Interim Results
19 Août 2008 - 6:00PM
UK Regulatory
RNS Number : 6665B
Ingenious Live VCT 1 plc
19 August 2008
INGENIOUS LIVE VCT 1 PLC
19 August 2008
Interim results for the six months to 30 June 2008
INTERIM MANAGEMENT REPORT
I am delighted to present the Company's half-yearly financial statements covering the six months to 30 June 2008 (the Reporting Period).
Overview of activities
The Company has continued to actively source and review investment propositions during the Reporting Period. It has now identified a
number of exciting opportunities that are in the later stages of negotiation and we look forward to reporting the details of these
investments in due course.
In January the Company agreed an investment of �402,000 with The Rival Organisation to co-promote an exciting three day music concert at
Powderham Castle in Devon for the 25-27 July. An excellent long weekend of music saw performances from artists as diverse as Boyzone, Katie
Melua and an evening of classic 80s greats which was the highlight of the weekend, with excellent weather and an audience of around 10,000.
The first year has raised the profile of Powderham Castle as a strong music venue and we believe a strong base has been laid to develop the
event in future years.
Since the Reporting Period the Company has also invested just over �1 million in both Creamfields and Underage and Field Day in July.
Creamfields
The Company completed its third investment to back the second day of leading dance music festival Creamfields. Now celebrating its tenth
anniversary year, the event boasts an impressive line up including Kasabian and Fatboy Slim for the weekend of the 23-25 August. Creamfields
has established itself as arguably the world's leading dance festival, and is ranked among the UK's top five annual live music events,
alongside Glastonbury, V and Reading. The festival has regularly attracted audiences of in excess of 40,000 and is the only festival concept
to be successfully exported globally with events staged in over 12 countries.
Underage and Field Day
Following the success of last year's sold out Underage and Field Day festivals, the Company agreed to provide further funding to
co-promote the second year of the festivals. The event returned for another weekend of exceptional music in August in Victoria Park, London.
Underage attracted an impressive line up of artists including Dizzee Rascal, Gallows, Foals, The Horrors, The Rascals, Bonde Do Role and The
Maccabees, whilst Field Day resumed the charm of a village fe and featured Simian Mobile Disco and Laura Marling as headline acts.
VCT qualifying status
The Company is managed as a venture capital trust, enabling shareholders to benefit from both the income and capital gains tax relief
available. Shareholders will be aware that in order to qualify for this tax relief 70% of net funds raised must be invested in VCT
qualifying companies within three years. Now a year since close of fundraising, the Manager believes that the Company will meet this
condition given the number of investment opportunities being pursued.
Results
The Company made a loss on ordinary activities of �0.15 million in the period to 30 June 2008. The Company's net asset value, however,
remained relatively constant during the period at 95.4 pence per share down from 95.6 at the beginning of period.
Outlook
It was noted in our review of the market in the last Annual Report and Accounts that 2007 had seen more music festivals than ever before
in the UK. Whilst 2008 has certainly produced a large and varied number of music events, it is currently prudent for any UK business to take
into consideration the slowdown of the economy. We think that the economic environment represents both an opportunity and a challenge for
the Company and its underlying investments. A downturn in economic activity is likely to affect consumer discretionary spending and may
force individuals to be more cautious in spending decisions. But this often means they are more selective, and strong brands will prosper at
the expense of weaker ones. Backed by excellent management teams, our investments have carved out their own unique identity in the live
music industry to create recognisable and lasting brands. Combined with investments such as Creamfields, which has now enjoyed ten years as
an established event, the Manager remains confident that the portfolio of investments is robust enough to withstand the economic factors facing the industry.
The Manager continues to see a good flow of high-quality investment opportunities and looks forward to announcing our first investments
in the consumer and trade exhibitions sectors in the near future. We would reiterate our commitment that, in the current economic
environment, we will only invest in opportunities that meet the most stringent of investment criteria as set out above.
I intend to report further on such activity in my full statement to accompany the annual report and financial statements for the year
ending 31 December 2008.
Patrick McKenna
Chairman
18 August 2008
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm to the best of their knowledge that:
* the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with
the Accounting Standards Board's Statement 'Half-Yearly Financial Reports';
* and the half-yearly management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's
Disclosure and Transparency Rules.
The half yearly financial report was approved by the Board on 18 August and the above responsibility statement was signed on its behalf
by
Patrick McKenna
Chairman
18 August 2008
INCOME STATEMENT (UNAUDITED)
for the six months ended 30 June 2008
Six months ended 30 June 2008
Revenue Capital Total
Note �'000 �'000 �'000
Loss on disposal of - (21) (21)
investments
Increase in fair value of - 109 109
investments held
Investment income 4 60 64
Arrangement fees - - -
Investment management fees (52) (52) (104)
Other expenses (63) - (63)
(Loss)/profit on ordinary activities before (111) 96 (15)
taxation
Tax on ordinary activities - - -
(Loss)/profit attributable to equity shareholders (111) 96 (15)
Basic and diluted return per 2 (1.2) 1.0 (0.2)
share (pence)
The Company has no recognised gains and losses other than those disclosed above.
