TIDMIE1H
INGENIOUS ENTERTAINMENT VCT 2 PLC
9 September 2016
Half- yearly results for the six months to June 2016
INTERIM MANAGEMENT REPORT
We are delighted to present the half-yearly financial report of
Ingenious Entertainment VCT 2 plc (the Company) covering the six
months ended 30 June 2016 (the Reporting Period). The half-yearly
financial report has not been audited.
Overview of Activities
The D share class reached its five year anniversary on 30 July
2015. The final investment held in the D share class is Liverpool
Sound City. An agreement for the sale of Liverpool Sound City has
been signed, and the sale is due to complete shortly. The intention
is to distribute the funds from this sale together with the
remaining funds in the D share class shortly.
Each of the E and F share classes reached its five year
anniversary on 30 July 2016. The final investment held in each of
those share classes was Love Supreme. The sale of Love Supreme
completed on 30June 2016 and the Company is due to receive the
funds from this sale shortly. Once received, the Company intends to
distribute these funds together with the remaining funds in the E
and F share classes.
The Company has completed its investment strategy and is fully
invested under VCT regulations for its G and H share classes. The
Manager is now focused upon maximising the returns from the
investments made from those share classes.
No further investments have been made during the Reporting
Period.
Results
The D shares, E shares, F shares, G shares and H shares are all
accounted for as separate pools of funds necessitating separate
reporting. The D shares made a profit of GBP50,000 (31 December
2015: loss of GBP153,000; 30 June 2015: loss of GBP14,000). The E
shares made a profit of GBP26,000 (31 December 2015: loss of
GBP100,000; 30 June 2015: profit of GBP7,000). The F shares made a
profit of GBP21,000 (31 December 2015: loss of GBP60,000; 30 June
2015: GBPNil). The G shares made a loss of GBP60,000 (31 December
2015: loss of GBP264,000; 30 June 2015: loss of GBP44,000). The H
shares made a loss of GBP26,000 (31 December 2015: loss of
GBP41,000; 30 June 2015: loss of GBP6,000).
The unaudited net asset value per D share is 2.7 pence (31
December 2015: 2.0 pence; 30 June 2015: 44.1 pence) after the
deduction of a total of 80.0 pence per share of dividends in
previous periods. The net asset value including distributions to
date is 82.7 pence per share (31 December 2015: 82.0 pence per
share; 30 June 2015: 84.1 pence per share).
The unaudited net asset value per E share is 44.6 pence (31
December 2015: 63.7 pence; 30 June 2015: 67.4 pence) after the
deduction of an interim dividend of 20.0 pence per share in the
Reporting Period and the deduction of a total of 20.0 pence per
share of dividends in previous periods. The net asset value
including distributions to date is 84.6 pence per share (31
December 2015: 83.7 pence per share; 30 June 2015: 87.4 pence per
share).
The unaudited net asset value per F share is 47.2 pence (31
December 2015: 65.9 pence; 30 June 2015: 69.7 pence) after the
deduction of an interim dividend of 20.0 pence per share in the
Reporting Period and the deduction of a total of 20.0 pence per
share of dividends in previous periods. The net asset value
including distributions to date is 87.2 pence per share (31
December 2015: 85.9 pence per share; 30 June 2015: 89.6 pence per
share).
The unaudited net asset value per G share is 60.5 pence (31
December 2015: 67.2 pence; 30 June 2015: 73.4 pence) after the
deduction of an interim 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 periods. The net asset value
including distributions to date is 80.5 pence per share (31
December 2015; 82.2 pence per share; 30 June 2015: 88.4 pence per
share).
The unaudited net asset value per H share is 75.4 pence (31
December 2015: 81.4 pence; 30 June 2015: 82.7 pence) after the
deduction of an interim dividend of 5.0 pence per share in the
Reporting Period and the deduction of a total of 10.0 pence per
share of dividends in previous periods. The net asset value
including distributions to date is 90.4 pence per share (31
December 2015; 91.4 pence per share; 30 June 2015: 92.7 pence per
share).
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 paying tax-free dividends to shareholders from
both the actual income received and capital profits on the sale of
investments in the companies that the Company and Ingenious
Entertainment VCT 1 plc (together the Ingenious Entertainment
VCT's) invest in (Investee Companies).
