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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ingenious E Ord | LSE:IE1E | London | Ordinary Share | GB00B42F8N96 | E ORD SHS |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMIE1E
INGENIOUS ENTERTAINMENT VCT 1 PLC ("the Company")
STATEMENT OF ANNUAL RESULTS
For the year ended 31 December 2015
Chairman's Statement
I am delighted to present the Company's eighth Annual Report and Accounts covering the year to 31 December 2015 (the Reporting Period).
Overview of Activities
In December 2014, the Company cancelled all of its C Shares and completed the full distribution of capital in relation to those shares in January 2015.
The Company has now completed its investment strategy and is fully invested under the VCT regulations for its D, E, F and G Share classes. The Company needs to make one final investment for its H Share class in 2016. The Manager will also focus upon maximising the returns from the investments.
The Company continued to actively source and review investment opportunities during this Reporting Period for the H Share class. In total, the Company made five investments during the Reporting Period. Details of all investments can be found in the Manager's Review.
During the Reporting Period two live events were undertaken by two of the Company's Investee Companies. Liverpool Sound City took place from 22 to 24 May 2015 with a new 'Festival style' format that was held in the Docklands area of Liverpool.
Field Day 2015 was staged on 7 and 8 June 2015 and once again delivered both increased attendances and increased profits from the year before. In June 2015, the Company accepted an offer to acquire its 15% stake in Waxarch Limited (the Investee Company that stages Field Day). The purchase price agreed was at a six times multiple of the event's 2015 profits. The deal completed in September 2015. The capital growth over the life of the investment equates to an unaudited six pence per share uplift for the D Share class (a three pence per share uplift since the previous valuation as at 31 December 2014) and an unaudited three pence per share uplift for each of the E and F Share classes (in each case an unaudited one pence per share uplift since the previous valuation as at 31 December 2014).
The D Share class reached its five year anniversary on 30 July 2015. It is the Directors' intention to distribute any residual funds remaining in this share class shortly.
Fund Raising
The Company raised no further funds during the Reporting Period.
Results
The C Shares (cancelled in year ended 31 December 2014), D Shares, E Shares, F Shares, G Shares and H Shares are accounted for as separate pools of funds necessitating separate non-statutory reporting.
The Company continues with its core strategy of blending high levels of downside protection with its attempt to drive positive returns from the investment portfolio. The Directors and the Manager have also maintained their prudent approach in the valuation of investments with the view that it takes at least two to three years to build brand awareness in the live entertainment sector. They remain cautiously optimistic about the future performance and the long term outlook of the Company.
The C Shares were cancelled during the year ended 31 December 2014 and therefore had no profit or loss to report (31 December 2014: loss of GBP47,000). D Shares made a loss of GBP153,000 (31 December 2014: loss of GBP13,000). The E Shares made a loss of GBP100,000 (31 December 2014: profit of GBP7,000). The F Shares made a loss of GBP60,000 (31 December 2014: loss of GBP6,000). The G Shares made a loss of GBP264,000 (31 December 2014: loss of GBP69,000). The H Shares made a loss of GBP41,000 (31 December 2014: loss of GBP16,000).
The net asset value per D Share at 31 December 2015 was 2.0 pence (31 December 2014: 64.3 pence) although this is after the deduction of the dividend of 60.0 pence per Share in the Reporting Period and the deduction of a total of 20.0 pence per Share of dividends in previous years. The net asset value as at 31 December 2015 including distributions was therefore 82.0 pence per D Share (31 December 2014: 84.3 pence).
The net asset value per E Share at 31 December 2015 was 63.7 pence (31 December 2014: 72.2 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 total of 15.0 pence per Share of dividends in previous years. The net asset value as at 31 December 2015 including distributions was therefore 83.7 pence per E Share (31 December 2014: 87.2 pence).
The net asset value per F Share at 31 December 2015 was 65.9 pence (31 December 2014: 74.7 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 total of 15.0 pence per Share of dividends in previous years. The net asset value as at 31 December 2015 including distributions was therefore 85.9 pence per F Share (31 December 2014: 89.7 pence).
The net asset value per G Share at 31 December 2015 was 67.2 pence (31 December 2014: 79.7 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 total of 10.0 pence per Share dividends in the previous years. The net asset value as at 31 December 2015 including distributions was therefore 82.2 pence per G Share (31 December 2014: 89.7 pence).
The net asset value per H Share at 31 December 2015 was 81.4 pence (31 December 2014: 87.9 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 previous year The net asset value as at 31 December 2015 including distributions was therefore 91.4 pence per H Share (31 December 2014: 92.9 pence).
Legislative and Regulatory Developments
The recent changes to the VCT rules are not expected to have a significant impact on the operation of the Company.
Outlook
Live entertainment continues to appeal to customers as an experience that is completely unique to the individual. When this appeal is combined with enjoying the live experience with other likeminded participants, then it is easy to understand why those events that can create their own 'niche' will continue to thrive whatever the economy may throw at them.
The 'season' has once again begun with Glastonbury selling out in record time. All of the events that the Company has on sale are currently ahead of forecast and the Board does not believe that any of these events will be adversely affected by any of the economic uncertainty that currently exists.
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.
