Insider Facts about the Film Industry

Introduction

The UK film industry is a valuable part of the British economy and has doubled its GDP in the past 20 years in real terms.

Extensive market research has shown that despite the recent recession in the UK, the film industry has continued to thrive. There are a number of UK films which have become mass market hits, generating a huge profit such as Skyfall and Harry Potter. The UK remains the third largest consumer market for filmed entertainment in the world, with an 11% share of the global box office market. According to the British Film Institute statistical yearbook 2014, the UK is predicted to overtake Japan by 2018. The British Film Industry has received a large number of awards for British film talent, according to Viscount Younger of Leckie, the minister for intellectual

property “British creativity is highly marketable, award-winning and sought after. Our creative industries that draw on it are among the most influential and successful in the world, contributing £71.4 billion per year to the UK economy.” Here at Red Rock Entertainment, film is at the heart of what we do, working in conjunction with a number of UK film production companies to raise equity for independent film projects. Red Rock Entertainment offer a number of film investment opportunities including: Private Equity, Distribution and EIS/SEIS. Our investors will benefit from uncapped upside potential and the availability of EIS Tax Loss Relief to help diminish downside risk.

Contents About us

4

What we do | What we look for in a Film Project

5

About Elstree Studios

6

Overview of the Film Industry

7-15

Why Invest in Film

16

EIS

17

SEIS

18

Loss Relief

19

Film Distribution

20

Distribution Investments

21

Directions to Elstree Studios

22

Source References

23

About Us

Boats ‘N’ Bikes

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DUSTY & ME

DUSTY & ME 1

Red Rock Entertainment is a film finance company; we work in conjunction with a number of UK film companies to raise equity for Independent film projects. As well as film, we also raise funds for TV and Distribution.

Red Rock Entertainment is a film finance company; we work in conjunction with a number of UK film companies to raise equity for Independent film projects. As well as film, we also raise funds for TV and Distribution. We are hired by production and distribution companies to finance their projects. We currently have a number of SEIS, EIS, Equity and Distribution investment opportunities available. Our sole focus is on our products as an investment opportunity, and we ensure that we work alongside the directors and producers to make sure that our projects stay within their budget and timeline. All monies paid by investors are

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sent directly to the UK production company. We can arrange for our investors to visit the sets during filming, appear as extras, and attend private screenings. We also arrange film investment seminars here at Elstree with guest speakers from the different film companies, along with qualified accountants who can discuss the various tax advantages of investing in the film industry. Our directors attend all the major Film Festivals and Film Markets including: The American Film Market, Berlin International Film Festival and Cannes International Film Festival, ensuring that we keep up to date with the latest film trends.

What we do

An executive producer is someone who has either personally funded or arranged the funding for a motion picture or television show. Making a television show, or film can be a costly process and so the Executive Producer essentially acts as the financial backer, helping the production to raise the extra finances it needs to get to the distribution stage. On the film/television set our main role is to ensure that the project is proceeding according to the set schedule and budget. Although as an Executive Producer we don’t have control over how the film is executed we do have a say in anything which may affect the films schedule or marketability.

What we Look for in a Film Project Red Rock Entertainment specialise in films. We mainly work with film projects which are at an advanced stage and are looking for the final amount of financing. We focus on film projects that have a commercial appeal, an identifiable audience, moderately low and controllable costs and a sound financial structure. We also require that certain elements are in place before we will commit to any film project.

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About Elstree Studios

Elstree Studios has firmly established itself as the number one Film and Television Studio in London, founded in 1925 by British film producer Herbert Wilcox and Hollywood producer J.D Williams. In the 1930’s Elstree launched the screen careers of stars such as Charles Laughton, Laurence Olivier, Anna Neagle, Googie Withers, Ray Milland and Stewart Granger. Its output was enormous and included quota quickie films working with Hollywood Studios, and by 1939 had produced over 200 features. In its 87 year history, Elstree has been the studio of choice for many legendary producers and directors from Alfred Hitchcock, George Lucas, Steven Spielberg and Stanley Kubrick to Danny Boyle, Tom Hooper, Guy Ritchie and Matthew Vaughn. Some of the most famous feature films have been produced at Elstree over the years which include the Star Wars and Indiana Jones trilogies, Superman, Moby Dick, The Dam Busters, The Shining, Ice Cold in Alex, and Labyrinth. Over 800 feature films, and similar impressive numbers of television programmes, have been produced at Elstree Studios.

