TIDMPWS
RNS Number : 7456D
Pinewood Group PLC
11 July 2016
Pinewood Group plc
Audited results for the year ended 31 March 2016
Pinewood Group plc, a world leading studio and production
services operator, delivers another year of strong growth.
Today the Company publishes its audited results for the year
ended 31 March 2016.
Strategic progress
-- Strategic review announced on 10 February 2016 in progress
-- The first phase of PSDF "Pinewood East" is now complete and part occupied
-- Pinewood Atlanta Studios Phase Three construction commenced
with completion expected before the end of Pinewood's 2017
financial year
Financial highlights
Year ended Year ended Year
31 March 31 March On Year
2016 2015 comparison
-------------------------- ----------- ----------- ------------
Group Revenue GBP83.2m GBP75.0m +10.9%
-------------------------- ----------- ----------- ------------
Media Services Revenue GBP66.6m GBP57.2m +16.4%
-------------------------- ----------- ----------- ------------
Group Operating Profit GBP13.6m GBP5.8m +136.3%
-------------------------- ----------- ----------- ------------
Media Services Operating
Profit GBP16.9m GBP11.0m +52.6%
-------------------------- ----------- ----------- ------------
Media Investment Profit
after Tax GBP0.4m (GBP0.1m) +457.9%
-------------------------- ----------- ----------- ------------
Normalised Profit after
Tax GBP10.1m GBP6.7m +51.6%
-------------------------- ----------- ----------- ------------
Normalised EPS (i) 17.7p 13.5p +31.1%
-------------------------- ----------- ----------- ------------
Final dividend per
share 3.2p 2.8p +14.3%
-------------------------- ----------- ----------- ------------
Net debt GBP72.8m GBP71.9m +1.2%
-------------------------- ----------- ----------- ------------
Adjusted Media Services
ROCE (ii) 12.8% 11.2% +14.3%
-------------------------- ----------- ----------- ------------
(i) Normalised EPS - EPS adjusted for exceptional items and fair
value movements on financial derivatives and the taxation on both
of these (See Note 9).
(ii) Adjusted Media Services ROCE - annualised operating profit
for Media Services before exceptional items including inter-segment
revenue and share of results for joint ventures as a percentage of
average capital employed, being total equity plus net debt,
excluding capital employed in assets under the course of
construction (See page 15).
Commenting on today's results, Ivan Dunleavy, Chief Executive,
said:
"The Company is very pleased to report today another set of
strong results showing a 10.9% increase in group revenue and a
31.1% increase in normalised earnings per share.
The result of the UK's referendum on membership of the EU is now
known. In the context of our business, the decline in the
GBPsterling exchange rate is undoubtedly positive for our
international customers. We will continue to monitor sentiment
around the issue going forward.
The Company is also pleased to confirm that the PSDF Phase One
became fully operational on 30 June 2016 adding five stages and
significant capacity to our existing world class offer. The Company
is delighted that the first production to utilise the new
facilities is "Film Stars Don't Die In Liverpool" produced by
Barbara Broccoli who has a long association with the Pinewood Group
through the Bond franchise. We have, as expected, already signed a
contract for an additional major film production which will fully
utilise these new facilities from August 2016.
This financial year has started strongly with good visibility
for the balance of 2016".
Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation.
Enquiries
Pinewood Group plc +44 (0)1753 656732
Andrew M. Smith
Corporate Affairs Director & Company Secretary
Peel Hunt LLP +44 (0)207 418 8900
Edward Knight / Euan Brown
Notes to editors
-- Pinewood Group plc is Europe's largest provider of stage and studio space
-- Pinewood Studios, Shepperton Studios and Pinewood Studio
Wales together accommodate 40 stages and three dedicated digital
television studios
-- Pinewood Studios is home to Europe's only studio-based
underwater filming stage, as well as one of the largest exterior
water tanks in Europe
-- The Group now offers financing to UK film, television and
video game production as part of its growing range of services
-- Pinewood Studios and Shepperton Studios have been home to
over 2,000 films in more than 80 years and have hosted over 800 TV
shows
-- There are 247 independent, media related companies based within the Group's Media Hub
-- The Pinewood Group's international network of studios
includes Toronto, Canada; Iskandar, Malaysia; the Dominican
Republic; Atlanta, Georgia, USA and service activities in China,
Germany and Ireland
Forward looking statements
This announcement includes forward looking statements that are
based on current expectations and assumptions. They involve risks
and uncertainties and may differ, possibly materially, from actual
results, performance and achievement. Neither the Company, nor any
of its Directors, undertakes any obligation to update publicly or
revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent
legally required.
For more information
www.pinewoodgroup.com
Neither the content of the Company's website nor the content of
any website accessible from hyperlinks on the Company's website,
nor any other website, is incorporated into, or forms part of this
announcement nor, unless previously published by means of a
recognised information service, should any such content be relied
upon in reaching a decision as to whether or not to acquire,
continue to hold, or dispose of, securities in the Company.
Chairman's Statement
Once again Pinewood Group plc has delivered record revenues as
the Company capitalises on the continuing demand for screen-based
entertainment. Group revenues for the year ended 31 March 2016 were
10.9% higher at GBP83.2m (year ended 31 March 2015: GBP75.0m).
The Company remained capacity constrained during the year which
makes the results particularly pleasing and gives confidence that
the recently opened additional capacity will significantly enhance
Pinewood's offer to the global screen-based industries.
The Board's strategy for the Pinewood Group is to capture more
of the value chain in content creation across film, television and
games. Clearly, expanding facilities at Pinewood Studios will be a
major part in delivering this. The Board has identified additional
opportunities internationally; in pre and post production; in
ancillary services and in consultancy. These opportunities will
expand and enhance our offer to customers and will leverage
Pinewood's reputation for expertise and excellence.
While management has continued to drive the business forward,
delivering another set of excellent results, the Board commissioned
a Strategic Review of the capital base and structure.
The Company announced a Strategic Review on 10 February 2016, as
follows:
"The objectives of last year's share placing, which was
successfully completed on 17 April 2015, were to raise proceeds of
GBP30m to part fund Phase One of the PSDF development and also to
create a more diversified shareholder base that would be able to
support the Company through subsequent phases of growth and enable
the Company to move up to a full listing on the main market.
The shareholder register, however, remains tightly held, which
has continued to stifle liquidity in the shares and has prevented
the Company from achieving its aim of obtaining a main market
listing.
The Board has now determined that it is appropriate to evaluate
alternative opportunities to maximise value for the Company's
shareholders and to build on Pinewood's successes to date. We
believe there is a requirement for a funding strategy to be in
place to fully realise the Company's future potential (for instance
to fund PSDF Phases Two and Three). Accordingly, Rothschild has
been appointed to assist with a strategic review of the overall
capital base and structure, which could include a sale of the
Company."
The Strategic Review is ongoing and we will, of course, update
shareholders on its progress when there is further information to
share.
The Board has decided to recommend a final dividend of 3.2p per
share, recognising the strong performance for the year to 31 March
2016. It is worth recording that as at 31 December 2001, and
following the acquisitions of Pinewood and Shepperton Studios,
staff numbers were 254. As at 31 March 2016, staff numbers were
also 254, but the Group has 6 additional sites, a television
studios business and many other new activities. This is a tribute
to management's constant drive for efficiency and our staff's high
levels of commitment.
My thanks must go to the staff and management of the Company who
have played such an important role in achieving this record
performance.
Lord Grade of Yarmouth, CBE
Chairman
10 July 2016
Strategic Report
This Strategic Report has been prepared solely to provide
additional information to shareholders to assess the Company's
business strategies and the potential for those strategies to
succeed.
