BROCHURE BROCHURE SHELLEY MEDIA EIS AUTUMN 2014 CONTENTS IMPORTANT INFORMATION 1 PART 1: OVERVIEW 3 PART 2: INVESTMENT OPPORTUNITY 4 1. OVERVIEW 4 2. INVESTMENT STRATEGY 4 3. THE MARKET FOR ENTERTAINMENT PROJECTS 6 4. WHY INGENIOUS? 9 PART 3: FINANCIAL ILLUSTRATION 10 1. ASSUMPTIONS 10 2. MONITORING OF INVESTEE COMPANIES 10 3. TAX BENEFITS 10 4. LIQUIDITY 11 5. WHO IS THIS SERVICE LIKELY TO BE SUITABLE FOR? 11 PART 4: THE MANAGER AND INVESTMENT TEAM 12 1. INVESTMENTS MANAGED BY INGENIOUS 12 2. THE MANAGERS INVESTMENT TEAM 12 3. THE SPECIALIST CONTENT PRODUCTION TEAM 13 PART 5: SERVICE STRUCTURE, OFFER DETAILS AND COSTS 15 1. STRUCTURE 15 2. INVESTMENT AMOUNTS 15 3. WITHDRAWALS 15 4. INVESTMENT HORIZON 15 5. OFFER DETAILS 16 6. HOW TO APPLY 16 7. RIGHT OF CANCELLATION 16 8. SERVICE COSTS AND FEES 17 PART 6: RISK FACTORS 18 1. RISKS RELATING TO RETURNS 18 2. RISKS RELATING TO TAXATION 19 3. RISKS RELATING TO THE EIS 19 4. RISKS RELATING TO ENTERTAINMENT PRODUCTION 20 5. RISKS RELATING TO FOREIGN EXCHANGE 20 6. FINANCIAL SERVICES COMPENSATION SCHEME 20 7. RISKS RELATING TO CASH 20 8. FORWARD LOOKING STATEMENTS 21 SHELLEY MEDIA EIS 9 PART 7: TAXATION BENEFITS FOR INVESTORS 22 1. EIS RELIEF 22 2. LOSS RELIEF AGAINST INCOME OR GAINS 24 3. IHT BUSINESS PROPERTY RELIEF 24 PART 8: OPERATION OF THE SERVICE 25 1. CLIENT ACCOUNTS 25 2. ALLOCATIONS 25 3. DOCUMENTATION AND COMMUNICATION 25 4. THE CUSTODIAN, DEPOSITARY AND NOMINEE 26 5. CONFLICTS POLICY 28 6. TREATING INVESTORS FAIRLY POLICY 28 PART 9: DEFINITIONS 29 1 BROCHURE IMPORTANT INFORMATION THIS NOTICE IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt about the content of this Brochure (the Brochure) and/or any action you should take, you are strongly recommended to seek advice immediately from a financial adviser authorised under the Financial Services and Markets Act 2000 (FSMA) who specialises in advising on investment opportunities of this type. Nothing in this Brochure constitutes investment, tax, legal or other advice by Ingenious Media (a trading division of Ingenious Capital Management Limited) (the Manager) and your attention is drawn to the section headed Risk Factors on pages 18-21. An investment in Shelley Media EIS Autumn 2014 (the Service) will not be suitable for all recipients of this Brochure. This Brochure constitutes a financial promotion pursuant to Section 21 of the FSMA and is issued by the Manager, 15 Golden Square, London, W1F 9JG, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. The Brochure also constitutes marketing for the purposes of the Alternative Investment Fund Managers Directive (AIFMD) and therefore includes information which is required to be provided to potential Investors under AIFMD. This Brochure contains information relating to Shelley Media EIS Autumn 2014 which is to comprise a number of discretionary managed investment portfolios for its Investors which are managed by the Manager in accordance with Investor Agreements which are all on identical terms. The Service will be looking to make investments in a number of Qualifying Shares in a number of Investee Companies and the portfolio of each Investor shall comprise a specific number of such Qualifying Shares in each such Investee Company. For FSMA purposes, this Brochure, therefore, constitutes an invitation to a prospective investor to establish an Investor Agreement with the Manager. The portfolios of the Investors collectively are not regarded as constituting promotion of the interests in an unregulated collective investment scheme. However, for the purposes of AIFMD, it is considered that the collection of portfolios which are managed on a common basis may constitute a collective investment undertaking and an alternative investment fund (AIF), and consequently this Brochure is being regarded as constituting marketing of interests in an AIF. The Manager has taken all reasonable care to ensure that the facts stated in this Brochure are true and accurate in all material respects and that there are no material facts in respect of which omission would make any statement, fact or opinion in this Brochure misleading. Delivery of this Brochure shall not give rise to any implication that there has been no change in the facts set out in this Brochure since the date hereof or that the information contained herein is correct as of any time subsequent to such date. The Manager accepts responsibility accordingly. This document is not intended to constitute a recommendation or provide advice of any sort to any prospective investor. Any references to tax laws or rates in this Brochure are subject to change. Past performance is not a guide to future performance and may not be repeated. The value of your investment can go down as well as up and you may not get back the full amount invested. You should consider an investment in the Service as a medium term investment. Investments made by the Manager are likely to be illiquid. No person has been authorised to give any information or to make any representation concerning the Service other than the information contained in this Brochure or in connection with any material or information referred to in it and, if given or made, such information or representation must not be relied upon. This Brochure does not constitute an offer to sell or a solicitation of an offer to purchase securities and, in particular, does not constitute an offering in any state, country or other jurisdiction where, or to any person or entity to which, an offer or sale would be prohibited. SHELLEY MEDIA EIS AUTUMN 2014 An Ingenious Discretionary Managed Portfolio Service Managed and Promoted by Ingenious Media, a trading division of Ingenious Capital Management Limited 2 SHELLEY MEDIA EIS AUTUMN 2014 A prospective investor may only set up an Investor Agreement in order to participate in the Service on the basis of this Brochure, the Investor Agreement and the relevant Application Form. All statements of opinion or belief contained in this Brochure and all views expressed and statements made regarding future events represent the Managers own assessment and interpretation of information available to it as at the date of this Brochure. No representation is made, or assurance given, that such statements or views are correct or that the objectives of the Service will be achieved. Prospective investors must determine for themselves what reliance (if any) they should place on such statements or views and no responsibility is accepted by the Manager in respect thereof. 3 BROCHURE PART 1: OVERVIEW The following points summarise the key details of the opportunity to subscribe to the Service and should be read in conjunction with the full text of this Brochure. Investment Opportunity Investment in flm and/or television, and potentially video game production, sectors displaying resilience to general prevailing economic conditions and showing strong medium and long term growth potential Investors will enjoy uncapped upside potential, while EIS tax reliefs and preferential recoupment terms will help reduce their downside risk Projected tax free returns between 8% -18% p.a Investment will focus on production companies producing strong commercial content with the beneft of distributor/publisher presales, applicable tax incentives and other revenue streams Managed by Ingenious, the UKs foremost investor in the entertainment industry, backers of feature flms including the X-Men franchise, Life of Pi, Avatar and Dawn of the Planet of the Apes and TV productions including The Fall, Doc Martin and Foyles War Ingenious is a leading Enterprise Investment Scheme (EIS) investment specialist and has raised in excess of 710 million, investing in and advising over 340 EIS qualifying media companies Excellent track record of delivering anticipated returns on our EIS investments Key Features Access to the experience and support of the Ingenious Group Benefts for UK taxpayers ofered by the Enterprise Investment Scheme Medium term investment (at least 3-3.5 years) Offer Details Launch Date: 8.00am on Monday 28 July 2014 Subscription Deadline: 5.00pm on 18 December 2014 1 Minimum Individual Investment: 10,000 2 What are the Benefits of the EIS? EIS is a government sponsored initiative to encourage investment in the UKs enterprise market (subject to meeting the relevant requirements and restrictions). The tax benefits of EIS qualifying investments include: 30% income tax relief, reducing net cost of investment to 70p per 1 invested Opportunity to defer capital gains realised within three years before, or up to 12 months after investments are made in the Service No CGT payable on gains realised on disposal of Qualifying Shares after the end of the Relevant Period Investments in Qualifying Shares held for more than two years should qualify for relief from inheritance tax Tax relief on shares disposed of at a loss, allowing investors to set that loss of against income in the year of disposal or previous year. This means that a 45% taxpayer with sufcient income is only at risk for 38.5p per 1 invested Service Fees and Reimbursement of Costs and Expenses 1.5% Upfront Arrangement Fee Upfront Initial Monitoring Fee Investors share of the aggregate upfront fees is capped at 6.5% of subscription amount (or 3.5% for Advised Retail Clients) 1.5% p.a. Annual Monitoring Fee Custodian Fee: 2,000 upfront fee charged pro-rata to each Investee Company, 11,000 p.a. for the first 4 million and 0.15% p.a. on any amount above 4 million of Aggregate Subscriptions Depositary Fee: up to 0.15% Reasonable Manager and third party expenses See page 17 for further details. How to Apply After reading the Brochure and Investor Agreement, if you wish to proceed to set up an Investor Agreement in order to participate in the Service, please complete the relevant Application Form and return it to Client Service Centre, Ingenious Media, 15 Golden Square, London, W1F 9JG, together with (i) any supporting documentation requested therein and (ii) your subscription payment (instructions for which are in Section 3 of the Application Form) by no later than the Subscription Deadline. Please note payments by cheque will not be accepted after 9 December 2014. 1 Subject to the Managers discretion to change. 2 Subject to the Managers discretion to accept a lower amount. 4 SHELLEY MEDIA EIS AUTUMN 2014 PART 2: INVESTMENT OPPORTUNITY 1. Overview The Service presents an exciting opportunity for UK tax paying individuals and trusts to invest in EIS qualifying companies producing original feature films and/or television programmes and, potentially, video games (Entertainment Projects) for exploitation. It is currently anticipated that the majority of investments will be invested in companies engaged in the production of feature films and television programmes. The Service will be managed on behalf of each Investor on the terms of the Investor Agreement, this Brochure and the Application Form, by Ingenious Media, a trading division of Ingenious Capital Management Limited. Ingenious Media is part of the Ingenious Group, one of the UKs leading media advisory and investment businesses. In its role as Manager, Ingenious Media will focus on identifying suitable Investee Companies whose business models for the production of Entertainment Projects meet the strategy required by investors. Despite the considerable challenges presented by the current economic climate, the sectors targeted by the Manager continue to exhibit strong indicators for sustained growth. For example, feature films remain a popular and cheap form of entertainment in times of reduced disposable income and current levels of theatrical box office receipts support the industrys historic reputation for performance that is not directly correlated with wider economic trends. Against this economic backdrop, the development and implementation of new distribution platforms and delivery technologies provide the producers of high quality entertainment content with broader revenue generating opportunities. 