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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Ingenious Music | LSE:IGM | London | Ordinary Share | GB00B05L0J61 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 67.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:8269W Ingenious Music VCT PLC 18 May 2007 INGENIOUS MUSIC VCT plc PRELIMINARY STATEMENT OF ANNUAL RESULTS For the year ended 31 January 2007 CHAIRMAN'S STATEMENT I am delighted to present the Company's second annual report and accounts covering the 12 months to 31 January 2007 (the "reporting period"). Overview of Activities The reporting period has been an active one for the Company with the speed of investment increasing as the year has progressed. Following the Company's first investments in up-and-coming acts The Heights and Martina Topley-Bird, it made its first co-investment with sister fund Ingenious Music VCT 2 plc in July 2006, supporting the release of Travis's highly anticipated fifth album. The Company has since proceeded to complete a further seven deals and committed a third more (34%) of its available funds earmarked for qualifying investment purposes, within the last six months. The deals completed have contributed to creating a strong roster of diverse acts across the musical genres. The Company has invested close to #6.5 million to support the forthcoming albums of a range of top acts including the highly acclaimed Peter Gabriel, 2006 World Cup song writers Embrace and renowned punk/ dance tribe The Prodigy, alongside up-and-coming acts including the bands Passenger and Apartment and solo-artists Indiana Gregg and David Ford. The investments were made alongside some of the most experienced players within the industry and are testament to the relationships forged across the sector. They include Real World Records (Peter Gabriel), Independiente (Embrace and David Ford), Cooking Vinyl Records (The Prodigy), Kuba Music Limited (Apartment) , and Gr8 Pop (Indiana Gregg), and IE: Music (Passenger), which is headed up by Tim Clark and David Enthoven, the managers of Robbie Williams. Since the year end, a further three investments have been made: the first was in newcomers Vatican DC, who have supported the likes of The Prodigy and Bloc Party ; the second was in Ulrich Schnauss, an up-and-coming artist who we believe has great potential following the critical acclaim received on his first album released earlier this year; and the third saw a further #500,000 investment in Travis's fifth album. The Manager continues to actively source and review new investment propositions and has a strong pipeline of opportunities which it should be well placed to conclude in the coming months, well within the deadline to retain VCT status. Results The reporting period has been dominated by new investments, with #6.4 million invested and committed to qualifying investments. The Company made a loss on ordinary activities of #58,000 in the period to 31 January 2007, which was expected given that these investments have not had time to mature. The Company's net asset value, however, remained relatively constant during the period at #14.3 million or 94.8 pence per share (2006: 95.2 pence per share). Outlook The outlook for the next financial year remains positive, with demand for the Company's investment capital expected to be driven by sustained activity in the independent sector, including music publishers migrating into wider rights exploitation companies, and by the Majors. I would like to take this opportunity to thank all shareholders for their continued support of the Company and I look forward to meeting those of you that are able to attend the AGM, scheduled for 11 July 2007. Patrick McKenna Chairman 17 May 2007 MANAGER'S REVIEW Investment Objective The investment objective of the Company is to provide shareholders with an attractive return from investments in a portfolio of music companies that will be engaged in the creation, development and exploitation of IP rights. The reporting period has seen strong deal flow throughout and we expect this to continue into the next financial year, with a large number of investment opportunities already in the pipeline. We continue to focus our efforts on identifying projects that we believe support the development of exciting acts, with the potential to deliver superior returns for our investors. Investments 2006 After closing its first two qualifying investments in up-and-coming acts The Heights and Martina Topley-Bird, the Company joined forces with its sister fund Ingenious Music VCT 2 plc, enabling it to pursue a range of co-investment opportunities , and went on to close its third deal on this basis by investing in Travis in July 2006. Since then the Company has continued to actively source and review investment propositions and has subsequently closed a further seven deals in the last six months. INDIANA GREGG The Company closed its fourth qualifying investment on 6 November 2006, by investing #417,000 in the joint venture company, Thorpe Trading Ltd, set up in-conjunction with GR8 Pop Limited, to provide funding