102 102
2,810,596 C Shares 1p each 28 28
6,735,624 D Shares 1p each 68 68
2,846,122 E Shares 1p each 28 -
1,572,095 F Shares 1p each 16 -
242 198
In the current year, 2,846,122 E Shares and 1,572,095 F Shares
were issued and allotted in accordance with the terms of the
relevant Prospectus. Share issue costs amounted to GBP157k and
GBP86k respectively of which GBP125k and GBP69k have been set off
against the share proceeds.
In the prior year, 6,785,624 D Shares were issued and allotted
in accordance with the terms of the relevant Prospectus of which
6,735,624 D Shares were fully paid at that year end. Share issue
costs amounting to GBP295k have been set off against the share
proceeds.
In the year ended 31 December 2009, 2,810,596 C Shares were
issued and allotted in accordance with the terms of the relevant
Prospectus. Share issue costs amounting to GBP121k have been set
off against the share proceeds.
In the period ended 31 December 2008, 10,205,010 Ordinary Shares
were issued and allotted in accordance with the terms of the
relevant Prospectus. The one subscriber share created upon
incorporation was issued at par. Share issue costs amounting to
GBP448k have been set off against the share proceeds.
Ordinary Shares, C Shares, D Shares, E Shares and F Shares rank
pari passu with each other in terms of voting and other rights. The
entire issued Ordinary, C, D, E and F share capital of the Company
has been admitted to the official list maintained by the Financial
Services Authority and to trading on the London Stock Exchange.
Number of E Aggregate value Aggregate share premium
Shares allotted of share net of issue costs
and fully paid premium allotted GBP'000
GBP'000
22 March 2011 1,412,218 1,398 1,337
5 April 2011 1,300,717 1,288 1,230
4 August 2011 133,187 132 126
2,846,122 2,818 2,693
Number of F Aggregate value Aggregate share premium
Shares allotted of share net of issue costs
and fully paid premium allotted GBP'000
GBP'000
22 March 2011 997,628 987 944
5 April 2011 510,806 506 483
4 August 2011 63,661 63 60
1,572,095 1,556 1,487
14. Reserves
Share premium Other reserve Capital Revenue Total
reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 6,351 11,615 12 (607) 17,371
1 January
2011
Issue of 4,374 - - - 4,374
equity
Dividends - (988) - - (988)
paid
Reduction (10,531) 10,531 - - -
of share
premium
account
Gain - - 91 - 91
on disposal
of
investments
Decrease in - - (282) - (282)
fair value
of
investments
held
Investment - - - 297 297
income
Arrangement (194) - - (49) (243)
fees
Investment - - (174) (174) (348)
management
fees
Other - - - (174) (174)
expenses
At - 21,158 (353) (707) 20,098
31 December
2011
The capital reserve includes realised investment holding losses
of GBP84k and unrealised investment holding losses of GBP269k. The
other reserve, capital reserve and revenue reserve accounts are the
only distributable reserves of the Company.
On 11 February 2011, the Company paid dividends amounting to
GBP510k on Ordinary Shares (13 April 2010: GBP510k) and GBP141k on
C Shares (28 May 2010: GBP141k). On 31 August 2011, the Company
paid dividends amounting to GBP337k on D Shares (31 December 2010:
GBPNil).
15. Net Asset Value Per Share Excluding Distributions to
Date
2011 2010
Net assets attributable to Ordinary 8,286 8,940
Shareholders (GBP'000)
Ordinary Shares in issue (number) 10,205,011 10,205,011
Net asset value per Ordinary Share (pence) 81.2 87.6
2011 2010
Net assets attributable to C Shareholders (GBP'000) 2,148 2,373
C Shares in issue (number) 2,810,596 2,810,596
Net asset value per C Share (pence) 76.4 84.4
2011 2010
Net assets attributable to D Shareholders (GBP'000) 5,791 6,256
D Shares in issue (number) 6,735,624 6,735,624
Net asset value per D Share (pence) 86.0 92.9
2011 2010
Net assets attributable to E Shareholders (GBP'000) 2,649 -
E Shares in issue (number) 2,846,122 -
Net asset value per E Share (pence) 93.1 -
2011 2010
Net assets attributable to F Shareholders (GBP'000) 1,466 -
F Shares in issue (number) 1,572,095 -
Net asset value per F Share (pence) 93.3 -
16. Financial Instruments and Risk Management
The Company's financial instruments comprise equity and floating
rate debt investments in unquoted companies, cash balances and
listed money market OEICs. The Company holds financial assets in
accordance with its investment policy.