2. Investment Strategy In this context, the Manager will implement an investment strategy (the Investment Strategy) designed to achieve the following objectives: to take advantage of the growth trends in the media and entertainment sector by utilising the Managers expertise and relationships to identify and secure opportunities to invest in companies producing high quality Entertainment Projects to commit only to Investee Companies with a business model aligned to the objectives of the Service The combination of the implementation of this Investment Strategy and the tax benefits available under the EIS should maximise Investors prospects of achieving attractive returns from their investment in the Service. For the avoidance of doubt, it is not envisaged that any leverage will be involved in the Service, simply exposure to investments in ordinary shares of those companies which are selected to be Investee Companies. The Ingenious Group has: global connections in the media industry including producers, broadcasters and distributors the largest and most experienced team of independent professionals in the UK dedicated to the analysis, commercial negotiation and monetisation of flm and television investments 15 years experience in all aspects of the development, production, distribution and fnancing of flm and television content extensive professional infrastructure, including a large fnance and investor relations team experienced in accounting and reporting procedures for funds The Manager has set a Subscription Deadline of 18 December 2014 3 , with a targeted delivery of EIS certificates within nine to thirteen months of the date of allotment of Qualifying Shares to the Investor 4 . 3 Subject to the Managers discretion to change. 4 Timing of delivery subject to factors beyond the Managers control, including HMRC response time. 5 BROCHURE The Managers objective is to manage the risk for investors and maximise their potential returns by identifying opportunities to invest in Investee Companies which will engage in the production of commercially viable Entertainment Projects. In this context, the Manager intends to appoint one or more of its employees to the board of each of the Investee Companies in which ordinary shares will be held by each of the Investors 5 . It is anticipated that each Investee Company will engage in the production and exploitation of Entertainment Projects and, in keeping with industry practice, may work with other production partners and/or production service providers on each project. The production process will vary depending upon the nature of the project undertaken, but it is anticipated that the majority of Entertainment Projects will be completed within nine to fifteen months from the commencement of production and it is likely, due to the scale of the Investee Companies in the early years, that they will only produce one or two Entertainment Projects over each twelve month period. Each Investee Company will be required to acquire all necessary rights to enable it to produce and exploit its Entertainment Projects. The business model of each Investee Company should be designed to: produce and deliver high quality Entertainment Projects that will be distributed in the domestic and international market place with a view to commercial success diversify risk through the production of a range of Entertainment Projects maximise the returns on its trading activities by engaging on Entertainment Projects where it is able to secure attractive fees for producing such projects and to negotiate an entitlement to share in the profts generated from the exploitation of its Entertainment Projects manage the risk on the production expenditure it incurs on each Entertainment Project by negotiating an entitlement to presale receipts, the beneft of applicable flm, television or video games tax incentives and/or other available revenue streams. In addition, each Investee Company will be required to obtain relevant insurance policies and Completion Bonds (where appropriate) in order to protect it from exposure to normal industry risks The Manager will not make an investment in any potential Investee Company without being satisfied that the company will apply this business model on the Entertainment Projects that it greenlights. After delivery of its first Entertainment Project, the Manager anticipates that each Investee Company will seek to undertake further projects (with a similar approach to risk mitigation) from its existing cash-flows. The Manager may also invest in Investee Companies engaging in the marketing or co-marketing of Entertainment Projects under comparable business models to that outlined above. References in this Brochure to production companies and the production of Entertainment Projects should be construed accordingly. The Managers preference would be for Investors to take a majority stake in each Investee Company but it will also look at co-investment with other similar services (including other services managed or operated by the Ingenious Group). This Investment Strategy is formally recorded as the agreed investment strategy in respect of each Investor Agreement, it is not intended that it will alter during the term of those Investor Agreements; any such alteration would require agreement of the Manager and each Investor. 5 Shares in Investee Companies will be held by a custodian on behalf of Investors. 6 SHELLEY MEDIA EIS AUTUMN 2014 3. The Market for Entertainment Projects Film Britain has a wide and deep pool of talent in all areas of film-making including writing, acting, producing and directing. UK films generated US $5.3 billion worldwide at the box office in 2012 6 , accounting for 15.3% of the global box office revenues. The market share of UK films in the largest market, North America, was 16.2%, representing over US$1,737 million of box office receipts 7 . 2013 was a strong year for the UK film industry. Projected UK box office receipts hit US$1.88 billion, and UK box office revenues are expected to grow to US$2.16 billion by 2018 8 . This proves the strength of the UK theatrical market as annual growth was sustained without reliance on a single title (such as Skyfall in 2012) to drive revenues. Filmed entertainment (the sector anticipated to provide the majority of Entertainment Project opportunities for the Investee Companies) is a sector that continues to display significant growth potential. Worldwide revenues from filmed entertainment through theatrical release, video/DVD and online are anticipated to grow to US$110 billion by 2018 from 2013s level of US $88 billion 9 , representing a compound annual growth forecast of 3.6%. This is in part driven by the resilience of theatrical revenues (which have historically proven able to withstand and even benefit from the pressures of economic downturns 10 ) and renewed growth in the home video market following several years of decline. This positive trend is driven by an increasing number of consumers using digital platforms to watch content such that the electronic home video market is expected to exceed physical disc sales and rental by 2018 11 . Notable sector performance highlights and developments include: Projected global box ofce revenues in 2013 were US$36.2 billion, and revenues in 2014 are expected to show a further annual increase of 5.3%. Global box ofce is forecast to grow to US$45.9 billion by 2018 at a compound annual growth rate of 4.9% 12
The US market accounts for approximately 35% of the 2013 total global revenues and EMEA (Europe, Middle East, Africa) a further 29% 13 . The UK is the third largest territory in the world (after the US and Japan) with an approximate 7% share of the global market The British Film Industry The economic and cultural importance of film has often led to government intervention to support national film industries and to attract overseas investment, principally from the US, in competition with other countries. In the five years to 2006, following the introduction of further tax incentives in respect of film expenditure in 1997, British films generated up to 2.4 billion 14 in overseas investment. This incentive has been phased out, but the UK government continue its support for the British film industry by the introduction of a tax credit for feature films, high-end UK TV drama and video games. These tax credits have provided a further boost to this important sector which contributes US$7.1 billion to the UK economy 15 . The British Film Institutes five-year plan for the future of UK film funding is to invest an expected total of 273 million in Lottery money from 2012-2017 16 . 6 BFI Statistical Yearbook 2013. 7 ibid. 8 PwC: Global Entertainment and Media Outlook 2014-2018. 9 ibid. 10 PwC: Global Entertainment and Media Outlook 2013-2017. 11 PwC: Global Entertainment and Media Outlook 2014-2018. 12 ibid. 13 ibid 14 PwC: Global Entertainment and Media Outlook 2013-2017. 15 PwC: Global Entertainment and Media Outlook 2014-2018. 16 PwC: Global Entertainment and Media Outlook 2013-2017. 7 BROCHURE Physical Home Video In 2013, combined DVD and Blu-ray revenues from rental, sales and digital streaming were worth an estimated US$36.4 billion. This is expected to decline to US$28.4 billion by 2018 17 . Following the closure of physical rental and sales outlets, such as Blockbuster and HMV, it is anticipated that this part of the business will migrate to mail order. Significant and stable growth in the electronic home video will offset much of the decline. Electronic Home Video The electronic home video market is expected to continue to grow strongly in the next few years and to surpass the physical video market by 2018 18 . The available platforms consist of both video-on-demand (VOD) and pay-per-view through TV subscription providers, and also include over the top/streaming services whose film content is accessed via a broadband or wireless internet connection and can be viewed on a PC, a TV, a tablet, or any other device. The former is offered as an enhancement to most TV subscription packages and is, therefore, highly dependent on the timing of film release windows. Steady, albeit moderate, annual growth in high single digit numbers is forecast for the years until 2018. The internet has created another potential distribution medium which the film industry has, to its credit, embraced. As more and more households take up broadband with its greater bandwidth, the internet is now becoming a viable distribution window. Numerous legitimate video streaming and download businesses now exist, including services offered by Apple, Netflix, Tivo, Lovefilm, Amazon and Hulu Plus. Subscription-based services such as Netflix and Lovefilm in the UK are the driving force behind Over-The-Top (OTT)/streaming revenues. OTT/streaming spending is forecast to rise sharply at a 28.1% compound annual rate to US$22.7 billion in 2018. The total electronic home video market will reach US$32.7 billion in 2018 from US$13.2 billion in 2013, a 19.9% increase compounded annually 19 . Television Europe boasts one of the largest television markets in the world and is a very successful exporter of television content, second only to the US. Total broadcaster revenues in Europe are forecast to exceed US$70 billion in 2014, growth from 2013 of 2.5% 20 . Original programming is set to remain the largest area of expenditure, but sectors such as sport are catching up. A significant increase in revenues will come from new platforms such as digital cable, internet protocol television (IPTV) and mobile television, which will all encourage subscription spending. An over-the-top market is also emerging through providers such as Netflix that stream television shows either over the internet or to video games consoles while bypassing a television provider. However, subscription spending remains the principal component of the global television market. Consumers are increasingly exploring new audio-visual media. The expanding digital terrestrial platforms, digital cable and IPTV are expected to stimulate growth in video-on-demand usage and in addition mobile television is also fast becoming a major platform for accessing content driven in part by the upgrade to mobile networks. While there is a major challenge in other media sectors persuading consumers to pay for digital content, the TV industry has successfully established a billing relationship with its consumers. The increase in the number of new channels and platforms continues to drive demand for television content, creating a significant commercial opportunity for producers of mass-appeal English language content. In 2014, BskyB is set to maintain its position as the UKs largest single investor in television programming. 17 PwC: Global Entertainment and Media Outlook 2014-2018. 18 ibid. 19 ibid. 20 MIP Television Programming Trends in 2014. 