for the support of all recording costs and ancillary expenditure including video, tour support and marketing expenditure required to launch Indiana Gregg's first solo album. About Indiana Gregg Indiana Gregg, who has already won numerous song writing awards, will be launching her first solo album with GR8 Pop Limited, led by Ian Morrow, who has previously worked with Seal, Wet Wet Wet, Lisa Stansfield and Nightcrawlers, and Graham Marr, a 25-year veteran from Warner Music. Indiana will be collaborating with several highly respected music industry figures on her new album including Grammy award nominee Paul Wright, who has worked with George Michael, Tina Turner and David Bowie. PASSENGER AND APARTMENT On 14 November 2006 the Company closed its fifth and sixth investments in up-and-coming bands, Passenger and Apartment. Passenger The investment in Passenger (formerly known as Mike Rosenberg Band) will see a financial commitment of #660,725 from the Company to support the band's debut album to form a joint venture company, Genius Music Limited, in-conjunction with IE: Music. IE Music is run by Tim Clark and David Enthoven, the managers of Robbie Williams, the UK's most successful solo artist whose albums have sold more than 32 million copies worldwide to date. Enthoven previously managed and named T. Rex, while also taking on amongst others, Brian Eno and Roxy Music. He did this with EG Records, the company he co-founded. Clark, as managing director of Island Records, oversaw the careers of Bob Marley, Cat Stevens, Steve Winwood, Jethro Tull and Mott the Hoople, amongst others. About Passenger Based in Brighton, the band is a creative partnership between lead vocalist, 22-year old Mike Rosenberg and BAFTA nominated composer Andrew Phillips. The deal follows a year of successful touring for the band that made their debut festival appearance at O2 Wireless and who have gone on to perform at sell-out shows across Brighton as well as performing at Glastonbury, In The City and various London gigs. Apartment The investment in Apartment sees a financial commitment of #227,647 from the Company to form a joint venture company, Funwood Music Limited, alongside independent record label Kuba Music Limited, to back the launch of Apartment's debut album. Kuba Music was founded and is run by Jack Steven, who has successfully launched and developed a number of successful artists and bands including Eurythmics before moving to Sony Records and later working with The Ministry of Sound. About Apartment Apartment has already released singles on the 'Fierce Panda' label, all of which have received critical acclaim from Radio 1 and XFM. The band has built up a strong live reputation and has previously supported The Killers, The Bravery and The Editors on tour. PETER GABRIEL On 11 January 2007, the Company invested #1 million in High Level Recording Limited, the joint venture company set up in conjunction with Real World Records to provide funding for the support of all recording costs along with the artist, video, tour support and marketing expenditure required to launch Peter Gabriel's fifteenth album in North America. Real World Records was founded by WOMAD and Peter Gabriel to provide talented artists from around the world with access to state-of-the-art recording facilities and access to audiences beyond their geographic region. Launched in 1989, Real World Records has grown into a label of wide-ranging, world-class music from all corners of the globe. About Peter Gabriel Peter Gabriel has earned a worldwide reputation for his innovative work as a musician, writer and video maker. When at school he co-founded the group Genesis , which he left in 1975. Since then, his albums, live performances and videos have won him a succession of awards. He launched his first solo album, released in February 1977, when he was just 26 years of age and has gone on to carve out a 25-year career in the music industry, releasing 14 albums with many grammy award winning hits, including 'Sledgehammer', which has won the most music video awards ever, including number one position in the 'Rolling Stones' top 100 videos of all time and the MTV most played video of all time. THE PRODIGY On 31 January 2007, the Company agreed to invest #1 million in joint venture company, Cooking Vinyl Ventures Prodigy Limited, set up in conjunction with Cooking Vinyl Records (the label behind musical luminaries such as Billy Bragg and the Buzzcocks) to back The Prodigy's latest album release. About The Prodigy The Prodigy is a British band, whose music consists of various styles ranging from rave, hardcore techno and industrial in the early 1990s to alternative rock and bigbeat with punk vocal elements in later times. The current band members include Liam Howlett (composer/keyboards), Keith Flint (dancer/vocalist) and Maxim (MC/vocalist). The Prodigy first emerged on the underground rave scene in the early 1990s, and has since achieved immense popularity and worldwide renown. Some of their most popular songs include 'Charly', 'Out of Space', 'Smack My Bitch Up', 'Voodoo People', 'No Good (Start