The Strategic Report contains certain forward-looking
statements. These statements are made by the Directors in good
faith based on the information available to them up to the time of
their approval of this report and such statements should be treated
with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such
forward-looking information.
The Directors, in preparing this Strategic Report, have complied
with Section 414c of the Companies Act 2006.
Our business model
Pinewood Group plc is a leading provider of studio and related
services to the global screen-based industries. Our services
support the screen based industries including film production,
filmed television and studio television recording, digital content
services and the provision of facilities to media related
business.
The Group's unique selling point is the breadth of production
related facilities and services available 'on-the-lot' which
provides clients with a full service offering.
The Company currently has two reporting segments - Media
Services, which provides studio and related services to the
screen-based industries; and Media Investment, which provides
investment funding and production services to the screen-based
industries.
The Media Services segment has principally three complementary
operating streams - Film; Television; and Media Hub.
Within Film and TV, operations are further divided into
Production Services (which includes stage and ancillary), Digital
Content Services ("DCS") and International.
DCS offers picture and sound post production, media storage and
management and distribution for original English language and
internationally re-versioned content.
International operations, which leverage the Pinewood brand,
include providing international sales, marketing, studio
development and consultancy services in Canada, the Dominican
Republic, Malaysia and China plus a joint venture in the United
States of America.
The Company's television ("TV") business provides a range of
unique TV production facilities, often utilising its stages and DCS
offerings to host and service large 'event' television productions.
The television offering consists of a comprehensive range of
production facilities such as high definition TV studios, film
stages and post production services to support all forms of
television production.
The Media Hub is currently home to 247 independent businesses
representing and providing expertise, equipment and support to the
film, television, games, advertising and photographic industries.
These companies come together to form a unique cluster and centre
of excellence for the entire creative industry.
The Media Investment segment (trading as "Pinewood Pictures")
includes an agreement to source and advise on film, high-end
television and video game investment opportunities for two media
development funds; a GBP25m fund established by the Isle of Man
Treasury and a GBP30m fund established by the Welsh Government. In
addition, the segment involves identification and investment by the
Company in British qualifying film and high-end television
productions.
Our objectives and strategy
The Group's vision is to build upon its UK facility focused
business to become a global production services business to the
screen based industries and to develop opportunities to capture
more of the value chain. This is reinforced in the Group's mission
to:
-- Continue to be the leading global supplier for the production of film;
-- Become the leading UK destination for the production of TV, games and digital media;
-- Leverage our brand through international operations;
-- Leverage our brand through diversified services and markets;
-- Exceed our customers' expectations through our commitment to
professionalism, quality of service and offering sustainable
advantage; and
-- Increase value for all our stakeholders.
Targeted strategic plans to achieve this mission include:
-- Operational growth:
-- Increase capacity through expansion of its stage and studio facilities and services;
-- Investment in digital activities and technology; and
-- Increased media and content investment activity.
-- Property development:
-- Plan to increase overall capacity; and
-- Demand-led Media Hub expansion.
-- Leveraging the brand:
-- Selective growth through joint ventures with limited capital commitment;
-- Lower risk investment in screen content; and
-- Provision of investment advice to third party 'content' funds.
Future developments
Media Services
The Company continues to focus on being the leading destination
for production of film and leveraging the Pinewood brand through
additional services and international activities.
The Pinewood Studios Development Framework
The PSDF comprises a substantial expansion of the existing
Pinewood Studios by ultimately adding a total of 1,000,000 sq. ft.
of new facilities including 10 large stages with supporting
workshops, production offices and infrastructure.
Phase One of the scheme incorporates five sound stages totalling
150,000 sq. ft., 140,000 sq. ft. of workshops across 10 buildings
and office buildings totalling 31,000 sq. ft. The stages were
completed on 30 June 2016.
The Company will consider the timing of the future phases based
on demand, the utilisation of Phase One and availability of
appropriate financing.
Media Investment
Future Funds
The Company is considering possible further media investment
funds. Both in terms of fund advice and direct diversification
opportunities, this segment continues to be an important driver for
the future.
Pinewood Television
On 26 January 2016, the Company announced a joint venture with
StoryFirst PST Limited. The new company is named Pinewood
Television Limited ("Pinewood Television") and its principal
business is to create, develop and finance high quality drama
series for television for the international market.
Helen Gregory has been appointed Creative Director to lead the
company and the creative process from development through
production to delivery to broadcasters and distributors. Helen is
an award winning producer of drama and comedy for BBC 1, BBC 2, BBC
3, ITV, C4, Five and Sky and was previously a commissioning editor
for Drama at Channel Four.
Pinewood Television is expected to be both an originating
producer and a co-producing partner for major drama projects
looking for deficit funding. It is now in the process of arranging
long term dedicated external financing.
Outlook
The Company is very pleased to report today another set of
strong results showing a 10.9% increase in group revenue and a
31.1% increase in normalised earnings per share.
The result of the UK's referendum on membership of the EU is now
known. In the context of our business, the decline in the
GBPsterling exchange rate is undoubtedly positive for our
international customers. We will continue to monitor sentiment
around the issue going forward.
The Company is also pleased to confirm that the PSDF Phase One
became fully operational on 30 June 2016 adding five stages and
significant capacity to our existing world class offer. The Company
is delighted that the first production to utilise the new
facilities is "Film Stars Don't Die In Liverpool" produced by
Barbara Broccoli who has a long association with the Pinewood Group
through the Bond franchise. We have, as expected, already signed a
contract for an additional major film production which will fully
utilise these new facilities from August 2016.
This financial year has started strongly with good visibility
for the balance of 2016.
Media Services Review
Commercial Director's Overview
Media Services has enjoyed another strong performance with total
revenues within this segment delivering GBP66.6m for the year (year
ended 31 March 2015: GBP57.2m), including GBP0.9m of intersegment
revenue (year ended 31 March 2015: GBP1.3m). Intersegment revenues
relate to revenue generated from the utilisation of the Company's
core services by the Group's wholly-owned Film Production Companies
("FPCs").
The demand for the Company's facilities throughout the year has
been strong, as reflected in stage occupancy of 90% (year ended 31
March 2015: 80%); however this ongoing strong film demand has
limited television's access to our film stages.
Revenues grew not only through strong utilisation of ancillary
facilities on the lot but also due to a positive contribution from
our new Pinewood MBS Lighting business both "on-the-lot" and
"off-the-lot".
During the year, Pinewood was home to the latest Bond film
SPECTRE as well as the largest grossing film of 2015, Star Wars:
VII The Force Awakens (Lucasfilm) and along with Shepperton Studios
hosted seven of the top 25 grossing films of the year.
In its first full year of trading, Pinewood Creative, which
represents a new activity providing creative services (including 3D
printing) to "on-the-lot" and "off-the-lot" customers, such as
Merlin Entertainment and Hampton Court Palace, enjoyed a strong
performance, exceeding expectations.
Digital Content Services, delivered record revenues of GBP9.4m
(year ended 31 March 2015: GBP7.2m) during the year through growing
our DPS services (secure management of data generated from film
cameras) and also with Disney where I'm pleased that we have
renewed our relationship to manage their International release
versions for a further 5 years.
Television had a resilient year, despite strong film demand
limiting opportunity, generating revenues of GBP5.2m (year ending
31 March 2015: GBP5.8m), with Pinewood's multi-camera HD studios
hosting a number of high profile light entertainment shows
including Still Open All Hours (BBC) and Birds of A Feather
(Freemantle).
Pinewood is host to 247 (31 March 2015: 242) tenant companies
across our Media Hub facilities and it is extremely encouraging
that tenant occupancy stands at 98% (year ending 31 March 2015:
97%) with over 90% of companies renewing leases that were due to
expire during the year.