Manager's Review
A summary of the Company's investments, their individual valuations and the split between the various share classes as of 31 December 2015 is shown below:
Hot Features
Premium
Total DShares GBP'000 EShares GBP'000 FShares GBP'000 G Shares GBP'000 H Shares GBP'000
GBP'000
Festivals
Liverpool
Sound
City
(Cost 110 110 - - - -
GBP600,000:
GBP1,200,000
across
the
Ingenious
Entertainment
VCTs)
Love
Supreme
Jazz
Festival
(Cost 749 - 444 305 - -
GBP750,063:
GBP1,500,126
across
the
Ingenious
Entertainment
VCTs)
Just For
London
Comedy
Festival
(Cost 875 - 320 180 - 375
GBP875,000:
GBP1,750,000
across
the
Ingenious
Entertainment
VCTs)
London
Flower
Show
(Cost 250 - - - - 250
GBP250,000:
GBP500,000
across
the
Ingenious
Entertainment
VCTs)
As One In
The Park
Festival
(Cost 520 - 335 185 - -
GBP660,000:
GBP1,320,000
across
the
Ingenious
Entertainment
VCTs)
The
Zoo
Project
Festival
(Cost 300 - - - 300 -
GBP300,000:
GBP600,000
across
the
Ingenious
Entertainment
VCTs)
SWG Power
Limited
(Cost 250 - - - - 250
GBP250,000:
GBP500,000
across
the
Ingenious
Entertainment
VCTs)
Seasonal
Events
Winterville
Events
Limited
(Cost 328 - - - 328 -
GBP500,000:
GBP1,000,000
across
the
Ingenious
Entertainment
VCTs)
Content
Exploitation
FM3 2013
Limited
(Cost 700 - - - 700 -
GBP700,000:
GBP1,400,000
across
the
Ingenious
Entertainment
VCTs)
Live
Venues
Event
Spaces
(Cost 625 - - - 625 -
GBP625,000:
GBP1,250,000
across
the
Ingenious
Entertainment
VCTs)
Genius
Star
Limited
(Cost 375 - - - - 375
GBP375,000:
GBP750,000
across
the
Ingenious
Entertainment
VCTs)
Counterculture
Bars
Limited
(Cost 250 - - - - 250
GBP250,000:
GBP500,000
across
the
Ingenious
Entertainment
VCTs)
Total 5,332 110 1,099 670 1,953 1,500
investments
Festivals
Liverpool Sound City Limited
In March 2012, the Entertainment VCTs made an investment into Liverpool Sound City Limited. This company has, for a number of years, been producing and promoting the Sound City concept which combines the best elements of a music festival, conference and expo across an entire city centre.
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 10:30 ET (14:30 GMT)
Liverpool Sound City is a 3 day international music, media and technology conference and live arts and music festival. The company has also organised international events in both New York and Abu Dhabi and plans to further expand the brand worldwide.
Liverpool Sound City has now held three main UK events since the Company made its investment. The May 2015 event was very well received by the press and public with a great impressive bill with headline performances from Belle and Sebastian, The Vaccines and The Flaming Lips. As a result, the company made a small profit for the year ended 30 June 2015, although the 30 June 2015 audited accounts show an accumulated loss position of GBP109k, spread across 2012 through to 2015.
All in all, however, the Company's Board believe that the Investee Company has now stabilised in terms of its control environment, has a better informed and effective commercial decision-making team, and that beneficial changes have been implemented to the business model which should enable the Sound City product to generate greater profits.
The business model changes focused on moving the main festival out of multiple venues, and into a dedicated festival site in the centre of Liverpool. This ensured no revenue leakage in respect of entry fees and bar income, and also better defined the brand as an urban music festival experience.
Love Supreme Jazz Festival
Initial Funding was in December 2011 with further funding in December 2013.
In December 2011, the Entertainment VCTs teamed up with Jazz FM and Neapolitan Music to invest in a company to co-promote the Love Supreme Jazz Festival.
The first event, which took place in July 2013, was loss making, but this outcome was very much anticipated as new event brands take time to generate full customer awareness. The July 2014 event very much reinforced this view by delivering a profit of GBP78,000.
The 2015 event took place on the 3-5 July, sold 9,000 tickets per day and it was a very successful show with headline performances from Van Morrison and Chaka Khan and supported by great heritage acts such as Lisa Stansfield, Neneh Cherry, Candi Staton as well as a host of international jazz artists such as Hugh Masekela, Ginger Baker, Larry Graham, Terrance Blanchard and Diane Reeves.
Tickets for the 2016 show are ahead of forecast.
Just For London Comedy Festival
In October 2014, the Ingenious Entertainment VCTs invested in a company to co-promotethe Just For London Comedy Festival.
A licence has been granted by Camden Council for hosting the event in Russell Square in London in conjunction with Logan Hall which is a 933 capacity venue part of UCL and the Camden Centre in Kings Cross.
The first event is to be held on 13-24 July 2016 and planning is well under way with regards to booking talent, marketing and the general branding of the show.
London Flower Show
In December 2015 an investment of GBP500,000 was made into The London Flower Show Limited to promote the annual event, The London Flower Show.
The first event is due to be held in September 2016 in Osterley Park and will run for four days. The event will aim to exploit the established market for flower shows and will aim to attract keen and novice gardeners as well as those looking for a picturesque day of food, entertainment, flowers, plants and all things you would find in a garden. The 2016 event will host indoor and outdoor activities including a garden competition, a village fete style food offering, live music, a vintage funfair as well as a range of flower and garden themed traders.
The revenue model for LFS is built on four primary pillars: ticketing revenue, pitch fees from exhibitors, pitch fees from food traders and bar revenue. As the event grows LFS will look to develop other revenue streams such as corporate hospitality and sponsorship. LFS has secured the services of RHS Chelsea Flower Show Gold Medal Winning Garden Designer Nigel Gibson to curate the garden competition, and to ensure a high level of horticultural activity which will attract dedicated gardening enthusiasts.
As One In The Park Festival
In February 2012 an investment of GBP1,320,000 was made into Saturn Star Limited to create a new gay and alternative lifestyle festival called As One In The Park, which was held in Victoria Park in May 2013.
Although well received by critics, the audience of 6,000 was significantly below the numbers anticipated and the event incurred a significant loss which has been taken into account in the valuation of the investment.
The Zoo Project Festival
In March 2014, the Ingenious Entertainment VCTs invested in a company to co-promote The Zoo Project Festival.
The festival promoters have, over the course of 2012 and 2013, established a strong festival brand with a core following and although it was very well received by the press and public, the attendance levels were disappointing and the event incurred a loss in the region of GBP37k.
The Manager is currently reviewing future options for the brand.
SWG Power Limited
In November 2015 an investment of GBP500,000 was made into SWG Power Limited which has been established to provide power to festivals, conferences and exhibitions.
The company has been established to act as a service provider supplying power to the festival, exhibition, conference and live event market. The company will aim to exploit the growing market for festivals and live events and will look to sign multi-year deals with events to provide a reliable source of income.
The company will use a portion of the investment to purchase new assets to enable the company to tender for power contracts.
During the 'build' of events, the purchased assets will be brought to the respective event sites to provide power for the event (e.g. for stage lighting, sound systems and back office) and to power individual traders and exhibitors working at the event, for which the company will receive supplementary income to the tendered amount with the event promoter.