Investments
The current investment portfolio includes:
Brighton Boundary Festival
Ingenious Entertainment VCT 2 investment amount: GBP250,000 (H
share)
(GBP500,000 across the Ingenious Entertainment VCTs)
The Ingenious Entertainment VCTs joined forces with LWE, SWG and
Matt Priest to produce and promote a new music festival called
Boundary in Brighton.
The first event is due to be held in September 2016 in Stamner
Park in Brighton and will form part of Fresher's Week for the
University of Sussex and Brighton as well as being aimed at the
local audience in and around Brighton and London.
Tickets are on sale and well ahead of forecast.
Genius Star Limited
Ingenious Entertainment VCT 2 investment amount: GBP375,000 (H
share)
(GBP750,000 across the Ingenious Entertainment VCTs)
The Ingenious Entertainment VCTs teamed up with Electric Star
Ltd, a company run by Rob Star that runs 4 successful multi-purpose
bar/kitchen style venues in East London and Kings Cross, to invest
in a new company, Genius Star Limited.
The concept is a multi-faceted and vibrant space which will
capitalise on the premises' location and the experience of Rob
Star.
The venue serves as a functioning bar and kitchen, and a
multi-purpose event space for promoted, co-promoted and externally
hired activities.
The opening night on the 21st July was a great success and the
venue hit its weekly target after just 3 days trading and week on
week the venue continues to exceed its targets.
Outlook
The recent Brexit referendum result has caused a significant
level of uncertainty in the UK economy. Anecdotally, the
expectation is that there will be a measure of downturn
economically which may adversely impact the performance of the
portfolio. The Manager hopes that discretionary spend increases,
and that live event attendances at least hold firm. What is
becoming evident is that the so-called 'headliner driven' events
are showing signs of customer fatigue and the events that deliver
more of a broad ranging customer experience are benefitting from
this. The Manager believes that it has created a portfolio that
delivers this enhanced customer experience.
The Manager's focus remains very firmly upon ensuring that the
investments made by the Company are carefully sourced and
structured in order to balance potential upside against capital
risk. The Manager also believes that the Company's strategy, which
aims to balance equity risk with a significant level of downside
protection through minimum revenue arrangements in respect of each
investment, remains entirely relevant in an uncertain economic
environment.
Ingenious Ventures
8 September 2016
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the six months ended 30 June 2016
Six months ended Six months ended Year ended
30 June 2016 30 June 2015 31 December 2015
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain - 202 202 - 60 60 - 103 103
on disposal
of investments
(Decrease)/increase - (81) (81) - (2) (2) - (484) (484)
in fair
value
of investments
held
Investment 29 - 29 79 - 79 128 - 128
income
Arrangement - - - - - - - - -
fees
Investment (30) (29) (59) (52) (52) (104) (92) (92) (184)
management
fees
Other expenses (80) - (80) (90) - (90) (181) - (181)
(Loss)/profit (81) 92 11 (63) 6 (57) (145) (473) (618)
on ordinary
activities
before
taxation
Tax - - - - - - - - -
on ordinary
activities
(Loss)/profit (81) 92 11 (63) 6 (57) (145) (473) (618)
attributable
to
equity
shareholders
Other - - - - - - - - -
Comprehensive
Income
Total (81) 92 11 (63) 6 (57) (145) (473) (618)
Comprehensive
Income
for
the financial
period
Basic and
diluted
return
per share
(pence)
D share 5 - 0.7 0.7 - (0.2) (0.2) - (2.2) (2.3)
E share 5 (0.7) 1.7 0.9 (0.3) 0.5 0.2 (0.8) (2.7) (3.5)
F share 5 (0.8) 2.1 1.3 (0.4) 0.4 - (1.0) (2.9) (3.8)
G share 5 (0.7) (1.1) (1.7) (0.6) (0.7) (1.3) (1.3) (6.2) (7.5)
H share 5 (0.9) (0.1) (1.0) (1.1) 0.8 (0.3) (2.2) 0.6 (1.5)
The Company had no recognised gains and losses other than those
disclosed above.
The total column is the Statement of Comprehensive Income of all
share classes for the period. The supplementary capital and revenue
columns are prepared following guidance published by the
Association of Investment Companies (AIC).
