abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS For the year ended 30 June 2013
WE ARE abc abc INVESTMENTS 15 Golden Square London W1F 9JG T +44 (0)20 7319 4000 F +44 (0)20 7319 4001 www.ingeniousmedia.co.uk [email protected] IMIL/SMF6/P/06.12 abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2013
REGISTERED NUMBER: 107574
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CONTENTS THE COMPANY AND ITS ADVISERS 1 INVESTMENT ADVISER'S REPORT 2 DIRECTORS' REPORT 5 INDEPENDENT AUDITOR'S REPORT 11 PROFIT AND LOSS ACCOUNT 12 BALANCE SHEET 13 CASH FLOW STATEMENT 14 NOTES TO THE FINANCIAL STATEMENTS 15 DEFINITIONS 20
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THE COMPANY AND ITS ADVISERS Directors M S Beilby S L Harrop D M Reid A J Underwood.Whitney M S H Lansdowne Company Secretary and JTC (Jersey) Limited Administrator PO Box 1075 Elizabeth House 9 Castle Street St Helier Jersey JE4 2QP Registered Office Elizabeth House 9 Castle Street St Helier Jersey JE2 3RT CISX Listing Sponsor JTC Listing Services Limited PO Box 1075 Elizabeth House 9 Castle Street St Helier Jersey JE4 2QP Investment Adviser Ingenious Ventures, a trading division of Ingenious Capital Management Limited 15 Golden Square London W1F 9JG Investment Consultant Apollo Media Limited 6, 30 Redcliffe Square London SW10 9JY Auditor Deloitte LLP Chartered Accountants London EC4A 3TR Legal Advisers Carey Olsen 47 Esplanade St Helier Jersey JE1 0BD Registered Number 107574
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INVESTMENT ADVISER'S REPORT Introduction The Investment Adviser is pleased to provide an update on the business activity of Ingenious Senior Film Fund Investments (Jersey) Limited (the Company) for the year ended 30 June 2013. The Company, together with Ingenious Senior Film Fund Limited Partnership (the Limited Partnership ) forms the Ingenious Senior Film Fund (the Fund ). The Fund has been established to offer investors the opportunity to invest in a diverse portfolio of mainstream commercial films in conjunction with a range of first.rate production, sales and distribution partners. The Fund, established under the laws of Jersey, is structured in such a way that there are two routes for investors to participate: • directly as a limited partner of the Limited Partnership; and • indirectly by subscribing for shares in the Company. The Limited Partnership does not form part of these financial statements as it is a separate legal entity and therefore prepares separate financial statements. Financial performance During the year the Company’s profit on ordinary activities was £71,307 (period ending 30 June 2012: £98,310), representing a return on ordinary activities of 1.93 pence per share (period ending 30 June 2012: 2.97 pence per share), primarily as a result of foreign exchange rate gains on bank deposits. The net asset value per share at 30 June 2013 was 104.60 pence (30 June 2012: 102.97 pence). The financial results for the year reflect the initial fundraising activity for the Company as the Fund is not yet operationally active in terms of its stated investment strategy. Strategy The Fund intends to provide senior finance to an envisaged 20 to 30 mainstream commercial independent films with budgets in excess of US$10 million over an initial investment period of four years (with the Founder Partners each having made a principal investment). The directors are pursuing this investment strategy with the aim of spreading investment risk. Based on its proprietary analysis of historical film performance and its industry relationships and knowledge, the Fund will make an investment in each film of up to a maximum of 50% of the sales agent’s estimates for foreign territories representing between 20% and 35% of any film’s budget. The Fund intends to provide financing to films meeting the following criteria: • Production budgets between US$10 million and US$60 million;
• Sales agents’ take estimates for foreign territories of at least twice the amount of finance provided by the Fund;
• The sales agents being approved by the General Partner and their take estimates verified by an independent third party sales agent with no commercial interest in the film being produced;
• Films which demonstrate early evidence of commerciality (first.class writers, producers, directors and on.screen talent) through the conclusion of at least two major.territory pre.sales; and
• An industry.standard production insurance package including a completion bond or suitable equivalent insurance.
In exchange for providing an investment in this range at a time when finance for film producers remains challenging, the Fund will seek to earn: • Executive producer fees payable from the budget of each film;
• A minimum commission on all revenues;
• 100% of revenues net of the sales agent’s and collection agent’s commission until such time as the Fund’s initial contribution has been recouped; and
• A share of future receipts (net profits) following the recoupment of the film’s equity finance. The Investment Adviser, in conjunction with the Investment Consultant, whose principals have previously arranged the successful financing of a number of independent feature films, is actively leveraging its extensive contacts within the industry to generate suitable investment opportunities; firstly by attendance at key film markets and festivals in the calendar (including Cannes in May, Toronto in September, Los Angeles in November and Berlin in February) and secondly by regular travel to Los Angeles to meet with the principals of the independent film industry’s primary dealmakers.
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INVESTMENT ADVISER'S REPORT (CONTINUED) Activity during the year Following the incorporation of the Company in February 2011 and the initial close of the Fund in April 2012, activity has focused on exploring and building a pipeline of suitable commercial film projects for which the Fund could consider providing senior finance. This has been achieved by attendance at the principal film festivals and markets of Toronto, Los Angeles, Berlin and Cannes since June 2012, at which relationships have been forged with key decision makers in the independent film business. Meetings were held with top agencies (who represent talent and package films, often assisting with the sales process especially in the domestic market), sales agents, film producers, US equity financiers and financial institutions.