Revenues will be generated in the form of equipment hire, service fees for staff operating the equipment and maintaining the equipment on site, and a mark-up on fuel costs charged to traders on the event site.
Seasonal Events
Winterville Events Limited
In September 2014, an investment of GBP1,000,000 was made by the Ingenious Entertainment VCTs into Winterville Events Limited to promote an annual Christmas based event - Winterville.
The first event took place in Victoria Park in East London and ran for the duration of December 2014. Winterville hosted indoor and outdoor activities including an ice rink, a live pantomime production, a vintage fun fair, themed food stalls, bars selling craft ales, beer and cider, a roller disco and a spiegeltent staging both comedy and live music for all age groups.
For the 2015 event, the Ingenious Entertainment VCTs and partners Marcus Weedon and Darren Guerin joined forces with AEG Live to utilise AEG's experience in this market (AEG have promoted four Winter Wonderlands in Hyde Park and a winter season in Dublin).
Unfortunately, due to the wettest December on record and the impact of an average event in 2014 culminating in the loss of customers to the 2015 event, the show has made substantial losses in the region of GBP565k of which the VCTs are responsible for 33.33%.
Content Exploitation
FM3 2013 Limited
In March 2014, an investment of GBP1,400,000 was made by the Ingenious Entertainment VCTs into FM3 2013 Limited to film festival and live event content.
The Ingenious Entertainment VCTs joined forces with Blink TV, a production and distribution company specialising in filming live entertainment content. The company will look to deliver five core revenue streams through the exploitation of music festival content, namely commissioned productions, distribution, advertising, brand activation and online video channel creation.
Live Venues
Event Spaces
In December 2014, an investment of GBP1,250,000 was made by the Ingenious Entertainment VCTs into Event Spaces Limited to promote a wide range of events to be hosted from a semi-permanent events structure situated in London.
A large semi-permanent structure was purchased that is currently situated on the Pontoon Dock site. The Pontoon Dock project has however been put on hold due to unresolvable issues with the land owner over the length of time the site could be leased for.
As a result the structure has been sold and the partners are looking for a new location to host events.
Genius Star Limited
In December 2015 an investment of GBP750,000 was made into Genius Star Limited to operate a multi-purpose bar/kitchen and live venue.
The Entertainment VCTs have teamed up with Electric Star Ltd which is the company run by Rob Star who runs 4 successful multi-purpose bar/kitchen style venues in East London and Kings Cross.
The concept is to create a multi-faceted and vibrant space which will capitalise on the premises' location and experience of the partners. The venue will serve as a functioning bar and kitchen, and a multi-purpose event space for promoted, co-promoted and externally hired activities. These activities will include musical performances, theatre, spoken word, yoga, corporate hire and product launches.
Counterculture Bars Limited
In September 2015 an investment of GBP500,000 was made into Counterculture Bars Limited to operate the multi-purpose bar/kitchen and live venue, 'Haunt' in Stoke Newington with Alexander Brooks.
Alex has spent two years looking in London for the right venue to launch his concept and has secured for the company a 15 year lease at this prime location on Stoke Newington Road.
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 10:30 ET (14:30 GMT)
The concept is to create a multi-faceted and vibrant space which will capitalise on the premises' location and experience of the partners. The venue will serve as a functioning bar and kitchen, and a multi-purpose event space for promoted, co-promoted and externally hired activities. These activities will include musical performances, theatre, spoken word, yoga, corporate hire and product launches.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2015
Year ended 31 December 2015 Year ended 31 December 2014
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain 11 - 103 103 - 64 64
on disposal
of investments
Increase/(decrease) - (484) (484) - 28 28
in fair
value
of investments
held
Investment 2 128 - 128 203 - 203
income
Arrangement 3 - - - - - -
fees
Investment 4 (92) (92) (184) (121) (121) (242)
management
fees
Other expenses 5 (181) - (181) (197) - (197)
Loss (145) (473) (618) (115) (29) (144)
on ordinary
activities
before
taxation
Tax 6 - - - - - -
on ordinary
activities
Total (145) (473) (618) (115) (29) (144)
comprehensive
income
attributable
to
equity
Shareholders
Basic and
diluted
return
per share
(pence)
D Share 7 (0.0) (2.2) (2.3) 0.3 (0.5) (0.2)
E Share 7 (0.8) (2.7) (3.5) 0.3 - 0.3
F Share 7 (1.0) (2.9) (3.8) (0.3) (0.1) (0.4)
G Share 7 (1.3) (6.2) (7.5) (1.5) (0.5) (2.0)
H Share 7 (2.2) 0.6 (1.5) (2.2) 1.6 (0.6)
The total column represents the profit and loss account of the Company for the year.
All revenue and capital items in the above statement derive from continuing operations.
NON-STATUTORY ANALYSIS BETWEEN THE D, E, F, G AND H SHARE FUNDS (UNAUDITED)
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2015
D Shares E Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain/(loss) on - 35 35 - 13 13
disposal
of investments
(Decrease)/increase - (163) (163) - (74) (74)
in fair
value
of investments
held
Investment income 55 - 55 29 - 29
Arrangement fees - - - - - -
Investment (22) (22) (44) (16) (17) (33)
management
fees
Other expenses (36) - (36) (35) - (35)
Loss on ordinary (3) (150) (153) (22) (78) (100)
activities
before taxation
Tax on ordinary - - - - - -
activities
Total (3) (150) (153) (22) (78) (100)
comprehensive
income
attributable
to
equity Shareholders
Basic and diluted (0.0) (2.2) (2.2) (0.8) (2.7) (3.5)
return
per share (pence)
F Shares G Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal - 13 13 - 2 2
of investments
Decrease in fair value - (48) (48) - (198) (198)
of investments held
Investment income 16 - 16 25 - 25
Arrangement fees - - - - - -
Investment management fees (10) (10) (20) (23) (23) (46)
Other expenses (21) - (21) (47) - (47)
Loss on ordinary (15) (45) (60) (45) (219) (264)
activities
before taxation
Tax on ordinary activities - - - - - -
Total comprehensive income (15) (45) (60) (45) (219) (264)
attributable
to equity Shareholders
Basic and diluted return (0.9) (2.9) (3.8) (1.3) (6.2) (7.5)
per share (pence)
H Shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gain on disposal of investments - 39 39
Decrease in fair value of investments held - (2) (2)
Investment income 2 - 2
Arrangement fees - - -
Investment management fees (19) (20) (39)
Other expenses (41) - (41)
Loss on ordinary activities before taxation (58) 17 (41)
Tax on ordinary activities - - -
Total comprehensive income attributable (58) 17 (41)
to equity Shareholders
Basic and diluted return per share (pence) (2.2) 0.6 (1.5)
The Total column represents the profit and loss account per Share class for the year.