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Most recently Elstree has been the studio of choice for The World’s End starring Simon Pegg, Sherlock Holmes: A Game of Shadows starring Jude Law and Robert Downey Jnr, Brian Singer’s Jack the Giant Slayer, Under the Skin starring Scarlett Johansson, the multi award winning The King’s Speech starring Colin Firth, and most recently Grimsby and Paddington Bear. Not only are major feature films produced at Elstree, but also some of the highest rated TV shows in the UK such as Big Brother for Channel 5, Dancing on Ice, Who Wants To Be A Millionaire? and Red or Black for ITV, The Voice for BBC, My Mad Fat Diary for E4, television specials such as ITV’s Michael Buble; Home for Christmas and children’s shows such as The Slammer for BBC and Bunnytown for Disney. The Studios are also very popular for commercials having recently provided stage space for Morrison’s, Gucci, Stella Artois, Littlewoods, BT, River Island and NatWest to name but a few. Most recently Burberry shot their Christmas Commercial featuring Romeo Beckham in George Lucas Stage 1.

The George Lucas stages are two of the tallest in Europe offering excellent grid loading and power. Internationally famous acts such as Take That, Alicia Keys, Kylie, Muse, Rihanna, One Direction, Jay Z, The Chemical Brothers, Chase & Status and many other artists find these stages ideal for their tour rehearsals enabling them to accommodate a full size stadium stage and lighting grid and to rehearse within a secure location.

Overview of the Film Industry

The film business has an impressive history of stability; even at the height of the financial crisis the demand for film remained stable and continued to make money, while many other industries struggled. There are a huge number of UK films that have become mass market hits generating impressive profits such as: Skyfall, Harry Potter, Mama Mia, Three Weddings and a Funeral and The Full Monty to name just a few. “In 2013 the UK film box office revenues were in excess of £1 billion for the third year in succession.” BFI Statistical Yearbook 2014 According to an independent report published by the British Film Institute (BFI), the UK film industry continues to be a valuable part of the UK’s creative industries, with a turnover of £7.3 billion and a direct contribution to Gross Domestic Product of £2.9 billion. “The UK has the third largest entertainment market in the world after the USA and Japan.” BFI Statistical Yearbook 2014 The UK remains the third largest consumer market for filmed entertainment in the world with an 11% share of the global box office market; in 2013 it generated revenues in excess of £4 billion and according to a recent report by the British Video Association, the UK is predicted to overtake Japan by 2018. But that’s not all, the UK has an abundance of creative talent and there are a number of big name actors who began their careers in small Independent British films such as Keira Knightly, Ewan McGregor, James Cosmo and James McAvoy. The British film industry received 25 awards last year for UK films and UK film talent including 6 Oscars and 13 BAFTAs, and so as far as the film industry goes, the UK has a lot to offer!

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Supporting British Film

There are a number of institutes within the UK which offer guidance, financial support and carry out extensive research for the film industry, including: The British Film Institute (BFI) and British Film Commission (BFC).

British Film Institute The British Film Institute (BFI) is a charitable organisation established by the Royal Charter in 1993 to encourage the development of the arts of film, television and the moving image throughout the United Kingdom. It is their main aim to promote education about film, television and the moving image, and their impact on society, to promote access to and appreciation of the widest possible range of British and world cinema and to establish, care for and develop collections reflecting the moving image history and heritage of the United Kingdom. They award Lottery funding to film production, distribution, education, audience development and market intelligence and research.

British Film Commission The British Film Commission (BFC) is the national agency with a remit to maximise and support the production of international feature film and television in the UK. The British Film Commission works in partnership with key film industry bodies and it is funded by the Department for Culture, Media and Sport through the British Film Institute and UK Trade and Investment. With offices in the UK and the US, the BFC provides free tailored production support at the highest level from the earliest stages of development through to post production, including guidance on the UK’s lucrative film and television tax reliefs and assistance with sourcing key crew, talent, facilities and locations.

