Pinewood...more Govt Propaganda

[Trueblood]

There's a big difference between traditional investments such as the stock market, gilts, gold, bonds etc taking advice from experienced and qualified investment managers and buying shares in Pinewood and funding films because Stephen Christian thinks its a good idea.

[Moghrey Mie]

 

 

 

From Manx Radio Alan Bell says he hopes it will finally silence the investments critics .. I bet you do !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

But it is starting to look like it might after all have been a pretty shrewd investment.

But it's not an IOMG approved investment scheme. The management of the "investment" was never, ever put out to tender.

Maybe this is another arrangement that should go to the Public Accounts Committee.

Then we would find out who made the decision to invest in Pinewood and what exactly we are committed to.

[pongo]

There's a big difference between traditional investments such as the stock market, gilts, gold, bonds etc taking advice from experienced and qualified investment managers and buying shares in Pinewood and funding films because Stephen Christian thinks its a good idea.

Investment managers tend to increase rather than reduce risk - and to charge for the privilege either directly or via the vig. Index trackers on average almost always out perform actively managed funds. Only a very small percentage of funds will out perform a market over any randomly selected 5 year cycle - and even fewer will be able to repeat that performance over another.

 

It's good to see the Govt's relatively small investment in Pinewood seems to be showing positive results. People hate good news !

[interestedman]

I think even a return on the share price will fail to make up the millions of pounds that have been invested for little or no return. Nevertheless, at least Mr Teare will be able to show some return !!

[woolley]

 

It's good to see the Govt's relatively small investment in Pinewood seems to be showing positive results. People hate good news !

It is good news, I agree. It is also academic unless there is a willing buyer at the time we want to sell.

[The Sick Moon]

It is good news, I agree. It is also academic unless there is a willing buyer at the time we want to sell.

 

I suspect there might be now. That planning permission coming through for that area is really quite extraordinary.

[asitis]

I assume that the basket of films in which we are 'invested' are making no return. In which case any profit is purely paper profit based on a share price at the top of the market. One can only hope the expansion makes the shares attractive in which case that could offer a way out. It is difficult to see how given the huge fees and the poor film returns this investment is contributing to the economy on a regular basis. Certainly a few bed nights on the island are not filling the void of a regular return !

[Slim]

It is also academic unless there is a willing buyer at the time we want to sell.

It's a publicly trading company, we wouldn't have to wait for a single buyer. The current price has a pretty large volume of trades.

[Lost Login]

 

It is also academic unless there is a willing buyer at the time we want to sell.

It's a publicly trading company, we wouldn't have to wait for a single buyer. The current price has a pretty large volume of trades.

In the last 12 months there have been about 130,000 shares traded, the IoM Government holds just under 4.9 million. A single trade of a 1,000 is about as big a trade as there is. To sell the shares at anywhere need the quoted price at a time of its choosing the Government would not be able to do so via brokers. It would have to cut a deal with a private buyer or another shareholder for its holding

 

Remember also that it had to move from the main listing on the stock exchange to AIM because it did not meet the requirement that a minimum of 25% of the company is in public hands. The figure is about 15%. That was only 2 years ago.

[Lost Login]

 

It's good to see the Govt's relatively small investment in Pinewood seems to be showing positive results. People hate good news !

It is good news, I agree. It is also academic unless there is a willing buyer at the time we want to sell.

I have a financial interest in this in that the "investment" is part of the IoM Government reserves which my taxes contribute to/pay for services etc that I use. I therefore want the investment to come good.

 

Having said that I believe it is and was a totally inappropriate investment for IoM Government to get into. If it turns a profit I will not see that as justification that the decision was a right one or the Government should do something similar in the future. Just becuase you lucked out ion a bad decision does not make the original decision a good one.