the Dance)', 'Breathe' and ' Firestarter'. EMBRACE and DAVID FORD The Company has cemented its strong relationship with Independiente, one of the UK's most prolific and successful independent record labels, after completing its investment in multi-platinum band Travis, to launch the band's fifth album. The Company has now secured a further two deals with the record label, all of which are testimony to the strength of the relationship forged. Embrace On 31 January 2007, the Company agreed to invest #700,000 in successful Brit band and World Cup 2006 anthem writer/performers, Embrace, forming the joint venture company, Independiente Music Ventures - Embrace Limited. About Embrace Following in the footsteps of Oasis and The Verve, Embrace became a minor pop sensation in post-Brit-pop Britain in the late 1990s. Like Oasis; the group has a knack for big, anthemic hooks, which has contributed to their popularity and allowed them to cultivate a strong fan base around the world, with hits such as 'The Good Will Out'. David Ford On 31 January 2007, the Company agreed to invest #387,500 in up and coming artist David Ford, forming joint venture company, Independiente Music Ventures - David Ford Limited. Emulating the emotional sounds of Damien Rice, David Ford released an album earlier this year to much critical acclaim. Outlook The UK music industry is unique among European nations, and second only to the US in the world, in terms of having nurtured and developed a rich recorded music heritage. Whilst overall music sales have witnessed a decline, opportunities exist to capitalise on the growing prominence of digital sales and participate in the wider exploitation of music rights, such as live performances and merchandising. The music business is hit-driven and it is this characteristic which underpins the importance of partnering with the right people to create a roster of acts across the musical genres. Ingenious will continue the policy of participating in joint ventures with experienced industry players across a range of new and established artists and will look, where possible, to benefit from a wide range of income streams. The UK continues to maintain a commanding position in online sales, accounting for the largest number of digital downloads across Europe. Sales of new British artists led to UK consumers buying a record 27.9 million artist albums in the first three months of 2006 with album sales up by 1.5% to give the best ever first quarter total sales of all artists on the global market, of which British artists claimed eight of the top 10 sellers, with seven debut acts. The UK charts have recognized the change in impact on sales brought about by the advent of digital technologies, with a recent adjustment meaning that online sales are now included in the calculation of chart position, bringing with it the opportunity for all releases new and old to feature in the charts more than once. According to industry figures, British acts continued to dominate the European album market in 2006. British acts scooped 19 of the year's 36 IFPI Platinum Awards for selling one million copies. The British Phonographic Institute has stated that the results underlined the current boom in new British music, with 6 of the 19 UK Platinum awards being 2006 releases. In the first half of 2006, CD sales still accounted for nearly three quarters of all retail music sales, out-earning digital sales by more than six to one. Retailers such as Target, Best Buy and particularly Wal-Mart have accounted for a steadily increasing share of CD sales. The recently released IFPI 2007 Digital Music Report states that in the last year alone (2006) consumers downloaded 795 million tracks, up 89% on 2005. The Company believes it is well positioned to take advantage of the current market developments and to capitalise on the full range of intellectual property rights that attach to an artist. Contact If you have any questions on this review or would like to speak to a member of the management team please do not hesitate to call us on 020 7319 4000. Ingenious Ventures Limited BUSINESS REVIEW The purpose of this review is to provide shareholders with a summary setting out the business objectives of the Company, the Board's strategy to achieve those objectives, the risks faced, the regulatory environment and the key performance indicators (KPIs) used to measure performance. 1. Strategy for Achieving Objectives Ingenious Music VCT plc is a tax efficient company listed on The London Stock Exchange. The investment policy of the Company is to invest in a portfolio of music companies that will be engaged in the value-added creation, development and exploitation of music-related intellectual property rights. The investment objective is to achieve a combination of a high degree of downside protection in an otherwise potentially high risk proposition and long-term capital growth, maximising distributions in order to take advantage of tax-free dividends. The Board has delegated day-to-day investment management and administration of the Company to Ingenious Ventures under the terms of a management deed and an administration agreement. 