The accompanying notes form an integral part of these financial
statements.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE D, E, F, G AND H
SHARE FUNDS
STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the six months ended 30 June 2016
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 - 50 50 - 57 57
of investments
(Decrease)/increase - - - - (4) (4)
in fair
value of investments
held
Investment income - - - 4 - 4
Arrangement fees - - - - - -
Investment management - - - (7) (6) (13)
fees
Other expenses - - - (18) - (18)
Profit/(loss) - 50 50 (21) 47 26
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit/(loss) - 50 50 (21) 47 26
attributable
to
equity shareholders
Basic and diluted - 0.7 0.7 (0.7) 1.7 0.9
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 - 40 40 - 1 1
of investments
Increase/(decrease) - (3) (3) - (28) (28)
in fair
value of investments
held
Investment income 3 - 3 13 - 13
Arrangement fees - - - - - -
Investment management (4) (4) (8) (10) (10) (20)
fees
Other expenses (11) - (11) (26) - (26)
(Loss)/profit (12) 33 21 (23) (37) (60)
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
(Loss)/profit (12) 33 21 (23) (37) (60)
attributable
to
equity shareholders
Basic and diluted (0.8) 2.1 1.3 (0.7) (1.1) (1.7)
return
per share (pence)
H shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Profit on disposal of investments - 54 54
(Decrease)/Increase in fair - (46) (46)
value of investments held
Investment income 9 - 9
Arrangement fees - - -
Investment management fees (9) (9) (18)
Other expenses (25) - (25)
(Loss)/profit on ordinary activities (25) (1) (26)
before taxation
Tax on ordinary activities
(Loss)/profit attributable (25) (1) (26)
to equity shareholders
Basic and diluted return per share (pence) (0.9) (0.1) (1.0)
The Company had no recognised gains and losses other than those
disclosed above.
The total column is the Statement of Comprehensive Income per
share class for the period. The supplementary capital and revenue
columns are prepared following guidance published by the AIC.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE D, E, F, G AND H
SHARE FUNDS
STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the six months ended 30 June 2015
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 - 3 3
of investments
(Decrease)/Increase - (6) (6) - 19 19
in fair
value of investments
held
Investment income 44 - 44 15 - 15
Arrangement fees - - - - - -
Investment management (16) (16) (32) (9) (9) (18)
fees
Other expenses (28) - (28) (12) - (12)
Profit/(loss) - (14) (14) (6) 13 7
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit/(loss) - (14) (14) (7) 14 7
attributable
to
equity shareholders
Basic and diluted - (0.2) (0.2) (0.2) 0.5 0.2
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 - 11 11 - 2 2
of investments
(Decrease)/Increase - 1 1 - (13) (13)
in fair
value of investments
held
Investment income 8 - 8 12 - 12
Arrangement fees - - - - - -
Investment management (5) (5) (10) (12) (12) (24)
fees
Other expenses (10) - (10) (21) - (21)
(Loss)/profit (7) 7 - (21) (23) (44)
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
(Loss)/profit (7) 7 - (21) (23) (44)
attributable
to
equity shareholders
Basic and diluted (0.4) 0.4 - (0.6) (0.7) (1.3)
return
per share (pence)
H shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gain on disposal of investments - 36 36
(Decrease)/Increase in fair - (3) (3)
value of investments held
Investment income - - -
Arrangement fees - - -
Investment management fees (10) (10) (20)
Other expenses (19) - (19)
(Loss)/profit on ordinary activities (29) 23 (6)
before taxation
Tax on ordinary activities - - -
(Loss)/profit attributable (28) 22 (6)
to equity shareholders
Basic and diluted return per share (pence) (1.1) 0.8 (0.3)
The Company had no recognised gains and losses other than those
disclosed above.
The total column is the Statement of Comprehensive Income per
share class for the period. The supplementary capital and revenue
columns are prepared following guidance published by the AIC.