NON-STATUTORY ANALYSIS BETWEEN THE D, E, F, G AND H SHARE FUNDS (UNAUDITED)
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
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 - 8 8 - (8) (8)
of investments
(Decrease)/Increase - (6) (6) - 26 26
in fair
value of investments
held
Investment income 116 - 116 49 - 49
Arrangement fees - - - - - -
Investment management (38) (38) (76) (18) (18) (36)
fees
Other expenses (55) - (55) (24) - (24)
Loss on ordinary 23 (36) (13) 7 - 7
activities
before taxation
Tax on ordinary - - - - - -
activities
Total comprehensive 23 (36) (13) 7 - 7
income
attributable
to
equity Shareholders
Basic and diluted 0.3 (0.5) (0.2) 0.3 - 0.3
return
per share (pence)
F Shares G Shares
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain/(loss) on - 14 14 - 61 61
disposal
of investments
(Decrease)/Increase - (4) (4) - (51) (51)
in fair
value
of investments
held
Investment income 23 - 23 11 - 11
Arrangement fees - - - - - -
Investment (11) (11) (22) (26) (26) (52)
management
fees
Other expenses (17) - (17) ) (38) - (38)
Loss on ordinary (5) (1) (6) (53) (16) (69)
activities
before taxation
Tax on ordinary - - - - - -
activities
Total (5) (1) (6) (53) (16) (69)
comprehensive
income
attributable
to
equity Shareholders
Basic and diluted (0.3) (0.1) (0.4) (1.5) (0.5) (2.0)
return
per share (pence)
H Shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Loss on disposal of investments - (5) (5)
Increase in fair value of investments held - 68 68
Investment income - - -
Arrangement fees - - -
Investment management fees (21) (21) (42)
Other expenses (37) - (37)
Loss on ordinary activities before taxation (58) 42 (16)
Tax on ordinary activities - - -
Total comprehensive income attributable (58) 42 (16)
to equity Shareholders
Basic and diluted return per share (pence) (2.2) 1.6 (0.6)
The Total column represents the profit and loss account per Share class for the year.
BALANCE SHEET
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 10:30 ET (14:30 GMT)
as at 31 December 2015
Note 31 December 2015 31 December 2014
GBP'000 GBP'000
Fixed assets
Qualifying Investments 8 5,332 8,280
held at fair value
Current assets
Debtors 10 28 22
Non-qualifying Investments 11 1,038 4,396
held at fair value
Cash at bank and in hand 1,219 54
2,285 4,472
Creditors: amounts falling 12 (109) (54)
due within one year
Net current assets 2,176 4,418
Net assets 7,508 12,698
Capital and reserves
Called-up share capital 13 174 174
Share premium account 13 - -
Other reserve account 9,734 14,923
Capital reserve (1,239) (1,304)
Revenue reserve (1,161) (1,095)
Shareholders' funds 7,508 12,698
Net asset value per D Share 14 2.0 64.3
Net asset value per E Share 14 63.7 72.2
Net asset value per F Share 14 65.9 74.7
Net asset value per G Share 14 67.2 79.7
Net asset value per H Share 14 81.4 87.9
The accompanying notes form an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 13 April 2016.
David Munns
Chairman
NON-STATUTORY ANALYSIS BETWEEN THE D, E, F, G AND H SHARE FUNDS (UNAUDITED)
BALANCE SHEET
as at 31 December 2015
D E F G H
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Qualifying Investments 110 1,099 670 1,953 1,500
Current assets
Debtors - 28 - - -
Non-qualifying Investments - 243 183 420 192
Cash at bank and in hand 59 486 192 1 481
59 757 375 421 673
Creditors: amounts falling (36) (47) (9) (9) (8)
due within one year
Net current assets 23 710 366 412 665
Net assets 133 1,809 1,036 2,365 2,165
Capital and reserves
Called-up share capital 68 28 16 35 27
Share premium account - - - - -
Other reserve account 961 2,125 1,171 2,800 2,238
Capital reserve (640) (181) (39) (220) 69
Revenue reserve (256) (163) (112) (250) (169)
Shareholders' funds 133 1,809 1,036 2,365 2,165
Net asset value excluding 2.0 63.7 65.9 67.2 81.4
distributions
to date (pence per share)
Net asset value including 82.0 83.7 85.9 82.2 91.4
distributions
to date (pence per share)
NON-STATUTORY ANALYSIS BETWEEN THE D, E, F, G AND H SHARE FUNDS (UNAUDITED)
BALANCE SHEET
as at 31 December 2014
D E F G H
Shares Shares Shares Shares Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Qualifying Investments 3,660 1,602 893 2,125 -
Current assets
Debtors 22 - - - -
Non-qualifying Investments 637 451 282 683 2,343
Cash at bank and in hand 39 6 1 1 1
698 457 283 684 2,344
Creditors: amounts falling (29) (5) (3) (6) (5)
due within one year
Net current assets 669 452 280 678 2,339
Net assets 4,329 2,054 1,173 2,803 2,339
Capital and reserves
Called-up share capital 68 28 16 35 27
Share premium account - - - - -
Other reserve account 5,003 2,267 1,250 2,976 2,371
Capital reserve (489) (103) 5 (2) 51
Revenue reserve (253) (138) (98) (206) (110)
Shareholders' funds 4,329 2,054 1,173 2,803 2,339
Net asset value excluding 64.3 72.2 74.7 79.7 87.9
distributions
to date (pence per share)
Net asset value including 84.3 87.2 89.7 89.7 92.9
distributions
to date (pence per share)
CASH FLOW STATEMENT
for the year ended 31 December 2015
31 December 31 December 2014
2015
Note GBP'000 GBP'000
Cash Flows from Operating
Activities (618) (144)
Loss for
the year
Adjustments
for:
Accrued investment (128) (203)
income
Gain on disposal (103) (64)
of investments
Decrease/ (increase) in fair 484 (28)
value of investments held
Decrease / (increase) in (6) 17
debtors and prepayments
Increase in other creditors 55 (27)
and accruals
Net cash used in operating (316) (449)
activities
Cash flows from Investing
Activities
Purchase of Investments 8 (1,500) (2,804)
held at fair value
Proceeds on disposal of 11 4,144 1,840
Qualifying Investments
Proceeds from sale of bonds 3,409 3,941
and similar investments
Net cash from investing 6,053 2,977
activities
Cash flows from financing
activities
Dividends (4,572) (2,629)
paid
Net cash used in financing (4,572) (2,629)
activities
Net increase/(decrease) in 1,165 (101)
cash and cash equivalents
Opening cash and 54 155
cash equivalents
Closing cash and 1,219 54
cash equivalents
Cash and cash equivalents comprise cash in hand and cash at bank.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2015
Share Capital Other reserve Capital Revenue Total
reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 174 17,524 (1,275) (980) 15,443
1 January
2014
Cancellation 28 - - 28
of C Shares
Dividends - (2,629) - - (2,629)
paid
Gain - - 64 - 64
on disposal
of
investments
Increase in - - 28 - 28
fair value
of