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Facts

The value of feature film production spend in the UK reached a record high of £1.5 billion in 2014, 84% of which was associated with inward investment features. The UK production spend of qualifying high-end television programmes was £615 million, while the spend of animation programmes was £37 million. • Total UK film production activity in 2014 was £1,475 million, up 35% from £1,093 million in 2013. • There were 154 domestic UK features (225 in 2013), 32 co-productions (53 in 2013) and 37 inward investment features (45 in 2012).

• The UK spend associated with inward investment features was £1,233 million, up 40% from £879 million in 2013.

• Seventeen big budget films (£30 million or over) accounted for 89% of the total UK film production spend. • The UK spend associated with inward investment high-end television (HETV) programmes was £287 million, just under half (47%) of the total UK HETV production spend.

• Between April and December 2014, the UK spend of qualifying video games production was £2.3 million.

The Value of UK Film Production The aggregate UK spend of features that commenced principal photography in 2014 was £1,475 million, the highest figure since our records began, and an increase of 35% compared with 2013 (£1,093 million). Inward investment films contributed £1,233 million (84%) towards the total UK film production spend in 2014, an increase from £879 million (80%) in 2013. Some of the big budget films contributing to this figure were Avengers: Age of Ultron, The Jungle Book, Night at the Museum: Secret of the Tomb and Spectre. Domestic UK features, including Bill, Everest and Shaun the Sheep spent £200 million in the UK, up £44 million (28%) from 2013. Official and unofficial co-productions had a UK spend of £37 million, down from £57 million in 2013. These included Autobahn, Queen of the Desert and Urban Hymn.

The Volume of UK Film Production The number of films produced in the UK grew from 46 in 1994 to a peak of 373 in 2010. From 2008 onwards, the data collected include feature films with budgets of less than £500,000 which partially explains the increase. (Prior to 2008 the collection of data on films at this budget level was not comprehensive.) The number of co-productions fell from 2007, reflecting a tightening in co-production certification requirements,

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Facts (continued)

followed by the introduction of the new film production tax relief based on a film’s UK spend rather than the entirety of the production budget. Minority co-productions saw the greatest reduction. In 2014, 223 films were produced wholly or in part in the UK, down from 323 in 2013. Of these, 32 were co-productions, 154 were domestic UK features (of which 80 had budgets of under £500,000) and 37 were inward investment films. The biggest fall was in domestic UK features with budgets of under £500,000, which were down from 160 in 2013 to 80. However, there is often a delay in acquiring full data on low and microbudget feature film activity in the UK, and the numbers for the last two years are likely to be revised upwards. A total of 19 UK/USA studio films were produced wholly or in part in the UK in 2014. These few films accounted for the majority of UK production spend. UK independent films made up almost 91% of all films produced in the UK, a similar percentage to 2013.

Number of Companies in the Film Industry of film production companies has increased by 24%. In this instance, the growth may reflect the number of special purpose vehicles (SPVs) created for specific productions but which remain in existence as companies after the completion of those titles.

The number of companies involved in the film industry has grown by 32% since 2009, compared to the UK all industries average of 5%. The most significant growth was seen in the number of video production (273%) and video distribution (100%) companies, which might partly be explained by the rise in demand for online audiovisual content. The number

(These SPVs will not usually be involved in the production of any other film). The number of film,

video and TV post-production, film distribution and film exhibition companies has remained broadly stable since 2009. In 2014 there were 6,090 film production companies, 2,465 film, video and TV post-production companies, 405 film distribution companies and 215 film exhibition companies.

Number of film and video companies by sub-sector, 2009-2014 2009

2010

2011

2012

2013

2014

Growth 2009 2014 (%)

Film Production

4,905

4,795

4,845

5,190

5,450

6,090

24.2

Video Production

590

855

1,105

1,470

1,905

2,200

272.9

2,470

2,365

2,265

2,205

2,240

2,465

-0.2

Film Distribution

420

395

420

415

395

405

-3.6

Video Distribution

40

45

45

60

75

80

100.0

Film Exhibition

225

225

210

205

215

215

-4.4

8,650

8,680

8,890

9,545

10,280

11,455

32.4

2,149,190

2,167,580

2,263,645

5.2

Sub-Sector

Film, Video and TV PostProduction*

Total UK all Industries

2,152,40

2,100,370 2,080,860

Source: Office for National Statistics.