Fixed asset investments (see note 8) are valued at fair value.
For quoted securities included in current asset Non-qualifying
Investments, this is mid price. In respect of unquoted investments,
these are fair valued in accordance with the International Private
Equity and Venture Capital Valuation Guidelines. The fair value of
all other financial assets and liabilities is represented by their
carrying value on the Balance Sheet.
Fair Value Hierarchy
2011 2010
GBP'000 GBP'000
Listed money market OEICs (note 11) Level 1 9,823 9,753
Unquoted investments (note 8) Level 3 10,309 7,670
20,132 17,423
Level 3 investments include a GBP94k revaluation gain on Into
The Groove Limited, a revaluation loss of GBP81k on Supervision
Media Limited and a GBP5k write off on The Apple Cart Festival
Limited during the year.
In accordance with FRS 29, "Financial Instruments: Disclosures",
the above table provides an analysis of these investments based on
the fair value hierarchy described below which reflects the
reliability and significance of the information used to measure
their fair value:
-- Level 1 - investments with quoted prices in active markets;
-- Level 2 - investments whose fair value is based directly on observable
market prices or is indirectly drawn from observable market
prices; and
-- Level 3 - investments whose fair value is determined using a valuation
technique based on assumptions that are not supported by
observable
current market prices or are not based on observable market
data.
The valuation techniques used by the Company are explained in
note 1 of the accounting policies.
Risk Management
The Company's investing activities expose it to various types of
risk that are associated with the financial instruments and markets
in which it invests. The most important types of financial risk to
which the Company is exposed are:
-- Market risk;
-- Interest rate risk;
-- Credit risk; and
-- Liquidity risk.
The nature and extent of the financial instruments outstanding
at the balance sheet date and the risk management policies employed
by the Company are discussed below:
a) Market Risk
Market risk embodies the potential for both losses and gains and
includes interest rate risk and price risk.
The Company's strategy on the management of investment risk is
driven by the Company's investment objective. Investments in
unquoted companies, by their nature, involve a higher degree of
risk than investments in larger "blue chip" companies.
The risk of loss in value is managed through careful selection
in accordance with a formalised investment decision process, with
each investment proposal evaluated by the Investment Committee as
part of the due diligence stage.
The Company's investment policy can be found in the Business
Review. The risk is also managed through continuous monitoring of
the performance of investments and changes in their risk
profile.
b) Interest Rate Risk
Some of the Company's financial assets are interest bearing, all
of which are at floating rates. As a result, the Company is subject
to exposure to interest rate risk due to fluctuations in the
prevailing levels of market interest rate.
When the Company retains cash balances, the majority of cash is
held within interest bearing money market OEICs. This is the
Non-qualifying Investments amount on the Balance Sheet of GBP9,823k
(31 December 2010: GBP9,753k). The benchmark rate which determines
the interest payments received on interest bearing cash balances
and debt investments in unquoted companies is the bank base rate
which was 0.5% as at 31 December 2011 (31 December 2010: 0.5%).
The following table illustrates the sensitivity of the impact on
ordinary activities for the year before taxation and total equity
to a change in interest rates of 50 basis points, with effect from
the beginning of the year. These changes are considered to be
reasonably possible based on observation of current market
conditions. The calculations are based on the Company's
Non-qualifying Investments held at each balance sheet date. All
other variables are held constant.
31 December 2011 31 December 2010
GBP'000 GBP'000
+/- 50 basis points +/- 50 basis points
Impact on loss
on ordinary
activities for
the year
before taxation and 49 49
total equity
c) Credit Risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company.
