IBIS Media VCT 1 plc Half Yearly Report (3169P)

TIDMIBSA

RNS Number : 3169P

IBIS Media VCT 1 plc

30 September 2013

IBIS Media VCT 1 plc

Half-Yearly Report

for the period ended 31 July 2013

Incorporated in England and Wales

with registered number: 5660269

Financial Summary

 
 Period ended                          31 July          31 July       31 January 
                                          2013             2012             2013 
-------------------------------  -------------  ---------------  --------------- 
 
 Net assets                          5,957,111     GBP6,365,220     GBP5,918,319 
-------------------------------  -------------  ---------------  --------------- 
 Net asset value per share              57.26p           60.80p           56.80p 
-------------------------------  -------------  ---------------  --------------- 
 Investment income                  GBP101,361        GBP50,790       GBP128,033 
-------------------------------  -------------  ---------------  --------------- 
 
 Return on ordinary activities 
  before tax 
 - Revenue                        GBP(161,382)      GBP(32,734)      GBP(22,365) 
 - Capital                          GBP222,065   GBP(1,431,137)   GBP(1,690,683) 
 - Total                             GBP60,683   GBP(1,463,871)   GBP(1,713,048) 
-------------------------------  -------------  ---------------  --------------- 
 
 Return per share 
 - Revenue                             (1.55)p          (0.33)p          (0.22)p 
 - Capital                               2.13p         (14.47)p         (16.61)p 
 - Total                                 0.58p         (14.80)p         (16.83)p 
-------------------------------  -------------  ---------------  --------------- 
 
 Dividend per share declared 
  in respect of the period 
 - Revenue                                 Nil              Nil              Nil 
 - Capital                                 Nil              Nil             1.5p 
 - Total                                   Nil              Nil             1.5p 
-------------------------------  -------------  ---------------  --------------- 
 
 Share price at end of period              50p              64p              55p 
-------------------------------  -------------  ---------------  --------------- 
 

Investment Policy

The objective of IBIS Media VCT 1 plc ("IBIS" or the "Company") is to make investments in unquoted companies within the media sector that have the potential to grow and to achieve capital appreciation on a subsequent exit.

Whilst the Company's directors ("Directors") and the Company's investment committee ("Investment Committee") are primarily targeting investments in privately owned companies, suitable opportunities to acquire VCT qualifying investments in smaller AIM-quoted stocks will also be considered where there is potential to achieve the level of return targeted by the Company's board of directors ("Board"). It is also the intention of the Directors to build a balanced portfolio with interests in a mixture of cyclical and non-cyclically exposed media companies operating both in mature and high growth areas of the market. IBIS is, however, unlikely to invest in all media sub-sectors as factors such as growth prospects, the competitive environment and valuations may mean that the prospective investment performance of certain of those sub-sectors would be unlikely to provide satisfactory rates of return.

Investments in business start-ups will generally be avoided unless the management team has a strong profile in the media sector and a track record of value creation for shareholders.

The Company's investment adviser is IBIS Private Equity Partners LLP ("Investment Adviser").

Chairman's Statement

Company Overview

The main features of the six month period ended 31 July 2013 were:

   --      An increase in the valuation of the IBIS' unquoted investments of GBP260,875 
   --      An increase in the Company's net asset value per share of 0.46p to 57.26p (+0.8%) 

-- Shareholder approval to pay the sixth consecutive annual dividend of 1.5p per share with respect to the 2012/13 financial year, bringing the cumulative dividend to 9.0p per share

   --      A third successful Share Realisation and Reinvestment Programme ("SRRP") 

-- The commencement of a private placement to provide continuing support to existing IBIS portfolio companies

Financial Performance

In the six months to 31 July 2013, a sixth consecutive annual dividend of 1.5p per share was approved by shareholders, bringing the total dividends per share since the launch of IBIS to 9.0p per share. The net asset value total return per share (comprising the sum of the net asset value per share and the cumulative dividends paid per share) as at 31 July 2013 was 64.76p, an increase of 0.72% from the 31 January 2013 return of 64.30p. Shareholders who invested in 2005/06 and (i) recovered the full 40% income tax relief of 40p per GBP1 subscribed and (ii) who subsequently sold the shares acquired in 2005/06 and reinvested the full proceeds under the Company's 2010/11 SRRP and received a further 30% income tax relief on the full reinvested sum and (iii) received each of the six 1.5p per share dividends paid by the Company to date will have enjoyed a total cash return of 77.21p per share as at 30 September 2013.