Ten months ended 30 June 2007
Revenue Capital Total
Note �'000 �'000 �'000
Loss on disposal of - - -
investments
Increase in fair value of - 21 21
investments held
Investment income 35 - 35
Arrangement fees (82) - (82)
Investment management fees (22) (21) (43)
Other expenses (42) - (42)
(Loss)/profit on ordinary activities before (111) - (111)
taxation
Tax on ordinary activities - - -
(Loss)/profit attributable to equity shareholders (111) - (111)
Basic and diluted return per (5.1) - (5.1)
share (pence)
Period ended 31 December 2007
Revenue Capital Total
Note �'000 �'000 �'000
Loss on disposal of - - -
investments
Increase in fair value of - 186 186
investments held
Investment income 69 63 132
Arrangement fees (92) - (92)
Investment management fees (70) (70) (140)
Other expenses (103) (4) (107)
(Loss)/profit on ordinary activities before (196) 175 (21)
taxation
Tax on ordinary activities - - -
(Loss)/profit attributable to equity shareholders (196) 175 (21)
Basic and diluted return per 2 (3.8) 3.4 (0.4)
share (pence)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (UNAUDITED)
as at 30 June 2007
30 June 2008 30 June 2007 31 December 2007
�'000 �'000 �'000
Opening shareholders' funds 8,836 - -
Capital subscribed - 8,201 9,227
Issue costs - (329) (370)
Loss for the period (15) (111) (21)
Closing shareholders' funds 8,821 7,761 8,836
BALANCE SHEET (UNAUDITED)
as at 30 June 2008
30 June 2008 30 June 2007 31 December 2007
Note �'000 �'000 �'000
Fixed assets
Qualifying investments 565 - 163
Current assets
Debtors 8 29 15
Non-Qualifying investments 3 8,192 7,602 8,514
Cash at bank and in hand 76 161 174
Creditors: amounts falling due (20) (31) (30)
within one year
Net current assets 8,256 7,761 8,673
Net assets 8,821 7,761 8,836
Capital and reserves
Called-up share capital 92 82 92
Share premium account 4 4,383 7,790 8,765
Other reserves 4 4,383 - -
Capital reserves
realised 4 (24) (21) (11)
unrealised 4 295 21 186
Revenue reserve 4 (308) (111) (196)
Shareholders' funds 8,821 7,761 8,836
Net asset value (pence per 5 95.4 94.5 95.6
share)
CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 30 June 2008
Six months ended Ten months ended Period ended
30 June 2008 30 June 2007 31 December 2007
�'000 �'000 �'000
Net cash outflow from (106) (130) (192)
operating activities
Capital expenditure and
financial investment
Purchase of qualifying (402) - (163)
investments
Purchase of non-qualifying (1,220) (7,581) (8,559)
investments
Disposal of non-qualifying 1,630 - 230
investments
Net cash inflow/(outflow) from 8 (7,581) (8,492)
capital expenditure and
financial investment
Financing
Issue of redeemable preference - 50 50
shares
Repurchase of redeemable - (50) (50)
preference shares
Issue of ordinary shares - 8,201 9,227
Expenses of the issue of - (329) (369)
ordinary shares
Net cash inflow from financing - 7,872 8,858
Increase in cash (98) 161 174
Reconciliation of Loss Before Taxation to Net Cash Flow from Operating Activities
�'000 �'000 �'000
Loss on ordinary activities before tax (15) (111) (21)
Gains on investments 21 - -
Increase in fair value of investments held (109) (21) (186)
Decrease/(increase) in debtors 7 (29) (15)
(Decrease)/increase creditors (10) 31 30
Net cash outflow/(inflow) from operating activities (106) (130) (192)
Reconciliation of Net Cash Flow to Movement in Net Funds
�'000 �'000 �'000
Opening cash balances 174 - -
Net cash (outflow)/inflow (98) 161 174
Closing cash balances 76 161 174
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
for the six months ending 30 June 2008
1. Accounting Policies
(a) Basis of Accounting
The financial statements for the half year ended 30 June 2008 have been prepared in compliance with the UK Generally Accepted Accounting
Practice, and with the Statement of Recommended Practice (the SORP) entitled "Financial Statements of Investment Trust Companies" which was
issued in January 2003 and revised in December 2005.
These financial statements have been drawn up adopting the accounting policies set out in the statutory accounts for the period ended 31
December 2007.
(b) Valuation of Investments
The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and
capital growth. As set out in the Prospectus all investments are designated at fair value.
Investee Companies
Unquoted investments including equity and loan investments are stated at fair value in accordance with the International Private Equity
and Venture Capital Guidelines and Financial Reporting Standard 26 "Financial Instruments: Recognition and Measurement" (FRS 26). They are
designated at fair value through profit and loss in accordance with FRS 26.
The guidelines set out six permissible valuation methodologies, of these the two methodologies most applicable to the VCT 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 of up to a year is often applied
as the long stop date for such a valuation.
2 - Discounted cash flows/earnings of the underlying business, calculating the net present value of expected future cashflows of the
investee companies. In relation to the VCT 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.