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Notes: Data as at March 2014. * Companies in the post-production

Productions by Genre, 2012|2014

A breakdown of production by genre for the years 2012-2014. The drama and documentary genres accounted for the highest proportion of films, at 16% and 21% respectively, but only 8% and 2% of total UK spend. These were followed by comedy and thriller which accounted for 15% and 14% of films respectively, and 7% and 9% of UK spend. The biggest spending genre was action, which accounted for 38% of UK spend, but only 6% of films. Genre of production in the UK, 2012-2014 (ranked by share of UK spend)

Action

Number of films 57

% of total films 6.3

Budget (£ million) 1,992.3

% of total budget 37.5

UK spend (£ million) 1,364.5

% of total UK spend 38.3

Thriller

123

13.6

440.2

8.3

313.1

8.8

Adventure

18

2.0

559.2

11.3

301.1

8.5

Sci-Fi

27

3.0

376.8

7.1

273.2

7.7

Drama

142

15.7

441.3

8.3

272.0

7.6

Comedy

133

14.7

370.7

7.0

257.8

7.2

Fantasy

10

1.1

243.2

4.6

195.4

5.5

Horror

68

7.5

146.4

2.8

101.5

2.9

Biopic

26

2.9

158.3

3.0

100.5

2.8

Music| Dance

8

0.9

104.0

2.0

93.6

2.6

Romance

34

3.8

103.3

2.0

67.8

1.9

War

10

1.1

111.6

2.1

64.8

1.8

Documentary

186

20.6

98.3

1.9

62.8

1.8

Crime

43

4.8

28.4

0.5

23.5

0.7

Animation

5

0.6

22.9

0.4

17.2

0.5

Mystery

6

0.7

10.7

0.2

9.1

0.3

Other

7

0.8

64.0

1.2

43.6

1.2

Total

903

100.0

5,311.6

100.0

3,562.4

100.0

Genre

DUSTY & ME

DUSTY & ME 1

Source: BFI Notes:The data have been presented for a three-year period to show as many genres as possible without disclosing the budgets of individual films. Figures/percentages may not sum to totals due to rounding.The genre ‘Other’ includes genres, ‘Family’ and ‘Western’.

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Productions by Genre, 2012|2014

Looking at the breakdown by genre of UK independent films alone over the three-year period the pattern was fairly similar. The main differences were that comedy, thriller, drama and biopic accounted for a much greater proportion of UK spend than for all films produced in the UK (54% compared with 26%), and action and adventure accounted for a lower proportion (20% compared with 47%). Independent UK productions by genre, 2012-2014 Number of films

% of total films

Budget (£ million)

% of total budget

UK spend (£ million)

% of total UK spend

Action

39

4.7

312.6

20.7

193.4

19.1

Comedy

125

15.1

274.2

18.1

190.0

18.7

Thiller

115

13.9

239.9

15.9

149.7

14.8

Drama

137

16.5

172.6

11.4

122.5

12.1

Biopic

25

3.0

146.4

9.7

88.6

8.7

Romance

32

3.9

74.3

4.9

48.8

4.8

Documentary

177

21.4

71.9

4.8

48.2

4.8

Horror

62

7.5

33.4

2.2

31.0

3.1

Sci-Fi

25

3.0

32.0

2.1

24.2

2.4

Fantasy

7

0.8

30.3

2.0

24.2

2.4

Crime

43

5.2

28.4

1.9

23.5

2.3

Animation

5

0.6

22.9

1.5

17.2

1.7

War

8

1.0

17.5

1.2

12.8

1.3

Adventure

10

1.2

14.2

0.9

10.6

1.0

Mystery

6

0.7

10.7

0.7

9.1

0.9

Other

12

1.4

29.9

1.5

20.4

1.5

Total

903

100.0

5,311.6

100.0

3,562.4

100.0

Genre

Source: BFI Note: Figures/percentages may not sum to totals due to rounding. The genre ‘Other’ includes genres ‘Music/dance’, ‘Family’ and ‘Western’.