 

Looking at the investment only I believe it was a punt based on the land and getting planning permission. Based on the land assets within the company the value of the shares were probably reasonably covered by that land however having bought the IoM Govt has locked up the money until an event happens which means it can get back. The sale of the shares is outside its control as there is virtually no market in the shares. It is therefore relying on a the company disposing of a major asset and getting a windfall profit, the company being taken over or being able to cut a deal with another shareholder.

 

Prior to the IoM Govt purchasing no investment manager had invested funds on behalf of the IoM Govt in the company and no fund has taken a major position in the company as far as I am aware. Now there are some pretty smart investment guys out there and the fact none have taken a major position in the company as part of their investment portfolio does not indicate that it is not viewed as a solid investment. On one side we have all these Investment experts noyt taking the opportunity yo invest and on the other hand we have Teare. Now taking a random pin approach you might well pick a share not picked up by fund managers which does well but more often than not they will be right

 

Teare described the investment as a "hedge" against the media fund firms given to Pinewood to manage. A hedge is basically investment which you expect to react in the opposite way to another investment due market forces. e.g if it is announced that it is expected to be the wettest summer on record you might expect the demand for umbrellas to go up but that for sun tan lotion to go down. I do not see how this investment is a "hedge" against the media fund not performing except that that Teare has made two punts and he is hoping one will perform. That is not a hedge.

 

As I said I hope the investment does produce a positive return to IoM Govt but sinking large amounts of funds into thinly traded UK companies that no fund managers appear to believe are worth investing in is not something IoM Govt should be doing with the reserves. The fact that this appears to be a deal that a couple of elected politians with no track record or particular knowledge of such deals thought worth doing is also not something that I would have thought a particularly prudent action.

[Lxxx]

 

 

It's good to see the Govt's relatively small investment in Pinewood seems to be showing positive results. People hate good news !

It is good news, I agree. It is also academic unless there is a willing buyer at the time we want to sell.

I have a financial interest in this in that the "investment" is part of the IoM Government reserves which my taxes contribute to/pay for services etc that I use. I therefore want the investment to come good.

 

Having said that I believe it is and was a totally inappropriate investment for IoM Government to get into. If it turns a profit I will not see that as justification that the decision was a right one or the Government should do something similar in the future. Just becuase you lucked out ion a bad decision does not make the original decision a good one.

 

Looking at the investment only I believe it was a punt based on the land and getting planning permission. Based on the land assets within the company the value of the shares were probably reasonably covered by that land however having bought the IoM Govt has locked up the money until an event happens which means it can get back. The sale of the shares is outside its control as there is virtually no market in the shares. It is therefore relying on a the company disposing of a major asset and getting a windfall profit, the company being taken over or being able to cut a deal with another shareholder.

 

Prior to the IoM Govt purchasing no investment manager had invested funds on behalf of the IoM Govt in the company and no fund has taken a major position in the company as far as I am aware. Now there are some pretty smart investment guys out there and the fact none have taken a major position in the company as part of their investment portfolio does not indicate that it is not viewed as a solid investment. On one side we have all these Investment experts noyt taking the opportunity yo invest and on the other hand we have Teare. Now taking a random pin approach you might well pick a share not picked up by fund managers which does well but more often than not they will be right

 

Teare described the investment as a "hedge" against the media fund firms given to Pinewood to manage. A hedge is basically investment which you expect to react in the opposite way to another investment due market forces. e.g if it is announced that it is expected to be the wettest summer on record you might expect the demand for umbrellas to go up but that for sun tan lotion to go down. I do not see how this investment is a "hedge" against the media fund not performing except that that Teare has made two punts and he is hoping one will perform. That is not a hedge.

 

As I said I hope the investment does produce a positive return to IoM Govt but sinking large amounts of funds into thinly traded UK companies that no fund managers appear to believe are worth investing in is not something IoM Govt should be doing with the reserves. The fact that this appears to be a deal that a couple of elected politians with no track record or particular knowledge of such deals thought worth doing is also not something that I would have thought a particularly prudent action.

