Insider Facts by Red Rock Entertainment

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 Tax Loss Relief to help diminish downside risk.

Contents About us

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

About Elstree Studios

6-7

Overview of the Film Industry

8-19

EIS

20-21

SEIS

22-23

Why Film Investment

The Value of UK Film Production

Distribution

26-27

Perk & Benefits of Investing

28-29

Map

Source References

About Us

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 sent

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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.

THEY HAVE THE MOST IMPORTANT MISSION. THEY MUST NOT FAIL. THEY ARE THE LAST.

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STEPHEN COOKSON FILMS

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SHAKESPEARE’S

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HEROES & VILLAINS &

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A PAUL HYETT FILM

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Lee Hatcher Jones Nelson Van Dien

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What we Look for in a Film Project !

MADNESS IN THE METHOD

Some journeys are measured by what you sacrifice to get there

JANUARY 2017

HOW FAR WOULD YOU GO TO PROECT THE ONES YOU LOVE?

ENDEAVOR

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28/06/2016 09:44

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

Dorothy Gish

Laurence Olivier

Elstree Studios holds a unique place in the story of British film. Founded in 1926 by young UK film producer Herbert Wilcox and Hollywood producer JD Williams, in its heyday it was known as the ‘British Hollywood’. In the 90 years since it hosted its first feature film — Madame Pompadour starring the silent-screen siren Dorothy Gish — it has established itself as one of the UK’s top film and TV studios. In the 1930s, Elstree helped launch the screen careers of stars such as Charles Laughton, Laurence Olivier,

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Young Hitchcock

Indiana Jones

Anna Neagle, Googie Withers, Ray Milland and Stewart Granger. Its output was enormous and, by the outbreak of the Second World War, it had produced more than 200 features. Elstree has been the studio of choice for many legendary producers and directors, from Alfred Hitchcock — who directed the fabulous Marlene Dietrich in Stage Fright there to George Lucas, Steven Spielberg and Stanley Kubrick. Among the contemporary giants of UK film to have worked at the studio are

Alfred Hitchcock & Marlene Dietrich

The King’s Speech

Danny Boyle, Tom Hooper, Guy Ritchie and Matthew Vaughn. In terms of its feature-film credits, Elstree has been the cradle of such iconic brands as the Star Wars and Indiana Jones trilogies, Superman, Moby Dick, The Dam Busters, The Shining, Ice Cold in Alex and Labyrinth. At the last count, more than 800 feature films and a similar number of television programmes have been produced at the facility. Most recently, Elstree hosted The World’s End, starring Simon Pegg; Sherlock Holmes: A Game of Shadows,

About Elstree Studios

Paddington

The World’s End

Star Wars

starring Jude Law and Robert Downey Jnr; Under the Skin, starring Scarlett Johansson; The King’s Speech, starring Colin Firth; Suffragette, starring Carey Mulligan and Helena Bonham-Carter; and Paddington Bear, named the highest grossing British independent film of 2014. The studio’s television credits are equally impressive: 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 including ITV’s Michael Buble: Home

Sherlock Holmes: A Game of Shadows

Suffragette

for Christmas; and children’s shows, such as The Slammer for BBC and Bunnytown for Disney. Elstree is also a popular destination for commercials and has recently provided stage space to several top brands, including Morrison’s, Gucci, Stella Artois, Littlewoods, BT, River Island and NatWest. Most recently, Burberry shot its Christmas commercial featuring Romeo Beckham on George Lucas Stage 1. With seven film and TV stages and green-screen stage,

Under The Skin

Superman

Elstree offers more than 60,000 sq ft of stage space. The famed George Lucas stages are not only two of the highest in Europe, but offer exceptional grid loading and power. This makes them popular choices as rehearsal stages for many of the world’s top recording artists, such as Take That, Alicia Keys, Kylie, Muse, Rihanna, One Direction, Jay Z and The Chemical Brothers.