2. Principal Risks, Risk Management and Regulatory Environment The Board believes that the principal risks faced by the Company are: * Investment and strategic - an investment in the recorded music sector is tied to a certain degree to the fortunes of that industry generally. In particular, there is a risk that the Company will not identify opportunities where the Artists' success is sufficient to earn royalties over and above minimum contractual income negotiated. * Loss of approval as a Venture Capital Trust - the Company must comply with section 842AA of the ICTA which allows it to be exempted from capital gains tax on investment gains realised by shareholders. Any breach of these rules may lead to the Company losing its approval as a VCT, qualifying shareholders who have not held their shares for the designated holding period having to repay the income tax relief they obtained and future dividends paid by the Company becoming subject to tax. The Company would also lose its exemption from corporation tax on capital gains. * Regulatory - the Company is required to comply with the Companies Act, the rules of the UK Listing Authority and United Kingdom Accounting Standards. Breach of any of these regulatory rules might lead to suspension of the Company's Stock Exchange listing, financial penalties or a qualified audit report. * Financial - inadequate internal controls might lead to misappropriation of assets. Inappropriate accounting policies might lead to misreporting or breaches of regulations. * External inherent risks - The Company's investments will be in unquoted companies which by their nature involve a higher degree of risk than investment in the main market due to the fact there is no liquid market and may, therefore, be difficult to realise. Furthermore, there may be further constraints imposed on realisations because of the requirement to satisfy certain conditions necessary for the Company to maintain its VCT status (such as the obligation to have at least 70 per cent. by value of its investments in qualifying holdings). The Board seeks to mitigate the internal risks by setting clear policies, including establishing a funding structure which provides for minimum royalty payments equivalent to at least 70 per cent. of the investment, regular reviews of performance, monitoring progress and compliance. 3. Key Performance Indicators (KPIs) The primary key performance indicator on which the Board assesses the performance of the Manager in meeting the Company's objective is the change in Net Asset Value per share. A review of the Company's performance during the period, the position of the Company at the year end and the outlook for the coming year is contained within the Chairman's Statement and Manager's Review INVESTMENT PORTFOLIO ------------------------------------------------------------------------ The Heights Recording Limited ------------------------------------------------------------------------ Artist: The Heights Date of investment: Jan-06 Initial investment: #200,000 Valuation: #200,000 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 49.90% ------------------------------------------------------------------------ Independiente Music Ventures - MTB Limited ------------------------------------------------------------------------ Artist: Martina Topley-Bird Date of investment: Jun-06 Initial investment: #1,000,000 Valuation: #1,000,000 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 49.90% ------------------------------------------------------------------------ Independiente Music Ventures - Travis Limited ------------------------------------------------------------------------ Artist: Travis Date of investment: Jul-06 Initial investment: #1,000,000 Valuation: #1,000,000 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% ------------------------------------------------------------------------ Thorpe Trading Limited ------------------------------------------------------------------------ Artist: Indiana Gregg Date of investment: Nov-06 Initial investment: #417,000 Valuation: #417,000 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% ------------------------------------------------------------------------ Funwood Music Limited ------------------------------------------------------------------------ Artist: Apartment Date of investment: Nov-06 Initial investment: #227,647 Valuation: #227,647 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% ------------------------------------------------------------------------ Genius Music Limited ------------------------------------------------------------------------ Artist: Passenger (formally known as Mike Rosenberg Band) Date of investment: Nov-06 Initial investment: #660,725 Valuation: #660,725 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% ------------------------------------------------------------------------ High Level Recording Limited ------------------------------------------------------------------------ Artist: Peter Gabriel Date of investment: Jan-07 Initial investment: #1,000,000 Valuation: #1,000,000 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% ------------------------------------------------------------------------ Independiente Music Ventures - David Ford Limited ------------------------------------------------------------------------ Artist: David Ford Date of investment: Jan-07 Initial investment: #387,500 Valuation: #387,500 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% ------------------------------------------------------------------------ Independiente Music Ventures - Embrace Limited ------------------------------------------------------------------------ Artist: Embrace Date of investment: Jan-07 Initial investment: #700,000 Valuation: #700,000 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% ------------------------------------------------------------------------ Cooking Vinyl Ventures Prodigy Limited ------------------------------------------------------------------------ Artist: Prodigy Date of investment: Jan-07 Initial investment: #1,000,000 Valuation: #1,000,000 Valuation basis: Fair value - Price of Recent Investment Percentage of equity held: 24.95% INCOME STATEMENT for the year ended 31 January 2007 (16mth) (16mth) (16mth) 2007 2007 2007 2006 2006 2006 Revenue Capital Total Revenue Capital Total Note #'000 #'000 #'000 #'000 #'000 #'000 -------------------------------------------------------------------------------------------- Gain on disposal of investments 10 - 96 96 - - - Increase in fair value of investments held 10 - 234 234 - 32 32 Investment income 2 125 55 180 354 - 354 Arrangement fees 3 - - - (151) - (151) Investment management fees 4 (170) (170) (340) (63) (63) (126) Other expenses 5 (190) (38) (228) (204) (24) (228) -------------------------------------------------------------------------------------------- Loss on ordinary activities before taxation (235) 177 (58) (64) (55) (119) Tax on ordinary activities 6 - - - - - - -------------------------------------------------------------------------------------------- Loss attributable to equity shareholders (235) 177 (58) (64) (55) (119) -------------------------------------------------------------------------------------------- Basic and diluted return per share (pence) 7 (1.56) 1.17 (0.39) (0.76) (0.64) (1.40) -------------------------------------------------------------------------------------------- The Company has no recognised gains and losses other than those disclosed above. The accompanying notes are an integral part of these financial statements. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the year ended 31 January 2007 (16mth) 2007 2006 #'000 #'000 ------------------------------------------------------------------------------- Opening equity shareholders' funds 14,370 - Capital subscribed - 15,093 Issue costs - (604) Loss for the period (58) (119) ------------------------------------------------------------------------------- Equity shareholders' funds at 31 January 2007 14,312 14,370 ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. BALANCE SHEET As at 31 January 2007 2007 2006 ------------------------------------------------------------------------------- Note #'000 #'000 ------------------------------------------------------------------------------- Fixed assets Qualifying investments 8 6,593 200 Current assets Debtors 9 10 156 Non-Qualifying investments 10 7,414 1,532 Cash at bank and in hand 2,026 12,811 ------------------------------------------------------------------------------- Creditors: amounts falling due within one year 11 (1,731) (329) ------------------------------------------------------------------------------- Net current assets 7,719 14,170 ------------------------------------------------------------------------------- Net assets 14,312 14,370 ------------------------------------------------------------------------------- Capital and reserves Called-up share capital 12 151 151 Share premium account 13 6,867 6,867 Other Reserve Account 13 7,471 7,471 Capital reserves realised 13 (144) (87) unrealised 12 266 32 Revenue reserve 13 (299) (64) ------------------------------------------------------------------------------- Equity shareholders' funds 14,312 14,370 ------------------------------------------------------------------------------- Net asset value (pence per share) 14 94.8 95.2 ------------------------------------------------------------------------------- The financial statements were approved by the Board of Directors on 17 May 2007. Signed on behalf of the Board of Directors: Patrick McKenna Chairman CASH FLOW STATEMENT for the year ended 31 January 2007 (16mth) 2007 2006 #'000 #'000 -------------------------------------------------------------------------------------------------- Net cash outflow from operating activities (540) (178) -------------------------------------------------------------------------------------------------- Capital expenditure and financial investment Purchase of qualifying investments (4,693) - Purchase of non-qualifying investments (12,549) (1,500) Disposal of non-qualifying investments 6,997 - -------------------------------------------------------------------------------------------------- Net cash outflow from capital expenditure and financial investment (10,245) (1,500) -------------------------------------------------------------------------------------------------- Financing Issue of ordinary shares - 15,093 Expenses of the issue of ordinary shares - (604) -------------------------------------------------------------------------------------------------- Net cash inflow from financing - 14,489 -------------------------------------------------------------------------------------------------- (Decrease)/Increase in cash (10,785) 12,811 -------------------------------------------------------------------------------------------------- Reconciliation of Loss Before Taxation to Net Cash Flow from Operating Activities #'000 #'000 -------------------------------------------------------------------------------------------------- Loss on ordinary activities before taxation (58) (119) Gain on disposal of investments (96) - Increase in fair value of investments held (234) (32) Decrease/(Increase) in receivables 146 (156) (Decrease)/Increase in payables (298) 129 -------------------------------------------------------------------------------------------------- Net cash outflow from operating activities (540) (178) -------------------------------------------------------------------------------------------------- Reconciliation of Net Cash Flow to Movement in Net Funds #'000 #'000 -------------------------------------------------------------------------------------------------- Opening cash balances 12,811 - Net cash outflow/inflow (10,785) 12,811 -------------------------------------------------------------------------------------------------- Closing cash balances 2,026 12,811 -------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 January 2007 1. Accounting policies (a) Basis of Accounting The results in respect of the 12 months to 31 January 2007 have been taken from the company's full accounts which have not yet been delivered to the Registrar of Companies. The comparative figures in respect of the 12 months to 31 January 2007 have been taken from the full accounts which have been delivered to the Registrar of Companies and which contain an unqualified audit report. This financial information does not constitute statutory accounts under section 240 of the Companies Act 1985. The financial statements for the period ended 31 January 2007 have been prepared in accordance 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. (b) Valuation of Investments Qualifying Investments 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 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 (i.e. pre-release) 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 following the release of the artists' records/albums. Non-Qualifying Investments The Company's investments in interest bearing money market open ended investment companies (OEIC's) are valued at mark-to-market. They have been designated as fair value and recognised as revenue through the income statement for the purposes of FRS26. 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 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. (e) Deferred Taxation Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. 2. Investment Income (16mth) 2007 2006 #'000 #'000 ------------------------------------------------------------------------------- Bank deposit interest 125 354 Reinvested interest from OEIC's 55 - ------------------------------------------------------------------------------- 180 354 ------------------------------------------------------------------------------- 3. Arrangement Fees (16mth) 2007 2006 #'000 #'000 ------------------------------------------------------------------------------- Arrangement fees - 151 ------------------------------------------------------------------------------- All direct and indirect expenses and costs arising out of the Offer were incurred by the Promoter and a fee of 5% of the gross proceeds of the Offer was paid in consideration of the service provided. The Directors believe that 80% of these fees relate directly to the raising of capital and have classified this proportion as issue costs. In accordance with FRS 26, the issue costs have been deducted from the share premium account. The remaining 20% reflected above has been taken to revenue. 4. Investment Management Fee (16mth) (16mth) (16mth) 2007 2007 2007 2006 2006 2006 Revenue Capital Total Revenue Capital Total #'000 #'000 #'000 #'000 #'000 #'000 ------------------------------------------------------------------------------------ Investment management fee 145 145 290 54 54 108 Irrecoverable VAT 25 25 50 9 9 18 ------------------------------------------------------------------------------------ 170 170 340 63 63 126 ------------------------------------------------------------------------------------ For the purposes of the revenue and capital columns in the income statement, the management fee has been allocated 50% to revenue and 50% to capital, which represents the proportion of the fee attributable to the management of the investments of the Company. 