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE D, E, F, G AND H
SHARE FUNDS
STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
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 on disposal - 35 35 - 13 13
of investments
(Decrease)/increase - (163) (163) - (74) (74)
in fair
value of investments
held
Investment income 55 - 55 29 - 29
Arrangement fees - - - - - -
Investment management (22) (22) (44) (16) (17) (33)
fees
Other expenses (36) - (36) (35) - (35)
Profit/(loss) (3) (150) (153) (22) (78) (100)
on ordinary
activities
before taxation
Tax on ordinary - - - - - -
activities
Profit/(loss) (3) (150) (153) (22) (78) (100)
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)/Increase - (48) (48) - (198) (198)
in fair
value of investments
held
Investment income 16 - 16 25 - 25
Arrangement fees - - - - - -
Investment management (10) (10) (20) (23) (23) (46)
fees
Other expenses (21) - (21) (47) - (47)
Loss on ordinary (15) (45) (60) (45) (219) (264)
activities
before taxation
Tax on ordinary - - - - - -
activities
Loss attributable to (15) (45) (60) (45) (219) (264)
equity shareholders
Basic and diluted (0.9) (2.9) (3.8) (1.3) (6.2) (7.5)
return
per share (pence)
H shares
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gain on disposal of investments - 39 39
(Decrease)/Increase in fair - (2) (2)
value of investments held
Investment income 2 - 2
Arrangement fees - - -
Investment management fees (19) (20) (39)
Other expenses (41) - (41)
(Loss)/profit on ordinary activities (58) 17 (41)
before taxation
Tax on ordinary activities - - -
(Loss)/profit attributable (58) 17 (41)
to equity shareholders
Basic and diluted return per share (pence) (2.2) 0.6 (1.5)
The Company had no recognised gains and losses other than those
disclosed above.
The total column is the Statement of Comprehensive Income per
share class for the period. The supplementary capital and revenue
columns are prepared following guidance published by the AIC.
BALANCE SHEET (UNAUDITED)
as at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Fixed assets
Qualifying 6 3,548 7,240 5,332
Investments
held at fair value
Non Qualifying 6 212 - -
Investments
held at fair value
Current assets
Debtors 977 50 28
Non-qualifying 6 369 3,147 1,038
Investments
Cash at bank 1,377 398 1,219
and in hand
2,723 3,595 2,285
Creditors: amounts (155) (69) (109)
falling
due within one year
Net current assets 2,568 3,526 2,176
Total assets 6,328 10,766 7,508
less current
liabilities
Capital and reserves
Called-up share 174 174 174
capital
Share premium account - - -
Other reserve account 8,104 13,048 9,295
Capital reserve (919) (1,298) (1,011)
Revenue reserve (1,031) (1,158) (950)
Total shareholders' 6,328 10,766 7,508
funds
Net asset value per 7 2.7 44.1 2.0
D share (pence)
Net asset value per 7 44.6 67.4 63.7
E share (pence)
Net asset value per 7 47.2 69.7 65.9
F share (pence)
Net asset value per 7 60.5 73.4 67.2
G share (pence)
Net asset value per 7 75.4 82.7 81.4
H share (pence)
The accompanying notes form an integral part of these financial
statements.
The condensed set of financial statements were approved by the
Board of Directors on 8 September 2016 and signed on its behalf by
Paul Gregg.
Paul Gregg
Director
Company Registration Number: 6395025 (England & Wales)
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE D, E, F, G AND H
SHARE FUNDS
BALANCE SHEET (UNAUDITED)
As at 30 June 2016 (unaudited)
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 - - 1,938 1,500
held at fair value
Non Qualifying Investments - - - - 212
held at fair value
Current assets
Debtors 50 528 345 - 54
Non-qualifying Investments - - - 176 193
held at fair value
Cash at bank and in hand 133 766 399 23 56
183 1,294 744 199 303
Creditors: amounts falling (110) (26) (3) (8) (8)
due within one year
Net current assets 73 1,268 741 191 295
Total assets less current 183 1,268 741 2,129 2,007
liabilities
Capital and reserves
Called-up share capital 68 28 16 35 27
Share premium account - - - - -
Other reserve account 961 1,557 857 2,624 2,105
Capital reserve (589) (134) (7) (257) 68
Revenue reserve (257) (183) (125) (273) (193)
Total shareholders' funds 183 1,268 741 2,129 2,007
Net asset value excluding 2.7 44.6 47.2 60.5 75.4
distributions
to date (pence per share)
Net asset value including 82.7 84.6 87.2 80.5 90.4
distributions
to date (pence per share)
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE D, E, F, G AND H
SHARE FUNDS
BALANCE SHEET (UNAUDITED)
As at 30 June 2015 (unaudited)
D E F G H
shares shares shares shares shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed assets
Qualifying Investments 2,570 1,637 908 2,125 -
held at fair value
Current assets
Debtors 50 - - - -
Non-qualifying Investments - 286 190 465 2,206