As a result a pipeline of some 100 film projects at various stages of development are being tracked with sales agents and producers.
• We are pleased to announce that following an Investment Committee meeting held on 26 April 2013, a letter of intent was signed with the producer of a US$17m film production entitled “ The Dressmaker ” which is to go into production in 2014. Kate Winslet and Judy Davies have agreed to star, and world sales were launched at Cannes 2013 by Embankment Films. Talent packaging agency CAA (Winslet’s agency) is consulting on the US sale. Subsequent to the year end, the board of the General Partner approved the investment at a board meeting held on 31 July 2013. The Investment Advisor and the Investment Consultant have agreed on the final terms for an investment on this project (subject to long.form documentation) and are now working towards an anticipated initial closing in December 2013, with a final closing to follow in 2014. Cash flow is then envisaged to begin later on this year, with the film shooting at the end of 2014.
The Advisers are also pleased to announce that following an Investment Committee meeting held on 28 June 2013 a Term Sheet is being agreed with the sales agent IM Global in respect of a US$23.5m budget film provisionally entitled “ Autobahn ”. The film is a thriller and will be shot on location in Germany, with principal photography commencing in early September 2013. Cash flow is expected to commence at that time. After consultation with US distributors, IM Global ascertained that Zac Efron is not as valuable to the US market as had been anticipated, so it was decided to replace him and negotiations are now underway with Nicholas Hoult to star (Amber Heard remains attached). This means the start date for the film has been pushed to mid.2014. It will be directed by Eran Creevy and produced by Ben Pugh, Rory Aitken and Brian Kavanaugh.Jones. This is the first of an expected pipeline of projects with sales agency IM Global.
The pipeline of projects with IM Global has begun to flow and several other films from them are now being considered for investment, including two projects that could begin shooting this year. The Advisers are currently in discussions with IM Global for both of these and are evaluating possible deals (one of which is “Trollhunters ”, now to be directed by Neill Marshall (“ The Descent ”).
• Subsequent to the Balance Sheet date both investments in “ The Dressmaker ” and “ Autobahn ” were approved by the Board of the General Partner of the Limited Partnership.
Recently, letters of intent were also sent in respect of the following films:
• to Jeremy Bolt (the producer of the “Resident Evil” franchise), who is producing a US$25m.$30m heist thriller called “ Decoy ”, which will go into production at the end of this year with Sierra Affinity handling world sales. Thor Freudenthal has been attached to direct, and the producers are now going out to cast;
• to Scott Free Productions (Ridley Scott’s company), which is producing a US$25m “Hunger Games-style ” thriller entitled “Blood Red Road ”, which will now go into production in 2014. The Advisers are in discussions with IM Global regarding the involvement of the Fund in the financing, and it is likely that this film will now be forthcoming as part of the expected pipeline;
• to producer Andrew Lazar (“ Get Smart ”, “ Confessions Of A Dangerous Mind ”), who is producing a US$20m thriller entitled “Surrender ”, with Hanway Films handling world sales. This film is awaiting casting and director finalisation;
• in addition, the Advisers are currently in discussions with two further top sales agents regarding up.coming projects:
• Good Universe, regarding a film they are selling entitled “High Wire Act ”, from producer Ted Field (The Last Samurai, Riddick) written by Tony Gilroy who wrote all the Bourne films, with John Moore (“A Good Day To Die Hard ”) attached to direct)
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• QED International, regarding a film they are selling entitled “Rock The Kasbah ”, to be directed by Barry Levinson, with Bill Murray attached
The Fund closed for further investment on 2 April 2013.
Ingenious Ventures , a trading division of Ingenious Capital Management Limited 15 Golden Square London W1F 9JG
Date: 24 September 2013
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DIRECTORS' REPORT The directors are pleased to present the Annual Report and Financial Statements of Ingenious Senior Film Investments (Jersey) Limited (the Company ) for the year ended 30 June 2013. Incorporation and structure The Company was incorporated in Jersey on 22 February 2011 and listed on the Channel Islands Stock Exchange ( CISX ) on 3 April 2012 through the placing of 3,310,118 shares at no par value. Since incorporation, additional investment brings the total number of shares placed at 30 June 2013 to 3,687,478.44 shares. The Company is classified as an expert fund in accordance with the Jersey Expert Fund Guide published by the Jersey Financial Services Commission. The Company is listed on the CISX in Jersey with code ISFp. Review of business and future developments A review of the Fund’s business, outlining activity during the year and giving an indication of future developments is provided in the Investment Adviser’s Report. Related party transactions Details of related party transactions are set out in note 12 of the financial statements. Going concern The directors have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. Further details regarding the adoption of the going concern basis can be found in note 1 of the financial statements. Principal risks and uncertainties The key risks and their controls are detailed in the Directors’ Report. Results and dividends The financial results for the year reflect the initial fundraising activity for the Company as the Fund was not yet operationally active in terms of its stated investment strategy. Profit on ordinary activities for the year was £71,307 (period ended 30 June 2012: £98,310), primarily as a result of foreign exchange rate gains on bank deposits. This represents a return on ordinary activities of 1.93 pence per share (period ended 30 June 2012: 2.97 pence per share). The net asset value per share at 30 June 2013 was 104.60 pence (30 June 2012: 102.97 pence). The directors do not propose to pay a final dividend (period ended 30 June 2012: £nil). No interim dividends were paid during the year (period ended 30 June 2012: £nil). Creditors payment policy The Company does not follow any specific code or standard on payment of creditors. The Company agrees the payment terms as part of the commercial arrangement negotiated with suppliers. Payments are made on these terms provided the supplier meets its obligations.