8 SHELLEY MEDIA EIS AUTUMN 2014 Video Games The global video games market will be worth US$89.0 billion by 2018, rising by an average of 6.2% a year from US$65.7 billion in 2013 21 . Consumer spending accounts for the vast majority of the market. The video games market is in a state of flux, with the online and mobile sectors growing strongly and taking larger shares of consumer spend. In 2009, 53% of consumer spending on video games was on console games. By 2018, the figure will have fallen to 35%. It is anticipated that sales of online games will continue to increase at a modest rate, but will not keep pace with the growth of the market overall. Online accounted for 24% of consumer spending in 2009 but by 2018 will reach 34% 22 . Mobile games will experience the highest compound annual growth rate at 10% and a significant increase in its market share to 17% by 2018 23 . The next generation of consoles, such as PS4 and Xbox One, was successfully launched globally in late 2013 which enhanced global console spending. The US will remain the largest market followed by the UK, which overtakes Japan this year as the second largest market with a projected CAGR of 4.3% between 2013 and 2018 and US$3.2 billion in 2018 24 . PC games spending will decline over the forecasted period. In particular, physical sales of PC games will experience a negative CAGR of 14.5%. Digital PC games will increase at a CGR of 4.4% to reach US$5.95 billion by 2018 25 . Mobile gaming has many of the benefits of the online platform and will also grow substantially over the forecast period. Rather than broadband penetration, mobile, and particularly smartphone penetration will be a major driver for this sector. The value of the mobile gaming sector is estimated to increase to US$14.97 billion in 2018, up from US$9.47 billion in 2013 26 . Growth in the short term will be higher than in the longer term, and growth in emerging markets, namely China, will be faster than in the more mature North America and Western Europe regions and driven primarily by mobile penetration. The mobile market has severely damaged the handheld-gaming-console market at the same time as significantly increasing the consumer base. The availability of low-cost, free or freemium games on a device that is almost always with the user is a considerably better value proposition than purchasing much more expensive games for a separate device. Summary and Current Developments Advances in technology are having a significant impact on the global film industry, both enhancing the consumer experience of filmed entertainment in traditional areas such as cinema, video and television as well as offering new viewing platforms to consumers such as the internet, mobile phones and tablets. These technological advances can be seen in the growing importance of the electronic home video market, which is expected to exceed the physical home video market by 2018. The trend is a welcome positive change after several years of decline in one of the key revenue streams for the film content business. Technological advances have affected theatrical distribution, which remains the key driver behind a films success in subsequent release windows. The growth in the number of digital cinemas, 3D and multiplexes is forecast to further boost box office sales as well as cutting distribution costs. 21 PwC: Global Entertainment and Media Outlook 2014-2018. 22 ibid. 23 ibid. 24 ibid. 25 ibid. 26 ibid. 9 BROCHURE Alongside the success of Apples iPod and iPad, many manufacturers have launched and developed multi-media portable devices capable of displaying video as well as music. The mobile telephone handset manufacturers (including Apple with its iPhone) have also incorporated video capability into their 3G and 4G handsets as the major network providers continue to roll out 4G networks. As well as offering consumers the opportunity to view pre-recorded films on the move, these changes are expected to benefit the film industry as downloading and streaming film or film clips is possible. In addition the mobile handset has become another tool in marketing forthcoming films directly to targeted audiences. Digital distribution growth and developments in technology are seen as important in combating piracy, introducing copy-protection technology into digital distribution in cinemas, Blu-ray and on-demand services and more sophisticated policing of infringements over the web and peer-to-peer networks. The film industry, together with government bodies worldwide, is increasingly focused on tackling the threat of piracy. In June 2010, the Digital Economy Act came into force in the UK to combat music and film piracy, and contains many of the suggestions made in the Digital Britain Report of 2009. Film industry associations have also launched consumer awareness programmes in order to prevent piracy at source and to promote the benefits of legitimate downloading and streaming. These anti-piracy measures are all directed at minimising the impact of piracy on the future growth of film revenues. 4. Why Ingenious? Ingenious has an extensive footprint across the UK media sector from both its investment and advisory activities. It operates a number of specialist services and manages specialist content businesses across the media sector. It has been at the forefront of the media and entertainment industry for more than 15 years. Its activities in the media sector have involved working with several of the worlds premier content producers including US film studios and some of the worlds leading independent producers and publishers of films, television programmes and video games. Ingenious is one of the UKs leading alternative asset managers and a specialist in EIS offerings, and has raised over 710 million from EIS investors since 2005, aiding investment in, and advising over 340 EIS based media production companies. In the last decade, companies within the Ingenious Group have been involved in the production of a broad range of films, video games and television programmes, closely monitoring the distribution of all titles to ensure investors fully capitalise on the success of the projects. Recent Ingenious projects include the multi award winning Life of Pi, Avatar (the highest grossing film ever produced), The Wolverine and the latest three films in the hugely popular X-Men franchise, Dawn of the Planet of the Apes, the video game Colin McRae: Dirt and the television programmes Foyles War, Law & Order: UK and Doc Martin. Investors who have set up Investor Agreements to participate in the Service will benefit from both the Managers considerable private equity experience and the specialist content creation and exploitation expertise of the Ingenious Group, collectively providing Investors with the following competitive advantages: well established industry relationships and contacts a thorough understanding of the risks, economics and commercial opportunities across a wide range of sectors within the media and entertainment industries extensive experience of the creation, exploitation and sale of entertainment content in the global marketplace 10 SHELLEY MEDIA EIS AUTUMN 2014 PART 3: FINANCIAL ILLUSTRATION 1. Assumptions 27 The Investment Strategy is to invest into companies that intend to follow a business model offering both risk management and significant potential for growth based on the production and exploitation of commercial Entertainment Projects. It is intended that each Investee Company commits its funding to development and production with all projected revenues from those productions recycled upon recoupment. Summary Financial Illustrations Low Case Upside Case Cost of Investment 100,000 100,000 Less Income Tax Relief at 30% (30,000) (30,000) Net Cost of Investment 70,000 70,000 Investment Proceeds 90,047 114,697 Total Return 28.64% 63.85% Average Annual Return (Tax Free) 8.18% 18.24% Average Gross Equivalent Annual Return 28 14.88% 33.17% 2. Monitoring of Investee Companies The Manager will monitor the activities of Investee Companies, particularly with respect to each Investee Companys adherence to its business strategy. In this context, the Manager intends to appoint one or more of its employees to the board of each of the Investee Companies. Any decisions or action required in relation to each investors rights and interests in the Investee Companies will be taken by the Manager, acting in its sole discretion. 3. Tax Benefits Investments made by the Manager are expected to enable Investors to benefit from the tax advantages offered by the EIS. Investors should obtain income tax relief (by way of tax credit) in respect of their shares in each Investee Company made at 30% against either their 2014/15 income tax liability, or their 2013/14 income tax liability (if a carry back claim is made). This means that if an investor has a tax liability of 30,000 in each of 2014/15 and 2013/14, an investment of 100,000 would enable the investor to reclaim income tax of 30,000 against either their 2014/15 income tax liability, or their 2013/14 income tax liability. The investor may also make a partial carry back claim to spread the relief over both years. The claim may be made in respect of each investment made once the Manager has obtained EIS3 certificates from HMRC and sent them to the investor. This relief is limited to investments of up to 1,000,000 in total in EIS qualifying companies when applied against a 2014/15 income tax liability (although investments of up to a further 1,000,000 may be carried back to 2013/14, to the extent the Investor did not fully utilise available EIS reliefs in that earlier year). Gains realised on disposal of such investments after the Relevant Period are exempt from CGT. 27 Illustrative only, based on the Investment Strategy, Shelley Media EISs historical performance and a number of assumptions, including a single investment of 100,000, income tax relief applied against an investors 2014/15 income tax liability, currently announced tax rates and a realisation of the investments in each Investee Company after three and a half full years of trade. The illustrative returns may not be a reliable indicator of actual performance. The value of an investment may go down as well as up and an investor may not get back the full amount invested. 28 Average Gross Equivalent Annual Return is the return an additional rate income tax paying investor would need to achieve from an equivalent investment in order to achieve the same return that provided through the Service. 11 BROCHURE In addition, capital gains realised by Investors on the disposal of other assets within three years before or up to 12 months after investments are made in the Investee Companies, may be deferred provided the investments made on behalf of the Investor at least equal the amount of the capital gains to be deferred. This may enable Investors to defer gains subject to CGT, which will then crystallise on disposal of the Qualifying Shares. The ability of an Investor to defer such gains arises from his/her share in each separate investment made through the Service, and consequently a deferral based on the full amount of the Investors investment can only be claimed for gains arising within three years before the date on which the final investment in an Investee Company is made on behalf of an Investor, or those which arise within 12 months after the date on which the first such investment is made on behalf of an Investor. Capital losses arising on the investments can be offset against income in the year in which the loss is crystallised (and/or the preceding year), after taking account of the initial tax relief claimed (at the applicable rate). EIS reliefs are available to Investors by reference to the date each investment is made in an Investee Company. The section above provides only a very brief summary of the EIS Reliefs. A fuller explanation of the tax benefts and requirements of the EIS is set out on pages 22-24 of this Brochure. The value of the tax reliefs will depend on personal circumstances and may be subject to changes in those circumstances or to the tax legislation. The Manager does not provide tax advice and prospective investors are recommended to obtain independent tax advice. 4. Liquidity As each Investors portfolio will be invested in shares in a number of unquoted companies, there will be no active market in the Qualifying Shares. Consequently, the most likely mechanism for realising an investment in an Investee Company is through a realisation process implemented by the Manager. The Manager will consider options for making realisations and returning funds to Investors after the Relevant Period. Investors should consequently be aware that there are no general redemption rights in normal or exceptional circumstances, other than the possibility of early termination of their Investor Agreement which would lead to the transfer of the shares held in their portfolio into their own name, and that if they should choose to do so, those Shares may not be readily realisable. 