investments
held
Investment - - - 203 203
income
Investment - - (121) (121) (242)
management
fees
Other - - - (197) (197)
expenses
At 174 14,923 (1,304) (1,095) 12,698
31 December
2014
Elimination (1,056) 766 290 -
of
reserves
for
Ordinary
and
C Shares
Dividends - (4,572) - - (4,572)
paid
Gain - - 103 - 103
on disposal
of
investments
Decrease in - - (484) - (484)
fair value
of
investments
held
Investment - - - 128 128
income
Investment - - (92) (92) (184)
management
fees
Other - - - (181) (181)
expenses
At 174 9,295 (1,011) (950) 7,508
31 December
2015
The capital reserve includes realised investment holding losses of GBP185,000 (31 December 2014: GBP387,000) and unrealised investment holding losses of GBP388,000 (31 December 2014: GBP917,000).
The other reserve was created from the cancellation of the share premium on all Shares issued by the Company, which was done in order to create a distributable reserve.
The revenue reserve includes all current and prior period retained profits and losses which do not relate to realised and unrealised investment losses. The other reserve, capital reserve and revenue reserve accounts are the distributable reserves of the Company.
During the year ended 31 December 2015 the following dividend payments were made on 26 February 2015 (unless otherwise stated):
31 December 31 December
2015 2014
GBP'000 GBP'000
Ordinary - 102
Share
C - 1,660
Share
D Share (includes GBP2,694,000 4,042 337
paid on 23 September 2015)
E 142 142
Share
F 79 79
Share
G 176 176
Share
H 133 133
Share
Total Dividends 4,572 2,629
Paid
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2015
1. Accounting Policies
a) Company Information
Ingenious Entertainment VCT 1 plc is a venture capitalist trust company domiciled in the United Kingdom and incorporated in England on 10 October 2007. The address of the registered office is 15 Golden Square, London, W1F 9JG.
b) Statement of Compliance
Basis of Accounting
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The financial statements for the Reporting Period have been prepared in compliance with UK Generally Accepted Accounting Practice, including Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), with the Companies Act 2006 and with the Statement of Recommended Practice entitled "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (the SORP 2014) (with the exception of paragraph 82 of the SORP 2014 regarding detailed disclosure of financial and operational performance of the Company's unquoted investments due to their confidential nature) which was issued in November 2014.
The comparative figures are for the year 1 January 2014 to 31 December 2014.
The financial statements have been prepared on a going concern basis under the historical cost convention, except for the measurement at fair value for Qualifying and Non-qualifying Investments. The principal accounting policies have remained materially unchanged from those set out in the Company's 2014 Annual Report and Accounts. However, there have been slight revisions as a result of the adoption of FRS 102 and the SORP 2014.
This is the first year in which the financial statements have been prepared under FRS 102. As a result, the statement of cash flows has been updated to comply with the format of FRS 102.
FRS 102 sections 11 and 12 have been adopted with regards to the Company's financial instruments.
The financial statements are presented in Sterling (GBP).
Key sources of economic uncertainty:
Many of the Company's financial instruments are measured at fair value in the balance sheet and it is usually possible to determine their fair values within a reasonable range of estimates.
For the majority of the Company's financial instruments, such as unlisted securities, fair value is derived from using valuation techniques, as recommended by International Private Equity and Venture Capital Valuation Guidelines (IPEVC). Fair value estimates are made at a specific point in time, based on market conditions and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgements (e.g. interest rates, volatility, estimated cash flows) and therefore cannot be determined with precision.
c) 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. In accordance with FRS 102 investments by the Company are held at fair value through profit and loss.
International Private Equity and Venture Capital Valuation Guidelines
Unquoted investments, including equity and loan investments, are stated at fair value through profit and loss and are valued in accordance with the IPEVC Guidelines and FRS 102. Investments are initially recognised at cost. The value of investments is subsequently re-measured to current fair value, as estimated by the Directors. Gains or losses arising from the revaluation of investments are taken directly to the Statement of Comprehensive Income. 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 of an investment, the Manager will apply
a methodology that is appropriate for 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 methodology most applicable to the Company's investments is:
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.
Non-qualifying Investments - OEICs
The Company's Non-qualifying Investments in interest bearing money market OEICs are valued at fair value which is bid price.
Gains and losses arising from changes in the fair value of Qualifying and Non-qualifying Investments are recognised as part of the capital return within the Statement of Comprehensive Income 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 Statement of Comprehensive Income.
d) Investment Income
Interest income is recognised in the Statement of Comprehensive Income under the effective interest method.
Under the effective interest method:
The interest income in a period equals the carrying amount of the loan at the beginning of a period multiplied by the effective interest rate for that period.
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 effective interest rate is determined on the basis of the carrying amount of the loan at initial recognition.
In accordance with FRS 102, when calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the loans (e.g. prepayments) and known credit losses that have been incurred, but it does not consider possible future credit losses not yet incurred. The main impact for the Company in that regard is the estimation of any loan note premiums.