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DIRECTORS' REPORT (CONTINUED) Directors The directors in office during the year and subsequently were as follows:
Appointed Resigned M S Beilby S L Harrop D M Reid N C Syvret 8 January 2013 A J Underwood.Whitney M S H Lansdowne 8 January 2013
Profiles of the directors can be found below. No fees are payable to directors for their services. The General Partner The General Partner of the Limited Partnership is Ingenious Senior Film Fund GP Limited, which was incorporated in Jersey on 22 February 2011 as a private limited company under the Companies (Jersey) Law 1991 and has the registered number 107575. The General Partner is the general partner of the Limited Partnership pursuant to the Limited Partnership Agreement and Jersey law and is responsible for making all significant decisions relating to the making, management and realisation of all Fund investments. Management and control of the General Partner and the Company are vested in their respective boards of directors. The board of the General Partner comprises M S Beilby, S L Harrop, M S H Lansdowne, D M Reid and A J Underwood.Whitney. Further information relating to the directors of the General Partner is provided below. The Investment Adviser The General Partner will receive investment advice from the Investment Adviser pursuant to the Investment Advisory Agreement. The Investment Adviser to the Fund is Ingenious Ventures, a trading division of Ingenious Capital Management Limited, a member of the Ingenious Group. Ingenious Capital Management Limited is authorised and regulated by the Financial Conduct Authority of the United Kingdom. The Ingenious Group has one of the largest and most experienced teams of professionals in the UK dedicated to the analysis, commercial negotiation and monitoring of investments in the media, clean energy and sport and leisure sectors. Since it was founded in 1998, Ingenious has raised and managed over US$11 billion of assets primarily in the media sector. As a result, Ingenious has a substantial footprint across the UK media sector for advising, managing, and operating a number of media investment funds. It has particular expertise in relation to all aspects of film production, distribution and financing, together with an excellent network of relationships with the leading film production companies. In addition to being at the forefront of the British film industry for some 11 years, Ingenious works with several of the major US studios and some of the world’s leading independent producers. In the last eight years companies within the Ingenious Group have participated in the finance of over 100 films, closely monitoring the distribution of all titles to ensure investors fully capitalise on the success of the films. While the Investment Adviser is appointed to provide advice on potential investments, it cannot make any decision as to whether or not any investment opportunities should be made or realised; the ultimate decision will be made by the General Partner. Ingenious Capital Management Limited’s senior management combines private equity investment disciplines with in.depth investment financing, consulting and operational experience gained across the media and entertainment sectors. Among the directors of Ingenious Capital Management Limited are: Patrick McKenna Patrick is the Chief Executive of Ingenious. Prior to forming Ingenious in 1998, he was Chairman & Chief Executive of The Really Useful Group and, prior to that, was a Partner at Deloitte, where he ran the media group. Patrick is Chairman of a number of companies in the media sector, including the award winning television company, Hat Trick Productions. He chairs The Young Vic Theatre and is Chairman of the Advisory Board for Goldsmiths College Institute for Creative & Cultural Entrepreneurship. He was previously a Board Member of the British Tourist Authority and Chairman of its Audit Committee, was a member of the Government’s Advisory Forum on Tourism and sat on the Board of the Liverpool Institute of Performing Arts.
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DIRECTORS' REPORT (CONTINUED)
Patrick has also been a Board Trustee of NESTA, where he chaired the Creative Economy Committee and a Board Member of the British Council. He is a Fellow of the RSA and a member of BAFTA. Patrick Bradley Patrick is CEO of Ingenious Ventures, the private equity division of Ingenious. The division is responsible for the sourcing, implementation and management of venture capital investments. The division invests group funds and third party funds. Prior to joining Ingenious in 2001, Patrick qualified as a lawyer in the City of London, following which he worked in the music, film and television industries. Patrick serves or has served as a non executive director on the boards of a number of companies Ingenious has invested in, including TV production, TV distribution, computer games development, live events, music publishing and marketing services. Patrick is also a director of the national film charity, Film Nation (UK) and a director of the National Army Museum, Chelsea. He is also a Governor of the University for the Creative Arts (UCA). He holds degrees from King’s College, London and Worcester College, Oxford University. James Clayton James is the Chief Executive of Ingenious Investments with overall responsibility for the company's fund raising and investment activities across its target sectors of media, clean energy, sport and leisure. James's previous roles at the company include Business Development Director and Chief Operating Officer. James qualified as a solicitor in 1999 and prior to joining Ingenious in 2003, worked for a leading media and entertainment law firm specialising in media finance. Neil Forster Neil is CFO and COO of Ingenious responsible for all financial management, governance, operational and strategic implementation across the Ingenious business. Prior to joining Ingenious, Neil was Group Finance Director at one of the UK’s leading producers of comedy, entertainment and drama programming, Hat Trick Productions, in the period when the television producer was private.equity backed. Neil has also held various senior finance roles at Walt Disney in their television division including Head of Finance for their EMEA sales business. Neil qualified as a Chartered Accountant with KPMG and remains a Non Executive Director of Hat Trick Productions. Neil is a committee member of the Institute of Chartered Accountants’ Entertainment and Media Special Interest Group.