Internationally, we have established Production Services
businesses in Canada, USA and Ireland where we continue to work
with our clients whilst they are on location.
In Atlanta, business was buoyant with the Company's share of
joint venture profits increasing from GBP400,000 for the year
ending 31 March 2015 to GBP1,200,000 for the year ending 31 March
2016. Phase Three of the Pinewood Atlanta Studios development is
currently under construction. When completed in early calendar year
2017, we will have added a further 128,000sq. ft. of stage space
creating a total of 346,000sq. ft. of stages at Pinewood Atlanta
Studios.
Film
Film revenues for the year ended 31 March 2016 were GBP53.0m
(year ended 31 March 2015: GBP43.9m), a year on year increase of
20.6%. The increase is due to high utilisation of stage and
ancillary studio space, expansion of the Group's offering in
complementary activities, growth in DCS revenues and a higher level
of international activity.
The largest film production based at Pinewood Studios during the
period was Star Wars: Episode VIII (Lucasfilm) and the largest
production at Shepperton Studios was Beauty and the Beast
(Disney).
Other major productions which were based at Pinewood and
Shepperton during the year included the 24th Bond film, SPECTRE
(Eon), Rogue One: A Star Wars Story (Lucasfilm) Assassin's Creed
(New Regency), Bridget Jones's Baby (Working Title/Universal) and
The Huntsman (Universal).
Pinewood Creative and 3D services have completed work for a
number of film, commercials and TV clients on the lot including
Disney, BBC and Discovery Channel. In addition the department has
successfully completed work for retailers including Burberry and
Harrods; the entertainment market including Merlin Group and
Kidzania. They also constructed a number of props and models for
major events in the UK including a Henry VIII exhibition at Hampton
Court.
DCS revenues included within the total film revenue for the year
ended 31 March 2016 were GBP9.4m (year ended 31 March 2015:
GBP7.2m).
Notable sound post production work completed during the year
included Everest (Working Title Films), Victor Frankenstein (20th
Century Fox), The Other Side of The Door (20th Century Fox) and
Roger Waters The Wall (Universal Pictures). The Company also
successfully completed sound work for the video games industry on
Uncharted (Sony) Guitar Hero Live (Activision) and War Hammer
(Creative Assembly).
Digital Production Services ("DPS"), the secure management of
data generated from digital film shoots on set and on location,
continues to grow with services provided to productions including
Rogue One: A Star Wars Story (Lucasfilm), Jason Bourne 5
(Universal), Time Out of Mind (New Regency), Life on the Road
(Independent) and Dr. Strange (Marvel). DCS continues to enhance
its offering to productions shooting on film, the growing number of
feature films choosing to shoot with digital camera technology and
television productions wishing to work in a digital file-based
environment at the Studios. As well as the Company offering dailies
grading for feature films and TV, the department has expanded its
offering with full picture post production services including
digital intermediate for Film and TV.
International
International revenues for the year included within Film were
GBP3.5m (year ended 31 March 2015: GBP3.1m) and relate to sales and
marketing agreements in Toronto, Malaysia and Dominican Republic,
and consultancy services provided in China, as further discussed
below.
Pinewood Toronto Studios
Pinewood Toronto Studios ("PTS") hosted the biggest budget
studio film to shoot in Ontario: Bravo 14 (aka Suicide Squad) which
began principal photography in June 2015 and ended in September
2015. Other productions to shoot at PTS during the year were
Paramount's xXx: The Return of Xander Cage and Downsizing. TV
series The Expanse - Season 1 (for Syfy Channel) wrapped in
September and started prep on Season 2 this April, The Strain -
(for F/X) started photography for Season 3 this January.
Pinewood Dominican Republic
Pinewood Dominican Republic ("PDR") hosted the Weinstein
Company's 47 Meters Down in August, and as part of Lantica Media's
co-financing deal with Pantelion (the Spanish language division of
Lionsgate Films): Ladrones, Cinderello, Navidad en el Caribe. PDR
handled all production service and water tank work for Paramount's
xXx: The Return of Xander Cage during February and March 2016.
Pinewood Malaysia
Pinewood Iskandar Malaysia Studios hosted the Netflix series
Marco Polo Season 2 from April 2015 to February 2016.
Pinewood Atlanta Studios
Pinewood Atlanta Studios ("PAS"), hosted Marvel's Captain
America 3: Civil War and Guardians of the Galaxy 2 which occupied
facilities in late 2015 with production commencing in April 2016.
In June 2015, construction was completed on Phase Two of
development, comprising 100,000sq. ft. of film sound stages (five
stages), 45,000sq. ft. of workshops and 20,000sq. ft. of offices in
addition to the six stages built in Phase One. Sony's Passengers
moved into the Phase Two stages once ready.
PAS has established several exclusive vendor relationships with
MBS Lighting, Hollywood Trucks and Home Depot. PAS also took over
sales and management of the Pinewood Atlanta Studios Production
Centre formerly managed by Rivers Rock LLC.
Pinewood Digital Content Services opened a preview theatre in
the Production Centre this March and serviced Fox Searchlight's
Three Billboards outside Ebbing, Missouri for on set digital
dailies in North Carolina.
Earlier this year PAS announced Phase Three of construction to
include 6 stages, 50,000sq. ft. of workshops and 20,000sq. ft. of
offices which are expected to be completed in early calendar year
2017.
China
The Company provides consultancy services to a number of leading
Chinese film industry companies. During the year the company
continued to provide advice on the design and construction of the
Qingdao Oriental Movie Metropolis, a film facility comprising 45
stages for the Wanda Group. Construction on Phase One commenced in
2015 with the studio complex scheduled to open in 2017. In addition
the Company continues to provide third party advice.
Pinewood Production Services
Pinewood International established new production services
divisions in Toronto (Pinewood Production Services Canada, "PPSC"),
Atlanta (Pinewood Productions Services Georgia, "PPSG") and Ireland
(Pinewood Productions Ireland Limited, "PPIL") to facilitate
productions shooting outside of the studio lots in each of these
territories.
Television
TV revenues for the year were GBP5.2m (year ended 31 March 2015:
GBP5.8m), with the year on year reduction being principally due to
strong film demand limiting opportunity.
Pinewood's dedicated multi-camera HD studio facilities hosted a
number of key UK light entertainment shows including Birds of A
Feather (Fremantle Media), Would I Lie To You (Endemol/Shine) and
Red Dwarf (BabyCow/UKTV). The TV studios also facilitated the live
election coverage for Channel 4 and A Dinosaur Autopsy for
Discovery network. In addition, utilising the company's flexible
media stages, the television business facilitated Bring The Noise
(Olga/Sky1) and a number of critically acclaimed Dramas including
The Crown (Leftbank/Netflix) and Humans (Kudos/Channel 4).
Pinewood Studio Wales
Pinewood Studio Wales ("PSW") has played host to a number of key
television dramas filming in Wales including The Bastard
Executioner (Fox) and more recently Sherlock (Hartswood/BBC) and
Class, a BBC; Dr Who spin off TV drama. Pinewood DCS in Wales and
London is servicing The Collection (Lookout Point). The tenant
community continues to grow with Alpha Grip and Take 2 joining PSW
recently.
Our TV media services offer continues to expand and now in
addition to our TV studios and media stages we offer Pinewood
Creative Services, Pinewood MBS Lighting and a comprehensive range
of Digital Content Services to the UK TV market.
Media Hub
Media Hub revenues inclusive of service, utility and facility
charges for the year were GBP7.6m (year ending 31 March 2015:
GBP6.2m). Media Hub revenue now includes GBP1.2m for Shepperton
Media Hub following the Shepperton Studios Property Partnership
transaction in December 2014.
