Lockout - S481 Offer

Below (in italics) is the text of Dolmen Securities - Wealth Management Section 481 Offer last year in respect of Lock-Out (aka Section 8), James Mather and Stephen St. Leger's film in the works for Luc Besson's EuropaCorp.

The 'Offer' is interesting for the insight it gives into the workings of the tax break in the current taxation climate.

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Reducing Your Tax Bill
Did you know that you can get up to €4,000 back in tax relief using the S481 film investment scheme? This tax break provides funding to the Irish film industry. From an investor point of view, it gives valuable tax relief that can be availed of every year under current tax legislation. Last year legislation was enhanced so that an investment of up to €50,000 will receive 100% tax relief in a qualifying S481 film scheme. If you have a single income of €90,000 or a joint income of €105,000 you can qualify for maximum relief.

The process is as follows:
1. You sign all relevant documentation and include a €200 administration fee cheque/bank draft payable to Dolmen Securities Limited.
2. You receive a Film 3 Form confirming the investment in the scheme.
3. You claim back the tax refund direct from Revenue.
4. The result is net tax relief of up to €4,000 (based on 100% relief).

Investors can claim their tax refund as follows:
• PAYE Worker - The Film 3 Form can be forwarded to the relevant tax district and the film relief can be included in the 2010 tax credit certificate. The tax relief will therefore be delivered monthly via payroll in the period up to December 2010.
• Self employed - The film relief can be taken into account when paying your preliminary tax in October 2010.

Borrowing Alternatives
Rather than investing all the capital from your own cash reserves you can borrow:
A. 67% of the total amount i.e. invest €16,500 and borrow €33,500. The €33,500 borrowing is full recourse to the investor but it is insured by funds placed in a defeasance deposit account to cover the capital and interest due on the investor borrowing. These funds are released once Revenue are satisfied the scheme has been conducted in accordance with the regulations for Section 481 (See Risk factors overleaf).
B. 100% of the amount. This has to be structured as two separate loans due in part to the insurance structure of the defeasance account, with a higher interest rate on the smaller €16,500 loan. Repayment of the Capital & Interest on this smaller loan is entirely the responsibility of the individual investor. Most investors use the tax relief to repay this loan and simply retain the excess relief once the loan has
been repaid.
Under options A and B (which are used by almost all investors), Dolmen will arrange the borrowings for you through Bank of Ireland this is subject to the normal credit approval process.

Single Income €90,000 Joint Income €105,000
Investment €50,000 €50,000
Tax Relief €20,500 €20,500

Section 481 operates to provide a return of €4,000 for an investor with €50,000 of income taxable at the top income tax rate (or €2,000 for someone with €25,000 at the top rate). We set out below details of our latest project.

Name ‘Lock- Out’
Type of Production - Full length theatrical Feature Film
Synopsis - "Lock-Out” takes place in a prison orbiting 50 miles above the Earth, which houses 500 of the world's most dangerous criminals. Not only are these wrongdoers kept in orbit, they're also kept asleep by sophisticated technology - until they suddenly all wake up."

Budget
The total budget is €20,000,000

Section 481 Funding
€ 5,800,000 (approximately 116 investors at €50,000 each)

Financed by Europacorp – International French Studio and Distribution company, listed on Euronext Paris, Europacorp specialises in the production of English Language films for worldwide distribution. Founded by its President Luc Besson, Europacorp is one of France’s largest producers releasing between 10 and 15 major feature films every year. Lockout will be fully funded by Europacorp and Section 481 investors.

Writer/Directors
Stephen St Leger and James Mather
Stephen Saint Leger and James Mather have been working together as writers, directors and cinematographers for twenty years. Stephen has been directing commercials since 1994. In the past ten years he has notched up a couple of hundred commercials both in Ireland and abroad. His directing has brought him to many locations including Russia, Australia, East Africa, The Middle East, All over Europe and to the USA, Including major campaigns for Amstel, Vodafone and Permanent TSB.
James Mather was also the Director of photography on numerous features and TV dramas including, the award winning Adam and Paul, Cold Feet and Prosperity. In 2005 James and Stephen wrote, shot and directed the award winning short “Prey Alone” With the success of the short film, Stephen and James were hired to write the screenplay for Universal studios “Lost Squad” based on the highly successful comic book series. In 2009 Stephen and James were hired to co-write, shoot and direct the sci-fi “Lock-Out” with the highly successful Luc Besson and his film studio EuropaCorp.

Producers
Luc Besson The Producer of Lockout is France’s most successful international Producer/Director with Directing credits that include
The Fifth Element starring Bruce Willis and Joan of Arc. Recent Producing credits include Taken starring Liam Neeson and
the international blockbuster movies Transporter, Transporter 2, and Transporter 3 starring Jason Statham.
Marc Libert Line Producer – Marc has been with Europacorp for the last 9 years, initially as personal assistant to Luc Besson and
more recently as a Producer in his own right on Europacorp funded projects.
James Morris Irish Co-Producer – James Morris is the chairman of Windmill Lane Pictures and founder of the original Windmill Lane Recording Studios. He was the lead Promoter in setting up TV3 in Ireland and its first Chairman until the sale of the network in 2006. He is currently Chair of the Irish Film Board

Considerations when choosing a specific section 481 scheme:
A. Track Record
Dolmen is using leading advisors Mazar Tierney and Matheson Ormsby Prentice, both of whom have a proven track record on structuring successful projects such as this.
B. Risk Factors
The only risk factors are non-delivery by the Production Company or non-acceptance by the Broadcaster. We mitigate this risk as much as possible by partnering with Producers who have a strong track record with S481 schemes. This is generally regarded as a medium risk tax based investment. In recent years all Revenue approved standard S481 film schemes have been completed successfully.

Illustration of cash flow under borrowing Option A:
** Assumes investor has at least €50,000 of income taxable at 41%
Any person acting on the information contained in this document does so at their own risk. This investment may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. The information contained in this document should not be taken as an offer or solicitation of investment advice. Approval of loan facility dependent on credit rating.

Amount Invested €50,000 (Maximum annual investment permitted)
Financing Loan €33,500 This is arranged with Bank of Ireland by Dolmen Securities Limited. Own Funds €16,500 Under Option B this too is borrowed.
Total €50,000
Gain on Investment (after receipt of tax credit)
Own Funds (€16,500) This portion is never returned to the investor
instead the tax relief (below) covers this.
Tax Relief €20,500 100% of amount invested qualifies for tax relief
Total Gain from 100% relief ** €4,000

Dolmen Securities Limited is a Member Firm of The London Stock Exchange. Dolmen Securities Limited is regulated by the Financial Regulator. Dolmen Stockbrokers is a Member Firm of The Irish Stock Exchange and The London Stock Exchange. Dolmen Stockbrokers is regulated by the Financial Regulator.
Dolmen Securities Limited, 75 St Stephen’s Green, Dublin 2. Telephone: 01 633 3800 Fax: 01 633 3618
Warning: Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. This investment is not readily realisable. Forward looking statements and forecasts may not be realised.