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Overview of the Film Industry

THE UK MARKET AS A WHOLE

FACTS IN FOCUS The total filmed entertainment market in the UK in 2015 was worth an estimated £4.1 billion, up from £3.8 billion in 2014. Revenues across theatrical, digital video and pay TV were up compared with 2014, with pay TV increasing by 71%. Gross revenues for UK film were an estimated £1,095 million, up from £836 million in 2014. Overall film revenues in the UK increased every year between 2006 and 2015, with the exception of 2014. In 2015, the UK had the third largest filmed entertainment market in the world after the USA and China, but is expected to be overtaken by Japan in the next four years. In 2015, theatrical revenues were the most significant component of the film value chain in the UK. As Table 1 shows, the box office accounted for 30% of the total market value (£1,236 million) in 2015, compared with 28% (£1,058 million) in 2014. Revenues from theatrical, digital video and pay TV were up on 2014, while those from physical video rental and retail, terrestrial and multi-channel TV were down. Pay TV revenues recorded the largest increase, with a rise in value from £466 million to £795 million and an increase in overall market share from 12% to 19%. (It should be noted that the majority of all television revenues accrue to the television industry rather than to the suppliers of film.) Gross revenues for UK films in 2015 were estimated to be £1,095 million, with the share for British films highest in the theatrical market (45%), followed by terrestrial TV (27%) and physical video rental and retail (both with 25%).

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Overview of the Film Industry

The UK is the third largest film market in the world, generating revenues in excess of £4.1 billion. In 2015, cinema-going remained the most significant component of the film value chain, with revenues of over £1.2 billion.

2014

2015

Total Gross Value (£ million)

Attributable to UK films (£ million)

UK film as % of Total Gross

Total Gross Value (£ million)

Attributable to UK films (£ million)

UK film as % of Total Gross

1,058

289

1,236

590

Physical Video Rental

Physical Video Retail

861

217

712

178

Digital Video

435

499

Pay TV

466

795

Terrestrial TV

235

225

Other MultiChannel

673

107

616

109

3,815

836

4,145

1.095

Theatrical

Total

Source: comScore, BASE, Official Charts Company, Attentional, ONS, IHS, BFI RSU analysis Notes: ‘Theatrical’ is the total gross UK theatrical revenues (including VAT) in the calendar years 2014 and 2015 for all films exhibited in the UK. See Box Office report. ‘Physical video rental’ is the estimated revenue from physical video rental (DVD, Blu-ray, etc) from the number of transactions in the calendar years 2014 and 2015. 2014 figures have been revised since the 2015 Yearbook. ‘Physical video retail’ is the total revenue from physical video retail transactions in the calendar years 2014 and 2015. The television values are retail equivalent values calculated from the dataset of films shown on UK television. Values are estimated by multiplying the film share of the total channel time by the total revenue applicable to that channel (licence fee, subscription or advertising revenue). Television values cover terrestrial, pay TV and other multi-channel TV. See Film on UK television report. Digital video revenues are derived from IHS estimates of the combined size of the television and online on-demand markets. UK share is based on an estimate derived from knowledge of UK film share in the pay TV and video markets. The above values are gross values and include distributor and exhibitor margins, VAT, prints and advertising costs, DVD/video retail margins, broadcaster and multi-channel TV operator margins in addition to net returns to the film production sector and film investors. The revenues shown here are revenues earned by film in the UK market, whether UK or foreign films. The table does not include export revenues for the UK film industry. See UK film economy report for UK film export revenues. * Figures may not sum to totals due to rounding.

The Evolution of UK Film Revenues, 2006-2015 Aggregate film revenues increased every year between 2006 and 2015, with the exception of 2014. Up to 2013, there was steady growth with increased theatrical, television and digital video revenues compensating for a decline in the value of the physical video rental and retail markets. Overall revenues increased again in 2015, rising to £4.1 billion from £3.8 billion in 2014, an increase of just under 9%.

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The UK Market Global

The UK Film Market in the Global Context According to the Pricewaterhouse Coopers’ Global Entertainment and Media Outlook 2016-2020, in 2015 the UK had the third largest filmed entertainment market in the world after the USA and China. The USA accounted for 37% of the world market, with China accounting for 8.7% and the UK for 7.0%. The next largest countries in terms of market share were Japan (6.9%), Germany (4.1%) and France (3.6%).