Duncan Reid Duncan is a Director of Ingenious sharing his time between Ingenious Investments and Ingenious Ventures. Duncan started his career in the music business before qualifying with Deloitte and Touche. He was then Business Development Manager for Andrew Lloyd Webber’s Really Useful Group prior to becoming Financial Director of Nottingham Forest Plc during its flotation.
The Investment Consultant The Investment Adviser has appointed Apollo Media Limited to act as its consultant. The Investment Consultant is a London. based media production and finance company and was founded in 1996. From 2007, working together with LA.based Grand Army Entertainment, Apollo arranged the financial structuring of over US$350 million of independent films and television financed by Bank of America and Wachovia Bank, including 18 films produced for television by RHI Entertainment, as well as 11 US independent feature film productions. Among the directors of Apollo Media Limited are: Mark Beilby, Chairman Having gained a First Class Honours BA degree in Modern History at Oriel College, Oxford University, Mark taught Modern History at Balliol and Oriel Colleges, Oxford University. Between 1982 and 1985 he worked as a researcher, writer, and executive producer for White City Films (a BBC subsidiary), Video Arts (which was Sir Antony Jay and John Cleese’s production company) and the American Program Bureau in Boston. He began his financial career as a Corporate Finance analyst at Morgan Stanley, before becoming a media equity analyst conducting research into the media industry and giving investment advice. He was rated the number one European Media Analyst for nine years by Institutional Investor magazine and Reuters surveys. After six years at UBS and eight years at Deutsche Bank, Mark joined JP Morgan as Managing Director for European Media in 2003. In January 2006, he joined Dresdner Kleinwort as Capital Markets Managing Director and head of the European media team. Mark is the co. founder and Chairman of Apollo Media. He has recently been a visiting Fellow in Film Finance at The Cass Business School in the City University of London, and is a board director of leading business publishing group Cavendish International, and served on the UK Government Committee in 2006 that reviewed the BBC’s licence fee. In 2008, he co.founded Lumi Technologies Ltd, a provider of real.time mobile interactive services that enables media and research companies to engage audiences across all mobile device types and platforms to clients including WPP, Ipsos, Mediaset, SVT, YLE, EMI, Teliasonera, and YouGov.
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DIRECTORS' REPORT (CONTINUED)
Gavin Poolman, Managing Director Born in Canada, Gavin graduated with an Honours BA in French Language and Literature from Trinity College, University of Toronto. After moving to the UK and graduating from the London Film School, he worked as an Acquisitions and Finance executive with the Film Trustees/Glinwood group, where he was involved in the financing and licensing of The Sheltering Sky , Naked Lunch , A Rage In Harlem , Howard’s End and The Crying Game . In 1994, Gavin was appointed Head of Development at sales agency Mayfair Entertainment International (Jefferson in Paris, Vanya On 42nd Street, Richard III). In 1996, he established Apollo Media Limited. Apollo’s first film, The Zookeeper , starring Sam Neill, premiered at the Toronto International Film Festival and won the Grand Prize at the Taos Film Festival 2002. Apollo’s second film, Festival Express , produced together with John Trapman, was released in the US in July 2005 to combined critical acclaim and commercial success. Since 2007, working together with LA. based Grand Army Entertainment and with Apollo Media in the UK, he has been involved in the financial structuring of 11 independent US feature film productions and 18 TV movies. In 2008, he co.founded Lumi Technologies Ltd, a provider of real. time mobile interactive services that enable media and research companies to engage audiences across all mobile device types and platforms to clients including WPP, Ipsos, Mediaset, SVT, YLE, EMI, Teliasonera and YouGov. John Trapman, Non-Executive Director John was born in Canada and graduated with a BA in Economics from the University of Western Ontario. He began his career working in financial markets working for four years as a market maker at the Amsterdam Options Exchange and in 1990 he founded Peachtree Film BV, a successful film, TV and commercials production company. In July 2005, together with Apollo Media, he produced Festival Express , a feature film released in the US to both critical acclaim and commercial success. Since 2007, working together with LA.based Grand Army Entertainment and with Apollo Media in the UK, he has been involved in the financial structuring of 11 independent US feature film productions and 18 TV movies. In 2008, he associate.produced Chelsea On The Rocks , which had its world premiere at the 2008 Cannes Film Festival. He also served as a director of Eurotin Inc., a mining company . The role of the Board The Board is responsible to shareholders for the proper management of the Company. The Board intends to meet regularly, at least quarterly. In addition, the Board may meet when necessary to discuss important ad hoc issues which require consideration between regular Board meetings. Management and control of the Company is vested in the Board. The Board is responsible for the Company’s day.to.day operations including compliance with the CISX listing rules and approval of the financial statements and annual reports. Board of directors of the Company Mark Beilby Please see the details included under ‘The Investment Consultant’ above. Saffron Harrop Saffron joined the Jersey Trust Company group of companies (JTCJTCJTCJTC) in 2000 and has worked in both the private client and corporate teams gaining extensive knowledge across both disciplines. She is a Fellow of the Institute of Chartered Secretaries and Administrators and in addition to heading up JTC’s Private Client Services business area Saffron also acts for a number of corporate clients, predominantly setting up complex property structures. Saffron holds a number of directorships across several business sectors in private and public companies. Duncan Reid Please see the details included under ‘The Investment Adviser’ above. Nigel Syvret (resigned 8 January 2013) Nigel started his career in the finance industry with Pricewaterhouse and moved to JTC Group in 1994. He is a Director on JTC's Group Board, Chairman of JTC’s in.house Banking and Investment Committee and focuses much of his time on special projects. Nigel has experience across all of JTC's business areas, concentrating in recent years on the needs of JTC’s Private Wealth clients. Nigel is a Fellow of the Institute of Chartered Secretaries and Administrators, a member of the Society of Trust and Estate Practitioners and also an active committee member of the Jersey Association of Trust Companies. Nigel has significant experience in managing the wealth of a diverse range of clients and has acted for and holds a number of directorships across several business sectors for both private and quoted companies.