Cash at bank and in hand 383 4 2 5 4
433 290 192 470 2,210
Creditors: amounts falling (34) (9) (4) (12) (10)
due within one year
Net current assets 399 281 188 458 2,200
Total assets less current 2,969 1,918 1,096 2,583 2,200
liabilities
Capital and reserves
Called-up share capital 68 28 16 35 27
Share premium account - - - - -
Other reserve account 3,657 2,124 1,173 2,800 2,238
Capital reserve (503) (90) 12 (25) 74
Revenue reserve (253) (144) (105) (227) (139)
Total shareholders' funds 2,969 1,918 1,096 2,583 2,200
Net asset value excluding 44.1 67.4 69.7 73.4 82.7
distributions
to date (pence per share)
Net asset value including 84.1 87.4 89.6 88.4 92.7
distributions
to date (pence per share)
NON-STATUTORY ANALYSIS (UNAUDITED) BETWEEN THE D, E, F, G AND H
SHARE FUNDS
BALANCE SHEET (UNAUDITED)
As at 31 December 2015 (audited)
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
held at fair value
Current assets
Debtors - 28 - - -
Non-qualifying Investments - 243 183 420 192
held at fair value
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
Total assets less current 133 1,809 1,036 2,365 2,165
liabilities
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)
Total 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)
STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the six months ended 30 June 2016
Share Capital Other reserve Capital Revenue Total
reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 174 9,295 (1,011) (950) 7,508
1 January
2016
Dividends - (1,192) - - (1,192)
paid
Gain - - 202 - 202
on disposal
of
investments
Increase in - - (81) - (81)
fair value
of
investments
held
Investment - - - 29 29
income
Investment - - (29) (30) (59)
management
fees
Other - - - (80) (80)
expenses
At 30 June 174 8,104 (919) (1,031) 6,328
2016
for the six months ended 30 June 2015
Share Capital Other reserve Capital Revenue Total
reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 174 14,923 (1,304) (1,095) 12,698
1 January
2015
Dividends - (1,875) - - (1,875)
paid
Gain - - 60 - 60
on disposal
of
investments
Increase in - - (2) - (2)
fair value
of
investments
held
Investment - - - 79 79
income
Investment - - (52) (52) (104)
management
fees
Other - - - (90) (90)
expenses
At 30 June 174 13,048 (1,298) (1,158) 10,766
2015
for the twelve months 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 14,923 (1,304) (1,095) 12,698
1 January
2015
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
Increase 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
30 December
2015
STATEMENT OF CASH FLOWS (UNAUDITED)
for the six months ended 30 June 2016
Period ended Period ended Year ended
30 June 2016 30 June 2015 31 December 2015
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit/(loss) on ordinary 11 (57) (618)
activities before tax
Investment Income (29) (79) (128)
Gain on disposal (202) (80) (103)
of investments
Decrease in fair value 81 2 484
of investments held
Increase in debtors (949) (28) (6)
and prepayments
Increase in other 46 15 55
creditors
and accruals
Net cash flows (1,042) (227) (316)
from operating
activities
Cash flows from investing
activities
Purchase of Investments (250) (1,500)
held at fair value
Proceeds on disposal of 1,973 1,137 4,144
Qualifying Investments
Proceeds from sale 670 60 3,409
of bonds
and similar investments
Net cash inflows from 2,393 1,197 6,053
investing activities
Cash flows from financing
activities
Payment of dividends (1,192) (1,875) (4,572)
Net cash outflow flow from (1,192) (1,875) (4,572)
financing activities
Net increase/(decrease) in 159 (905) 1,165
cash and cash equivalents
Opening cash and 1,219 4,447 54
cash equivalents
Closing cash and 1,378 3,542 1,219
cash equivalents
Closing cash and cash equivalents comprise of cash in hand and
cash at the bank.
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
for the six months ended 30 June 2016
1. Accounting Policies
a) Company Information
Ingenious Entertainment VCT 2 plc is a venture capital trust
company resident in the United Kingdom and incorporated in England
and Wales on 10 October 2007. The address of the registered office
is 15 Golden Square, London, W1F 9JG.
b) Statement of Compliance
Basis of Accounting
The financial statements for the Reporting Period have been
prepared in compliance with applicable UK Accounting Standards,
being FRS 102 - The Financial Reporting Standard, the Companies Act
2006 and with the Statement of Recommended Practice (the SORP)
entitled "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" (with the exception of paragraph 82 of the
SORP 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 half
year accounts are prepared in accordance with Financial Reporting
Standards 104 - Interim Financial Reporting.