Gross inflation-adjusted film revenues, all platforms, 2006-2015 (expressed in pounds) 2015 £ million 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2006

2007

2008

Theatrical

917

960

966

1,052

Physical video rental

410

345

322

1,566

1,684

1,653

Physical video retail Digital video Film on television Total

115

2009

2011

2012

2013

2014

2015

1,068

1,101

1,145

1,106

1,061

1,236

317

300

277

231

149

1,461

1,369

1,233

1,008

960

140

158

244

133

2010

863

712

345

438

499

1,282

1,163

1,213

1,234

1,267

1,480

1,553

1,590

1,377

1,637

4,255

4,240

4,269

4,197

4,145

4,249

4,180

4,149

3,826

4,146

Source: PwC, Global Entertainment and Media Outlook 2016-2020, www.pwc.com/outlook Notes: Information contained in this table was taken from the Cinema segment and the Home Video section of the TV and Video segment of the PwC Global Entertainment and Media Outlook, 2016-2020, www.pwc.com/outlook, however, some calculations and categorisation of regions are our own. The breakdown of sectors by segments in the current Global Entertainment and Media Outlook differ from those used in previous years; filmed entertainment revenues are now calculated differently. ‘Cinema’ comprises both box office and advertising. ‘Home video’ includes both electronic and physical home video of films, TV programming and other premium video content.

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The UK Market Global

Country | Region

US$ million

USA

31,529

37.0

China

7,434

8.7

5,936

7.0

Japan

5,887

6.9

Other Western Europe

3,983

4.7

Germany

3,532

4.1

France

3,086

3.6

Canada

2,884

3.4

Australia

2,255

2.6

India

2,020

2.4

South Korea

1,790

2.1

Other Asia Pacific

1,631

1.9

Other Central and Eastern Europe

1,600

1.9

Brazil

1,549

1.8

Italy

1,419

1.7

Mexico

1,387

1.6

Other Latin America

1,249

1.5

Taiwan

1,210

1.4

Middle East and Africa

1,137

1.3

Russia

1,031

1.2

Spain

853

1.0

Malaysia

701

0.8

Netherlands

646

0.8

Hong Kong

524

0.6

Total

85,273

100.0

Revenue comprises sell-through and rental of physical home video, and subscription and transactional revenues from electronic home video; it is from consumer spending. Other Western Europe comprises Austria, Belgium, Denmark, Finland, Greece, Republic of Ireland, Norway, Portugal, Sweden and Switzerland. Other Asia Pacific comprises Indonesia, New Zealand, Pakistan, Philippines, Singapore, Thailand and Vietnam. Other Central and Eastern Europe comprises Czech Republic, Hungary, Israel, Poland, Romania and Turkey. Middle East and Africa comprises Algeria, Bahrain, Egypt, Jordan, Kenya, Kuwait, Lebanon, Morocco, Nigeria, Oman, Qatar, Saudi Arabia, South Africa and the United Arab Emirates. Other Latin America comprises Argentina, Chile, Colombia, Peru and Venezuela.

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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 UKâ&#x20AC;&#x2122;s lucrative film and television tax reliefs and assistance with sourcing key crew, talent, facilities and locations.

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Facts

In the UK, the majority of film industry companies are in the production and post-production sectors, but most of these are small companies. The exhibition sector has the greatest proportion of large companies, the top 10 of which generated 92% of the sectorâ&#x20AC;&#x2122;s total turnover in 2015.

FACTS IN FOCUS In 2015, there were over 6,800 film production companies and almost 2,700 post-production companies in the UK. There were 420 film distributors and 230 film exhibitors. The majority of companies were small (turnover under ÂŁ250,000). The production, post-production and distribution sectors were concentrated in London and the South East, while the exhibition sector was more dispersed. Outside London and the South East there were significant production and post-production clusters in the East of England, the South West and the North West.

Number of Companies in the Film Industry The number of companies involved in the film industry has grown by 47% since 2010, compared to the UK all industries average of 17% (Table 1). The most substantial growth was seen in the number of video production (198%) and distribution (89%) companies, which might partly be explained by the rise in demand for online audiovisual content.

The number of film production companies has increased by 42%. 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. (These SPVs will usually only be involved in the production of one film).

The number of film distribution and film exhibition companies has remained broadly stable since 2010. You can see below In 2015 there were 6,805 film production companies, 2,660 film, video and TV postproduction companies, 420 film distribution companies and 230 film exhibition companies.