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DIRECTORS' REPORT (CONTINUED)
Miranda Lansdowne (appointed 8 January 2013) Miranda joined JTC Group in 2007 from Bedell Group. She plays a senior role in managing and coordinating the administration teams in their Fund Services practice, together with supervision of the provision of services to a number of corporate clients. Tony Underwood-Whitney Tony joined JTC Group in 1997, was appointed Director in 2007 and Group Director in 2012. He is now responsible for the ongoing management of the Corporate Services business area and client administration teams. Prior to this, Tony was intrinsically involved in the development of JTC’s Fund & Employee Services Division and continues to oversee the initial structuring of fund and employee benefit arrangements. Tony is a fellow of the Institute of Chartered Secretaries and holds a number of directorships across several business sectors. Key risks and their mitigation Strategic risk Strategic risk can arise from inadequate Board processes as well as external factors which may lead to a failure to implement strategic decisions. The Board monitors strategic risks and maintains an awareness of external factors which may impact on the Company’s strategy. The Investment Adviser and the Investment Consultant assist in providing advice to the Board in the pursuit of the Company’s strategy. Regulatory risk Regulatory risk is the risk of non.compliance with regulations applicable to the Company. The Board monitors its compliance and internal control procedures to ensure current and future compliance. Business risk The key business risk of the Company is exposure to sales agent performance risk. This risk is mitigated by the strategy and operational procedures of the Fund, which are designed to maximise the chances of the Fund working only with first.class international sales agents with established track records and depth of product offering, and selecting and evaluating investments with a view to participating in films that generate sufficient sales to cover the Fund's investment in a particular film. Credit risk As and when sales agents convert sales estimates to actual sales, a counterparty risk will arise with respect to the distributor acquiring the rights to a film in its territory. The timing of that risk is short.term, and can typically be between 9 and 15 months, dependent upon when in the production process the contract is agreed and when the payment is to be made. The Fund will be actively involved in vetting distributors, utilising its own experiences and that of external sources so as to mitigate the risk of relying upon payments from uncreditworthy distributor counterparties. Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities. The Company mitigates this risk through management of its cash requirements to ensure the Company has sufficient liquid resources to meet the operating needs of the business. Internal controls The Board is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting in accordance with United Kingdom Accounting Standards. Internal controls over financial reporting include policies and procedures that pertain to the maintenance of records that: • accurately and fairly reflect transactions and assets; • provide reasonable assurances that transactions are recorded to permit preparation of financial statements in accordance with United Kingdom Accounting Standards; • provide reasonable assurance that receipts and expenditures are made only in accordance with authorisations of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of assets that could have a material effect on the financial statements.
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DIRECTORS' REPORT (CONTINUED) Statement of directors' responsibilities The directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial period. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable United Kingdom Accounting Standards have been followed; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditor In the absence of a notice proposing that the appointment be terminated, the auditor, Deloitte LLP, will be deemed to be re.appointed in accordance with Article 113 of Companies (Jersey) Law 1991. Approved by the board of directors and signed on its behalf by:
A J Underwood-Whitney Director Date: 24 September 2013
Registered office Elizabeth House 9 Castle Street St Helier Jersey JE2 3RT
Company Registration Number: 107574
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF INGENIOUS SENIOR FILM INVESTMENTS (JERSEY) LIMITED We have audited the financial statements of Ingenious Senior Film Investments (Jersey) Limited for the year ended 30 June 2013 which comprise the Profit and Loss Account, the Balance Sheet, the Cash Flow Statement and the related notes 1 to 19. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company’s members, as a body, in accordance with article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non.financial information in the Directors’ Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the Company's affairs as at 30 June 2013 and of its profit for the year ended 30 June 2013;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been properly prepared in accordance with the Companies (Jersey) Law 1991.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion: • adequate accounting records have not been kept; or
• the financial statements are not in agreement with the accounting records; or
• we have not received all the information and explanations we require for our audit.