 

 

And there, in a nutshell, encapsulates our elected officials. They do not see the money at their disposal as public funds, rather their own little playground to do with as they choose, usually on a nod and wink from their friends in the private sector who have the intelligence, commercial nous and charm to run rings around our starstruck PE teachers, branch managers and farmers.

Edited June 22, 2014 by Lxxx

[slinkydevil]

"Technically it's not tax payers money." Eddie Teare

[Albert Tatlock]

"Technically, Eddie Teare's an idiot." Taxpayer

[newsnight]

I am obliged to Lost Login for that promulgation regarding the viability of the prospects of selling the taxpayers shareholding in the Pinewood Group and his further considerations on the reality of that public purse spend by the Government.

Slim’s posting on the matter is to my mind typical of the expressions of wishful thinking about the Pinewood and related matters as opposed to considered and rigorous reasoning of them which Lost Login has provided as a logical counterpoint to what is a provable fiction in Slim’s statement.

When everything is fully considered from the Public Accounts Reports on the Film Investment Fund what stands out for me is the following.

The Government of the Isle of Man invested in a private IOM Company Cinemanx Ltd upwards to the sum of £50 million pounds.

‘With CinemaNX Limited, although Treasury approval is still required for each individual investment, the entire balance of the Media Development Fund (around £50 million) has already been effectively handed over to the company. This allows CinemaNX Limited to use the income arising on the Media Development Fund balance as a management charge to cover its working capital requirements. 14 Treasury described this arrangement to us by saying that "CinemaNX essentially acts as a Fund Manager to the Treasury"; 15

[page 10]

• Isle of Man Film Limited does not make a profit. As noted above, any surplus it might generate is transferred back to the Media Development Fund. CinemaNX Limited on the other hand may make a profit. Under the CinemaNX Limited arrangements, the Treasury is entitled to 20 per cent of CinemaNX Limited's profits annually(but would not share in any losses), while the Media Development Fund is entitled to the bulk of any profit shares generated by any individual film‘.

4.5 We note that in 2007 the company received the entire balance of the Media Development Fund, some £50 million which is available for investment subject to Treasury approval on a project by project basis.

Cinemanx Ltd did not act as a Fund Manager.

4.2 When, in 2007, the arrangements with CinemaNX were being set up, no consideration appears to have been given to whether Tynwald should have a say in such a novel departure. The idea was put to Treasury by Steven Christian in January 2007 and set out in more detail in a formal Treasury paper written in February 2007. The new arrangements were alluded to by the Treasury Minister in his budget speech in March 2007 but the comments in the Pink Book were vague and there was no explicit motion on the Tynwald Order Paper.

The findings of the Committee are clearly stated.

‘4.7 In our report on the management and use of reserve funds in general we looked at the issue of fund performance and examined the investment mandates for externally managed funds. We concluded that we were content with the arrangements.

19 When it came to the Media Development Fund, Treasury explained to us that, since 2007, CinemaNX Limited essentially acts as a Fund Manager to the Treasury. Treasury has invested the £50 million balance of the Media Development Fund with CinemaNX Limited.

Although Treasury has a supervisory role through its presence on the CinemaNX Limited Board and the requirement for Treasury approval of particular projects, CinemaNX Limited has been given a high degree of independence and flexibility to achieve such return on the Government's investment as it can‘.

Clive McGreal was the man who gave the explanations to the PAC on behalf of the Treasury it is important to keep this in mind when reading the following.

4.9 When we asked how CinemaNX Limited demonstrated to the Treasury that the aims were being met, they wrote that: "Treasury are represented on the Board of CinemaNX and are, therefore, kept closely informed on all relevant strategic issues". 21 We infer from this response, and from the Agreement between CinemaNX Limited and the Treasury, that no specific financial performance target has been set for CinemaNX Limited in their capacity as fund managers.

We would also point out that the performance of CinemaNX Limited does not appear to be monitored by the Investment Committee of the Treasury as is that of other fund managers but acknowledge that Treasury officers do meet with Steve Christian at least twice a year and receives regular updates on matters pertaining to the industry and individual investments.