The total number of Media Hub companies accommodated at the
year-end was 247 at Pinewood Studios and Shepperton Studios, with
occupancy of 98% across a net lettable area of 306,000 sq. ft.
(year ended 31 March 2015: 242 companies, 97% occupancy, 359,000sq.
ft.).
The Company accepted a surrender of the Technicolor lease on 1
February 2016. The successful reallocation of this space to Film
production accommodation resulted in a 41,000 sq. ft. reduction in
the net lettable area in Media Hub.
Media Investment Review
Media Investment revenue for the year was GBP17.4m (year ended
31 March 2015: GBP19.0m).
The year on year reduction is principally driven by a reduction
in the earnings and cash neutral Film Production Company activity
(GBP15.5m in the year ending 31 March 2016 versus GBP17.8m in
2015).
Revenues excluding this have grown by 55.6% from GBP1.2m in the
year ending 31 March 2015 to GBP1.9m in the year ended 31 March
2016 principally due to other income and commissions earned from
the UK distribution activity undertaken by the Company on Spooks:
The Greater Good and Pressure and additional producer fees.
Yu-Fai Suen joined Pinewood Pictures on 7 March 2016 as Managing
Director.
Investment advisory
The Company has continued to advise on the Isle of Man Media
Development Fund and the Welsh Media Investment Budget.
During the year to date, the Isle of Man MDF has invested in
five online games including JCB: Mars Pioneer and Grimm: Origins
(an ancillary to the successful Universal TV series Grimm), as well
as Scott Free's Mindhorn, a comedy feature film set on the IOM.
Pinewood advised on the Welsh MIB investment into horror feature
film Don't Knock Twice from the Welsh company Red & Black
Films.
The Welsh Ministers also invested, alongside Pinewood, in both
Lone Scherfig's Their Finest Hour and a Half and Amazon-backed TV
series The Collection to be produced by Lookout Point/BBC
Worldwide. Investment advisory revenue for the year was GBP0.8m
(year ended 31 March 2015: GBP0.8m).
In addition to the investment made by third party funds, the
Group also provided film finance totalling GBP1.4m to its
wholly-owned subsidiary FPCs (year ended 31 March 2015:
GBP1.0m).
During the year the Company earned other commissions and
investment recoupment totalling GBP1.2m against film investments
made in prior years (year ended 31 March 2015: GBP0.5m). The
recoupment revenue has been generated principally from the release
of Riot Club and further income from Dom Hemingway.
Film production companies
Revenue from FPCs for the year totalled GBP15.5m (year ended 31
March 2015: GBP17.8m). An FPC is considered active from the close
of film financing until the production is completed and
delivered.
The operating loss from FPC activity of GBP3.5m (year ended 31
March 2015: GBP4.3m) was offset by UK film tax relief of GBP3.3m
(year ended 31 March 2015: GBP4.1m) as expected.
Included in the Group net cash balance of GBP1.4m, is GBP2.0m
(year ended 31 March 2015: GBP0.6m) restricted solely for use in
the production of specific FPC operations. The Group trade
receivables balance of GBP11.4m includes GBP6.4m (31 March 2015:
GBP0.7m) consolidated from FPC activities whilst the Group trade
and other payables balance of GBP42.7m includes GBP12.9m (31 March
2015: GBP5.1m) from FPCs. The year on year variance is driven by
the timing of completion of active FPCs.
Financial Review
Finance Director's Overview
Since changing the financial year end, which resulted in the
period to 31 March 2012 being a 15 month period, Group revenue has
increased from GBP55.0m for the year ended 31 March 2013 to
GBP83.2m for the year ended 31 March 2016.
In Media Services revenue has grown from GBP46.5m for the year
ended 31 March 2013 to GBP66.6m for the year ended 31 March 2016,
representing compound annual growth of 12.7% over this period.
Whilst this includes the impact of the acquisition of the 50% share
of Shepperton Studios Property Partnership (Media Hub revenue has
increased from GBP5.6m to GBP7.6m over this time period principally
due to this) the key driver for the increase is Film revenue which
has increased from GBP35.2m in 2013 to GBP53.0m for the year ended
31 March 2016. The Group's strategy to increase capacity, invest in
digital activities and leverage the Pinewood brand is reflected in
this growth.
In Media Investment performance is most meaningfully assessed at
the profit after tax level which, for the year ended 31 March 2016,
is a profit of GBP0.4m (year ended 31 March 2015: GBP0.1m loss).
The segment (established in 2012) has recorded improving results
and the Company believes the profit recorded for the year ended 31
March 2016 once again represents an endorsement of the Group's
strategy to increase activity in this segment.
Key Performance Indicators
The Board uses a number of key performance indicators ("KPIs")
to monitor the Company's performance, as well as to measure
progress against the Company's objectives.
The KPIs used to measure performance and which are discussed in
further detail below are:
Year ended Year ended
31 March 2016 31 March 2015
--------------------------------------------------------------- --------------- ---------------
Media Services
--------------------------------------------------------------- --------------- ---------------
Revenue (including inter-segment) GBP66.6m GBP57.2m
--------------------------------------------------------------- --------------- ---------------
Operating profit before exceptional items GBP16.9m GBP11.0m
--------------------------------------------------------------- --------------- ---------------
Return on capital employed 12.8% 11.2%
---------------------------------------------------------------- --------------- ---------------
Stage occupancy 90% 80%
---------------------------------------------------------------- --------------- ---------------
Media Hub occupancy (as a % of net lettable area) 98% 97%
---------------------------------------------------------------- --------------- ---------------
Media Investment
--------------------------------------------------------------- --------------- ---------------
Number of active Film Production Companies during the year 4 7
---------------------------------------------------------------- --------------- ---------------
Profit/(loss) after tax GBP0.4m (GBP0.1m)
--------------------------------------------------------------- --------------- ---------------
Film finance funding invested by the Group GBP1.6m GBP1.0m
--------------------------------------------------------------- --------------- ---------------
Film finance funding from third party funds GBP7.7m GBP6.4m
--------------------------------------------------------------- --------------- ---------------
Group performance
--------------------------------------------------------------- --------------- ---------------
Normalised profit after tax GBP10.1m GBP6.7m
--------------------------------------------------------------- --------------- ---------------
Normalised earnings per share 17.7p 13.5p
---------------------------------------------------------------- --------------- ---------------
Cash generated from operations GBP21.7m GBP18.4m
---------------------------------------------------------------- --------------- ---------------
Net debt GBP72.8m GBP71.9m
---------------------------------------------------------------- --------------- ---------------
Group profit after tax for the year ended 31 March 2016 was
GBP8.1m (year ended 31 March 2015: GBP8.1m) including the impact of
exceptional items and the movement on fair value of financial
derivatives.
Normalised profit after tax and earnings per share are adjusted
to exclude exceptional items and the mark to market impact of the
Company's financial derivatives. Results for the Group are more
meaningfully reviewed at the after tax level due to the impact of
the UK Film Tax Credit in the Media Investment segment.
Normalised profit after tax and earnings per share of GBP10.1m
and 17.7p respectively represent growth of 51.6% and 31.1% (year
ended 31 March 2015: GBP6.7m and 13.5p). The growth is driven by
increased Media Services sales revenue, the benefit of the
acquisition of the 50% share of Shepperton Studios Property
Partnership ("SSPP"), previously owned by Aviva Investors, in
December 2014, an improved Media Services operating margin, and the
profit after tax in Media Investment.