Number of film and video companies by sub-sector, 2010-2015 2010

2011

2012

2013

2014

2015

Growth 2010 2015 (%)

Film Production

4,795

4,845

5,190

5,450

6,090

6,805

41.9

Video Production

855

1,105

1,470

1,905

2,200

2,545

197.7

2,365

2,265

2,205

2,240

2,265

2,660

12.5

Film Distribution

395

420

415

395

405

420

6.3

Video Distribution

88.9

Film Exhibition

225

210

205

215

230

2.2

8,680

8,890

9,545

10,280

11,455

12,745

46.8

2,167,580

2,263,645

2,449,415

16.6

Sub-Sector

Film, Video and TV PostProduction*

Total UK all Industries

2,100,370 2,080,860 2,149,190

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Facts (continued)

Number of Companies in the Film Industry Video production company turnover saw the most substantial rise between 2010 and 2015 (70%) but film production and distribution companies accounted for the largest proportions of turnover in the period. In 2015, the turnover of film production companies was £2,967 million, an increase of 12% compared with 2010. Film, video and TV post-production company turnover was £1,478 million, an increase of 11% on 2010, and film exhibition company turnover was £1,339 million an increase of 39% compared with 2010. in 2015 although film distributors represented 3% of film industry companies, they accounted for 31% of film industry turnover. This reflects the dominant position of the UK subsidiaries of the major US studios in the film value chain. Film, video and TV post-production companies represented 21% of companies and 16% of total turnover.

National/Regional Distribution Of Film Companies In The UK The national/regional distribution of film companies and film company turnover in 2015. Overall, 71% of film companies were concentrated in London and the South East, and over 78% of turnover was generated by companies located in these two regions. The London concentration was particularly strong for distribution (61% of companies and 97% of turnover) but the exhibition sector was more widely spread across the UK, with 74% of companies and 44% of turnover associated with companies based outside London. While London and the South East dominate in production and post-production, there are significant regional centres, particularly in the East of England, the South West and the North West.

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Genre & Classification, 2015|2016

Action was the most popular genre among UK cinema-goers in 2015, with animation second and drama third. As in previous years, there were more ‘15’ releases than any other classification, but ‘12A’ films generated the largest single share of the box office.

FACTS IN FOCUS Action was the highest earning genre of 2015, taking 30% of the box office from 9% of releases. The top earning action title was SPECTRE. Drama accounted for the highest proportion of releases (26%) but shared only 10% of the box office. The top earning drama was Fifty Shades of Grey. Sci-fi took more money per cinema on average than other genres due mainly to the record-breaking success of the top film of the year, Star Wars: The Force Awakens. Ten of the top performing films by genre were UK qualifying films, including the top biopic, top fantasy and top documentary releases. Action was also the highest earning genre for UK qualifying films (39% of total box office from 9% of releases). Drama was the highest earning genre for UK independent films (27% of total box office from 23% of releases). The table below shows the relative popularity of different genres at the box office in the UK and Republic of Ireland in 2015. The pattern of box office by genre each year is usually determined by a small number of high grossing releases. Action, which included the second biggest film of the year, SPECTRE, was the top earning genre with a combined gross of £394 million. Animation was the second highest earner with a combined gross of £210 million and sci-fi, due mainly to the success of the year’s top film, Star Wars: The Force Awakens, was third with £141 million. Drama films had the highest proportion of releases (26%) but earned only 10% of the total box office gross.

No of Releases

% of Releases

Action

9.5

Gross B. Office (£ million) 393.9

Animation

3.8

Sci-fi

Comedy

% of Total Box Office

Top performing Title

30.3

SPECTRE

210.0

16.2

Minions

2.4

141.0

10.9

Star Wars: The Force Awakens

166

21.9

135.1

10.4

Pitch Perfect 2

Drama

201

26.5

130.2

10.0

Fifty Shades of Grey

Biopic

1.3

83.4

6.4

The Theory of Everything

Adventure

1.6

75.9

5.8

The Hunger Games: Mockingjay – Part 2

Thriller

6.9

37.1

2.8

Taken 3

Horror

5.8

34.9

2.7

The Woman in Black: Angel of Death

Fantasy

0.1

21.3

1.6

Cinderella

Romance

1.6

12.8

1.0

Brooklyn

Music|dance

1.2

12.0

0.9

Into the Woods

Documentary

117

15.4

8.3

0.6

Amy

Crime

1.4

0.1

The Gambler

Western

0.3

0.6

<0.1

Slow West

Family

0.4

0.2

<0.1

A Christmas Star

Total

759

100.0

1,298.4

100.0

Genre

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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, The table below presents the production companies involved in the greatest number of UK feature film projects between 2013 and 2015. Three companies topped the list with a total of nine films each for the period – Working Title Films, which had the highest combined budget of the three (£177 million; equivalent to a mean budget per film of £20 million), Vertigo Films (combined budget of £45 million) and Pinewood Pictures (combined budget of £37 million). North Bank Entertainment produced eight films, but had the lowest combined budget at £500,000. Production companies involved in five or more UK productions, ranked by number of films, 2013-2015 Production Company