Whilst the Company is exposed to credit risk due to its
GBP7,576k (31 December 2010: GBP5,493k) unsecured loan note
instruments, this risk is mitigated by the Company requiring that
minimum royalty arrangements are in place prior to the investment
as set out in the Company's investment policy. In addition, and in
accordance with the Company's monitoring procedure, the Manager
closely monitors progress (including financial expenditure) against
the Investee Companies' agreed business plans.
The GBP7,576k (31 December 2010: GBP5,493k) unsecured loan notes
are the contractually agreed 70% of initial investments.
d) Liquidity Risk
The Company's financial instruments include equity and debt
investments in unquoted companies, which are not traded in an
organised public market and which generally may be illiquid. As a
result, the Company may not be able to liquidate quickly some of
its investment in these instruments at an amount close to fair
value.
The Company maintains sufficient reserves of cash and readily
realisable marketable securities to meet its liquidity requirements
at all times. No numerical disclosures have been provided in
respect of liquidity risk as this is not considered to be
material.
17. Contingent Assets
There is currently interest income accruing on the unsecured
loan note instruments at a rate of 4.5% (31 December 2010: 4.5%),
being 4% over the bank base rate which was 0.5% as at 31 December
2011 (31 December 2010: 0.5%), totalling GBP165k (31 December 2010:
GBP38k). The repayment of this interest is not deemed recoverable
based on current profits being derived by the Investee Companies,
which currently can not be determined with any certainty, therefore
the Directors have not recognised it in the financial
statements.
18. Related Party Transactions
a) The Company has appointed Ingenious Media Investments
Limited, a company of which Patrick McKenna is a director, to be
its promoter. Ingenious Media Investments Limited is a wholly-owned
subsidiary within the Ingenious Media Holdings plc group of
companies (the Ingenious Group) which is controlled by Patrick
McKenna. During the Reporting Period, the Company paid Ingenious
Media Investments Limited a fee of 5.5% of the gross proceeds of
the E and F Share Offer, amounting to GBP243k (31 December 2010: D
Share fee amounting to GBP369k) which was paid in consideration for
services provided as promoter. The fee of 5.5% of the gross
proceeds of the G Share Offer will become payable upon the
allotment of the G Shares which starts in 2012.
b) Ingenious Ventures Limited was the Company's investment
manager until 28 February 2008, when the investment management
agreement was novated to Ingenious Asset Management Limited, and
Ingenious Ventures became a trading division of Ingenious Asset
Management Limited. Patrick McKenna is a director of Ingenious
Asset Management Limited which is a subsidiary within the Ingenious
Group, which is controlled by Patrick McKenna.
The Manager, as per the investment management agreement,
receives a management fee of 0.4375% of the net asset value payable
quarterly in advance. This amounted to GBP348k as at 31 December
2011 (31 December 2010: GBP280k). The Manager also charges an
administration fee of GBP69k (31 December 2010: GBP53k) per annum
and irrecoverable VAT.
c) The funds invested in OEICs are managed by Ingenious Asset
Management Limited of which Patrick McKenna is a director.
Ingenious Asset Management Limited is a subsidiary of the Ingenious
Group, which is controlled by Patrick McKenna. There is no fee
associated with this transaction.
d) Patrick McKenna is a director and a shareholder of Ingenious
Entertainment VCT 1 plc. The Company and Ingenious Entertainment
VCT 1 plc have agreed to invest in an existing company, Venn Music
Limited, to promote two live music festivals called We, The People
and Shakedown. In February 2011 the Company invested GBP750k for a
total of 15.00% of the equity in Venn Music Limited. Ingenious
Entertainment VCT 1 plc invested GBP750k for 15.00% of the equity
in Venn Music Limited.