5. Who is this Service Likely to be Suitable for? This Service is likely to be suitable for UK tax paying investors looking for a medium term investment whose personal circumstances allow them to take advantage of the EIS Reliefs, such that they are able to benefit from the income tax relief and/or defer capital gains, for example: an investor who has sufcient income tax liability to claim income tax relief under the EIS an investor wishing to defer a taxable capital gain an investor wishing to defer a capital gain, but who also has sufcient income tax liability to claim income tax relief under the EIS The minimum individual investment in order to set up an Investor Agreement is 10,000 29 . Investors should note that the portfolio which will be created under their Investor Agreement will comprise shares in small unquoted companies (often with high risk) and that they may not have access to their capital for at least 3-3.5 years from the date of subscription. 29 Subject to the Managers discretion to accept a lower amount. 12 SHELLEY MEDIA EIS AUTUMN 2014 PART 4: THE MANAGER AND INVESTMENT TEAM The Manager is Ingenious Media, a trading division of Ingenious Capital Management Limited, which is authorised and regulated by the Financial Conduct Authority. The Managers investment team will be responsible for sourcing, approving, implementing and managing investments. Ingenious Medias senior management combines private equity investment disciplines with in-depth investment financing, consulting and operational experience gained principally across the media and entertainment sectors. The investment team will be supported by the extensive professional infrastructure of the Ingenious Group, including a large finance team experienced in accounting and reporting procedures for both private and listed investment vehicles and funds. 1. Investments Managed by Ingenious The first media fund managed by Ingenious was a partnership with UBS. The fund was established in August 2001 and invested 22.5 million in five companies across the music, television, live events and video games sectors. Ingenious Ventures LP made one of its first investments in 19 Entertainment Ltd, the company that created the worldwide hit formats Pop Idol and American Idol. Ingenious Capital Management Limited is also the manager of Ingenious Media Active Capital (IMAC), as well as a number of VCTs and EIS services operating in the media and entertainment, leisure and clean energy sectors. 2. The Managers Investment Team The Managers investment team will comprise Patrick McKenna, Duncan Reid, Sebastian Speight and Stephen Fuss. Patrick McKenna and Duncan Reid are members of the Managers investment team for the Ingenious VCTs. Patrick McKenna Patrick is the Chief Executive of Ingenious. Prior to forming Ingenious in 1998, he was Chairman and Chief Executive of The Really Useful Group and, prior to that, was a partner at Deloitte, where he ran the media group. Patrick is the 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 Company, the National Film and Television School (NFTS) and the Westminster music venue, St. Johns in Smith Square. He is a board member of the British Council and is chairman of the Advisory Board of the Institute for Creative & Cultural Entrepreneurship (ICCE) at Goldsmiths in the University of London and is a member of the Creative Industries Council (CIC). Patrick was previously a board trustee of NESTA (National Endowment for Science, Technology and the Arts), where he chaired the Creative Economy Committee, and a board member of the British Council. Duncan Reid Duncan is a director of Ingenious, sharing his time between Ingenious Investments and Ingenious Capital Management Limited. Duncan started his career in the music business before qualifying with Deloitte & Touche. He was Business Development Manager for Andrew Lloyd Webbers The Really Useful Group prior to becoming Financial Director of Nottingham Forest Plc during its flotation. 13 BROCHURE Sebastian Speight Sebastian has been a director of the Manager since 2009, responsible for the origination of new investment opportunities. Since April 2011, he has led the Clean Energy division within the Manager as its Manager Director where he is responsible for the investment fund offerings focused on the Clean Energy sector. Sebastian joined Ingenious in 2003 and was Head of Product Development from 2005, structuring and launching investment products in the market. He has been on a number of investment committees of Ingeniouss VCT funds and has worked across the media investment funds. Sebastian qualified as a lawyer with Simpson Curtis, moving to Allen & Overy in 1997 where he was a senior associate in the banking group. Stephen Fuss Stephen is a Senior Investment Director within the Manager. His remit is to oversee all the independent film and TV activities at Ingenious whilst also focusing on sourcing and evaluating suitable film and television projects, running commercial negotiations and overseeing all aspects of the production process. Prior to joining Ingenious in January 2009, Stephen was a lawyer in the entertainment industry at both Denton Wilde Sapte and DLA Piper where he became a senior associate. 3. The Specialist Content Production Team When it comes to the business of content production, the Manager has strength in depth, with a team of experienced content production professionals with a track record in day-to-day production work and the management of production projects, who can also provide strategic advice and execution capacity with respect to the production and exploitation of Entertainment Projects. James Clayton James is the Chief Executive of the Manager with overall responsibility for the Managers fund raising and investment activities across its target sectors of media, clean energy, sport and leisure. Jamess previous roles at Ingenious 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. Nik Bower Nik is the Managing Director of the Media division within the Manager. He joined Ingenious in 2005, after many years working in acquisition and project finance for Allen & Overy and Goldman Sachs. For the last eight years his responsibilities have included sourcing, evaluating and negotiating production arrangements for television and theatrical feature film productions. He regularly attends the major film markets to source attractive projects and negotiate and monitor the commercial exploitation of completed films for client businesses. Charles Auty Charles is the Fund Managing Director for Shelley Media EIS and is primarily responsible for the day to day management of the Shelley Media team. A former lawyer, Charles has 13 years experience within the film business, including running and selling a successful post production business. His role at Ingenious focuses on sourcing and evaluating suitable Investee Companies, evaluating film and television projects and overseeing all aspects of the production process. 14 SHELLEY MEDIA EIS AUTUMN 2014 Michael Shyjka Michael is an Investment Director, responsible for sourcing, evaluating, negotiating and overseeing investments in film, music and other media sectors. Michael joined Ingenious in 2009 from Allied Irish Banks, where he was Joint Head of Entertainment Finance. Before joining Allied Irish, Michael spent over seven years at Socit Gnrale as a Director of the media team with responsibility for the origination, negotiation and execution of structured finance loans in the filmed entertainment sector. Eleanor Windo Eleanor is the Senior Investment Manager for Shelley Media EIS. She qualified as a solicitor at Linklaters in 2006 and moved to Olswang in 2008 to specialise in media and entertainment law. She holds a postgraduate diploma in international copyright law and joined Ingenious in 2009 to work in the Ingenious legal team on a range of film, television music and entertainment deals. Since 2012 Eleanor has focused on the commercial side of film and television transactions, including sourcing and evaluating projects, and all aspects of the production and exploitation of film and television productions. Simon Williams Simon is an Investment Manager within the Manager, responsible for the sourcing, financial modelling and analysis of investments within the media and entertainment industries. Prior to joining Ingenious in 2012, Simon was at The RP Capital Group, an Emerging Markets focused Hedge Fund where he worked on investments in sectors such as Real Estate, Media and E-commerce. Simon has a Masters degree in Mathematics, is a member of the Association of Certified Chartered Accountants and passed the final stage of the CFA exams in August 2013. Uri Stramer Uri is an Investment Manager within the Manager responsible for the sourcing, financial modelling, and analysis of investments within the media and entertainment industries. Prior to joining Ingenious in 2013, Uri was at Merrill Lynch and Barclays Capital where he was a director of fixed income derivatives trading for thirteen years. Uri holds a MEng from Cambridge University and a Masters degree in Filmmaking from the London Film School. 15 BROCHURE PART 5: SERVICE STRUCTURE, OFFER DETAILS AND COSTS 1. Structure Each prospective investor will enter into a discretionary managed portfolio investment management arrangement with the Manager by means of an Investor Agreement (attached to this Brochure). The separate Investor Agreements entered into with each Investor shall together comprise the Service. The Manager will be responsible, pursuant to the terms of each Investor Agreement, for discretionary decisions in relation to the selection of, and the exercise of rights in relation to, investments in Investee Companies, but the Investor will retain beneficial ownership of the Qualifying Shares purchased by the Manager. The intention is that each investment in an Investee Company and each disinvestment from an Investee Company will be made on a common basis for each of the Investors, there being aggregation of deals for transactions in the Investee Company. An Investor cannot require the Manager to dispose of his or her interest in an Investee Company prior to disposal of the Services overall investment in that Investee Company. The Manager may, at its absolute discretion, however, have regard to any requests made to it by an Investor to realise any individual shareholdings in Investee Companies (but such termination may result in a loss of EIS Reliefs and crystallisation of any deferred capital gain). 2. Investment Amounts The minimum individual investment in order to set up an Investor Agreement is 10,000 (subject to the Managers discretion to accept a lower amount). There is no restriction on the maximum investment by an individual, subject to control restrictions preventing individuals owning more than 30% of an individual Investee Company. However, the maximum amount on which an Investor can obtain EIS income tax relief in any tax year is limited to 1,000,000. Each spouse has his or her own limit of 1,000,000. In addition, investments of up to a further 1,000,000 may be carried back to the previous tax year, to the extent that the Investor did not fully utilise EIS income tax relief in that year 30 . This annual limit applies to the aggregate of EIS investments made by an Investor within a given tax year. There is no limit to the capital gains which may be deferred by means of an investment in Investee Companies, or in the value of assets acquired which qualify for relief from inheritance tax. 3. Withdrawals An Investor is not permitted to make a partial withdrawal from his portfolio. An Investor may be permitted to make an early withdrawal, provided that he does so in full. Early withdrawal will result in termination of the Investor Agreement, in which case the relevant Investors investments (whether Qualifying Shares and/or cash), will be transferred into that Investors name. In such circumstances, the Manager will be under no obligation to sell or otherwise realise the cash value of any Qualifying Shares to which the Investor is entitled. If a disposal of Qualifying Shares occurred before the end of the Relevant Period, that Investor would have to repay the initial income tax relief (if it had been claimed) and any deferred gains would crystallise. The Manager will be entitled to retain or dispose of some or all of the assets being withdrawn by an Investor and apply the proceeds in discharging an Investors liability to the Manager in respect of damages or accrued but unpaid fees or reimbursable costs or expenses. The balance of any sale proceeds and control of any remaining investments will then be passed to the Investor. 4. Investment Horizon In order to retain the EIS Reliefs, Investors must hold the Qualifying Shares acquired by the Manager for the Relevant Period, and no partial withdrawals are permitted within this time. It is intended that the Manager will consider options for realising the Qualifying Shares in the interests of the Investors after the expiry of the Relevant Period. Having regard to the Relevant Period and the feasibility of obtaining a realisation thereafter, the investment horizon is approximately 30 See Income Tax Relief section on page 22 for more details. 16 SHELLEY MEDIA EIS AUTUMN 2014 three to three and a half years, but there can be no guarantee that all of the Qualifying Shares will be realised within this period. The Manager will have regard to the maximisation of value in considering the strategy for, and timing of, the realisation of the Qualifying Shares. It would be prudent to view an investment in the Service as medium term. A prospective Investor should only apply to set up an Investor Agreement in order to participate in the Service on the basis that his Subscription will remain invested for at least three to three and a half years. Following realisation of the Qualifying Shares in each Investee Company, the realisation proceeds will be paid to Investors. Consequently, it is possible that Investors will receive distributions over a period of time. 5. Offer Details Launch Date: 8.00am on 28 July 2014 Subscription Deadline: 18 December 2014 31