The financial statements have been prepared on a going concern
basis under the historical cost convention, modified to include
certain items at fair value. The principal accounting policies have
remained unchanged from those set out in the Company's 2015 Annual
Report and Accounts.
c) Financial Instruments
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions of the
instrument.
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
of its liabilities.
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 methodologies most applicable to the Company's
investments are:
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.
As a result of the above basis of valuation, there is
significant judgement associated with the valuation of
investments.
Non-qualifying Investments - OEICs
The Company's Non-qualifying Investments in interest bearing
money market OEICs are valued at fair value which is 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 the
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.
d) Investment Income (continued)
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 the
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 30 June 2016: 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. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Company's accounting policies, which
are described in note 1, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
3. Loss on ordinary activities before taxation
Loss on ordinary activities before taxation is stated after
charging:
30 June 2016 30 June 2015 31 December 2015
GBP GBP GBP
Audit fees 11,000 8,850 21,000
11,000 8,850 21,000
4. Directors' remuneration
and employees
30 June 2016 30 June 2015 31 December 2015
GBP GBP GBP
Aggregate Directors' 18,750 18,750 37,500
remuneration
18,750 18,750 37,500
The Company had no employees during the financial period ended
30 June 2016 (31 December 2015: Nil, 30 June 2015: Nil).
5. Basic and Diluted Return per share
The basic return per D share has been calculated on a weighted
average of 6,735,624 D shares in issue for the six months ended 30
June 2016 (31 December 2015: 6,735,624; 30 June 2015:
6,735,624).
The basic return per E share has been calculated on a weighted
average of 2,846,122 E shares in issue for the six months ended 30
June 2016 (31 December 2015: 2,846,122; 30 June 2015:
2,846,122).
The basic return per F share has been calculated on a weighted
average of 1,572,095 F shares in issue for the six months ended 30
June 2016 (31 December 2015: 1,572,095; 30 June 2015:
1,572,095).
The basic return per G share has been calculated on a weighted
average of 3,518,044 G shares in issue for the six months ended 30
June 2016 (31 December 2015: 3,518,044; 30 June 2015:
3,518,044).
The basic return per H share has been calculated on a weighted
average of 2,660,842 H shares in issue for the six months ended 30
June 2016 (31 December 2015: 2,660,842; 30 June 2015:
2,660,842).
There are no dilutive potential D shares, E shares, F shares, G
shares or 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.
6. Investments
30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
Fixed Assets
Level c (ii)
Qualifying Investments: 3,548 7,240 5,332
Non Qualifying Investments: 212
Current Assets
Non-qualifying Investments: 369 3,147 1,038
4,129 10,387 6,370
a) Qualifying Investments
Quoted market prices in active markets - "Level a"
Level a: quoted prices in active markets for an identical asset.
The fair value of financial instruments traded in active markets is
based on quoted market prices at the balance sheet date. A market
is regarded as active if quoted prices are readily and regularly
available, and those prices represent actual and regularly
occurring market transactions on an arm's length basis. The quoted
market price used for financial assets held is the current bid
price.
Valued using models with significant observable market
parameters - "Level b"
Level b: where quoted prices are not available, the price of a
recent transaction for an identical asset, providing there has been
no significant change in economic circumstances or a significant
lapse in time since the transaction took place.
Valued using models with observable parameters - "Level c
(i)"
Level c(i): fair values where the value estimate relies on
observable market data. The fair value is determined by using
valuation techniques. These valuation techniques maximise the use
of observable data where it is available and rely as little as
possible on entity specific estimates. If all the inputs required
to fair value an instrument are observable, the instruments is
included in level c (i).
Valued using models with significant unobservable parameters -
"Level c (ii)"
Level c(ii): fair values are not traded in an active market and
the fair value is determined by using valuation techniques such as
less recent third party transactions or earnings multiples. If one
or more of the significant inputs is not based on observable market
data, the instrument is included in level c (ii). The Company's
unquoted investments all fall into this category.
There have been no transfers between these classifications in
the year. The change in fair value for the current and previous
year is recognised through the statement of comprehensive
income.
b) Non-qualifying Investments
In order to safeguard the capital available for investment in
VCT 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.