Timothy Spall and actress Marion Bailey

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Leading Film Production Companies in the UK Drawing on the BFI Research and Statistics Unit’s production database and public information, This table presents the production companies involved in the most productions in the UK over the three-year period 2012 to 2014. Top 20 production companies involved in UK production, ranked by number of films, 2012-2014 Nº of films

Estimated C. budget* (£million)

Working Title Films

14

289

Everest; Les Miserables; The Theory of Everything

Press On Features *

12

13

Essex Boys Retribution; The Hooligan Wars; Shame the Devil

Passion Pictures

12

12

The Green Prince; I Am; Listen to Me Marlon

Vertigo Films

11

41

All Stars; Pudsey the Dog: The Movie; Walking on Sunshine

Production Company

Selected Titles

Scoot Free Films

9

254

Before I Go to Sleep; Exodus: Gods and Kings; Get Santa

Pinewood Pictures

9

39

Pressure; Robot Overlords; Take Down

North Bank Entertainment

9

1

The Last House on Cemetery Lane; Theatre of Fear aka The Midnight Horror Show; Valley of the Witch

The Fyzz Facility

7

10

Legendary: Tomb of the Dragon; The Survivalist; X Moor

Met Film Production

7

4

The Great Hip Hop Hoax; How to Change the World; Pantomime

Templeheart Films

7

3

AB Negative; Deadly Virtues: Love.Honor.Obey.; Ibiza Undead

Revolution Films

6

42

The Face of an Angel; Rush; The Trip to Italy

Altitude Film Entertainment

6

11

Big Game; Kill Your Friends; Tiger House

Richwater Films

6

2

Age of Kill; Top Dog; We Still Kill the Old Way

Potboiler Productions

5

52

A Little Chaos; A Most Wanted Man; Our Kind of Traitor

Matador Pictures

5

26

Generation Z; Jimi: All Is By My Side; The Numbers Station

Baby Cow Films

5

20

The Look of Love; Northern Soul; Philomena

Green Screen Productions

5

13

Awaiting; The Knife That Killed Me; Dusty & Me

Film & Music Entertainment

5

4

Lost in Karastan; Rio 50 Degrees; StreetKids United II – The Girls From Rio

New Black Films

5

2

The Battle of the Sexes; Mandela’s Children; Shooting for Socrates

Third Films

5

2

6 Desires: DH Lawrence and Sardinia; Blood Cells; Bypass

Chata Pictures

5

1

The Fall of the Essex Boys; Riot; White Collar Hooligan 2: England Away

Dartmouth Films

5

1

Basically, Johnny Moped; The Spirit Level; Still the Enemy Within

Roast Beef Productions

5

1

The Do Gooders; Pussy Riot – A Punk Prayer aka Show Trial: The Story of Pussy Riot; The Russian Woodpecker

Source: BFI Notes:* Press On Features entered administration in 2014. Companies ranked by number of films produced, then by estimated combined budget*.

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Ranking All Time Top Films

The top performing films at the box office in the UK and Republic of Ireland in 2014 was the final instalment of the Hobbit trilogy, The Hobbit: The Battle of the Five Armies, with earnings (to 22 February 2015) of more than £41 million. The second most popular release of the year was the UK independent film, Paddington, with takings of £37 million. In total, five UK titles featured in the top 20, three of which were independent UK films. There were six UK titles in the top 20 films of 2013, all of which were UK/USA collaborations, produced, at least partly, in the UK.

Box office results for the top 20 films released in the UK and Republic of Ireland, 2014

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Ranking All Time Top Films

Country of Origin

Box O. Gross (£ million)

Nº of Opening weekend Cinemas

Opening weekend Gross (£ million)