4.10 We asked the Treasury to explain the procedure for Treasury approval of particular investments. The Treasury response established that in the first instance any prospective investment would be reliant on the report and recommendation made by CinemaNX Limited in their submission to the Treasury. These reports would be examined by the Corporate Strategy Division who would challenge the commercial criteria and potential risks and return on the investment and make a recommendation if appropriate for approval by the Treasury. 22

Clive McGreal was the Director on Cinemanx Ltd (as was Steve Christian and they both were Directors of Isle of Man film at that same time).

The Head of the Corporate Strategy Division was then and is now Clive McGreal.

‘4.15 This issue is not only of historical interest. In the accounting period ending 30th June 2008 substantial fees were paid by CinemaNX Limited to Gasworks Media Limited (Steven Christian) and to Samuelson Productions Limited (Marc Samuelson). Samuelson Productions Limited also recharged costs in respect of rent, rates and services. All of these transactions were incurred on an arm's length basis‘.

INVESTMENTS BY CINEMANX LIMITED

4.16 CinemaNX Limited owns 100 per cent of the ordinary share capital of a variety of special purpose vehicles to finance various productions.’

The DTI submitted the following evidence to the PAC.

5.18 In another letter (signed by the DTI Chief Executive) the Treasury provided the following contribution on the CinemaNX Limited arrangements: 34

"The initial expectations were that the new fund would sustain a part investment in up to six films per annum. It was expected that CinemaNX Limited would secure other investors so that there would be a syndicate of investors in each film thereby sharing the investment risk.

The Island would benefit directly from the local film production spending and subsequent investment returns and indirectly from the positive international exposure provided by the publicity involved.

The assessment of whether expectations are being met is made by the following process:

(a) For each proposed investment a report is produced by GasWorks Media on behalf of CinemaNX which includes sales estimates produced by the sales agents.

Each report is reviewed by Treasury in advance of the investment decision being made and questions asked and answered as necessary.

(b) CinemaNX Limited formally attends a Treasury meeting twice a year. In practice Steve Christian, director of Cinemanx Limited meets Treasury more frequently. ( c ) Treasury's Financial Controller, Clive McGreal sits on the board of CinemaNX Limited. Board meetings are held bi-monthly during which past productions and forthcoming potential investments are reported upon. (d) CinemaNX produces a quarterly investment report for Treasury."

A report is produced by GasWorks Media (Steve Christian) on behalf of Cinemanx (Steve Christian) who presents that to the Corporate Strategy Division (the head of which is Clive McGreal who was a Director at that time of Cinemanx Ltd) and he approves it to be approved by the Treasury the Financial Controller being, Clive McGreal.

The PAC stated that.

“5.22 We conclude that CinemaNX Limited is not being treated as a fund manager“.

It is my contention based upon careful reading of the evidence as published in the Reports by the Public Accounts Committee and in Hansard that Allan Bell together with the Political Members of the Treasury accepted a proposal from Steve Christian to invest upwards of £50 million pounds in his own Company.

Moreover, the money handed over to Cinemanx Ltd was not subject to the ordinary rules of scrutiny by the Investment Regulations made by Treasury in fact it was not subject to any rules of any kind at all.

It is my understanding that Cinemanx Ltd invested the money it had received from the Treasury in projects that it either owned outright or had the majority ownership of.

What possible legal basis can there have been for the Treasury to have provided a private company with £50 million pounds of public money to spend on its own projects and out of which that same Company drew down the interest paid on the £50 million as working capital ?

Can anyone give me another example of an Isle of Man Company being so treated by the Government?

This is another example to my mind of Government acting without the benefit of the law and maybe it is another matter worthy of being sent off Island to be examined regarding the legality of it all?

Or maybe it should just be sent to the Financial Crimes Unit for investigation?

[ballaughbiker]

Governments must 'gamble' with taxpayers money all the time, grants, supporting business, development funds, investments..

You've missed out education and health.