EBITDA (earnings before exceptional items, interest, tax,
depreciation and amortisation) for the year was GBP21.0m (year
ended 31 March 2015: GBP12.2m), including GBP3.7m of Media
Investment loss (year ended 31 March 2015: GBP5.3m loss) but
excluding the EBITDA attributable to the Group's share of joint
ventures. After adding back the FPC loss which is offset by the UK
Film Tax Relief and the Group's share of joint ventures, adjusted
EBITDA is GBP25.6m (year ended 31 March 2015: GBP17.6m).
Profit margins
The Media Services segment gross margin, including intersegment
revenues, for the year ended 31 March 2016 was 41.4% (year ended 31
March 2015: 37.2%). The Media Services operating margin before
exceptional items is 25.3% (year ended 31 March 2015: 19.3%). The
year on year increase is principally driven by operational gearing
and the acquisition of the other 50% of SSPP offset by an increase
in depreciation costs.
Results for the Media Investment segment are more meaningfully
reviewed at the profit after tax level due to the impact of the UK
Film Tax Relief.
The profit after tax for the segment is GBP0.4m (year ended 31
March 2015: GBP0.1m loss).
Normalised Group profit after tax for the year ended 31 March
2016 was GBP10.1m which was a 12.1% margin (year ended 31 March
2015: GBP6.7m, 8.9% margin).
Exceptional items
The Group discloses as exceptional items on the face of the
income statement those items which, because of the nature and
expected infrequency of the events giving rise to them, merit
separate disclosure to allow users of the financial statements to
better understand the elements of financial performance in the
year, so as to facilitate comparison with prior periods and to
better assess trends in financial performance.
The Company earned net exceptional operating income of GBP0.4m
(year ended 31 March 2015: GBPnil) as detailed below, consisting of
GBP0.3m of exceptional costs and GBP0.7m of exceptional income.
Strategic review
On 10 February 2016 the Company announced that it had appointed
Rothschild to advise on a strategic review of the Company. Expenses
incurred to 31 March 2016 relate to professional fees and were
GBP0.3m (year ended 31 March 2015: GBPnil).
Technicolor lease surrender
During the year the Company accepted a surrender of the lease to
Technicolor Limited. The net income from the lease surrender, after
related expenses, was GBP0.7m (year ended 31 March 2015:
GBPnil).
These exceptional items are further disclosed in Note 4 of these
financial statements.
In the prior year to 31 March 2015, the Company also earned
exceptional income (after operating profit) of GBP1,952k, which
arose as a result of the SSPP transaction as detailed further in
Note 5.
Return on capital employed
The Company measures return on capital employed ("ROCE") for the
Media Services segment by reference to annualised operating profit
before exceptional items, including intersegment revenue and share
of results of joint ventures, as a percentage of average capital
employed, being total equity plus net debt. ROCE for the twelve
months ended 31 March 2016 was 10.3% (twelve months ended 31 March
2015: 10.1%).
The increase in ROCE is principally driven by capital investment
during previous years, including SSPP, now becoming revenue
generating.
The PSDF is a capital intensive project with significant
long-term infrastructure spend front-loaded. Capital employed at 31
March 2016 includes GBP53.7m of assets in the course of
construction and land of GBP5.3m relating to the project, totalling
GBP59.0m (31 March 2015: GBP11.4m) which were non-revenue
generating in the year, and are not expected to be so until the
year ending 31 March 2017. Excluding these assets from average
capital employed gives an adjusted ROCE of 12.8% for the year ended
31 March 2016 and 11.2% for the prior period.
Taxation
The total corporation tax credit for the period, based on profit
before tax of GBP7.8m, was GBP0.3m (year ended 31 March 2015:
GBP3.1m).
Corporation tax paid in the year ended 31 March 2016 was GBP1.2m
(year ending 31 March 2015: GBP1.2m).
The Group qualified for an aggregate film tax credit of GBP3.3m
(year ended 31 March 2015: GBP4.1m) on the expenditure from the
film production companies that are group subsidiaries.
The underlying rate of tax on profit before accounting for UK
film tax relief from FPCs, prior year adjustments and exceptional
items is 23.5% (year ended 31 March 2015: 23%).
Liquidity management
The Company's cash balance (including restricted cash of
GBP2.0m) decreased by GBP5.0m during the year, which includes a
GBP1.5m increase in the FPC cash balance relating to FPC activity
that is not available for general business operations. The main
drivers of this decrease are the Company's investing activities
during the period, principally in relation to the PSDF Phase One
development.
As anticipated capital expenditure has increased from GBP7.1m in
the comparative year to GBP46.3m principally due to the PSDF Phase
One development.
As a result of the share placing on 17 April 2015, the
cancellation of existing bank facilities and the inflow from new
banking facilities agreed on 6 March 2015, cash inflow from
financing activities in the period was GBP21.8m (year ended 31
March 2015: GBP35.1m).
The movements in the Company's cash position has had an impact
on net debt and gearing. At 31 March 2016 net debt was GBP72.8m
although this included GBP2.0m of restricted FPC cash. Excluding
this amount, net debt was GBP74.8m (31 March 2015: GBP71.9m
including FPC cash; GBP72.5m excluding FPC cash). Gearing has
decreased from 78.6% at 31 March 2015 to 58.5% at 31 March 2016,
excluding fair value and loan issue costs principally due to the
cash inflow from financing activities being through relatively more
equity than debt at the balance sheet date.
Interest rate risk is the risk that the fair value or future
values of a financial instrument will fluctuate because of changes
in market interest rates. The Company's exposure to the risk of
changes in market interest rates relates primarily to the Company's
long term debt obligations with floating interest rates. In order
to manage its interest rate risk the Company's policy is to have at
least 50% of its borrowings at fixed rates of interest. To do this,
the Company enters into interest rate swaps, in which the Company
agrees to exchange, at specific intervals, the difference between
fixed and variable rate interest amounts calculated by reference to
an agreed-upon notional principle amount.
At 31 March 2016, the Group had the following interest rate
swaps in place to minimise the volatility in cash flows from a
change in LIBOR:
Year Year
ended ended
Effective interest 31 March 31 March
rate % Maturity 2016 2015
GBP000 GBP000
------------ -------------------- ------------- ---------- ----------
Interest 1.33% + variable
rate swap margin 1 July 2016 7,500 7,500
------------ -------------------- ------------- ---------- ----------
Interest 1.66% + variable 28 November
rate swap margin 2016 7,500 15,000
------------ -------------------- ------------- ---------- ----------
Interest 0.69% + variable 4 January
rate swap margin 2016 - 17,500
------------ -------------------- ------------- ---------- ----------
Interest 2.00% + variable 30 April
rate swap margin 2025 25,000 -
------------ -------------------- ------------- ---------- ----------
40,000 40,000
----------------------------------------------- ---------- ----------
Interest 2.08% + variable 30 April
rate swap* margin 2022 25,000 -
------------ ----------------- --------- -------
25,000 -
------------ ----------------- --------- -------
* The instrument commenced on 1 July 2016 with contractually
committed fair value recognised at 31 March 2016
The interest rate swap finance costs are charged to the Group
income statement as payable. Any change in the fair value is
recognised in the income statement.
Net finance costs for the period were GBP6.9m (year ended 31
March 2015: GBP3.9m) which included fair value movements on
interest rate swaps of GBP2.9m (year ended 31 March 2015:
GBP0.1m).
Dividend
The Board is committed to pay dividends in line with its
dividend policy of not less than three times cover. The Board has
declared a final dividend of 3.2p (year ended 31 March 2015:
2.8p).
The dividend is GBP1,837,000 and is to be paid on 3 October 2016
to shareholders on the register at close of business on 2 September
2016 (ex-dividend date of 1 September 2016).
