The event made a loss in the first year, however it was
extremely well received by both the corporate partners and the
paying public. Sponsorship and exhibitor income are already ahead
of this year's budget and 2011 ticket sales are also ahead of where
they were in 2010. Both Brand Events and IMG are confident that the
event will move into profit in 2011, building on the significant
brand awareness that was created in its first year.
Live Venues
Scarborough Open Air Theatre
Investment amount: GBP1,000,000 (GBP4,000,000 across the
Ingenious Live VCTs and the Ingenious Entertainment VCTs).
The Ingenious Live VCTs along with Apollo Resorts and Leisure
Scarborough joined forces to co-promote a new venue in 2009 known
as the Scarborough Open Air Theatre. The theatre was originally
opened in 1932 and in 2009 Scarborough Council entered into a major
restoration programme as part of the North Bay Project to reinstate
the theatre, reopening it to the public in 2010.
Scarborough is now the largest open air theatre in Europe. It
was opened by the Queen on 20 May 2010 and this ceremony was
followed by a series of sell out events throughout the summer
season. These included the Gala Opening with performances by Jose
Carreras and Dame Kiri Te Kanawa as well as the 80s Rewind concert,
which included performances from Boy George, Rick Astley and Paul
Young.
The second half of the season showcased an impressive range of
events, which included a number of shows by Justin Fletcher, the
Bafta award winning children's presenter and star of CBeebies. This
new venue also hosted some less successful events, which meant that
in its opening year Scarborough did not generate a profit.
Nonetheless, following the encouraging reception Scarborough
received in its first year, we are confident that this venue will
move into profit in 2011.
Television Format
Let's Dance
Investment amount: GBP500,000 (GBP2,000,000 across the Ingenious
Live VCTs and the Ingenious Entertainment VCTs).
Originally commissioned by the BBC for Comic Relief in 2009 and
Sport Relief in 2010, the TV format Let's Dance is the celebrity
packed dance spectacular which sees well known celebrities such as
Rufus Hound and Jo Brand pay homage to some of the world's most
iconic dance routines in front of a live audience. Let's Dance has
started its international roll-out with deals in Russia, Holland,
Germany, Slovakia, Indonesia and Sweden.
In 2010 the show had a peak audience of over eight million
viewers and as a result, the programme was recommissioned in 2011
for the third year, once again in conjunction with Comic Relief.
The series aired during its usual prime time TV slot on BBC One on
Saturday 19 February 2011. The series ran over four weeks, featured
three heats and culminated in a spectacular final dance off on Red
Nose Day weekend.
Outlook
The economic environment continues to challenge the Company as a
whole, however we are pleased to report that the live events sector
has performed resiliently in the downturn and we anticipate that
the expansion of the digital media sector will also create new
markets for content creators.
Our business model is effective and we believe this is crucial
in order to stay ahead of the competition and produce successful
global brands. We aim to continue to raise the profile of the
Company's investments and to enhance their profitability which
enables the Company to achieve its investment strategy.
All our investments are backed by management teams with vast
experience in the live events sector. Examples include Brand
Events, the event production company behind Taste of Christmas and
all the Taste Festivals and Whizz Kid who have experience in
producing top quality programmes across a wide-range of genres
including factual entertainment; events and music such as Let's
Dance and The Orange British Academy Film Awards.
Contact
If you have any questions on this review or would like to speak
with a member of the management team, please do not hesitate to
contact us on 0207 319 4000.
Ingenious Ventures
7 April 2011
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 Live VCT 2 plc is a tax efficient company listed on
The London Stock Exchange.
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 Agreement.
The Manager's review provides a review of the investment
portfolio and the market outlook.
2. Investment Policy
The Company's investment policy is to invest in Investee
Companies that will produce and promote new and established events
whose revenues will be underpinned by warranties or other similar
contractual arrangements. The Ingenious Live VCTs will invest in
Investee Companies which are expected to participate in the
revenues and growth of events. The events produced and promoted by
the Investee Companies are likely to be held primarily in the UK
and may include concerts, festivals, exhibitions, theatrical shows,
conferences, trade fairs and sporting events.
The Company will only invest in an Investee Company:
-- where the event has been approved by the Manager through its
selection process; and
-- where the Investee Company has obtained performance
warranties or similar contractual arrangements that will provide
for the Investee Company to receive minimum revenues equivalent to
at least 75% of the Company's investment, although the Manager is
currently endeavouring to secure higher levels of minimum revenues
in the current economic environment.
The initial capital required by an Investee Company will be
provided by the Company. The majority of this initial capital will
be provided through loan finance which should provide additional
capital protection. The Company can invest, under current venture
capital trust legislation, up to GBP1million per tax year in any
one Investee Company.
The Company has the flexibility to retain up to 30% of its
assets in cash and cash equivalent instruments which the Directors
believe should provide a significant degree of downside protection
whilst preserving the upside potential of the Events within the
portfolio.
At 31 December 2010 the Company had made ten investments in
Qualifying Companies, with contractual arrangements that provide
for the Investee Company to receive minimum revenues equivalent to
at least 75% of the Company's investment, all of which had received
the prior approval of the Manager's investment committee.
3. Principal Risks, Risk Management and Regulatory
Environment
The Board believes that the principal risks faced by the Company
are:
-- Investment and strategic - the performance of an investment
in an event is tied to a certain degree to the fortunes of the
industry generally. In particular, there is a risk that the Company
will not identify opportunities where the commercial success of the
Event is sufficient to earn revenues over and above the minimum
contractual income negotiated.
-- Loss of approved status as a Venture Capital Trust - the
Company must comply with section 274 of the ITA which allows it to
be exempt 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, and qualifying Shareholders who have
not held their Shares for the designated holding period would have
to repay the income tax relief they obtained and future dividends
paid by the Company would become 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% by value of its
investments in qualifying holdings by the beginning of the
accounting period commencing three years after provisional VCT
approval).
The Board seeks to mitigate the internal risks by setting clear
policies, including establishing a funding structure which provides
for minimum revenues equivalent to at least 75% of the investment,
regular reviews of performance, monitoring progress and
compliance.
Key Performance Indicators (KPIs)
The primary KPI 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 year, the
position of the Company at the year end and the outlook for the
coming year is contained within the Chairman's Statement and the
Manager's Review.
INCOME STATEMENT
Ingenious 2 (LSE:ILV2)
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