5. Other Expenses (16mth) (16mth) (16mth) 2007 2007 2007 2006 2006 2006 Revenue Capital Total Revenue Capital Total #'000 #'000 #'000 #'000 #'000 #'000 ------------------------------------------------------------------------------------ Directors' remuneration (including Employers National Insurance) 65 - 65 72 - 72 Auditors' remuneration 15 - 15 12 - 12 Legal & Professional fees 4 38 42 34 24 58 Other administration expense 106 - 106 86 - 86 ------------------------------------------------------------------------------------ 190 38 228 204 24 228 ------------------------------------------------------------------------------------ All figures include irrecoverable VAT, where applicable. The company is not registered for VAT. Auditors' remuneration relates to audit services only. Further details on the Directors' fee disclosures are given in the Directors' Remuneration Report. 6. Tax Charge on Ordinary Activities (16mth) (16mth) (16mth) 2007 2007 2007 2006 2006 2006 Revenue Capital Total Revenue Capital Total #'000 #'000 #'000 #'000 #'000 #'000 -------------------------------------------------------------------------------------- Loss on ordinary activities before tax (235) 177 (58) (64) (55) (119) Loss on ordinary activities 30% (2006: 30%) (70) 53 (17) (19) (17) (36) Adjustments: Non taxable gains on investments - (80) (80) - (10) (10) Non taxable income - (8) (8) - - - Disallowed expenses 4 10 14 1 7 8 Unutilised losses for the current period 66 25 91 18 20 38 -------------------------------------------------------------------------------------- - - - - - - -------------------------------------------------------------------------------------- Capital returns are not included in the above as the Company is a VCT and its capital gains are not taxable. At 31 January 2007 the Company had surplus management expenses of #429,000 which have not been recognised as a deferred tax asset. This is due to the fact that the Company has only been investing for a short period of time, and future taxable income can not be predicted with reasonable certainty. Due to the Company's status as a VCT, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future the Company does not provide deferred tax on any capital gains or losses which arise on the revaluation of investments. 7. Basic and Diluted Return per Share (16mth) (16mth) (16mth) 2007 2007 2007 2006 2006 2006 Revenue Capital Total Revenue Capital Total #'000 #'000 #'000 #'000 #'000 #'000 ---------------------------------------------------------------------------------------------- (Loss)/Profit on ordinary activities after taxation (#'000) (235) 177 (58) (64) (55) (119) Weighted average shares in issue (number) 15,093,281 15,093,281 15,093,281 8,481,868 8,481,868 8,481,868 ---------------------------------------------------------------------------------------------- (Loss)/Profit attributable per share (pence) (1.56) 1.17 (0.39) (0.76) (0.64) (1.40) ---------------------------------------------------------------------------------------------- There are no dilutive potential ordinary 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 2007 2006 #'000 #'000 ------------------------------------------------------------------------------- Unquoted investments 6,593 200 ------------------------------------------------------------------------------- Equity shares 1,978 60 Unsecured loan notes 4,615 140 ------------------------------------------------------------------------------- 6,593 200 ------------------------------------------------------------------------------- Qualifying Investments #'000 #'000 ------------------------------------------------------------------------------- Opening valuation 200 - Purchases at cost 6,393 200 ------------------------------------------------------------------------------- Closing valuation and book cost 6,593 200 ------------------------------------------------------------------------------- As at 31 January 2007 the unsecured loan notes of the Company are repayable in 2011 (#1,831,900) and in 2012 (#2,783,200). Significant Interests The Company has interests of greater than 20% of the nominal value of the allotted shares of the following UK incorporated investee companies as at 31 January 2007: % class and % voting rights share type ------------------------------------------------------------------------------- The Heights Recording Limited 49.90% A Ordinary 49.90% Independiente Music Ventures - MTB 49.90% A Ordinary 49.90% Limited Independiente Music Ventures - 24.95% A Ordinary 24.95% Travis Limited Thorpe Trading Limited 24.95% A Ordinary 24.95% Funwood Music Limited 24.95% A Ordinary 24.95% Genius Music Limited 24.95% A Ordinary 24.95% High Level Recording Limited 24.95% A Ordinary 24.95% Independiente Music Ventures - 24.95% A Ordinary 24.95% David Ford Limited Independiente Music Ventures - 24.95% A Ordinary 24.95% Embrace Limited Cooking Vinyl Ventures Prodigy 24.95% A Ordinary 24.95% Limited ------------------------------------------------------------------------------- The investments made by the Company are part of its portfolio of investments. As a VCT, the Company value those investments at fair value in accordance with FRS 26. 