Share issuance
On 17 April 2015 the Company raised GBP30m (before expenses of
GBP1.2m) by way of a placing of 8,000,000 new ordinary shares at a
price of 375 pence per new ordinary share. As a consequence of the
new share issue GBP1.2m of costs have been charged to the share
premium account.
Going concern
In assessing the going concern basis, the Directors considered
the Group's business activities, the financial position of the
Group and the Group's financial risk management objectives and
policies. The Group meets its day-to-day working capital
requirements through its bank facilities. The Group's forecasts and
projections, taking account of reasonably possible changes in
trading performance, economic uncertainty and the results of the
European Referendum, show that the Group should be able to operate
within the level of its current facilities. Although the Group is
in a net current liability position of GBP22.7m, the Group
currently has GBP62.0m of undrawn committed loan facilities in
place. The Directors are confident these undrawn debt facilities
provide sufficient headroom to support continued trading.
The Directors have specifically considered the level of capital
commitment at 31 March 2016 and the projected spend on the PSDF
compared with the existing financing and the additional financing
completed in April 2015 (see Note 12).
Information on the Group's risks, management and exposure are
set out in the "Principal Risks and Uncertainties" section of the
Annual Report. The Directors, having made appropriate enquiries,
consider that the Group has adequate resources to continue in the
operational business for the foreseeable future and have therefore
continued to adopt the going concern basis in preparing the
financial statements.
Corporate Responsibility Review
Corporate Affairs Director's Overview
During the year ended 31 March 2016 we have continued to play a
key role in working with opinion formers and stakeholders, and
deploying evidence based arguments for the development of policy
around the screen based industries in general, but particularly
around skills and training to ensure the UK has a skilled
workforce. In 2015 the total UK film production activity was GBP1.4
billion, the second highest total since records began, and total UK
production spend for high-end television programmes was GBP759
million. High levels of production spend have continued with GBP297
million spent on film and high-end television in Q1 2016. With
additional stage capacity coming on stream from 30 June 2016 at
Pinewood Studios, adding to the skilled workforce to meet the
growing demand from film and high-end television productions which
is why we have been actively involved in developing these skills
with the BFI, Creative Skillset, Film Skills Council, the British
Film Commission and the Local Enterprise Partnership.
As Board Director responsible for China, a key part of our
international growth strategy, I am pleased with the progress to
date. During the year China accounted for 38.3% of international
revenues. China is the second largest cinema box office in the
world and is likely to be the largest next year. The Company
currently provides consultancy services to Chinese film industry
companies. During the period, the Company continued to provide
advice on the design and construction of the Qingdao Oriental Movie
Metropolis, a film facility comprising 45 stages for the Wanda
Group. Construction on Phase One commenced in 2015 and is scheduled
to open in 2017. In addition the Company completed the provision of
consultancy advice to the Shanghai Film Group on its studio
facilities in Chidden. The Company is in the process of opening a
representative office in Beijing and exporting its UK educational
and training initiatives such as The Business of Film, MOOC, and
the Pinewood Studios Management Diploma to the flourishing Chinese
film market.
Corporate Responsibility
Pinewood has been at the forefront of developing a more business
focused approach in film making and has developed, in conjunction
with the Open University, a free online course (MOOC) 'The Business
of Film'. The course is available for anyone to inspire learners,
whatever their background to progress and continue to develop the
UK industry into the future. Nearly 10,000 people have completed
the course to date.
We continue to support and encourage the next generation of
employees in the UK screen-based industries. By giving training,
studio information visits and work experience, the Company seeks to
develop a skilled production resource base in order to maintain the
high degree of excellence that draws overseas productions to this
country.
During the period we have sponsored Lord Puttnam's Atticus
Education Online Seminars on Creativity in Film based at Bath Spa
University and the Best British Short Film Award for the Iris Prize
through the use of our post production facilities.
The Company supports two undergraduate scholarships to the
National Film and Television School. Pinewood offers the Rye Studio
School with visits to the studios and the BFI Academy schemes which
introduce young people across the country to film and television
production.
Pinewood Studios, Shepperton Studios and Pinewood Studio Wales
also work with local schools, colleges and universities, including
Buckinghamshire New University, Amersham and Wycombe College,
Chalfont Community College and the London Film School. Visits to
local secondary schools and colleges (in line with section 106 for
PSDF) to explain about opportunities for work experience and roles
working directly for The Pinewood Studios Group and to give
information on jobs in the film and TV industries.
Employees
Training is seen as serving three main purposes: helping to meet
the Company's corporate aims and objectives; helping to improve the
individual's performance in undertaking their current duties; and
developing the individual's abilities and potential by extending
knowledge, skills and influencing attitudes. During the period, 50%
of training was health and safety-related and 50% related to skills
training and career progression. As part of the Pinewood Studios
Group Apprenticeship Scheme, seven apprentices were recruited in
2015 in electrical, plumbing, carpentry and digital. The Company's
Studio Management Diploma has been expanded with 44 employees and
ten external students having been enrolled on the course since
inception in 2013.
The Company actively considers the position of its employees'
rights through comprehensive and regularly reviewed employment
practices in the areas of recruitment, training, welfare,
remuneration and employee relations. As Corporate Affairs Director
I have Board responsibility for these areas and regularly update
the Board on relevant issues.
At the Executive Management Team level, the Group Human
Resources Manager maintains responsibility for all operational
human resources issues and provides the Board with a monthly
report.
In addition to a published grievance policy, the Company
maintains a 'Whistleblower' policy providing an opportunity for
employees to raise grievances with senior management initially and
then ultimately with the Senior Independent Non-Executive Director,
Ruth Prior.
The Company's stated policy on Equal Opportunities recognises
the diversity of individuals and has procedures in place to ensure
that recruitment and promotion recognises such diversity and is not
biased by any consideration of age, gender, disability, colour,
racial origin, religion or sexual orientation. We provide employees
with reasonable conditions of employment and career prospects.
Employees receive regular and relevant communication via the
Company's intranet site Spotlight and staff briefings regarding
operational issues and trading performance and, where appropriate,
the views of employees are sought in guiding business practices and
strategy.
Executive Management Team
The Executive Management Team members are the first line of
support for the Board and their combined experience and backgrounds
assist us in delivering the Group's strategy and maximising
stakeholder value. They are a key part of the succession plan for
the Group and their training and development needs are reviewed
regularly to ensure that the talent pool is developed and
retained.
Details of the Executive Management Team can be found on the
Group's website,
www.pinewoodgroup.com/about-us/management-team.
Health and Safety
The Company is committed to maintaining a safe working
environment and monitoring its already high standards of health and
safety, acknowledging its responsibilities under the Health and
Safety at Work Act 1974 and subordinate regulations.
The Company places the safety of all persons in high regard and
has a detailed policy that clearly details each employee's
responsibilities. With the continued high levels of business and
the Company's expansion, the Health, Safety and Fire Team remain
focused on raising the profile of Health and Safety both within the
business and with our clients. The Group Health, Safety and Fire
Team are always available to provide advice supplemented by
information on the Company's intranet, Spotlight, which is
accessible to all staff and clients.
There has been a very slight increase in the number of minor
staff accidents with no reportable injuries under the Reporting of
Injuries, Diseases and Dangerous Occurrences Regulations
("RIDDOR").
M T Rainey, Non-Executive Director, had Board accountability
during the year for Health and Safety issues, supported by Nicholas
Smith, Commercial Director and the Executive Management Team. The
Board monitors relevant Health and Safety issues each month.
Environmental
The Group's environmental policy seeks to minimise any adverse
impact that the Group's business activities may have on the
environment, to ensure we are compliant with the increasing number
of regulatory requirements, to reduce CO(2) emissions and to
continuously improve the environmental performance of the
Group.
