Prescience Film Finance was established in 2003 and has launched three film partnerships during that time. The company will select the films and television projects based on strict commercial criteria intended to minimise the risks and maximise the returns to investors. It will ensure it can recover its financial contribution by net sales of up to 25 per cent of the production budget and sales estimates must be at least 125 per cent of the budget. All films will have a completion bond and relevant insurances in place. The projects will typically have budgets of between £3m and £15m and will be co-produced alongside producers with a track record of success.
In respect of television projects, the company will only produce projects where there are guaranteed broadcaster commissions for 85 per cent of the budget. The EIS will finance up to 15 per cent of the budgets and will negotiate a share of the profits. As produce or co-producer, the company intends to own all or the majority of the rights to each film or television project.
To find the projects, the company will draw on its network of contacts. Projects already identified for co-production include A Woman of No Importance, starring Lindsay Lohan, based on the play by Oscar Wilde. Seasons of the Dust will star Orlando Bloom and Robin Williams, while world war II drama Beat of Bataan will star John Travolta. An animation called K-9, a spin-off from Doctor Who, is also planned.
The directors of the EIS say demand for film is strong and one production can be exploited through different media around the world, including cinema, DVD, i-pod and mobile phones. They say that on the intended production models and trading assumptions over five years, this EIS should achieve returns of 11.78 per cent a year. This would increase to 16.89 per cent if the full income tax credit is used or 23.16 per cent a year taking into account a retained share of the profits for each project. However, investors cannot rely on this, as library sales are uncertain.
Other risks include the possibility that a production will be a commercial failure, a project may go over budget which may reduce returns and pre-sales could be worthless if the buyer defaults or does not meet the agreed conditions.