Nº Estimated of C. budget* films (£million)

Selected Titles

Working Title Films

177

The Danish Girl; Everest; The Theory of Everything

Vertigo Films

Monsters: Dark Continent; Pudsey the Dog: The Movie; Walking on Sunshine

Pinewood Pictures

Pressure; The Riot Club; Spooks: The Greater Good

North Bank Entertainment

0.5

Kill Kane aka Blood Relations; Poltergeist Activity; Robert the Doll

Scoot Free Films

235

Exodus: Gods and Kings; Get Santa; The Martian

Altitude Film Entertainment

IBig Game; Kill Your Friends; Tiger House

Passion Pictures

Richwater Films

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

Sixteen Films

I, Daniel Blake; Jimmy’s Hall; War Book

Pulse Films

20,000 Days on Earth; American Honey; The Possibilities Are Endless

MoliFilms Entertainment

Golden Years; Montana; North v South

Fulwell 73

The Guvnors; Level Up aka London Underground; One Direction: Where We Are – The Concert Film

Roast Beef Productions

Jungle Sisters; The Russian Woodpecker; Tierra Caliente

Green Screen Productions

Bliss!; Dusty and Me aka Slapper and Me; The Journey

Film & Music Entertainment

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

Unstoppable Entertainment

The Anomaly; Legacy; We are Monster

Tiger Lily Films

The Lovers and the Despot; The Ones Below; Remainder

Runaway Features

Dangerous Mind of a Hooligan; The Disappearance of Lenka Wood; White Collar Hooligan 3

The Fyzz Facility

A Patch of Fog; Scottish Mussel; The Survivalist

Hopscotch Films

Atomic: Living in Dread and Promise; The Carer; I Am Belfast

Third Films

Blood Cells; Bypass; Light Years

Templeheart Films

He Who Dares; Heretiks; The Last Scout

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Top Films of All Time at the UK Box Office In 2015, Star Wars: The Force Awakens became the top earning film of all time at the UK box office, while titles based on UK characters and stories continue to dominate the chart with 12 of the top 20 highest grossing films.

FACTS IN FOCUS Star Wars: The Force Awakens has become the highest grossing film of all time in the UK, with box office earnings of over £122 million. Two other films released in 2015, SPECTRE and Jurassic World, also entered the top 20 list. The box office gross of Star Wars: The Force Awakens is enough to overtake Titanic for the top spot in the inflationadjusted box office chart. Sequels and franchise films make up 17 of the all-time top 20 chart, whilst 10 are UK/USA collaborations. Four 2015 releases – Legend, The Second Best Exotic Marigold Hotel, Shaun the Sheep the Movie and The Lady in the Van – appear in the chart of all-time top independent UK films. After three years at the top of the chart, Skyfall was overtaken by the 2015 release Star Wars: The Force Awakens, which outgrossed the most successful James Bond outing to date by almost one fifth with a take of over £122 million. Two other releases from 2015 entered the top 20. The latest 007 adventure, SPECTRE, is third in the list with earnings of £95 million and Jurassic World is 10th with £64 million. The list is dominated by franchise movies, including four of the eight Harry Potter titles and all three Lord of the Rings films. Only three of the top 20 films are neither sequels nor franchise titles, namely Avatar (although three sequels to this film remain in pre-production), Mamma Mia! and Titanic. Ten of the top 20 films are UK/USA collaborations and 12 of the top 20 are based on stories and characters created by UK writers such as Ian Fleming, JK Rowling and JRR Tolkien and the playwright Catherine Johnson, which shows the sustained appetite for home-grown material amongst British audiences.

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Ranking All Time Top Films

Source: comScore, BFI RSU analysis Notes: Figures have not been inflation adjusted. Box office gross = cumulative total up to 21 February 2016. * Film still on release on 21 February 2016. # The box office grosses for Titanic and Star Wars Episode I: The Phantom Menace include the grosses from their original releases plus the grosses from their 3D re-releases in 2012.