Minimum Individual Investment: 10,000 32
6. How to Apply After reading this Brochure and the Investor Agreement, please complete and sign the relevant Application Form and return it to Client Service Centre, Ingenious Media, 15 Golden Square, London, W1F 9JG; together with (i) any supporting documentation requested therein and (ii) subscription payment (instructions for which are in Section 3 of the Application Form), to arrive no later than the Subscription Deadline. 7. Right of Cancellation An Investor may exercise a right to cancel his/her subscription and terminate the Investor Agreement by notification to the Manager within 14 days of the Manager accepting the Investors Application Form. This should be done by sending a cancellation notice to the Managers registered office as set out in this document. For convenience, a cancellation notice form is provided at the end of this Brochure. On exercise of the Investors right to cancel, the Manager will refund any monies paid to the Service by the Investor, less any charges the Manager has already incurred for any services undertaken in accordance with the Investor Agreement and less any sums paid to advisers and introducers. The Custodian is obliged to hold investment monies until satisfactory completion of checks by the Manager under the Money Laundering Regulations 2007 (as amended). The Investor will not be entitled to interest on monies refunded following cancellation. The right to cancel under the FCA rules applies to the setting up of the Investor Agreement. It does not give the Investor the right to cancel or terminate or reverse any particular investment transaction executed for the account of the Investor before cancellation takes effect. The Manager reserves the right to treat as valid and binding any application not complying fully with the terms and conditions set out in this Brochure. In particular, but without limitation, the Manager may accept applications made otherwise than by completion of an Application Form where the prospective Investor has agreed in some other manner acceptable to the Manager to apply in accordance with this Brochure and the Investor Agreement. 31 Subject to the Managers discretion to change. 32 Subject to the Managers discretion to accept a lower amount. 17 BROCHURE 8. Service Costs and Fees The following fees will apply: Arrangement Fee An upfront Arrangement Fee equal to 1.5% of the total capital invested in each Investee Company, charged to the relevant Investee Company Monitoring Fees An upfront Initial Monitoring Fee. Each Investors share of the aggregate of all Arrangement Fees and Initial Monitoring Fees charged to Investee Companies shall not exceed 6.5% of that Investors Subscription (or 3.5% in the case of Advised Retail Clients) The Manager will also charge each Investee Company an annual Monitoring Fee equal to 1.5% of the total capital invested in that company Custodian Fees 2,000 upfront fee charged pro-rata across the Investee Companies 11,000 per annum for the frst 4 million of the aggregate amount of Subscriptions as at the Subscription Deadline, charged pro-rata to each Investee Company 0.15% per annum of the aggregate amount of Subscriptions as at the Subscription Deadline on any amount above 4 million, charged pro rata to each Investee Company Depositary Fee Pursuant to AIFMD requirements, a depositary will be required and a depositary fee will need to be charged. The fee has yet to be determined, but we have applied a working assumption of 0.15% p.a. of the net asset value of the Service Performance Fee 20% of any proceeds of the realisation of Qualifying Shares that exceed 103% of Aggregate Subscriptions The Manager and/or an Associate of the Manager may provide or procure certain administration, management and other services, including custodian, nominee and/or depositary services, to or on behalf of the Manager and/or an Associate of the Manager and/or some or all of the Investee Companies, including for example, legal, accounting, company secretarial, taxation, audit, administration and transactional services, and assistance in the sourcing of opportunities, due diligence, monitoring and day-to-day trading operations, in consideration of which such companies shall be entitled to charge or recover (as the case may be) their reasonable costs and/or fees from Subscriptions or the Investee Companies (as appropriate). Such expenses and costs may include (but not be limited to), transactional fees of 40,000 for legal services on each Entertainment Project and an annual administrative services charge of 15,000 per Investee Company, linked to the higher of the Retail Price Index or Consumer Price Index, for the provision of corporate administrative services. All fees, costs and expenses are exclusive of VAT, which will be charged where applicable. The fact that an Investor makes an early withdrawal from the Service does not affect his or her or any other partys liability to pay all of the fees set out above, or the right of any party entitled to the reimbursement of costs or expenses under the Investor Agreement, the Custodian Agreement or otherwise to do so, in either case whether accruing before or after such withdrawal, notwithstanding the termination of the Investor Agreement in those circumstances. The Manager maintains, and regularly reviews, conflict of interest management policies which are designed to ensure that the fee payment arrangements should not create any potential conflict of interest in respect of its obligations to investors in providing discretionary investment management services and arranging related custody services for their Portfolios. 18 SHELLEY MEDIA EIS AUTUMN 2014 PART 6: RISK FACTORS Prior to making an investment decision, prospective investors should carefully consider all of the information set out in this Brochure and should consider whether they wish to set up an Investor Agreement and so participate in the Service and whether consequently investing in Qualifying Shares will constitute a suitable investment in light of their personal circumstances, tax position and the financial resources available to them. Such investment involves a high degree of risk and may not be suitable for all investors. Potential investors should, therefore, seek advice from a stockbroker, accountant, fund manager or other financial adviser before making any decision to invest. Potential investors are also recommended to consult a professional adviser regarding their personal tax position. This section contains the material risk factors that the Manager believes to be associated with such investment. If any of the following events or circumstances arise, the financial position and/or results of an investment could be materially and adversely affected; as could the availability of tax reliefs to Investors. In such circumstances, Investors may lose all or part of their investment. Additional risks and uncertainties not presently known, or that are deemed to be immaterial, may also have an adverse effect and the risks described below do not necessarily include all the risks associated with investment pursuant to an Investor Agreement in respect of the Service. 1. Risks Relating to Returns The value of the Qualifying Shares may go up or down. An Investor may not get back the full amount invested and may, therefore, lose some or all of their investment. Therefore, assumptions, projections, intentions, illustrations or targets included within this Brochure cannot and do not constitute a defnitive forecast of how the investments will perform but have been prepared upon assumptions which the Manager considers reasonable After holding the Qualifying Shares in Investee Companies for the Relevant Period, it may be difcult to realise the Qualifying Shares or to obtain reliable information as to their value, as it is anticipated that there may not be a ready market for them The performance of investments made through the Service is, in part, dependent on the Manager being able to identify appropriate Investee Companies which carry on, and continue to carry on, a Qualifying Trade for the Relevant Period The Investee Companies do not have an established track record and will be operating in a competitive industry where the commercial risks are high. The past performance of the Manager is not a guide to future performance The Manager intends to invest in Investee Companies producing between them a range of Entertainment Projects in accordance with the business model envisaged by this Brochure. This approach is intended to help mitigate the performance risk exposure for an individual Investee Company and to increase the chances of generating attractive returns for Investors across the portfolio of Investee Companies and their respective Entertainment Projects. If the availability of suitable Entertainment Projects for production by Investee Companies is limited, the opportunities for diversifcation may be reduced The lower the amount of subscriptions raised through the Service is, the smaller the opportunity will be to diversify investments in diferent Investee Companies, which may adversely impair returns Each Investor should note that it is possible that other taxes or costs may arise for the Investor in connection with its investment in the Service that are not paid via, or imposed by, the Manager The level of return to Investors will be a function of the quantum and economic performance of the Entertainment Projects produced by each Investee Company, the value of the sales generated by the Entertainment Projects and the receipt of the beneft of anticipated applicable flm, television or video games tax incentives Each Investee Company will be exposed to credit risk in relation to that proportion of revenues for which Investee Companies will be accounting, including the anticipated monetisation of the Investee Companies future revenue rights 19 BROCHURE 2. Risks Relating to Taxation This Brochure is prepared in accordance with the Managers interpretation of current legislation, rules and practice. Such interpretation may not be correct and it is always possible that legislation, rules and practice may change. Any such changes, and in particular any changes to the bases of taxation, tax reliefs, rates of tax or the Investors tax position, may afect the return Investors receive from the Service Tax law is complex and prospective investors should seek independent tax advice to determine and understand the suitability of investing in the Service and any efect this may have on their own position generally The tax benefts described and their value to an Investor are dependent on the Investors personal circumstances. Therefore, these tax benefts may not be available to all Investors and/or may be lost by Investors in certain circumstances Tax relief may be withdrawn in certain circumstances and neither the Manager, nor the Custodian accepts any liability for any loss or damage sufered by any Investor or other person in consequence of such relief being withdrawn or reduced If the amount of an Investors subscription is such that his pro-rata benefcial interest in an Investee Company amounts to