The adopted approach fair values the investments at the "price of recent investment" (i.e. cost) in their first year of investment.
Subsequently, 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.
Open Ended Investment Companies
The Company's investments in interest bearing money market open ended investment companies (OEICs) are valued at fair value, which is
deemed to be mark-to-market. 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 the capital return within the income statement.
(c) Investment Income
Interest income is included on an accruals basis using the effective interest method.
(d) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to the revenue account within the income statement except
that:
* expenses which are incidental to the acquisition or disposal of an investment are charged to capital in the income statement as
incurred; and
* expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the
investments held can be demonstrated.
2. Basic and Diluted Return per Share
The calculation of basic return per share is based on the return on ordinary activities after tax for the period and on a weighted
average of 9,242,845 ordinary shares in issue for the six months ended 30 June 2008 (31 December 2007: 5,156,960; 30 June 2007: 2,193,434).
There are no dilutive elements and therefore the basic return per share is the same as the diluted return per share.
3. Non-qualifying investments
In order to safeguard the capital available for investment in Qualifying Investments and balance this with the need to provide good
returns to investors, available funds from the net proceeds are invested in appropriate securities (money market securities and cash funds)
until required for Qualifying Investment purposes.
4. Reserves
Share premium Other reserve Capital realised Capital unrealised Revenue reserve Total reserves
�'000 �'000 �'000 �'000 �'000 �'000
At 1 January 2008 8,765 - (11) 186 (196) 8,744
Loss on disposal of - - (21) - - (21)
investments
Increase in fair value of - - - 109 - 109
investments held
Investment Income - - 60 - 3 63
Investment management fees - - (52) - (52) (104)
Other expenses - - - - (63) (63)
Reduction of share premium (4,382) 4,383 - - - 1
account
At 30 June 2008 4,383 4,383 (24) 295 (308) 8,729
On 31 January 2008, the Company registered the court order dated 19 December 2007 which confirmed the reduction of the Company's share
premium account by �4,382,670. The purpose of the reduction was to enable the company to create a distributable reserve for the purpose of
purchasing shares in the market.
5. Net Asset Value per Share
The net asset value per share has been calculated based on 9,242,845 ordinary shares being the number of ordinary shares in issue as at
30 June 2008 (31 December 2007: 9,242,845; 30 June 2007: 8,216,606).
6. Contingent Asset
The Company had a contingent asset subsequent to the balance sheet date relating to VAT recoverable. The contingent asset has arisen as
a result of an announcement by HM Revenue & Customs in Brief 35/08 that it accepts that VCT management should have fallen within the VAT
exemption for fund management introduced on 1 January 1990, and now invites claims for VAT charged retrospectively.
The amount of VAT recoverable is yet to be finalised.
7. Related Party Transactions
The Company has appointed Ingenious Media Investments Limited, a company in which Patrick McKenna is a director, to be their promoter.
Ingenious Media Investments Limited is ultimately owned by Ingenious Media Holdings Plc which is controlled by Patrick McKenna.
The Company has appointed Ingenious Ventures to provide investment management and administrative services. Ingenious Ventures Limited
was the Manager up until 1 March 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 Ventures
Limited and Ingenious Asset Management Limited, which are both wholly owned subsidiaries within the Ingenious Media Holdings plc group,
which is controlled by Patrick McKenna.
The funds invested in OEICs, are also managed by Ingenious Asset Management Limited.
During the period the Company has carried out a number of transactions with the above-mentioned related parties in the normal course of
the business and on an arm's length basis:
30 June 2008 30 June 2007 31 December 2007 30 June 2008 30 June
2007 31 December 2007
Entity Expenditure Expenditure Expenditure Amounts due�*000 Amounts
due�*000 Amounts due�*000
paid�*000 paid�*000 paid�*000
Ingenious Ventures Limited
- Investment management fee 104 43 140 -
- -
- Administration fee 11 5 15 -
- -
Ingenious Media Investments Limited
- Arrangement fee - 82 461 -
- -
Amounts
Amounts Amounts receivable�*000
receivable�*000
receivable�*000
Ingenious Media Investments Limited
- Expenses recharged -
- 12
Ingenious Media Consulting Limited, a company in which Patrick McKenna is a director, has entered into consultancy agreements with each
of the investee companies to provide management services. For the provision of such services, consulting fees totalling �36,498 including
VAT (31 December 2007: nil; 30 June 2007: nil), have been invoiced for the period, none of which remains outstanding as at 30 June 2008.
Patrick McKenna is a director of The Young Vic (a registered charity) which holds 0.2% of the equity in each of the investee companies.
8. The unaudited half-yearly financial statements for the period ended 30 June 2007 do not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985 and have not been delivered to the Registrar of Companies.
9. Copies of the half-yearly report are being sent to all shareholders. Further copies can be obtained from
the Company's Registered Office at 15 Golden Square, London, W1F 9JG.
Enquiries to
Sarah Cruickshank
Ingenious Ventures
15 Golden Square
London
W1F 9JG
0207 319 4000
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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