The investment of GBP750k in Venn Music Limited is a joint
investment between the C Shares (GBP225k) and the D Shares
(GBP525k).
e) Patrick McKenna is a director and a shareholder of Ingenious
Entertainment VCT 1 plc. The Company and Ingenious Entertainment
VCT 1 plc have agreed to invest in an existing company, This is
Cricket Limited, to promote a new sports event called Titans of
Cricket. In June 2011 the Company invested GBP1 million for a total
of 15.00% of the equity in This is Cricket Limited. Ingenious
Entertainment VCT 1 plc invested GBP1 million for 15.00% of the
equity in This is Cricket Limited.
The investment of GBP1 million in This is Cricket Limited is a
joint investment between the C Shares (GBP200k) and the D Shares
(GBP800k).
f) Patrick McKenna is a director and a shareholder of Ingenious
Entertainment VCT 1 plc. The Company and Ingenious Entertainment
VCT 1 plc have agreed to invest in an existing company, Love
Supreme Festival Limited, to promote a live jazz music festival
called Love Supreme Jazz Festival. In December 2011 the Company
invested GBP1 million for a total of 12.50% of the equity in Love
Supreme Festival Limited. Ingenious Entertainment VCT 1 plc
invested GBP1 million for 12.50% of the equity in Love Supreme
Festival Limited.
The investment of GBP1 million in Love Supreme Festival Limited
is a joint investment between the C Shares (GBP375k), D Shares
(GBP375k), E Shares (GBP125k) and F Shares (GBP125k).
During the year the Company has entered into transactions with
the above-mentioned related parties in the normal course of
business and on an arm's length basis as listed in the table
below.
2011 2011 2010 2010
Entity Note Expenditure paid Amounts due Expenditure Amounts
GBP'000 GBP'000 paid due
GBP'000 GBP'000
Ingenious
Media
Investments
Limited
- Arrangement a 243 - 369 -
fee
Ingenious
Asset
Management
Limited
- Investment b 348 - 280 -
management
fee
- b 69 - 53 -
Administration
fee
- 4 - - 3
Irrecoverable
VAT
Transactions Between Related Parties
Ingenious Media Consulting Limited, a company which is a
wholly-owned subsidiary in the Ingenious Group, which is controlled
by Patrick McKenna, has entered into consultancy agreements with
each of the Company's Investee Companies to provide management
services. For the provision of such services, consulting fees
totalling GBP172k excluding VAT (31 December 2010: GBP89k), have
been invoiced in the period of which GBP50k remains outstanding as
at 31 December 2011 (31 December 2010: GBPNil).
19. Events After the Balance Sheet Date
The Company declared an interim dividend of 5.0 pence per
Ordinary Share on 2 February 2012 (2011: 5.0 pence). The dividend
was paid on 24 February 2012 by way of a capital distribution
reducing the Company's other reserves.
The Company declared an interim dividend of 5.0 pence per C
Share on 2 February 2012 (2011: 5.0 pence). The dividend was paid
on 24 February 2012 by way of a capital distribution reducing the
Company's other reserves.
The Company declared an interim dividend of 5.0 pence per D
Share on 2 February 2012 (2011: Nil pence). The dividend was paid
on 24 February 2012 by way of a capital distribution reducing the
Company's other reserves.
20. Capital Management
The capital management objectives of the Company are:
-- To safeguard its ability to continue as a going concern so that it can
continue to provide returns to Shareholders.
-- To ensure sufficient liquid resources are available to meet the
funding requirements of its investments and to fund new
investments
where identified.
The Company has no external debt; consequently all capital is
represented by the value of share capital, distributable and other
reserves. Total shareholder equity at 31 December 2011 was
GBP20,340k (31 December 2010: GBP17,569k).
In order to maintain or adjust its capital structure the Company
may adjust the amount of dividends paid to the Shareholders, return
capital to Shareholders, issue new shares or sell assets.
There have been no changes to the capital management objectives
of the business from the previous period.
The capital structure of the Company was changed by the issue of
E & F Shares (see note 13) during the year.
The Company is subject to the following externally imposed
capital requirements:
-- As a public company Ingenious Entertainment VCT 2 plc must have a
minimum of GBP50k of share capital.
The level of dividends may be influenced by the need to comply
with the VCT legislation which states that no more than 15% of
income from shares and securities may be retained.
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