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Ranking Top 20 of All Time Top Films

Title

Country of Origin

Uk Box O.Total (£ million)

Distributor

Year of Release

Star Wars: The Force Awakens*

UK|USA

122.3

Walt Disney

2015

Skyfall

UK|USA

103.2

Sony Pictures

2012

SPECTRE *

UK|USA

95.2

Sony Pictures

2015

Avatar

USA

94.0

20th Century Fox

2009

Titanic #

USA

80.3

20th Century Fox

1998|2012

Toy Story 3

USA

74.0

Walt Disney

2010

Harry Potter and the Deathly Hallows: Part 2

UK|USA

73.1

Warner Bros

2011

Mamma Mia!

UK|USA

68.6

Universal

2008

Harry Potter and the Philosopher’s Stone

UK|USA

66.1

Warner Bros

2001

Jurassic World

USA

64.5

Universal

2015

Lord of the Rings: The Fellowship of the Ring

NZ|USA

63.0

Entertainment

2001

Lord of the Rings: The Return of the King

NZ|USA

61.1

Entertainment

2003

Lord of the Rings: The Two Towers

NZ|USA

57.6

Entertainment

2002

Star Wars Episode I: The Phantom Menace #

USA

56.4

20th Century Fox

1999|2012

The Dark Knight Rises

UK|USA

56.3

Warner Bros

2012

Casino Royale

UK|USA Czech

55.6

Sony Pictures

2006

Harry Potter and the Chamber of Secrets

UK|USA

54.8

Warner Bros

2002

Pirates of the Caribbean: Dead Man’s Chest

USA

52.5

Walt Disney

2006

Harry Potter and the Deathly Hallows: Part 1

UK|USA

52.5

Warner Bros

2010

The Hobbit: An Unexpected Journey

NZ?USA

52.3

Warner Bros

2012

RED ROCK ENTERTAINMENT

Tax Benefits of Investing in Film (EIS)

The UK has two government-sponsored investment schemes for direct investment in companies: the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). Both schemes, which offer generous tax relief, were set up to encourage investment into start-up businesses that are not listed on a stock exchange. Investment in unquoted companies often carries a high risk. The tax relief is intended to offer some compensation for that risk.

Enterprise Investment Scheme The Enterprise Investment Scheme (EIS) was introduced by the UK government in 1994 with the aim of helping small UK companies to raise capital from private investors. While an EIS investment is not without risk, the incentives for those looking for tax-efficient ways to invest are extremely attractive.

These benefits include:

Income Tax Relief Investors can claim a rebate of 30% of the amount invested from income tax paid in the year prior to investment, or on tax that is owed in the tax year of investment. Relief can be claimed on up to a maximum of ÂŁ1,000,000 invested in shares in EIS-qualifying companies, giving a maximum tax reduction in any one year of ÂŁ300,000, providing the investor has sufficient income-tax liability to cover it. Shares must be held for at least 3 years.

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EIS

Capital Gains Tax Exemption If the investment is successful and a profit is made on the sale of shares in an EIS-qualifying company, the investor will be exempt from capital gains tax on the profit made.

Capital Gains Tax Deferral If investors have any capital gains tax to pay in the current or next tax year, or if they have paid capital gains tax in the last two to three years, they can claim back or defer tax to the equivalent of up to 20% (or 28% if the gain is on a residential property or for 2015/16) of the capital they have invested in the EIS-qualifying company. If the gain is deferred, when the EIS shares are disposed of then the gain will crystallise at the prevailing rate at that time. The payment of tax on a capital gain can be deferred where the gain is invested in the shares of an EIS-qualifying company. A capital gain can arise from the disposal of any kind of asset, but the investment must be made within a period of one year before or three years after the gain arose. There are no minimum or maximum amounts for deferral, nor is there a 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.

Loss Relief If a loss is made on the disposal of EIS shares then the loss, less the 30% initial relief may be set against income or capital gains for tax purposes.

Key Points EIS investors can place a maximum of £1,000,000 in a single tax year, which can be spread over a number of companies. A company can raise no more than £5,000,000 in total via EIS investment in a 12 month period. Investors have no control over companies that receive their capital and must not hold more than a 30% stake in any company in which they invest.