When calculating the effective interest rate, the Company amortises any related fees, finance charges received, transaction costs and other premiums or discounts over the expected life of the loan. However, the Company uses a shorter period if that is the period to which the fees, finance charges paid or received, transaction costs, premiums or discounts relate.
e) Dividend Income
Dividend income is recognised in the Statement of Comprehensive Income once it is declared by the Investee Companies.
f) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to the revenue account within the Statement of Comprehensive Income except that:
-- expenses which are incidental to the acquisition or disposal of an
investment are charged to capital in the Statement of Comprehensive
Income 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.
General expenses were paid for by the D Share class until 5 August 2015 and from 6 August 2015 by the E Share class and have been recharged on a quarterly basis to the other Share classes based on the proportional net asset value per Share class as at the last day of the previous quarter.
g) Taxation
Current tax is recognised for the amount of income tax payable in respect of the taxable profit for the current or past reporting periods using the tax rates and laws that that have been enacted or substantively enacted by the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated. Timing differences are differences between taxable profits and total comprehensive income as stated in the financial statements that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is calculated using the tax rates and laws that that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
h) D Shares, E Shares, F Shares, G Shares and H Shares
The Company had five Share classes up to 31 December 2015: D Shares, E Shares, F Shares, G Shares and H 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.
2. Investment Income
2015 2014
GBP'000 GBP'000
Dividend income from Qualifying Investments - 29
Loan note interest from Qualifying Investments - 38
Loan note premium from Qualifying Investments (note 8) 128 136
128 203
3. Arrangement Fees
2015 2014
GBP'000 GBP'000
Arrangement fees - -
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Since there were no share offers made during the year (nor in the year ended 31 December 2014) no arrangement fees were incurred.
4. Investment Management Fees
2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management 92 92 184 121 121 242
fees
For the purposes of the revenue and capital columns in the Statement of Comprehensive Income, 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
2015 2015 2015 2014 2014 2014
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)
Auditor's
remuneration
- Audit fees 2015 21 - 21 17 - 17
Legal 10 - 10 21 - 21
and professional
fees
Other 112 - 112 121 - 121
administration
expense
181 - 181 197 - 197
The Company is not registered for VAT. Fees payable to the Company's auditor for the audit of the Company's financial statements are GBP16,500 (31 December 2014: GBP14,125) excluding VAT. Further details on the Directors' fee disclosures are given in the Directors' Remuneration Report.
6. Tax Charge on Ordinary Activities
2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on ordinary (145) (473) (618) (115) (29) (144)
activities
before tax
Loss on ordinary (29) (96) (125) (25) (6) (31)
activities
by tax rate
20.247% (31 December
2014: 21.493%)
Adjustments:
Non-taxable - 77 77 - (20) (20)
(gains)/losses
on investments
Disallowed expenses 19 19 2 26 28
Unutilised losses for 29 - 29 29 - 29
the current year
UK dividends - - - (6) - (6)
not taxable
- - - - - -
As the Company is a VCT its capital gains are not taxable.
At 31 December 2015 the Company had surplus management expenses of GBP1,229,000 (31 December 2014: GBP1,087,000). A deferred tax asset has not been recognised in respect of these surplus management expenses as the future taxable income of the Company cannot 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
C Shares 2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss - - - (29) (18) (47)
on ordinary
activities
before
taxation
Weighted - - - 2,695,092 2,695,092 2,695,092
average
Shares
in issue
(number)
Profit/(loss) - - - (1.1) (0.7) (1.8)
attributable
per Share
(pence)
D Shares 2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/ (3) (150) (153) 23 (36) (13)
gain
on
ordinary
activities
before
taxation
Weighted 6,735,624 6,735,624 6,735,624 6,735,624 6,735,624 6,735,624
average
Shares
in issue
(number)
Profit/(loss) (0.0) (2.2) (2.3) 0.3 (0.5) (0.2)
attributable
per
Share
(pence)
E Shares 2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/ (22) (78) (100) 7 - 7
gain
on
ordinary
activities
before
taxation
Weighted 2,846,122 2,846,122 2,846,122 2,846,122 2,846,122 2,846,122
average
Shares
in issue
(number)
Profit/(loss) (0.8) (2.7) (3.5) 0.3 - 0.3
attributable
per
Share
(pence)
F Shares 2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss (15) (45) (60) (5) (1) (6)
on
ordinary
activities
before
taxation
Weighted 1,572,095 1,572,095 1,572,095 1,572,095 1,572,095 1,572,095
average
Shares
in issue
(number)
Loss (1.0) (2.9) (3.9) (0.3) (0.1) (0.4)
attributable
per
Share
(pence)
G Shares 2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss (45) (219) (264) (53) (16) (69)
on
ordinary
activities
before
taxation
Weighted 3,518,044 3,518,044 3,518,044 3,518,044 3,518,044 3,518,044
average
Shares
in issue
(number)
(Loss)/profit (1.3) (6.2) (7.5) (1.5) (0.5) (2.0)
attributable
per
Share
(pence)
H Shares 2015 2015 2015 2014 2014 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/ (58) 17 (41) (58) 42 (16)
gain
on
ordinary
activities
before
taxation
Weighted 2,660,842 2,660,842 2,660,842 2,660,842 2,660,842 2,660,842
average
Shares
in issue
(number)
(Loss)/profit (2.2) 0.6 (1.6) (2.2) 1.6 (0.6)
attributable
per
Share
(pence)
There are no dilutive potential D, E, F, G and H 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
2015 2014
GBP'000 GBP'000
Unquoted investments 5,332 8,280
Equity shares 2,844 2,959
Unsecured loan notes 2,488 5,321
5,332 8,280
Qualifying Investments
2015 2014
GBP'000 GBP'000
Opening valuation 8,280 7,228
Purchases at cost 1,500 2,625
Return of investment (4,092) (1,729)
Fair value adjustment (356) 156
Closing valuation 5,332 8,280
Included in the valuation above is an equal and opposite fair value gain and fair value loss amounting to GBP128,000 (31 December 2014: GBP136,000). This represents the accounting treatment of the guaranteed loan note premium. The GBP128,000 (31 December 2014: GBP136,000) is included in the Statement of Comprehensive Income under Investment Income (refer to note 2).