more than 30% of the capital or voting rights, he will be connected with that company and will therefore not be entitled to income tax relief in respect of that investment. In determining whether an Investor is connected with the company, the interests of his associates are also considered (associates broadly meaning relatives and business partners of the Investor) 3. Risks Relating to the EIS It is possible that an Investor could cease to be entitled to certain of the tax benefts available under the EIS which are set out in this Brochure. For example, deferral relief may be lost if an Investor ceases to be a tax resident in the UK during the Relevant Period, and all EIS Reliefs may be lost if an Investor receives value from an Investee Company (other than a normal dividend), in the period from one year before the issue of Qualifying Shares to the Nominee to the end of the Relevant Period Delays to the investment timetable could cause certain Investors to lose the opportunity to defer capital gains which arose more than three years prior to their respective investment in an Investee Company The ability of the Manager to identify suitable Investee Companies within expected timescales may afect the availability and timing of tax reliefs and the return Investors receive from their investment The Manager will only invest in companies which have received advance assurance from HMRC that they will be qualifying companies under the EIS. However, it cannot be guaranteed that the EIS Reliefs will be available or will continue to be available, in respect of each investment made by the Manager If an Investee Company ceases to carry on a Qualifying Trade during the Relevant Period, its EIS qualifying status may be adversely afected. While the Manager will require various safeguards to be provided against this risk, the Manager does not guarantee that all Investee Companies will retain their qualifying status Investee Companies are required to employ all of the EIS funding they receive in their trade within two years of issuing the relevant Qualifying Shares or commencing their trade, whichever is later. Failure to employ funds within this time limit would be a breach of the EIS rules and result in a withdrawal of tax relief on that investment If an Investee Company fails to meet the EIS qualifying requirements: (i) Investors may, as a result, be required to repay the income tax relief received (at the applicable rate) on a particular investment (along with any related interest); (ii) a liability to CGT may arise on the subsequent disposal of the relevant Qualifying Shares; and (iii) any deferred capital gains may crystallise Any sale of Qualifying Shares prior to the end of the Relevant Period will create a liability to repay the income tax relief claimed (at the applicable rate) as a result of the investment in those Qualifying Shares and any gain will be subject to capital gains tax 20 SHELLEY MEDIA EIS AUTUMN 2014 4. Risks Relating to Entertainment Production The production cost of an Entertainment Project may exceed its budget. In order to mitigate the risk, Investee Companies will be expected to budget for an element of contingency to allow for any potential cost overruns. In addition, where appropriate, Investee Companies will be expected to arrange for customary production related insurances to be put in place for all productions prior to commencing any production funding on an Entertainment Project If an Investee Company does not produce an Entertainment Project in accordance with the requirements set out in a commissioning agreement, or an Entertainment Project is not completed, this could adversely afect the revenue derived from it, particularly where a distributor refuses to accept delivery of the Entertainment Project. In order to mitigate this risk, the Manager will monitor the Investee Companys production of each Entertainment Project on an ongoing basis. In addition, where appropriate, the Investee Company will be expected to put a Completion Bond or other suitable arrangement in place If a claim is brought by a third party that an Entertainment Project is defamatory, libellous or obscene or infringes the rights of a third party, this could adversely afect the revenues the Investee Company derives from it. In order to mitigate the risk, the Manager may require that Investee Companies acquire appropriate errors and omissions insurance for Entertainment Projects efective from the start of principal photography Due to the nature of the industry, content production is inherently risky (as it is not generally possible to accurately predict the level of sales income that can be achieved). However, as described herein, each Investee Company will be expected to reduce these risks by negotiating suitable recoupment positions providing an Investee Company with a spread of revenues from various positions in the exploitation chain, all of which will be negotiated prior to committing to production or co-production The receipt by an Investee Company of any amount in respect of an agreed proft share of revenues generated from the exploitation of an Entertainment Project is dependent on the Entertainment Project generating sufcient levels of revenue to trigger any such entitlement To the extent that revenues received by an Investee Company with respect to its Entertainment Projects are re applied in production activity on similar terms, the same risks apply to the returns from such further production activity 5. Risks Relating to Foreign Exchange Each Investee Company may be exposed to currency risk as a portion of revenues will arise in foreign currency, the value of which will be affected by movements in exchange rates. In order to mitigate any exchange rate risk associated with an Investee Companys revenue entitlements with respect to the contracted minimum revenue entitlements it has negotiated in relation to its Entertainment Projects, it is anticipated that each Investee Company will ensure that such receipts will either be paid in sterling or that suitable hedging arrangements will be put in place. 6. Financial Services Compensation Scheme The Manager and the Custodian are covered by the Financial Services Compensation Scheme. An Investor may be entitled to compensation from the scheme if the Manager or the Custodian cannot meet their obligations, as described in greater detail in the Investor Agreement. 7. Risks Relating to Cash Funds will be placed on deposit by the Custodian at the Investors own risk and neither the Manager, nor any person engaged by either of them to hold such funds as receiving agent or otherwise (Deposit Holder), nor any director or officer of any of them, will be liable to any Investor or prospective investor in the event of an insolvency of any bank with which such funds are deposited, nor in the event of any restriction on the ability of any Deposit Holder to withdraw funds from such bank for reasons beyond the reasonable control of any of them. 21 BROCHURE 8. Forward Looking Statements This Brochure includes statements that are (or may be deemed to be) forward-looking statements. These forward-looking statements can be identifed by the use of forward-looking terminology including the terms believes, continues, expects, intends, may, will, would or should or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Brochure based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under applicable laws and regulations, the Manager does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this Brochure 22 SHELLEY MEDIA EIS AUTUMN 2014 PART 7: TAXATION BENEFITS FOR INVESTORS This summary is based upon current UK tax law and practice and is intended as a guide only. It is not intended to constitute legal or tax advice and prospective investors are recommended to consult their own professional advisers concerning the possible tax consequences of purchasing, holding, selling or otherwise disposing of Qualifying Shares. The value of any tax reliefs will depend on the individual circumstances of investors and may be subject to change in the future. The examples in this section are set out for illustrative purposes only. They are not, and should not be construed as, forecasts or projections of the likely performance of an investment in the Service. It is intended that Investors who invest in the Service through an Investor Agreement will be able to claim EIS Reliefs and IHT relief on the amount of their subscription, as described below. To obtain the tax reliefs described below it is necessary to subscribe for Qualifying Shares and claim the relief. The summary below gives only a brief outline of the tax reliefs and assumes that the Investor is an additional rate taxpayer in 2013/14 and 2014/15. It does not set out all the rules which must be met during the Relevant Period by the Investee Company and the Investor. The tax reliefs will only be relevant to Investors who have a UK income tax liability and/or wish to defer a capital gain. 1. EIS Relief (a) The Three Elements of EIS Relief Income Tax Relief Individuals can obtain income tax relief on the amount subscribed for Qualifying Shares provided they (or their associates) are not connected with the issuing company. Income tax relief is limited to EIS qualifying investments of up to 1,000,000 in aggregate in each tax year and husbands, wives, and civil partners, can each obtain income tax relief on investments up to this amount. This relief will total 30% of the amount subscribed. In addition, investments of up to a further 1,000,000 may be carried back to the preceding tax year (i.e. 2013/14) to the extent the investor did not fully utilise his/her entitlement to EIS income tax relief in that year. In these circumstances, relief may also be claimed at the rate of 30% for the 2013/14 tax year. In each case, the total relief cannot exceed an amount which reduces the Investors income tax liability to nil. Income Tax Relief Investment applied against 2014/15 income tax liability () Gross Investment in Qualifying Shares 100,000 Less Income Tax Relief (at 30%) (30,000) Net Cost of Investment 70,000 Exemption from CGT Any capital gains realised on a disposal of Qualifying Shares after the Relevant Period and on which EIS income tax relief has been given and not withdrawn, will be exempt from capital gains tax. CGT Exemption () Realisation Value of Qualifying Shares 105,000 Less Original Cost (100,000) Tax Free Gain 5,000 23 BROCHURE CGT Deferral Relief To the extent to which a UK tax paying individual (including certain trustees) subscribes for Qualifying Shares, he or she can claim to defer paying tax on all or part of a chargeable gain. The gain may have arisen on the disposal of any asset, or a previously deferred gain may have been brought back into charge. There is no limit on the amount of chargeable gains which may be deferred in this way. The gains which may be deferred are those which have arisen in the three years before Qualifying Shares are issued, and those which arise up to one year after that date. Such gains are deferred until there is a chargeable event such as a disposal of Qualifying Shares or an earlier breach of the EIS rules. It is important to note that the ability to defer gains relates to each separate investment made in an Investee Company and consequently a deferral based on the full amount of the investment can only be claimed for gains arising within three years before the date on which the final investment in an Investee Company is made on behalf of an Investor, or those which arise within 12 months after the date on which the first such investment is made in an Investee Company on behalf of an Investor. (b) EIS Requirements The following is a non-exhaustive list of some of the requirements for qualification under the EIS: Investee Companies Investee Companies must be unlisted (i.e. they must not be listed on a recognised stock exchange) and there must be no arrangements in place for such companies to become listed. In addition, throughout the Relevant Period, such a company must not be a subsidiary of, or be controlled by, another company; and the company must either exist to carry on a Qualifying Trade or must be the parent company of a trading group. There must be no arrangements in existence for the Investee Company to come under the control of another company. Qualifying Trade Each Investee Company must either carry on a Qualifying Trade or must be the parent company of a trading group and employ the money raised by the issue of Qualifying Shares in such a Qualifying Trade. Money Raised An Investee Company must not raise more than 5 million from EIS or other state-aided