During the period under review, the Company's net assets increased by GBP38,792. This increase can be attributed to a decrease in the share capital and share premium account of GBP21,891 (arising primarily from the Company's SRRP) and the Company's return attributable to shareholders of GBP60,683. The Company's return attributable to shareholders is made up of a capital return of GBP222,065, comprising an unrealised gain of GBP260,875, arising primarily from the increase in valuation of the Company's investments in Contagious, Ginx TV and Freshwater set off against the decrease in the valuation of Futurelex and a realised loss of GBP38,810 representing the Investment Adviser's fee for the period allocated to capital and a revenue loss of GBP161,382, including GBP190,805 of accrued loan note interest due from Futurelex written off.

Investment Performance

During the period, the valuation of the Company's portfolio of private equity investments increased by GBP260,875 (+5.0%). With respect to the companies in the IBIS portfolio, we have made a number of adjustments in the carrying value of our investments:

-- Steel River Media, the holding company for Contagious, has continued to expand its business both domestically and internationally, winning new client contracts with brands such as Mondelez and Google

-- Ginx TV has accelerated its deal flow to the point of being on the verge of reaching break even. In August 2013, the company reached its target of raising GBP750,000 via a rights issue at a 25% premium to the price per share of its previous fundraising in order to acquire a pan-European thematic television channel that will extend Ginx TV's viewership by 26 million homes

-- Freshwater is making encouraging progress in restoring profits to pre-recession levels and strengthening its financial position

   --      Get Me Media had an excellent first half and is trading well ahead of last year 

-- Masher Technologies has received preliminary acquisition interest and a potential acquirer has commenced product testing of Masher's new website

-- IBIS has supported Futurelex in its fundraising efforts by participating in the company's restructuring, the net result of which has seen the value of IBIS' investment in the company decrease by GBP121,876 and a further GBP190,805 in accrued loan note interest written off

More detail of the performance of the Company's portfolio is given in the Investment Adviser's Review.

Corporate Developments

The Company's most recent SRRP structured as linked tender and open offers closed on 27 February 2013. The programme gave all shareholders the opportunity to sell their shares to the Company at the most recently published net asset value per share, provided the proceeds of the sale were reinvested in new shares, which investment carried income tax relief of 30%. The SRRP was targeted at investors whose shares were allotted on or before 28 February 2008, as these shares could be sold without jeopardising the up-front income tax relief (40% if allotted on or before 5 April 2006 and 30% thereafter) associated with their acquisition. As at 31 July 2013, 81.5% of the shares allotted on or before 28 February 2008 had been tendered under the programme, suggesting an encouraging level of shareholder loyalty, for which the Board is very grateful.

During the period, IBIS launched a private placement targeting approximately GBP675,000 of new shareholder funds to provide continuing support to existing portfolio companies as they prepare for exit.

Outlook

The IBIS investment portfolio contains some very promising investments and a number of investee companies delivered pleasing results over the period under review. Trading is up year-on-year at Contagious, Ginx TV, Get Me Media and Freshwater while the outlook for each remains encouraging. There have been positive developments at Masher since the launch of its new website and IBIS' Investment Adviser is working with the company's management towards realising an exit for shareholders. While it remains difficult to assess the prospects of Futurelex, IBIS has taken steps to support the company and its fundraising efforts by restructuring its debt.

IBIS will continue to provide support for the on-going development and initiatives of our investee companies while its Investment Adviser plays an active role with management teams towards achieving successful exits for IBIS shareholders.