Calum Thomson, FCA for and on behalf of Deloitte LLP Chartered Accountants London, United Kingdom Date: 25 September 2013
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PROFIT AND LOSS ACCOUNT YEAR ENDED 30 JUNE 2013 Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 Notes £’000s Administrative income 76 93 Operating profit 76 93 Interest receivable and similar income 4 - 5 Interest paid 5 (5) - Profit on ordinary activities for the year/period 71 98 Return per share (pence per share) 12 1.93 2.97 The notes to the financial statements on pages 15 to 20 form an integral part of the financial statements. All of the Company's profit is derived from continuing operations during the current year and prior period. The Company has no recognised gains or losses other than those shown above and therefore no separate Statement of Total Recognised Gains and Losses has been presented.
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BALANCE SHEET AS AT 30 JUNE 2013 30 June 2013 30 June 2012 Notes £’000s £’000s Fixed assets Investments 6 919 238 Current assets Cash at bank and in hand 3,457 3,170 7 Debtors - 320
Current liabilities Creditors: amounts falling due within one year 8 (840) -
Net current assets 2,937 3,170 Net assets 3,856 3,408
Capital and reserves Stated Capital 9 3,687 3,310 Profit and loss account 10 169 98 Shareholders' funds 11 3,856 3,408 Net asset value (pence per share) 12 104.60 102.97 The notes to the financial statements on pages 15 to 20 form an integral part of the financial statements. The financial statements were approved by the board of directors and authorised for issue on 24 September 2013. They were signed on behalf of the board of directors by:
A J Underwood-Whitney M S H Lansdowne Director Director
Company Registration Number: 107574
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CASH FLOW STATEMENT YEAR ENDED 30 JUNE 2013
Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 Notes £’000s Net cash flow from operating activities 15 596 93 Returns on investment and servicing of finance Bank interest received 16 - 5 Interest paid to investors 16 (5) - Capital expenditure and financial investment Payments to acquire fixed asset investments 6 (681) (238) (90) (140) Financing Issue of ordinary share capital 17 377 3,310 Increase in cash in the year/period 18, 19 287 3,170 The notes on pages 15 to 20 form an integral part of the financial statements.
14 abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2013
1. Accounting policies The principal accounting policies are summarised below. They have been applied consistently throughout the current year and prior period. Basis of accounting The Annual Report and Financial Statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards. Going concern The Company has committed to invest US$ 5.8m into the Limited Partnership. As at 30 June 2012, there were undrawn commitments of US$ 5.2m, which represents 86% of the total amount committed (30 June 2013: US$ 4.9m, representing 93%). The Company's business activities, together with the factors likely to affect its future development, performance and position have been reviewed by the directors. Having assessed the risks facing the business as set out in the Directors’ Report, its financial position and profit and cash flow forecasts, the directors believe that the Company is well placed to manage its business successfully despite the current uncertain economic outlook. Therefore, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. Foreign currencies The functional currency of the Company, defined in accordance with Financial Reporting Standard 23 ‘Foreign Exchange’, is pound sterling. Transactions denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the Balance Sheet date. Exchange differences are taken to the Profit and Loss Account and are included within Administrative Income. Taxation Profits arising in the Company are subject to Jersey corporate income tax at the rate of 0%. Investments Investments are included at cost, less provision for any permanent diminution in value. 2. Audit costs Audit fees of £6,000 payable to the Company's auditor are borne by the Limited Partnership on behalf of the Company and are therefore not recognised in the Company's financial statements. 3. Staff costs The Company incurred no staff costs nor paid any remuneration to its directors during the current year or prior period. The Company had no employees during the year (period ended 30 June 2012: £nil). 4. Interest receivable Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 £’000s Bank interest receivable - 5
5. Interest Payable
Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 £’000s Interest paid to investors 5 -
15 abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 30 JUNE 2013
6. Fixed asset investments 30 June 2013 30 June 2012 £’000s £’000s Cost Balance brought forward 238 - Additions in the year/period 681 238 Balance carried forward 919 238 Fixed asset investments represent commitments drawn down by the Limited Partnership. At 30 June 2013, there were undrawn commitments of £2.8 m, which represents 75% of the total amount committed (30 June 2012: £3.1 m, representing 93%). Further information can be found in note 13 ‘Related Party Transactions’. 7. Debtors 30 June 2013 30 June 2012 £’000s £’000s Amounts due from Limited Partnership 320 .