9. Significant Interests
The Company has interests of 3%, or greater, of the nominal value of the allotted shares in the following Investee Companies incorporated in the United Kingdom as at 31 December 2015:
Trading Companies % class and share type % voting rights CLS Concerts Limited 50.00% A Ordinary 16.67% Dance Floor Limited 50.00% A Ordinary 12.48% Event Spaces Limited 50.00% A Ordinary 22.50% FM3 2013 Limited 50.00% A Ordinary 20.00% The London Flower 50.00% A Ordinary 22.50% Show Limited Just For London Limited 50.00% A Ordinary 16.67% Liverpool Sound 50.00% A Ordinary 15.00% City Limited Love Supreme Festival 50.00% A Ordinary 12.50% Limited Saturn Star Limited 50.00% A Ordinary 20.00% Genius Star Limited 50.00% A Ordinary 25.00% Counterculture Bars Limited 50.00% A Ordinary 14.48% SWG Power Limited 50.00% A Ordinary 22.50% Winterville Events Limited 50.00% A Ordinary 15.00% The Zoo Project Festival 50.00% A Ordinary 18.75% Limited
As permitted by FRS 102, the above investments in associated undertakings are held at fair value with changes in fair value recognised in profit or loss.
10. Debtors
2015 2014
GBP'000 GBP'000
Prepayments and accrued income 28 22
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11. Current Asset Investments
2015 2014
GBP'000 GBP'000
Funds held in listed 1,035 4,393
money market OEICs
Investment in Investee 3 3
Companies
1,038 4,396
Non-Qualifying
Investments
2015 2014
GBP'000 GBP'000
Opening valuation 4,396 8,130
Purchases at cost - listed - 179
money market OEICs
Disposal proceeds - listed (3,267) (3,919)
money market OEICs
Unrealised change in value - (91) 6
listed money market OEICs
Closing valuation 1,038 4,396
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.
Analysis of Realised Gain or Loss on Disposal of Unquoted Investments
Unquoted Gain/ Proceeds 2015 Carrying Value 2014 Carrying
Investments (Loss) GBP000 GBP000 Value
GBP000 GBP000
Titans of Sport - 667 667 757
Limited
Venn Music - 680 680 857
Festival
Ltd
Liverpool Sound - 420 420 538
City Limited
Love Supreme - 375 375 375
Festival
Limited
Waxarch Limited 52 2,002 1,950 1,755
Realised gains 52 4,144 4,092 4,282
on unquoted
investments
Unrealised loss (91)
on disposal
of
unquoted
investments
Realised gains 142
on quoted
investments
Total realised 103
gains
on investments
12. Creditors: Amounts Falling Due Within One Year
2015 2014
GBP'000 GBP'000
Trade creditors 21 1
Accruals 88 53
109 54
13. Called-up Share Capital
2015 2014
Allotted, called-up and fully paid GBP'000 GBP'000
6,735,624 D Shares 1p each 68 68
2,846,122 E Shares 1p each 28 28
1,572,095 F Shares 1p each 16 16
3,518,044 G Shares 1p each 35 35
2,660,842 H Shares 1p each 27 27
174 174
In the year ended 31 December 2014, the High Court of Justice of England and Wales made an order sanctioning the resolutions passed by the Company in general and class meetings held on 27 November 2014 by which the Company's Shareholders approved the reduction of the Company's share capital by the cancellation and extinguishment of all of its C Shares of 1p each.
In the year ended 31 December 2013, the High Court of Justice of England and Wales made an order sanctioning the resolutions passed by the Company in general and class meetings held on 28 November 2013 by which the Company's Shareholders approved the reduction of the Company's share capital by the cancellation and extinguishment of all of its Ordinary Shares of 1p each.
In the year ended 31 December 2013, 2,660,842 H Shares were issued and allotted in accordance with the terms of the relevant Prospectus. Share issue costs amounted to GBP81,000 of which GBP65,000 have been set off against the Share premium account.
In the year ended 31 December 2012, 3,518,044 G Shares were issued and allotted in accordance with the terms of the relevant Prospectus. Share issue costs amounted to GBP194,000 of which GBP155,000 have been set off against the Share premium account.
In the year ended 31 December 2011, 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 GBP157,000 and GBP86,000 respectively of which GBP125,000 and GBP69,000 have been set off against the Share premium account.
In the year ended 31 December 2010, 6,785,624 D Shares were issued and allotted in accordance with the terms of the relevant Prospectus. 6,735,624 D Shares were fully paid at that year end. Share issue costs amounting to GBP295,000 have been set off against the Share premium account.
D Shares, E Shares, F Shares, G Shares and H Shares rank pari passu with each other in terms of voting and other rights. The entire issued D, E, F, G and H Share capital of the Company has been admitted to the official list maintained by the Financial Conduct Authority and to trading on the London Stock Exchange.
14. Net Asset Value per Share Excluding Distributions to Date
2015 2014
Net assets attributable to 133 4,329
D Shareholders (GBP'000)
D Shares in issue 6,735,624 6,735,624
(number)
Net asset value per 2.0 64.3
D Share (pence)
2015 2014
Net assets attributable to 1,813 2,054
E Shareholders (GBP'000)
E Shares in issue 2,846,122 2,846,122
(number)
Net asset value per 63.7 72.2
E Share (pence)
2015 2014
Net assets attributable to 1,036 1,173
F Shareholders (GBP'000)
F Shares in issue 1,572,095 1,572,095
(number)
Net asset value per 65.9 74.7
F Share (pence)
2015 2014
Net assets attributable to 2,365 2,803
G Shareholders (GBP'000)
G Shares in issue 3,518,044 3,518,044
(number)
Net asset value per 67.2 79.7
G Share (pence)
2015 2014
Net assets attributable to 2,165 2, 339
H Shareholders (GBP'000)
H Shares in issue 2,660,842 2,660,842
(number)
Net asset value per 81.4 87.9
H Share (pence)
15. 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 bid 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
2015 2014
GBP'000 GBP'000
Listed money market OEICs (note 11) Level 1 1,035 4,393
Investment in investee companies (note 11) Level 3 3 3
Unquoted investments (note 8) Level 3 5,332 8,280
6,370 12,676
Level 3 investments include a GBP8,000 revaluation loss on Liverpool Sound City Limited, a GBP53,000 revaluation loss on Titans of Sport Ltd during the year, a GBP141,000 revaluation loss on Saturn Star during the year, a GBP177,000 revaluation loss on Venn during the year and a GBP173,000 loss on Winterville during the year.
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.