The Hobbit: The Battle of the Five Armies*

USA|NZ

41.2

598

9.8

Warner Bros

Paddington*

UK|Fra

36.9

520

5.2

StudioCanal

Aus|USA Den

34.3

547

8.0

Warner Bros

UK

33.4

509

12.5

Entertainment

Dawn of the Planet of the Apes

USA

32.7

563

8.7

20th Century Fox

The Hunger Games: Mockingjay – Part 1*

USA

31.1

565

12.6

Lionsgate

UK|USA

38.5

557

6.4

Walt Disney

X-Men: Days of Future Past

USA

27.1

539

9.1

20th Century Fox

How to Train Your Dragon 2

USA

25.1

135

0.6

20th Century Fox

The Amazing Spider-Man 2

USA

24.1

545

9.0

Sony Pictures

The Wolf of Wall Street

USA

22.7

501

4.6

Universal

Gone Girl*

USA

22.4

552

4.1

20th Century Fox

Interstellar*

USA

20.6

576

5.4

Warner Bros

12 Years a Slave

USA

20.0

207

2.5

eOne Films

USA|China

19.5

533

11.7

Paramount

UK|USA

19.5

486

6.6

Walt Disney

Captain America: The Winter Soldier

USA

19.3

535

6.0

Walt Disney

22 Jump Street

USA

18.6

456

4.8

Sony Pictures

Godzilla

USA|Jap

17.2

551

6.4

Warner Bros

The Imitation Game*

UK|USA#

16.2

461

2.8

StudioCanal

Title

The Lego Movie

The Inbetweeners 2

Guardians of the Galaxy*

Transformers: Age of Extinction Maleficent

Distributor

Source: Rentrak, BFI RSU analysis Notes: Box office gross = cumulative total up to 22 February 2015. * Film still on release on 22 February 2015. # Film made with independent (non-studio) US support.

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Why Invest in Film?

What makes a film investment so special? Well, a film doesn’t need to be a large success at the box office in order for an investor to receive a return on their investment, that’s the benefit of investing in independent film. The global marketplace for film and TV programmes is growing rapidly as a result of the increasing amount of platforms and media by which they can be shown. The benefits of investing in film stretch far beyond the sales of box office tickets, DVD/Blu-Ray sales, Television airings, Video on Demand (VOD) subscriptions and the sale of merchandise all count towards the profit a film makes and can continue to generate a profit for many years after a films initial release.

In 2013, the total video entertainment market grew 0.5% to an estimated £2.2 billion in consumer spending; 143 million DVDs were sold in the UK and UK consumers made 56 million digital rentals (The British Film Institute Yearbook 2014). As well as simply making a return on your investment, there are a number of extra benefits which are attached to investing in film such as:

• • • • • • •

Having your name in the credits at the end of the film Get involved with the production of the film, become an extra Meet the cast and crew and visit the film set Attend Red Carpet events including the Film Premiere Attend special events as a VIP, such as The Cannes International Film Festival Be the first to sample merchandise Receive generous tax rewards

A film investment allows you to be part of something much bigger than just an investment; a film investment offers you the opportunity to be part of the next big success story, and as well as high returns and a life time of earnings, investing in the British film industry can also offer you a great deal of tax relief benefits. In 2012 the Prime Minister, announced the extension of the film tax relief for UK filmmakers, creating a range of incentives for film investors when they chose to invest in an EIS/SEIS film investment scheme.

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Tax Benefits of Investing in Film

In the UK there are two kinds of government sponsored investment schemes, offering generous tax benefits to investors, The Enterprise Investment Scheme (EIS) and The Seed Enterprise Investment Scheme (SEIS). These were set up by the government to make it easier for investors to invest in small high risk businesses which are not listed on the stock exchange.

Enterprise Investment Scheme The EIS scheme was introduced by the government in 1994 with a main objective to help small UK companies raise capital from private investors. Whilst investing in EIS is not without risks, the incentives for investors looking at tax planning opportunities are attractive, these benefits include:

Income Tax Relief You can claim a tax rebate (30% of the amount in which you have invested) on the income you have paid in the last year or on tax which you still owe in the current tax year. Relief can be claimed up to a maximum of £1,000,000 invested in such shares, giving a maximum tax reduction in any one year of £300,000 providing you have sufficient Income Tax liability to cover it.

EIS Capital Gains Tax If the investment is a success and you make a profit on the sale of your shares you will be exempt from Capital Gains Tax on the amount of profit you have made. If you have any Capital Gains Tax or Inheritance Tax liability to pay in the current or next tax year or if you have paid either of these in the last 2/3 years you can claw back or defer tax equivalent to 28% of the capital you have invested in the EIS film.

Capital Gains Tax Deferral The payment of tax on a capital gain can be deferred where the gain is invested in shares of an EIS qualifying company. The gain can arise from the disposal of any kind of asset, but the investment must be made within the period one year before or three years after the gain arose. There are no minimum or maximum amounts for deferral. There is no minimum period for which the shares must be held; the deferred capital gain is brought back into charge whenever the shares are disposed of, or are deemed to have been disposed of under the EIS legislation.