sources in any period of 12 months. In addition, all of the money raised from the issue of Qualifying Shares to the Investors must be employed for the purposes of the Qualifying Trade within two years of the issue of the Qualifying Shares or the commencement of trade (if later) by the Investee Company. Gross Assets The gross assets of each Investee Company must not exceed 15 million immediately before the issue of Qualifying Shares and 16 million immediately afterwards. (c) Timing of EIS Claim Investors will obtain income tax relief in the tax year in which investments in qualifying EIS companies are made. The Manager anticipates that all of the capital raised will be deployed into qualifying EIS companies before the end of the current tax year (2014/15), although this cannot be guaranteed. Investors are also entitled to carry back EIS income tax relief to the tax year preceding that in which investments are made, to the extent that they have not already used their EIS capacity in that year. Once each Investee Company has been trading for four months, the Manager will apply to HMRC for EIS3 certificates. Once the applications have been processed HMRC will send the EIS 3 certificates to the Manager and the Manager will then send them to each Investor. The EIS3 certificates will confirm the amount of EIS qualifying investments the Investor has made and are required by Investors in order to claim EIS Relief. The 24 SHELLEY MEDIA EIS AUTUMN 2014 Manager anticipates that the Investee Companies will begin trading soon after investment, and estimates that EIS3 certificates will be available within 9-13 months of this date. However, this timescale is subject to a number of factors outside of the Managers control, including response times of HMRC. EIS Reliefs must be claimed no later than five years after 31 January following the tax year in which the shares are issued in each Investee Company. 2. Loss Relief Against Income or Gains In addition to the three elements of EIS Relief set out above, tax relief is available for any loss realised on the disposal of Qualifying Shares on which EIS income tax relief (see 1(a) above) has been obtained. The amount of the loss (after taking account of any income tax relief initially obtained) may be set against the individuals taxable income arising in the tax year in which the disposal occurs, or the previous tax year, or both (if sufficient relief is available). Alternatively, the loss may be offset against capital gains in the tax year of disposal. Any excess losses may be carried forward for relief against future capital gains. In the case where no proceeds are received on disposal of the Qualifying Shares, the net loss after tax on an investment of 100,000 would be as follows for a higher rate tax payer: Loss Relief Realised Value of Qualifying Shares nil Amount Invested in Qualifying Shares (100,000) Income Tax Relief at 30% 30,000 Loss net of Income Tax Relief (at applicable rate) (70,000) Loss Relief at 45% 31,500 Net Loss after Tax (38,500) 3. IHT Business Property Relief The Qualifying Shares should constitute Relevant Business Property (as defined in IHTA). Accordingly, once such Qualifying Shares have been held for a period of two years, they should qualify for 100% business property relief, which would reduce the IHT liability on a transfer of the Qualifying Shares to nil. 25 BROCHURE PART 8: OPERATION OF THE SERVICE 1. Client Accounts Prior to investment in Investee Companies, and following the realisation of investments in Investee Companies but prior to the distribution of proceeds, Investors funds will be held by the Custodian in cash in a designated client money account with trust status. Funds may be held on overnight deposit or, where realisation for investment is not required immediately, in a term deposit not exceeding the lesser of the expected realisation date and three calendar months. All client money will be held in UK bank approved by the Prudential Regulatory Authority, typically RBS or another institution with equivalent standing and credit rating. Qualifying Shares will be registered in the name of the Nominee. Qualifying Shares which form the portfolio investments for each Investor under his Investor Agreement will be beneficially owned by the Investor at all times, but the Custodians Nominee will be the legal owner of the portfolio investments. Any dividends received by the Nominee from Investee Companies in respect of an Investors shareholding will be paid to the Investor. However, the Manager does not anticipate that any dividends will be paid by the Investee Companies during the Relevant Period. 2. Allocations The number of Qualifying Shares allocated to a particular Investor will be calculated by reference to the proportion which the Investors Subscription, net of his or her share of the upfront fees charged to Investee Companies (as set out in Part 5 section 8 above), bears to the total Aggregate Subscriptions net of all such fees of all Investors. It is intended that monies received from each Investor will be invested on a pro-rata basis to his or her Subscription, as investment opportunities arise. Variations to this standard procedure will only occur to avoid issuing fractions of shares, or if an Investor is subject to professional rules preventing him or her from making an investment in a particular Investee Company. Should an Investor die before his or her subscription is fully invested, all uninvested sums subscribed by him or her will be repaid by the Manager upon receipt of notice from the Investors personal representatives. Consideration will be given to liquidating the deceased Investors Qualifying Shares, subject to the Managers absolute discretion. 3. Documentation and Communication The Manager will provide each Investor with half-yearly (interim and annual) reports pursuant to their Investor Agreement in each year, containing details of all investments made by the Manager into Investee Companies, together with a commentary on the progress of each of these investments. For each complete year ending on 5 April, the Manager shall provide the annual report and an auditors report shall be reproduced in full in this report. It should be noted that, as the Service is not formally a fund entity but an informal collection of individual portfolio management arrangements, which together comprise a collective investment undertaking and an alternative investment fund for AIFMD purposes, formal audit provisions which apply to most alternative investment funds are not applicable. The Manager, however, intends to make arrangements with the Auditor to audit the terms of the annual report to verify the information it contains regarding the valuation in respect of each Investors portfolio. The Manager will provide Investors with EIS3 certificates which are required to claim EIS Reliefs, subject to each Investors own circumstances. Assuming a Subscription Deadline of 18 December 2014, it is anticipated that these will be issued within 9-13 months of the allotment of Qualifying Shares to the Investor, however this timescale is subject to a number of factors outside of the Managers control, including response times of HMRC. 26 SHELLEY MEDIA EIS AUTUMN 2014 4. The Custodian, Depositary and Nominee By completing the Application Form, a prospective Investor will, inter alia, be deemed to have irrevocably agreed to the Manager having appointed the Custodian and Depositary on their behalf, to exercise the powers, and to carry out duties, on behalf of the Investors and prospective investors in accordance with the provisions of the Custodian Agreement and Depositary Agreement, certain provisions of which are summarised below. Investors should note that the following does not summarise all the provisions of the Custodian and/or Depositary Agreement. Investors may request a copy of the Custodian and/or Depositary Agreement from the Manager. A. Functions The function of the Custodian will be to perform (or procure the performance of) custodian, nominee and associated administrative services, which are conferred upon it by the terms of the Custodian Agreement. Investors may obtain an electronic copy of the terms and conditions of the Custodian in respect of the provisions of the Custodian Services by contacting the Custodian at ingenious@woodsidesecretaries.co.uk or on +44 (0)20 3216 2000 in order to request the same. The Depositary shall: (a) ensure that cash flows in respect of the Investor Agreements comprising the Service are properly monitored; (b) ensure all assets in respect of each Investor Agreement comprising the Service are properly held in the name of the Nominee or Custodian; (c) have various general oversight duties regarding subscriptions to, and payments from, Investor Agreements, valuations, transactions in Investee Companies and application of income, all in accordance with the terms of the Investor Agreement; (d) carry out the instructions of the Manager unless they conflict with applicable national law or the terms of this Brochure or the Investor Agreements. Its services shall therefore include those required of a depositary under the AIFMD. B. Custodians Obligations and Powers The Custodian shall, in respect of the assets held pursuant to each Investor Agreement comprising the Service: (a) hold funds arising from Investor Subscriptions in cash in a designated client money account with trust status. Funds may be held on overnight deposit or, where realisation for investment is not required immediately, in a term deposit not exceeding the lesser of the expected realisation date and three calendar months. All client money will be held in a Prudential Regulatory Authority approved UK bank, typically the Royal Bank Scotland or another institution with equivalent standing and credit rating pending investment in Qualifying Shares; (b) deploy funds on the instructions of the Manager acting in accordance with the Investor Agreement, appoint the Nominee to acquire Qualifying Shares and hold the corresponding shares and share certificates in its name, and act on the instructions of the Manager to realise investments for Investors; and (c) be authorised to: (i) buy, sell, retain, convert, exchange or otherwise deal in the Investors Qualifying Shares upon the instructions of the Manager; (ii) exercise voting and other shareholder rights in relation to the Investors Qualifying Shares upon the instructions of the Manager; and (iii) carry out such other acts and deeds which are in its reasonable opinion necessary or reasonably incidental to its appointment as a Custodian, acting in compliance with ITA, FSMA and the FCA rules as applicable 27 BROCHURE C. Custodian Liability The Custodian will act in good faith and with reasonable care and diligence in the performance of its functions. The Custodian will not be liable to an investor in the event of any loss in value of funds invested or any insolvency of any bank with which funds are deposited in accordance with the Custodian Agreement, nor in the event of any restriction on the Custodians ability to withdraw funds from such bank for reasons reasonably beyond the control of the Custodian. D. Depositarys Obligations and Powers The Depositary shall, in respect of the assets held in respect of each Investor Agreement comprising the Service: (a) monitor the cash flows of the Service; (b) verify whether the Service (or the Manager acting on behalf of the Service) holds an ownership interest in the assets; (c) have oversight and supervision of the Manager and the Service; (d) maintain accurate records in relation to the above duties; and (e) conduct such other duties or services as shall be agreed between the parties from time to time. E. Depositary Liability Subject to the below, the Depositary shall be liable to the Investors in the Service or the Manager for any expense, loss or damage suffered by or occasioned to the Investors in the Service or the Manager to the extent caused by the Depositarys negligent or intentional failure to properly fulfil its obligations pursuant to the Depositary Agreement. The Depositary shall not be liable to the investors in the AIF or the AIFM for any expense, loss or damage suffered by or occasioned to the investors in the AIF or AIFM by: (a) any act or omission or insolvency of any third party (including any Custodian) who is not an Associate of the Depositary, provided the Depositary can show that it was reasonable to delegate the functions concerned, that the third party was and remained competent to provide the functions in question and that the Depositary took reasonable care to ensure that the functions in question were performed in a competent manner; (b) reliance by the Depositary on any information, advice or notices sent to the Depositary by the Manager or any third party in accordance with the Agreement; or (c) delay arising while the Depositary obtains clarification of incomplete, unclear, conflicting or inconsistent instructions sent in accordance with the Depositary Agreement. No party will be liable to another (under any indemnity contained in this Agreement or otherwise) for any loss of business, revenue, profits or goodwill suffered by the other, as a result of any breach of the Depositary Agreement or any tortious act or omission. If the Depositary is liable under the Depositary Agreement for any loss caused to the Investors in the Service or the Manager by a third party (including a Custodian) then, subject to the Depositary having paid in full the loss, the Depositary shall have full rights of subrogation in respect of any rights or remedies of the Investors in the Service or the Manager against such third party. F. Termination The Custodian Agreement may be terminated (i) by either party on 180 days written notice or (ii) if either the Custodian or the Manager fails to remedy a material breach of the Custodian Agreement within 10 business days of notice of same. Where the Custodian is to be replaced, the Custodian will co-operate with the Manager and any replacement custodian to ensure an effective transfer of responsibilities. 