Companies seeking investment must be based in the UK and have a permanent base in the country. The company’s trade must be no more than seven years old. Tax relief of 30% can be claimed in the current or previous tax year (from date of share certificate). A capital gains deferral can be claimed against the current tax year.

No inheritance tax to be paid after two years. No income tax or capital gains tax to be paid on any profits on disposal. Loss relief on any monies lost can be claimed at current tax rate. Monies must remain in the company for three years to benefit from the above.

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SEIS

The Seed Enterprise Investment Scheme (SEIS) complements the EIS by offering a range of tax reliefs to individual investors who purchase shares in smaller, early-stage companies. The SEIS is intended to compensate for the difficulties faced by start-ups in attracting investment by offering tax relief at a higher rate than that offered by the existing EIS.

Seed Enterprise Investment Scheme

As with the EIS, a percentage (50% in the case of SEIS) of the cost of an investment can be claimed against the investor’s income tax liability for the tax year in which the investment was made. The maximum investment through the SEIS in any tax year is £100,000. As with the EIS, there is no capital gains tax, or inheritance tax to be paid on an SEIS investment opportunity.

Income Tax Relief Income tax relief is available to investors who subscribe for qualifying shares in a company that meets the SEIS requirements and who have UK tax liability against which to set the relief. However, there are certain rules: Shares must be held for a period of three years. If shares are disposed of within the three-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.

Relief is given by way of a reduction of tax liability, which requires that there is sufficient tax liability against which to set it. A claim for relief can be made up to five years after the 31st of January of the following tax year in which the investment was made.

Capital Gains Tax Relief If the investor has a Capital Gains Tax liability in the year of investment, then up to 50% of the amount invested can be offset against that Capital Gain, with a potential saving of 10%, being half of 20% (14% for gains on residential properties).

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SEIS

Capital Gains Tax Exemption If the investment is successful and a profit is made on the sale of shares in an SEIS-qualifying company, the investor will be exempt from capital gains tax on the profit made.

Loss Relief If a loss is made on the disposal of SEIS shares then the loss, less the 50% initial relief may be set against income or capital gains for tax purposes.

Who can Participate in SEIS? Unconnected shareholders should be entitled to all the aforementioned relief schemes. For connected shareholders, income tax relief and capital gains tax exemption are not normally available. ‘Connection’ is defined by a financial interest in, or employment by, 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 generally includes directorships but precludes the employment of associates, although directors can participate in SEIS companies if holding under 30%. Furthermore, there is an exemption for business angels who become directors.

Key Points SEIS investors can place a maximum of £100,000 in a single tax year, which can be spread over a number of companies. A company can raise no more than £150,000 in total via SEIS investment. Investors have no control over companies that receive their capital and must not hold more than a 30% stake in any company in which they invest. Companies seeking investment must be based in the UK and have a permanent base in the country. Companies must have fewer than 25 employees. In the case of parent companies, that figure applies to the entire group. The company’s trade must be no more than two years old and the company must have gross assets of less than £200,000. Tax relief of 50% can be claimed in the current or previous tax year (from date of share certificate). A capital gains write-off of 50% of any gain can be claimed against the current tax year. No inheritance tax to be paid after two years. No income tax or capital gain tax to be paid on any profits on disposal. Loss relief on any monies lost can be claimed at current tax rate. Monies must remain in the company for three years to benefit from the above. The above is intended as a brief guide only. Red Rock Entertainment is not a financial advisor and, as with any investment or tax-related issue, it is important that potential investors seek advice from a financial advisor.

RED ROCK ENTERTAINMENT

Why Film Investments?

What makes a film investment so special? Well, a film doesnâ&#x20AC;&#x2122;t need to be a large success at the box office in order for an investor to receive a return on their investment, thatâ&#x20AC;&#x2122;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.

RED ROCK ENTERTAINMENT

The Value of UK Film Production The value of feature film production spend in the UK in 2015 was £1.4 billion, 83% of which was associated with inward investment features. The UK production spend of qualifying high-end television and animation programmes was £788 million, while the UK spend of qualifying video games was £59.5 million.