9. Debtors 2007 2006 #'000 #'000 ------------------------------------------------------------------------------- Prepayments and accrued income 9 156 Trade Debtors 1 - ------------------------------------------------------------------------------- 10 156 ------------------------------------------------------------------------------- 10. Current Asset Investment 2007 2007 #'000 #'000 ------------------------------------------------------------------------------- Funds held in listed money market instruments 7,414 1,532 ------------------------------------------------------------------------------- Non-Qualifying Investments #'000 #'000 ------------------------------------------------------------------------------- Opening valuation 1,532 - Purchases at cost 12,549 1,500 Disposal proceeds (6,997) - Realised gains on disposal 96 - Unrealised change in value of investment 234 32 ------------------------------------------------------------------------------- Closing valuation and book cost 7,414 1,532 ------------------------------------------------------------------------------- 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. Included within the total amount for Non-Qualifying Investments, #2.0m has been invested in the Ingenious Enhanced Cash Fund managed by Ingenious Asset Management. 11. Creditors: Amounts Falling Due Within One Year 2007 2006 #'000 #'000 ------------------------------------------------------------------------------- Trade Creditors 1 65 Accruals and deferred income 30 64 Amounts due to Investee company 1,700 200 ------------------------------------------------------------------------------- 1,731 329 ------------------------------------------------------------------------------- 12. Called-Up Share Capital 2007 Authorised #'000 ------------------------------------------------------------------------------- 35,000,000 ordinary shares 1p each 350 ------------------------------------------------------------------------------- Allotted, called-up and fully paid ------------------------------------------------------------------------------- 15,093,283 ordinary shares 1p each 151 ------------------------------------------------------------------------------- 15,093,281 shares were issued and allotted in accordance with the terms of the Prospectus. The two subscriber shares created upon incorporation were issued at par. The entire issued ordinary share capital of the Company has been admitted to the official list maintained by the Financial Services Authority and to trading on the London Stock Exchange. Number of Aggregate Aggregate shares allotted nominal value consideration allotted received net of issue costs #'000 #'000 Date of issue and allotment 17 November 2004 2 - - 4 April 2005 4,597,022 46 4,413 5 April 2005 341,300 3 327 29 April 2005 463,700 5 445 17 June 2005 1,302,400 13 1,250 28 June 2005 3,984,416 40 3,825 29 June 2005 4,024,443 40 3,864 30 June 2005 380,000 4 365 ------------------------------------------------------------------------------- 15,093,283 151 14,489 ------------------------------------------------------------------------------- 13. Reserves Share Other Capital Capital Revenue Total premium reserve realised unrealised reserve reserves #'000 #'000 #'000 #'000 #'000 #'000 ---------------------------------------------------------------------------------------------------------- At 1 February 2006 6,867 7,471 (87) 32 (64) 14,219 Issue of equity - - - - - - Gain on disposal of investments - - 96 - - 96 Increase in fair value of investments held - - - 234 - 234 Investment income - - 55 - 125 180 Arrangement fees - - - - - - Investment management fees - - (170) - (170) (340) Other expenses - - (38) - (190) (228) ---------------------------------------------------------------------------------------------------------- At 31 January 2007 6,867 7,471 (144) 266 (299) 14,161 ---------------------------------------------------------------------------------------------------------- On 31 October 2005, the Company registered the court order dated 26 October 2005 which confirmed the reduction of the Company's share premium account by #7,471,174. The purpose of the reduction was to enable the Company to create a distributable reserve for the purpose of purchasing shares in the market. 14. Net Asset Value Per Share 31 January 2007 31 January 2006 ------------------------------------------------------------------------------- Net assets attributable to shareholders (#'000) 14,312 14,370 Shares in issue (number) 15,093,283 15,093,283 ------------------------------------------------------------------------------- Net asset value per share (pence) 94.8 95.2 ------------------------------------------------------------------------------- Enquiries to: Sarah Cruickshank Ingenious Ventures Limited 15 Golden Square London W1F 9JG Tel: 020 7319 4000 This information is provided by RNS The company news service from the London Stock Exchange END FR OKOKBOBKDNPD
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