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SEIS

The Seed Enterprise Investment Scheme (SEIS) complements the existing Enterprise Investment Scheme (EIS), offering a range of tax reliefs to individual investors who purchase shares in small, early stage companies. SEIS is intended to recognise the particular difficulties which very early stage companies face in attracting investment, by offering tax relief at a higher rate than that offered by the existing EIS. As with an EIS investment, you can reclaim a percentage (50%) of the cost of your investment against your Income Tax liability for the tax year in which the investments were made.

SEIS

The maximum you can invest through SEIS in any tax year is £100,000. As with EIS there is no Capital Gains Tax, Inheritance Tax or Loss Relief Tax to be paid on an SEIS investment opportunity.

Income Tax Relief Income Tax Relief is available to you if you subscribe for qualifying shares in a company which meets the SEIS requirements, and if you have UK tax liability against which to set the relief. However, there are some rules: Your shares must be held for a period of 3 years from date of issue for relief to be retained. If they are disposed of within that 3 year period, or if any of the qualifying conditions cease to be met during

that period, relief will be withdrawn or reduced. Relief is available at 50% of the cost of the shares, on a maximum annual investment of £100,000. The relief is given by way of a reduction of tax liability, providing there is sufficient tax liability against which to set it. A claim to relief can be made up to 5 years after the 31 January following the tax year in which the investment was made.

Who can Participate in SEIS? Unconnected shareholders should be entitled to all of the reliefs above. For connected shareholders Income Tax Relief and the CGT exemption are not normally available. Connection may be by financial interest or by employment with the company. Financial interest occurs where the subscriber and their associates (such as parents, children and business partners) control more than 30% of the company. Employment includes directorships and also precludes the employment of associates (as defined above). However there is an exemption for business angels who become Directors. The above is set out as a brief guide online, Red Rock Entertainment are not financial advisors, as with any investment or tax related issue it is important that you seek advice from a financial advisor.

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Loss Relief

If your shares are disposed of at a loss, you can elect that the amount of the loss, less any Income Tax relief given, can be set against income of the year in which they were disposed of, or any income of the previous year, instead of being set off against any capital gains.

An EIS Investment is Suitable for you if you are Looking to: • • • • • •

Take advantage of Income Tax Relief Defer a payment of Capital Gains Tax Shelter investments from Inheritance Tax Harness the potential for significant tax free capital growth in today’s financial markets Diversify your existing investment portfolio Find a complementary solution to a pension

Who is Eligible to Invest? Any UK taxpayer is eligible for the tax breaks however; the initial tax relief is limited to the amount of tax you pay.

Where can I Sell? You should be prepared to retain an EIS investment for at least three years or you will lose any initial reliefs claimed. Once the company in which you are invested has been trading for at least three years after your investment dates, the following options may become available to you to realise your investment at a later date.

• Disposal of your shares to a third party or back to the company • Management buyout • Trade sale RED ROCK ENTERTAINMENT

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Film Distribution

Distribution is the very competitive business of launching and sustaining films in the market place. Every week on average, about 12 films are released in UK cinemas, generating annual box office gross receipts of more than £1 billion. Distributors invest more than £330m a year to bring all these titles to market, launching and sustaining them in cinemas. In 2012, £184m of this was allocated to media advertising, the rest on film prints, advertising production, publicity, premieres and related costs. The distribution process is the task of a professional film distributor who determines the marketing strategy for the film, the media in which the film is to be exhibited and the date in which this is to be done.

Who are the Distributors? The UK has a number of distributors who are directly affiliated to the Hollywood studios, and a number of independent distributors who handle the films which are made outside of the major studios.