FACTS IN FOCUS Total UK film production activity in 2015 was £1,410 million, down 6% from £1,497 million in 2014, but still the second highest total since records began. There were 124 domestic UK features (224 in 2014), 30 co-productions (37 in 2014) and 47 inward investment features (49 in 2014). The UK spend associated with inward investment features was £1,177 million, down 6% from £1,247 million in 2014. Fifteen big budget films (£30 million or over) accounted for 73% of the total UK film production spend. The UK spend associated with domestic high-end television (HETV) programmes was £380 million, just over half (50.1%) of the total UK HETV production spend. The UK spend of qualifying animation programmes was £29 million, while video games production generated a UK spend of £59.5 million.

The aggregate UK spend of features that commenced principal photography in 2015 was £1,410 million, a slight decrease on 2014’s record-breaking total of £1,497 million, but still the second highest figure since our records began. The high totals of these two years coincides with the extended tax relief introduced by the UK government in 2014.

RED ROCK ENTERTAINMENT

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 different 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)

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

RED ROCK ENTERTAINMENT

Source: Film Distributors Association

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

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 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.

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.

Video on Demand

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

Perks & Benefits of Investing

Film Set Visits Patience is a virtue — and never more so than on a film set. Pick your moment to approach an actor carefully: it’s never a good idea to disturb talent when they are shooting a scene, or preparing to shoot one. So be prepared to wait for the right moment to take a picture or ask for an autograph. You will probably be assigned with a ‘runner’ from the production company, whose job it will be to look after you and let you know what’s going on.

Private Screenings Private film screenings form part of a film’s production and release cycle. To show off the film to its best advantage, special preview screenings are routinely held in low seat-count theatres offering high-quality projection and sound equipment. These events, which are usually accompanied by food and drink, also feature commentary from the film’s producers, writers or actors. The guest list for a private screening typically includes VIP media personalities, investors, and key marketing and distribution executives.

Appearing as an Extra Being an investor also gives you the opportunity to be cast as a background actor, or extra. This is a performer in a film or television show who appears in a non-speaking capacity, usually in the background to the central action —as an audience member, for example, or a passer-by in the street. Punctuality, reliability and the ability to take direction are important if you want to experience of thrill of appearing in front of the camera.

RED ROCK ENTERTAINMENT

Perks & Benefits of Investing

Name in the Credits

Photos with the Stars

Red Carpet Events A red-carpet premiere is the highpoint of a film’s release. Attended by its stars, alongside A-list celebrities, industry moguls and the media, they epitomise the Hollywood dream.

THE

LONDON FIRM

When one of our films premieres, our investors are invited to join us on the red carpet, and experience the glitz and glamour of showbiz for themselves.

Memorabilia As an investor, if available you will have access to film memorabilia, including autographs, brochures, props, advertising material and scripts. These are not just great keepsakes — if a film goes on to be successful, they can also be valuable in their own right.

M EADNESS THOD THAT GOOD NIGHT

Jason

Danny

Matt

Kevin

Mewes Trejo Willis Smith Stan

Teri

Vinnie

Judd

Gina

Mickey

Casper

Lee Hatcher Jones Nelson Van Dien Dean

Cain

Carano Gooch

MADNESS IN THE METHOD

STARRING

STEPHEN COOKSON FILMS

STEVEN

BERKOFF IN

THE

SHAKESPEARE’S

HEROES & VILLAINS

SHAKESPEARE’S VILLAINS

TELL-TALE HEART

THE

LONDON FIRM

CK FILMS

RED ROCK ENTERTAINMENT

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.

RED ROCK ENTERTAINMENT

References

British Film Commission: http://www.britishfilmcommission.org.uk/ 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 BFC’s activities include: Maximising and supporting the production of international feature film and television in the UK – England, Northern Ireland, Scotland and Wales Strengthening and promoting the UK’s production infrastructure Working to ensure film-friendly policies are in place The BFC delivers: Guidance on British qualification and the UK’s lucrative Film and TV Tax Reliefs Highly knowledgeable and experienced teams based in both the UK & US Free bespoke production support Expertise throughout the UK via a network of industry partners Assistance with sourcing suitable key crew, talent, facilities and locations 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.

British Film Institute Statistical Yearbook:

http://www.bfi.org.uk/education-research/film-industry-statistics-research/statistical-yearbook 2016

British Film Institute: http://www.bfi.org.uk

Elstree Studios Online:

http://www.elstreestudios.co.uk

IMDB - Red Rock Entertainment:

http://www.imdb.com/company/co0556596/?ref_=fn_al_co_1

You can find us at:

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

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 info@redrockentertainment.com www.redrockentertainment.com