8. Creditors: amounts falling due within one year 30 June 2013 30 June 2012 £’000s £’000s Amounts due to Limited Partnership (520) - Other Creditors (320) - (840) -
9. Stated Capital
Allotted, called up and fully paid 30 June 2013 30 June 2012 £ No £ No
Ordinary management shares of no par value 10 10 10 10
Ordinary participating shares of no par value 3,687,478 3,687,478 3,310,118 3,310,118
10. Statement of movements on Profit and Loss Account Year ended 30 Period from June 2013 22 February 2011 to £’000s 30 June 2012 £’000s Balance brought forward 98 - Profit for the financial year/period 71 98 Balance carried forward 169 98
16 abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 30 JUNE 2013
11. Reconciliation of movements in shareholders' funds Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 £’000s Profit for the financial year/period 71 98 Share capital issued for cash during the year/period 377 3,310 Net movement in shareholders' funds 448 3,408 Shareholders' funds brought forward 3,408 - Shareholders' funds carried forward 3,856 3,408
12. Net asset value per share and return per share
No. of Shares Return Net Asset Value per Share per Share (Pence) (Pence)
30 June 2013 Ordinary Participating shares 3,687,478 1.93 104.60
30 June 2012 Ordinary Participating shares 3,310,118 2.97 102.97
The calculation of return per share of 1.93 pence is based on the return on ordinary activities and on 3,687,478 participating shares, being the weighted average number of shares for the purpose of the earnings per share calculation.
13. Related party transactions Since the General Partner has control over the Limited Partner, the Company deems it not appropriate to consolidate the Limited Partnership. During the year the Company invested £681,058 into the Limited Partnership. As at 30 June 2013, the Company held 73% of the Limited Partnership’s capital (30 June 2012: 71%). The Limited Partnership is controlled by the General Partner. The directors of the Company are also directors of the General Partner. Expenses incurred in relation to the organisation or the offering of shares in the Company are borne by the General Partner and therefore are not recognised in the Company's financial statements. 100% of the ordinary management shares, which do not attract any voting rights, are held by the Investment Adviser. JTC (Jersey) Limited (previously called JTC Management Limited), which acts as administrator and company secretary, receives fees for administration services provided. These fees are borne by the General Partner and therefore are not recognised in the Company's financial statements. S L Harrop, A J Underwood.Whitney and M S H Lansdowne were directors of JTC (Jersey) Limited during all or part of the year. Audit fees of £6,000 payable to the Company's auditor are borne by the Limited Partnership on behalf of the Company and are therefore not recognised in the Company's financial statements (period ended 30 June 2012: £6,000).
17 abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 30 JUNE 2013
14. Controlling party In the opinion of the directors there is no controlling party as defined by Financial Reporting Standard No 9 'Related Party Disclosures.'
15. Reconciliation of operating profit to net cash flow from operating activities Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 £’000s Operating profit 76 93 Increase/(decrease) in creditors 840 - (Increase)/decrease in debtors (320) - Net cash flow from operating activities 596 93
16. Returns on investment and servicing of finance Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 £’000s Bank interest received - 5 Interest paid to investors (5) - (5) 5
17. Financing Year ended Period from 30 June 2013 22 February 2011 to £’000s 30 June 2012 £’000s Issue of ordinary participating share capital 377 3,310
18. Analysis of net funds
Balance brought forward Cash flow At 30 June 2013 from prior period £’000s £’000s £’000s
Cash at bank 3,170 287 3,457
18 abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 30 JUNE 2013
19. Reconciliation of net cash flow to movement in net funds Period from Year ended 22 February 2011 to 30 June 2013 30 June 2012 £’000s £’000s Increase in cash in the year/period 287 3,170 Movement in net funds resulting from cash flows 287 3,170 Balance brought forward 3,170 - Net funds at the end of the year/period 3,457 3,170
19 abc SENIOR FILM INVESTMENTS (JERSEY) LIMITED
DEFINITIONS The following definitions apply throughout the Annual Report and Financial Statements unless the context otherwise requires:
Administrator JTC (Jersey) Limited, who acts as administrator and company secretary of the Fund
Board The Company’s board of directors
CISX The Channel Islands Stock Exchange
Company Ingenious Senior Film Investments (Jersey) Limited
Directors The directors of the Company from time to time
Fund The Fund comprises the Jersey.based limited partnership, Ingenious Senior Film Fund Limited Partnership, and the Company, Ingenious Senior Film Investments (Jersey) Limited
General Partner The General Partner of the Limited Partnership is Ingenious Senior Film Fund GP Limited
Ingenious or Ingenious Group Ingenious Media Limited and its parent company and subsidiaries from time to time
Investment Adviser In gen ious Ventures, a trading division of Ingenious Capital Management Limited
Investment Consultant Apollo Media Limited
Investment Team The joint operational teams of the Investment Adviser and Investment Consultant
Limited Partnership Ingenious S enior Film Fund Limited Partnership
20 INGENIOUS SENIOR FILM INVESTMENTS (JERSEY) LIMITED (THE COMPANY) NOTICE OF ANNUAL GENERAL MEETING
NOTICE is hereby given pursuant to the articles of association of Ingenious Senior Film Investments (Jersey) Limited (the Company ) that the Annual General Meeting of the Company will take place at Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT on Wednesday 24 October 2013 at 11.00am, or at any adjournment thereof, for the purpose of considering and, if thought fit, passing the following resolutions:
Ordinary Resolutions
1. THAT Deloitte LLP be and are hereby reappointed as the auditors of the Company for the ensuing year and THAT the fee payable to them in respect of the year ending 30 June 2014 be determined by the directors of the Company; 2. THAT the financial statements for the year ended 30 June 2012 be adopted by the shareholders of the Company; and 3. THAT the financial statements for the year ended 30 June 2013 be adopted by the shareholders of the Company.