28 SHELLEY MEDIA EIS AUTUMN 2014 5. Conflicts Policy The Manager may make an investment in an Investee Company involved in an Entertainment Project in which members of the Ingenious Group have a commercial interest. The Manager shall take steps necessary to ensure that, in either case, such decisions are taken fairly and without reference to that commercial interest. The Manager and other members of the Ingenious Group act, and will continue to act, as the administrator, investment manager, operator, agent and/or investment adviser to various other new and existing clients which are involved in the production of Entertainment Projects. Projects may therefore arise that are suitable for the Investee Companies, or one or more other clients of the Ingenious Group (both current and future). The Manager and/or its affiliates will seek in their absolute discretion to ensure that any suitable projects are allocated fairly between such other clients of the Ingenious Group in accordance with the conflicts policies of the Ingenious Group from time to time and without prejudice to the Managers obligations to Investors. A summary of the Managers policy for managing conflicts of interest can be found in the Investor Agreement. Companies within the Ingenious Group are, and will continue to be, active investors in, and advisers to, entities and individuals in the media and entertainment sector. There may be circumstances in the future, therefore, where the Ingenious Group, its subsidiaries and/or managed services might enter (or propose to enter) into contracts, transactions, arrangements or investments in connection with the Service and/or an Investee Company or may otherwise be directly or indirectly interested in contracts, transactions, arrangements with, or investments by, the same. Such circumstances (if they occur) will be managed in accordance with any requirements under applicable laws and regulations. 6. Treating Investors Fairly Policy The Manager shall ensure at all times that it: acts honestly, with due skill, care and diligence and fairly in conducting its activities; acts in the best interests of the Investors; has and employs efectively the resources and procedures that are necessary for the proper performance of its activities; takes all reasonable steps to avoid conficts of interest (and, when they cannot be avoided, to identify, manage and monitor, and where applicable, disclose, those conficts of interest in order to prevent them from adversely afecting the interests of Investors); ensures that there is fair treatment; complies with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of the Investors and the integrity of the market; seeks to treat all Investors fairly and any preferential treatment which might be accorded by the Manager to one or more of the Investors shall not result in any overall material disadvantage to the other Investors. 29 BROCHURE PART 9: DEFINITIONS The following definitions apply throughout this document unless the context otherwise requires: Terms Definitions Advised Professional Client An investor who has been categorised as a professional client by their adviser for the purposes of their investment in the Service in accordance with COBS Advised Retail Client Any investor in the Service who is NOT: (i) an Advised Professional Client; (ii) an Introduced Investor (Non-Advised Execution Only); or (iii) a Direct Investor (Non-Advised Execution Only) Aggregate Subscriptions The aggregate amount of Subscriptions to the Service as at the Subscription Deadline AIFMD The Alternative Investment Fund Managers Directive (2011/61/EU) Application Form An application form in such form as is prescribed by the Manager for use by a prospective investor to apply to set up an Investor Agreement enabling an Investor to participate in the Service, as completed by the Investor and (where applicable) their adviser or introducer Arrangement Fee Shall have the meaning ascribed in Part 5, section 8 of this Brochure Auditor Such person as the Manager may appoint to provide, and with which the Manager has agreed such terms for, audit services in respect of the Service and at the date of this Brochure is Shipleys, LLP, registered in England and Wales under limited liability partnership number OC317129, and whose registered office is at 10 Orange Street, London WC2H 7DQ Brochure This brochure CGT Capital Gains Tax COBS The FCAs Conduct of Business Sourcebook Completion Bond Contractual support provided by a recognised completion guarantor or other suitable entity, giving protection against certain production risks that can be incurred in completing and delivering an Entertainment Project, or any other similar arrangement Custodian Such person as the Manager may appoint to provide, and with which the Manager has agreed terms for, safe custody, custodial, nominee and administrative services in respect of the Service and at the date of this Brochure is Woodside Corporate Services Limited, with its registered office at 4th Floor, 50 Mark Lane, London, EC3R 7QR, which is authorised and regulated by the FCA and is registered on the FCA register with registration number 467652 Custodian Agreement The agreement between the Custodian and the Manager setting out the agreed terms for safe custody, custodial nominee and administrative services to be provided by the Custodian to investors 30 SHELLEY MEDIA EIS AUTUMN 2014 Terms Definitions Custodian Fees Shall have the meaning ascribed in Part 5, section 8 of this Brochure Depositary Such person as the Manager may appoint to provide, and with which the Manager has agreed terms for, depositary services in accordance with AIFMD in respect of the Service and at the date of this Brochure is Thomson Taraz LLP, registered in England under company number OC307438, with its registered office at 35 Grosvenor Street, London, W1K 4QX Depositary Agreement The agreement with the Depositary, setting out the agreed terms for depositary services to be provided by the Depositary in respect of the Service Depository Fee The fee payable to the Depositary for the services provided by it in respect of the Services, as further described in Part 5, section 8 of this Brochure Direct Investor (Non-Advised Execution Only) An investor in the Service who: (i) applies directly to the Service himself/herself; and in addition (ii) has NOT received any Personal Recommendation in respect of his/her investment in the Service from ANY person EIS The Enterprise Investment Scheme set out in ITA Sections 156-257, and in TCGA Sections 150A-150D and Schedule 5B EIS Reliefs The tax reliefs available under the EIS, including the income tax relief, capital gains tax exemption and deferral relief Entertainment Project Original film, television and/or video game content to be created by an Investee Company FCA The Financial Conduct Authority HMRC HM Revenue and Customs IHT Inheritance tax IHTA The Inheritance Tax Act 1984 IMAC Ingenious Media Active Capital Limited, registered number 4435, registered and main country of operations in Guernsey Ingenious or Ingenious Group Ingenious Media Holdings plc and each of its subsidiaries from time to time Ingenious Investments Ingenious Media Investments Limited, a company registered in England and Wales with company number 03775736, with its registered office at 15 Golden Square, London, W1F 9JG Ingenious Media Ingenious Media, a trading division of Ingenious Capital Management Limited, registered in England and Wales under company number 7728908, with its registered office at 15 Golden Square, London, W1F 9JG, which is authorised and regulated by the FCA and is registered on the FCA register with registration number 562563 31 BROCHURE Terms Definitions Ingenious VCTs Various VCTs managed by Ingenious Capital Management Limited including Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc Introduced Investor (Non Advised Execution Only) An investor who: (i) applies to invest through a third party introducer or platform service whether online or otherwise; and in addition (ii) has NOT received a Personal Recommendation in respect of his/her investment in the Service from ANY person; (iii) and in addition where such third party introducer or platform service is authorised by the FCA (iv) does NOT receive Personal Recommendations on ANY Retail Investment Products from such third party introducer or platform service Investee Company A company in which an Investor is invested, which is a qualifying company for EIS purposes Investment Strategy Shall have the meaning ascribed in Part 2, section 1 of this Brochure Investor An investor who wishes to participate in the Service and so sets up an Investor Agreement Investor Agreement The agreement to be entered into between each Investor and the Manager, in the terms set out in the Appendix ITA The Income Tax Act 2007 Manager Ingenious Media, a trading division of Ingenious Capital Management Limited Monitoring Fee Shall have the meaning ascribed in Part 5, section 8 of this Brochure Nominee Such nominee as the Custodian may appoint from time to time, which at the date of this Brochure is WCS Nominees Limited Performance Fee Shall have the meaning ascribed in Part 5, section 8 of this document Personal Recommendation As defined in the glossary to the FCA handbook Qualifying Shares Ordinary shares in an Investee Company Qualifying Trade A trade permitted by Sections 189 and 192 ITA Relevant Period The period beginning on the date that the Qualifying Shares are issued by the Investee Company and ending three years after that date, or three years after the last Investee Company has commenced trading, whichever is later Retail Investment Product As defined in COBS Service Shelley Media EIS Autumn 2014, an Ingenious discretionary managed portfolio service Subscription Means a subscription pursuant to Clause 5 of the Investor Agreement 32 SHELLEY MEDIA EIS AUTUMN 2014 Terms Definitions Subscription Deadline This is determined by the Manager as the last date upon which the Investor may make a Subscription to his Investor Agreement in respect of the Service and, at the date of issue of this Brochure, the Subscription Deadline is 5.00pm on 18 December 2014, subject to the Managers discretion to change Tax Benefits The various tax benefits, including EIS Reliefs, arising from subscriptions for shares in Investee Companies TCGA The Taxation of Chargeable Gains Act 1992 Trade With respect to each Investee Company, the production and exploitation of Entertainment Projects as described in this Brochure VCT A company approved as a venture capital trust under s259 ITA This Brochure is dated 28 July 2014. 33 BROCHURE CANCELLATION NOTICE You may cancel your Application and terminate the Investor Agreement at any time within 14 days of the Manager accepting your Application Form. If you wish to cancel your Application, please complete the details below and send this notice to the Manager for the attention of: Client Service Centre, Ingenious Media, 15 Golden Square, London W1F 9JG. I hereby cancel my application to Shelley Media EIS Autumn 2014. Title Postcode First Name(s) Signature Last Name Date D D M M Y E A R Address
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