This policy has been endorsed by the Environment Agency who,
following a recent visit to Pinewood, commented that the efforts
being made were a 'truly international success'.
Key to this success has been the holistic approach taken to all
environmental issues including reducing waste, the promotion of
travel plans and energy management to reduce CO(2) emissions.
Close cooperative working not only between the different
departments within the Company, but with the tenants, productions
and the selected partner companies has also helped to achieve this
goal.
Recycling
The Company continues to recycle as much domestic waste as
possible and diverts any non-recyclable waste from landfill to
local Energy from Waste (EfW) facilities where it is incinerated to
generate electricity for use in the neighbouring areas.
New operational procedures now ensure that any 'trade' waste
generated by the Studios is segregated to improve recycling rates,
deliver further cost savings and generate recycling rebates. This
system also allows for the re-use of unwanted materials, furniture
and equipment or for it to be donated to local charities and
organisations.
A regular audit of the studios' waste enables its source to be
identified and for it to be categorised and weighed to provide
valuable information as to where and how the volumes can be further
reduced.
Travel Plan
Travel Plan measures continue to be promoted to staff, tenants
and productions to further reduce the number of vehicles arriving
at the studios, to cut the associated CO(2) emissions and to
encourage sustainable travel options and meet our targets for
PSDF.
An independent travel survey has shown that the number of Single
Occupancy Vehicles (SOV) arriving at the studio on the date of the
survey constituted just 57% of all the journeys made. This is the
lowest recorded rate since the first survey in 2011 when the SOV
figure was at 65%.
Some of the travel initiatives include participation in the
Cycle to Work scheme, provision of cycle shelters, travel
information points, travel surveys, video conferencing facilities
and the installation of electric car charging points. The
Guaranteed Lift Home Policy and a Season Ticket Loan Scheme are
also used to encourage staff to choose more sustainable modes of
transport.
The two hybrid pool cars that are available when making business
journeys also help to reduce CO(2) emissions and as they are
centrally booked, this encourages members of staff to share
journeys with their colleagues.
The shuttle bus services provided to and from local railway
stations for anyone arriving at the studios, have the greatest
impact on reducing the number of car journeys and the associated
CO(2) emissions. In 2015 approximately 115,000 passenger journeys
were made across the Group, which was the highest figure since the
service began in 2008.
The addition of a new shuttle service to and from Gerrard's
Cross in 2015 has assisted with the growth in passenger figures and
is now becoming a well-established service.
In total approximately 678,000 passenger journeys have been made
on the shuttle buses since 2008, when they first became
operational.
Energy
The Group's absolute (or total) CO(2) emissions for 2015/16 were
4% lower than those in 2014/15 and 13% below those from the
baseline year of 2010/11.
The 2015/16 benchmark CO(2) figure shows a reduction of 34% when
compared to the Company's baseline CO(2) figure of 2010/11.
The significant reductions in CO(2) figures are achieved by the
continuing investment and focus on the Group's energy saving
measures and procedures identified by the Carbon Management Group.
The Group consists of representatives from various Departments to
identify and implement initiatives to reduce CO(2) emissions and
energy consumption including:
-- the conversion of Pinewood from gas oil to gas;
-- replacing existing gas oil boilers with more energy-efficient gas fired models;
-- measuring and monitoring of energy consumption;
-- management of Building Management Systems (BMS);
-- the identification of unnecessary energy consumption;
-- extending the use of the Automated Meter Reading (AMR) system; and
-- the installation of energy-efficient motors, devices and
systems wherever possible, including stage lighting and boiler
controls.
Compliance Schemes
The Company has to participate in the Government's Carbon
Reduction Commitment Energy Efficiency Scheme (CRC), which aims to
cut CO(2) emissions by reducing energy consumption. An 'Allowance'
must be purchased from the Department of Energy and Climate Change
(DECC) for every qualifying tonne of CO(2) emitted by the
Group.
The Group must now also comply with additional mandatory schemes
including the Energy Saving Opportunities Scheme (ESOS) that
requires energy audits to be carried out every 4 years, Minimum
Energy Performance Standards (MEPS) that sets minimum standards for
a building's energy efficiency and the Heat Network (Metering and
Billing) Regulations 2014 that requires specific heating systems to
be identified and reported. In addition to the reporting element
this scheme also requires that heat meters are installed in
specified locations to assist with the monitoring of energy
use.
Principal risks and uncertainties
The Board views effective risk management as a primary part of
the Group's wider strategy and is fully committed to the
identification, evaluation and management of significant risks
facing the Group. The table below outlines the key risks and
uncertainties identified by the Board, together with an outline of
mitigation activities.
1. General risks
Risk Description Mitigation
-------------------------------------- -------------------------------------- --------------------------------------
Importance of key customers and big The Group's largest customers account The Group maintains strong,
budget films for a high percentage of revenues. If long-standing relationships through
'big budget' filmmakers consistent levels of service
cease to choose the Group's and retention of employees to offer
facilities, or if Pinewood's key continuity.
customer base experiences financial
difficulties, this could reduce The Group continues to diversify its
revenues. revenues through the development of
its strategy and
demand for the Group's facilities
continues to exceed supply.
In addition, strong relationships are
maintained with key industry decision
makers at government
level to continue to highlight the
importance of the tax credit regime.
-------------------------------------- -------------------------------------- --------------------------------------
Competition The Group competes in an international The Directors believe that the Group
marketplace and film producers are has significant competitive advantage
able to choose from in its market.
a number of studios worldwide.
The Group continues to invest both in
Were other existing studios to invest the UK and overseas to ensure that the
significantly, or new studios to be expectations
successfully established and demand from the industry are met.
either in the UK or elsewhere, this This includes investment in the PSDF
may have a material adverse effect on and also further
the Group's market investment in foreign studio
share, reduce its bargaining power in operations such as Pinewood Atlanta
commercial negotiations, and threaten Studios via a joint venture
profitability with River's Rock LLC.
due to ongoing operational costs being
largely fixed in nature.
-------------------------------------- -------------------------------------- --------------------------------------
Industrial action Members of the various trade The Group maintains strong,
guilds/unions work on a high long-standing relationships with
proportion of UK inward investment members of guilds and unions.
films. Industrial action could impact
on the production of films and
television programmes
at the Group's studio facilities and,
consequently, could have a material
impact on the Group's
business.
-------------------------------------- -------------------------------------- --------------------------------------
Loss of reputation The Group provides services to the The Directors and Executive Management
worldwide film and television team maintain strong relationships and
industries which requires open lines of
a strong reputation. Damage to that communication with customers and
reputation could have an adverse international partners, and consider
effect on the Group. the risks pertaining
to such partners before entering into
any significant commercial
arrangements.
The Group invests in and adapts all
key sites to maintain high levels of
security, and continues
to focus closely on safeguarding
confidentiality.
-------------------------------------- -------------------------------------- --------------------------------------
Exit from the European Union ("EU") The decision to exit from the EU may The Group's exposure to a UK exit from
have a limited impact on demand for the EU is largely mitigated as its
the Group's facilities. most significant
customers are US based. The Group also
has a significant presence in a number
of overseas
markets.
-------------------------------------- -------------------------------------- --------------------------------------
Risk of pandemics, acts of terrorism Diseases, terrorist threats and With UK-based studios and operational
and natural disasters natural disasters may reduce the partners in a number of international
appeal to customers of travel locations the
and may impact local operational Group consider that the availability
capability. of location options would reduce the
risk in this area.