Level 3 unquoted investments have been valued at fair value. Fair
value is estimated by assessing the financial performance of the
Company's investee and adjusting upwards or writing down the cost of
the Company's investment using IVCA valuation techniques as described
in note 1(c) - 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 Company measures risk by assessing the impact that each risk parameter will have on the profitability of the Company, or in the case of liquidity risk, by assessing the impact that any given factor will reduce the likelihood of the Company being able to meet its financial liabilities as they fall due. 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 credit risk, 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.
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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 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 GBP1,038,000 (31 December 2014: GBP4,393,000). 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 2015 (31 December 2014: 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 2015 31 December 2014
GBP'000 GBP'000
+/- 50 basis points +/- 50 basis points
Impact on loss on ordinary 5 31
activities for the year
before taxation and
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 GBP2,488,000 (31 December 2014: GBP5,321,000) 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 GBP2,488,000 (31 December 2014: GBP5,321,000) unsecured loan notes are mostly 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.
16. Related Party Transactions
a) 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 Board approved a deed of novation which, with effect from 6 April 2012, novated the management agreement so that Ingenious Capital Management Limited, of which Patrick McKenna is a director, replaced Ingenious Asset Management Limited as Manager to the Company. Ingenious Capital Management Limited, trading as Ingenious Ventures, undertakes the same duties as Ingenious Asset Management Limited and, save for the change of name of the Manager, there has been no other change to the terms of the management agreement. The reason for this change was to effect an administrative reorganisation within the Ingenious Group.
The Manager, as per the investment management agreement, receives a management fee of 0.4375% of the net asset value per Share class, payable quarterly in advance. In aggregate, this amounted to GBP184,000 as at 31 December 2015 (31 December 2014: GBP242,000). The Manager also charges an administration fee of GBP71,000 (31 December 2014: GBP88,000) per annum (adjusted for inflation and additional Share classes, if any) and irrecoverable VAT.
b) 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.
c) Patrick McKenna is a director and a shareholder of Ingenious Entertainment VCT 2 plc. The Company and Ingenious Entertainment VCT 2 plc have agreed to create and invest in a new company, Counter Culture Bars Limited, to operate a multi-purpose bar/Kitchen and live venue. In September 2015 the Company invested GBP250,000 for a total of 14.28% of the equity in Counter Culture Bars Limited. Ingenious Entertainment VCT 2 plc invested GBP250,000 for 14.28% of the equity in Counter Culture Bars Limited. The investment was made in the H Share class.
d) Patrick McKenna is a director and a shareholder of Ingenious Entertainment VCT 2 plc. The Company and Ingenious Entertainment VCT 2 plc have agreed to invest in a new company, Just for London Limited, to create a new comedy festival in Central London. In October 2014 the Company invested GBP500,000 for a total of 16.67% of the equity in Just for London Limited. Ingenious Entertainment VCT 2 plc invested GBP375,000 for a total of 16.67% of the equity in Just for London Limited. The investment was made in the E, F and H Share classes.
e) Patrick McKenna is a director and a shareholder of Ingenious Entertainment VCT 2 plc. The Company and Ingenious Entertainment VCT 2 plc have agreed to invest in a new company, SWG Power Limited, to provide power to festivals, conferences and exhibitions. In November 2015 the Company invested GBP250,000 for a total of 22.50% of the equity in SWG Power Limited. Ingenious Entertainment VCT 2 plc invested GBP250,000 for a total of 22.50% of the equity in SWG Power Limited The investment was made in the H Share class.
f) Patrick McKenna is a director and a shareholder of Ingenious Entertainment VCT 2 plc. The Company and Ingenious Entertainment VCT 2 plc have agreed to create and invest in a new company, Genius Star Limited, to operate a multi-purpose bar/kitchen and live venue. In December 2015 the Company invested GBP375,000 for a total of 25% of the equity in Genius Star Limited. Ingenious Entertainment VCT 2 plc invested GBP375,000 for 25% of the equity in Genius Star Limited. The investment was made in the H Share class.
g) Patrick McKenna is a director and a shareholder of Ingenious Entertainment VCT 2 plc. The Company and Ingenious Entertainment VCT 2 plc have agreed to create and invest in a new company, The London Flower Show Limited, to promote the annual event, The London Flower Show. In December 2015 the Company invested GBP250,000 for a total of 22.50% of the equity in The London Flower Show Limited. Ingenious Entertainment VCT 2 plc invested GBP250,000 for 22.50% of the equity in The London Flower Show Limited. The investment was made in the H Share class.
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.
2015 2015 2014 2014
Entity Note Expenditure paid Amounts due Expenditure Amounts
GBP'000 GBP'000 paid due
GBP'000 GBP'000
Ingenious
Capital
Management
Limited
- Investment a 184 - 242 -
management
fee
- a 71 - 88 -
Administration
fee
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 GBP137,000 excluding VAT (31 December 2014: GBP122,000), have been invoiced to the Investee Companies in the period of which GBP45,000 remained outstanding as at 31 December 2015 (31 December 2014: GBP38,000).
17. Events After the Balance Sheet Date
a) The Company declared an interim dividend of 20.0 pence per E Share on 11 February 2016 (2014: 5.0 pence). The dividend was paid on 18 March 2016 by way of a capital distribution reducing the Company's other reserves.
b) The Company declared an interim dividend of 20.0 pence per F Share on 11 February 2016 (2014: 5.0 pence). The dividend was paid on 18 March 2016 by way of a capital distribution reducing the Company's other reserves.
c) The Company declared an interim dividend of 5.0 pence per G Share on 11 February 2016 (2014: 5.0 pence). The dividend was paid on 18 March 2016 by way of a capital distribution reducing the Company's other reserves.
d) The Company declared an interim dividend of 5.0 pence per H Share on 11 February 2016 (2014: 5.0 pence). The dividend was paid on 18 March 2016 by way of a capital distribution reducing the Company's other reserves.
18. Capital Management
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 10:30 ET (14:30 GMT)
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 2015 was GBP7,508,000 (31 December 2014: GBP12,698,000).
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 cancellation of C Shares during the year.
The Company is subject to the following externally imposed capital requirements:
-- As a public company Ingenious Entertainment VCT 1 plc must have a
minimum of GBP50,000 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160414006016/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
April 14, 2016 10:30 ET (14:30 GMT)
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