By order of the Board Ingenious Senior Film Investments (Jersey) Limited 24 September 2013
Notes:
1. The directors of the Company have fixed 6.00pm on Tuesday 22 October 2013 as the record time for determining the persons entitled to attend and vote at the Annual General Meeting, so that the persons entered on the Company's register of members at that time are the persons so entitled. 2. To be passed, each ordinary resolution requires a simple majority of votes cast to be cast in favour of the ordinary resolution. 3. At any general meeting a resolution put to the vote of the meeting shall be decided in the first instance on a show of hands unless before or on the declaration of the result of the show of hands a poll is demanded. 4. A shareholder entitled to attend and vote at the meeting convened by the notice set out above is entitled to appoint a proxy to attend and, on a poll, to vote instead of him/her. A proxy may demand, or join in demanding, a poll. A proxy need not be a shareholder of theCompany. 5. A Form of Proxy is enclosed. To be valid, this Form and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority must reach the Company Secretary at Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT not less than twenty?four hours before the time appointed for holding the Annual General Meeting or adjournment or the taking of a poll at which the person named in the Proxy Form proposes to vote. 6. The completion of a Form of Proxy will not preclude a member from attending the Annual General Meeting and voting in person. 7. Where there are joint holders of any shares, such joint holders may elect one of their number to represent them and vote whether personally or by proxy in their name. In default of such election the person whose name appears first in the register in respect of such shares shall be the only person entitled to vote in respect thereof. 8. Any body corporate which is a shareholder may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of shareholders (or of any class of shareholders) and the person so authorised shall be entitled to exercise on behalf of the body corporate which he represents the same powers as that body corporate could exercise if it were an individual. Where a person is authorised to represent a body corporate at a general meeting of the Company the directors or the chairman of the meeting may require him to produce a certified copy of the resolution from which he derives his authority.
INGENIOUS SENIOR FILM INVESTMENTS (JERSEY) LIMITED (THE COMPANY)
FORM OF PROXY
For use at the Annual General Meeting (the AGM ) of the Company to be held at Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT on Thursday 24 October 2013 at 11.00am, or at any adjournment thereof.
I/We (name(s) in full) (In BLOCK CAPITALS)
Of (address) (In BLOCK CAPITALS)
being a holder of shares in the capital of the Company hereby appoint the Chairman of the AGM or the Company Secreta ry of the Company (such appointment to be determined by the Company Secretary), or
(In BLOCK CAPITALS) to act as my/our proxy to vote for me/us and on my/our behalf at the AGM to be held at the above address on Thursday 24 October 2013 at 11.00am or at any adjournment thereof and to vote for me/us on my/our behalf as directed below.
NOTICE OF ANNUAL GENERAL MEETING
Please indicate in the appropriate box below how you wish your vote to be cast in respect of the Ordinary Resolutions.
RESOLUTIONS (see Note 2) For Against Abstain 1. THAT Deloitte LLP be and are hereby reappointed as the auditors of the Company for the ensuing year and THAT the fee payable to them in respect of the year ending 30 June 2014 be determined by the directors of the Company; and
2. THAT the financial statements for the year ended 30 June 2012 be adopted by the shareholders of the
Company; and
3. THAT the financial statements for the year ended 30 June 2013 be adopted by the shareholders of the
Company.
NOTICE OF ANNUAL GENERAL MEETING
Please read the notes on the following page.
INGENIOUS SENIOR FILM INVESTMENTS (JERSEY) LIMITED FORM OF PROXY
Signature(s) or common seal
Date 2013
Please return this completed and signed form to the office of the Company Secretary at Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT, so as to be received not less than forty eight hours before the time appointed for holding the AGM.
NOTES 1. Please insert an "X" or the number of shares you hold in the relevant space according to how you wish your votes to be cast. However, if you wish to cast your votes in respect of a lesser number of shares than you own in the Company, please insert in the relevant space the number of shares held in respect of which you wish to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the AGM as he/she/it deems fit in respect of all of your votes exercisable at the annual general meeting (unless you attend and vote at the AGM in person). A shareholder is not obliged to use all the votes exercisable by the shareholder, but the total of the votes cast or in respect of which abstention is recorded may not exceed the total number of votes exercisable by the shareholder. An "abstained" vote is not a vote in law and will not be counted in the proportion of shares for or against any resolution.
2. If any other proxy is preferred, strike out the words “Chairman of the AGM” and add the name and address of the proxy you wish to appoint and initial the alteration. The proxy need not be a shareholder.
3. If the appointer is a corporation, this form must be completed under its common seal or under the hand of some officer or attorney duly authorised in writing.
4. If shares are held jointly, the signature of any one of the joint holders will be sufficient, but the names of all the joint holders should be stated.
5. To be valid, this form and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power must reach the Company Secretary at Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT not less than forty eight hours before the time appointed for holding the AGM or adjournment or the taking of a poll at which the person named in the Proxy Form proposes to vote.
6. The completion and return of the form of proxy will not prevent a shareholder from attending the AGM and voting in person instead of their proxy, if they so wish.
7. Any alteration of this form must be initialled. abc VENTURES 15 Golden Square London W1F 9JG T +44 (0)20 7319 4000 F +44 (0)20 7319 4001 www.ingeniousmedia.co.uk [email protected] IVL/SFF/ARA/09.13