How do Distributors get their Films? UK distributors acquire the films they release from a number of difference sources, including:

• Third-party sales agent, acting on behalf of a producer at an event such as a Film Festival

• By forming a relationship with a particular studio or production company

• Covering a slate of titles (a number of different films from the same company)

• Acquiring a single title at any stage before, during or after production

Distribution is a challenging role; it is a distributor’s role to bring a film to the market by: • Identifying its audience • Considering why the audience will go and see the film • Estimating the revenue potential for the film • Persuading exhibitors (cinema operators) to play the film • Build awareness and interest in the film Source: Film Distributors Association

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Film Investment Opportunities

Red Rock Entertainment offers a number of different kinds of film investment opportunities catering to different types of circumstances, including:

Distribution Investments Some films are exhibited directly to the public through a movie premiere and will remain in the theatre for a number of weeks; others will be released straight to television, VOD and or DVD and Blu-Ray discs.

Red Rock Entertainment work with film projects that are almost finished and are looking for the final amount of financing to cover the distribution costs such as the theatrical release and film promotion. Red Rock Entertainment has a number of Film Distribution Investments available in which investors will be able to see a return on their investment plus a share of the profit from the DVD and Blu-Ray sales, Video-on-Demand and Rental Subscriptions.

Video on Demand

EIS/SEIS Investment Opportunities We also offer a number of EIS/SEIS film investments which offer the investors generous tax relief benefits. Another perk of an EIS/SEIS film investment opportunity is that they come with a planned exit after three years, which gives investors certainty over when they will get their returns. Investing in film and television projects through an EIS/SEIS can generate more secure, low-risk return on your money.

Pure Equity In addition to the investment notes above, we also work with a range of films which are currently in the process of, or about to begin shooting. With a Pure Equity investment, there is a shorter hold time for investors than through the EIS/SEIS schemes; however, investors can still benefit from a return of capital often with a premium attached plus generous returns from a variety of sales mediums including both theatrical release and digital platforms. Here at Red Rock Entertainment, we only ever offer films which have been identified as being commercially viable, having assessed the production budget, genre and distribution intent.

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Directions

Directions by Rail

Fast service from central London (Farringdon and Kings Cross) to E lstree and Borehamwood Station. The First Capital Connect Line (Thameslink) runs from Bedford to Kings Cross stopping at Elstree and Borehamwood station on route. The Rail journey from Kings Cross should take approximately 20 minutes. Turn right out of the station and walk the length of the high street. At the end of the shops continue on for another 100 yards and the Studios can be seen on the right hand side (next to Tesco, opposite McDonalds). Total travelling from Kings Cross 30 minutes.

Directions by Car Nearby links with motorways, M1 (junction 6A), M25 (junction 23) A1 (1 mile), giving easy access to all parts of the country, airports and cross-channel routes to Europe. Exit the M25 at Junction 23 which will bring you straight on to the South Mimms roundabout. Take the exit off the roundabout marked A1 (London) and continue down the A1 for approximately three miles. Start to slow down as there is a small turning off the A1 (on your left hand side) sign posted A5135 to Borehamwood. This road will take you on to the bridge over the A1. At the half roundabout take the second turning. Stay in the left hand lane and continue over the next two small roundabouts, heading towards the town centre. At the next large roundabout the Studios will be on your left and the entrance is off the roundabout. Total distance from Junction 23 = approximately 3.5 miles.

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References

BBC Film Network: http://www.bbc.co.uk/filmnetwork/filmmaking/guide/distribution/distribution Box Office Mojo: http://www.boxofficemojo.com/franchises/chart/?id=paranormalactivity.htm British Film Commission: http://www.britishfilmcommission.org.uk/ British Film Institute Statistical Yearbook: http://www.bfi.org.uk/sites/bfi.org.uk/files/downloads/bfi-statistical-yearbook-2014.pdf British Film Institute: http://www.bfi.org.uk CNBC online: http://www.cnbc.com/id/39083257 Elstree Studios Online: http://www.elstreestudios.co.uk IMDB: http://www.imdb.com/title/tt0185937 The Hollywood Reporter: http://www.hollywoodreporter.com The Numbers Box Office data: http://www.the-numbers.com/movie/budgets

You can find us at:

Our team are always available and welcome any enquiries. RED ROCK ENTERTAINMENT

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Contact Details Red Rock Entertainment Ltd, Suite 12 Elstree Studios, Shenley Rd, Borehamwood, Hertfordshire, WD6 1JG, United Kingdom Telephone: +44 203 745 5380 Office open: Monday | Thursday: 9-5 | Friday: 9-3 [email protected] www.redrockentertainment.com