7. Net Asset Value per share
The unaudited net asset value per D share has been calculated
based on 6,735,624 D shares being the number of D shares in issue
as at 30 June 2016 (31 December 2015: 6,735,624; 30 June 2015:
6,735,624).
The unaudited net asset value per E share has been calculated
based on 2,846,122 E shares being the number of E shares in issue
as at 30 June 2016 (31 December 2015: 2,846,122; 30 June 2015:
2,846,122).
The unaudited net asset value per F share has been calculated
based on 1,572,095 F shares being the number of F shares in issue
as at 30 June 2016 (31 December 2015: 1,572,095; 30 June 2015:
1,572,095).
The unaudited net asset value per G share has been calculated
based on 3,518,044 G shares being the number of G shares in issue
as at 30 June 2016 (31 December 2015: 3,518,044; 30 June 2015:
3,518,044).
The unaudited net asset value per H share has been calculated
based on 2,660,842 H shares being the number of H shares in issue
as at 30 June 2016 (31 December 2015: 2,660,842; 30 June 2015:
2,660,842).
8. Related Party Transactions
a) The Company has appointed Ingenious Ventures as Manager.
Ingenious Ventures is a trading division of Ingenious Capital
Management Limited. Patrick McKenna is a director of Ingenious
Capital Management Limited which is a subsidiary of Ingenious
Capital Management Holdings Limited, which is controlled by Patrick
McKenna.
The Manager, in accordance with the management agreement,
receives a management fee of 0.4375% of the net asset value payable
quarterly in advance (1.75% annualised). The Manager also receives
an administration fee of GBP56,000 per annum from the Company.
b) Since April 2016 the funds invested in OEICs are managed by
Tilney Asset Management Ltd. Before this Ingenious Asset Management
Limited, a company of which Patrick McKenna was a director managed
the funds invested in OEICs. Ingenious Asset Management Limited was
a subsidiary of Ingenious Asset Management Group Limited, which was
also controlled by Patrick McKenna. There is no fee payable by the
Company in relation to this transaction.
c) Patrick McKenna is a director and a shareholder of Ingenious
Entertainment VCT 1 plc. The Company and Ingenious Entertainment
VCT 1 plc both invested in Brighton Boundary Festival Limited, to
stage the first Brighton Boundary Festival which is due to take
place in September 2016. In May 2016, the Company invested
GBP250,000 in Brighton Boundary Festival Limited - GBP175,000 for a
15% equity stake with a GBP75,000 loan note instrument. Ingenious
Entertainment VCT 1 also invested GBP250,000 in Brighton Boundary
Festival Limited - GBP175,000 for a 15% equity stake and GBP75,000
loan note instrument.
During the period the Company has carried out a number of
transactions with the above-mentioned related parties in the normal
course of business and on an arm's length basis:
Expenditure Paid Amounts Due
Entity Note 30 June2016 30 June2015 31 December2015 30 June2016 30 June2015 31 December2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Ingenious
Capital
Management
Limited
- Investment b 59 104 184 - - -
management
fee
- b 29 38 71 - - -
Administration
fee
- b - - - - - -
Irrecoverable
VAT
Transactions between Related Parties
Ingenious Capital Management Limited, a company which is a
wholly-owned subsidiary of Ingenious Capital Management Holdings
Limited, which is controlled by Patrick McKenna, has entered into
consultancy agreements with each of the Company's Investee
Companies to provide management services.
During the period, Ingenious Capital Management Limited charged
consulting fees for the provision of such services totalling
GBP35,000 excluding VAT (31 December 2015: GBP137,000; 30 June
2015: GBP103,000), of which GBPNIL remained outstanding as at 30
June 2016 (31 December 2015: GBP45,000; 30 June 2015: GBPNIL).
The Company's statutory financial statements for the year ended
31 December 2015 have been delivered to the Registrar of Companies.
The auditor's report on those financial statements was unqualified
and did not contain statements under section 498(2) or section
498(3) of the Companies Act 2006.
This condensed interim information for the period does not
constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006.
Copies of the half-yearly financial report are being sent, or
made available electronically, to all shareholders. Further copies
can be downloaded from the Company's website:
www.ingeniousvcts.co.uk
View source version on businesswire.com:
http://www.businesswire.com/news/home/20160909005379/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
September 09, 2016 08:30 ET (12:30 GMT)
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