-------------------------------------- -------------------------------------- --------------------------------------
2. Financial risks
Risk Description Mitigation
----------------- --------------------------------------- -------------------------------
Fiscal incentives Changes to the UK's film, animation, Reasoned, evidence-based
video games and high end television arguments continue to
tax incentives or an increase of be put forward to the
incentives in overseas jurisdictions Government highlighting
could damage the attractiveness the cultural and economic
of the UK as a destination for contribution that screen-based
film making. industries make to the
UK economy.
----------------- --------------------------------------- -------------------------------
Exchange rates The majority of international film The Group assesses the
and high end television clients need for a formal foreign
are in the US and an adverse movement exchange hedging strategy
in currency exchange rates may on an annual basis.
result in a reduction in the Group's
competitive edge versus other European The risk is mitigated
or international locations. in part by the Group's
strategy to invest in
international sites.
The Group also holds
funds in foreign currencies
in international bank
accounts which can be
used for operational
purposes as required.
----------------- --------------------------------------- -------------------------------
Treasury Risks exist in a number of areas These are discussed
including credit risk, liquidity in detail in Note 29
risk, interest rate risk and market of the consolidated
risk. Group financial statements.
----------------- --------------------------------------- -------------------------------
3. Operational Risks
Risk Description Mitigation
---------------------- ----------------------------------------- --------------------------------
Pinewood Strategic The construction of Phase one of A leading construction
Development Framework the PSDF is dependent on the performance company has been appointed
("PSDF") of third party contractors and on a fixed price contract,
may suffer delays or may fail to with the necessary scale
achieve expected results. and credentials to undertake
this project.
The Group has engaged
experienced project
managers within the
business to monitor
the progress of the
construction.
As at 31 March 2016
the project was nearing
completion with the
five sound stage structures
in place and being internally
fitted out. The site
has become operational.
---------------------- ----------------------------------------- --------------------------------
Business continuity A major incident such as a fire A dedicated health,
and disaster or an explosion could put people safety and fire team
recovery and/or the sites of operation at carries out regular
risk, result in a loss of revenue risk evaluation. Further
and damage the Group's reputation. details can be found
in the Corporate Responsibility
In addition, given the profile section of the Annual
of the business and its operations, Report.
there is a risk that its sites
of operation or information technology A Business Continuity
systems could be subject to cyber-attack Team is also in place
or acts of terrorism. If these to ensure that the operational
occur, there is no guarantee that business continues as
trading will not suffer in the far as possible in the
short or medium term. event of a major incident.
The Group has an insurance
portfolio, which looks
to mitigate potential
incidents described.
It also invests in information
technology and monitors
the adequacy of its
applications in use
on an ongoing basis.
---------------------- ----------------------------------------- --------------------------------
Environmental While the Directors believe that Details of the Group's
the Group currently complies with environmental policy
applicable environmental laws and are included on pages
regulations, any future changes 20-21 of this report.
or developments in environmental
regulation may adversely affect The Group has a health
its operations, results or financial and safety process for
condition. dealing with any asbestos
that becomes exposed
A number of buildings at Pinewood and, in accordance with
Studios and Shepperton Studios health and safety legislation,
are many decades old and contain engages the services
asbestos. If an accident or other of a specialist asbestos
unanticipated event were to result remover if required.
in any asbestos becoming exposed
at either studio, there is a risk All productions on site
that filming could be interrupted are required to have
or otherwise affected. public liability insurance
in place prior to accessing
any facilities.
---------------------- ----------------------------------------- --------------------------------
Ability to attract The Group relies on the continued The Executive Directors
and retain key services and performance of the are subject to service
personnel Executive Directors. agreements with notice
periods commensurate
The Directors place considerable to their level of seniority.
importance on attracting and retaining
top quality personnel and acknowledge The Group has a Remuneration
that competition for such personnel Committee which reviews
in the industry and wider market compensation packages
is intense. against market comparable
data to ensure a competitive
offering.
---------------------- ----------------------------------------- --------------------------------
Rising energy There is a general climate of increasing The Group engages energy
prices prices for all forms of energy. consultants who monitor,
and provide advice on
the energy markets.
The Group has also invested
in an energy efficient
replacement equipment
programme and an Automated
Meter Reading system
to measure and monitor
energy consumption.
---------------------- ----------------------------------------- --------------------------------
By order of the Board,
Ivan Dunleavy
Chief Executive
10 July 2016
Group income statement for the year ended 31 March 2016 and 31
March 2015
Year Year
ended ended
31 March 31 March
2016 2015
Notes GBP000 GBP000
---------------------------------------------------------------- ------ ---------- ----------
Revenue - continuing operations 3 83,182 75,002
---------------------------------------------------------------- ------ ---------- ----------
Cost of sales (58,357) (58,027)
---------------------------------------------------------------- ------ ---------- ----------
Gross profit 24,825 16,975
---------------------------------------------------------------- ------ ---------- ----------
Selling and distribution expenses (2,155) (2,036)
---------------------------------------------------------------- ------ ---------- ----------
Administrative expenses:
---------------------------------------------------------------- ------ ---------- ----------
* Recurring activities in the ordinary course of
business (9,358) (9,222)
---------------------------------------------------------------- ------ ---------- ----------
* Exceptional items 4 416 -
----------
Total administrative expenses (8,942) (9,222)
---------------------------------------------------------------- ------ ---------- ----------
(Loss)/profit on disposal of
property, plant and equipment (122) 41
---------------------------------------------------------------- ------ ---------- ----------
Operating profit 13,606 5,758
---------------------------------------------------------------- ------ ---------- ----------
Comprising:
---------------------------------------------------------------- ------ ---------- ----------
* Operating profit from Media Services activities,
before exceptional items 16,855 11,043
---------------------------------------------------------------- ------ ---------- ----------
* Operating loss from Media Investment in respect of
Film Production Companies (3,475) (4,328)
---------------------------------------------------------------- ------ ---------- ----------
* Operating loss from Media Investment activities,
excluding Film Production Companies (190) (957)
---------------------------------------------------------------- ------ ---------- ----------
* Exceptional items 4 416 -
---------------------------------------------------------------- ------ ---------- ----------
13,606 5,758
---------------------------------------------------------------- ------ ---------- ----------
Exceptional income 5 - 1,952
---------------------------------------------------------------- ------ ---------- ----------
Share of results of joint ventures 6 1,102 1,149
---------------------------------------------------------------- ------ ---------- ----------
Finance costs 7 (6,880) (3,890)
---------------------------------------------------------------- ------ ---------- ----------
Profit before tax 7,828 4,969
---------------------------------------------------------------- ------ ---------- ----------
Current corporation tax expense (2,544) (1,814)
---------------------------------------------------------------- ------ ---------- ----------
UK Film Tax Relief from Film
Production Companies 3,340 4,062
---------------------------------------------------------------- ------ ---------- ----------
Deferred tax (charge)/credit (503) 879
---------------------------------------------------------------- ------ ---------- ----------
Total tax credit 8 293 3,127
---------------------------------------------------------------- ------ ---------- ----------
Profit for the year 8,121 8,096
---------------------------------------------------------------- ------ ---------- ----------
Attributable to:
Equity holders of the parent 8,121 8,096
---------------------------------------------------------------- ------ ---------- ----------
Earnings per share
Basic and diluted for result
for the year 9 14.2p 16.4p
---------------------------------------------------------------- ------ ---------- ----------
The notes on pages 32 to 47 are an integral part of these
consolidated financial statements.
Group statement of other comprehensive income for the year ended
31 March 2016 and 31 March 2015
Year Year
ended ended
31 March 31 March
2016 2015
GBP000 GBP000
-------------------------------- ---------- ----------
Profit for the year, and total
comprehensive income for the
year, net of tax 8,121 8,096
--------------------------------- ---------- ----------
Attributable to:
Equity holders of the parent 8,121 8,096
--------------------------------- ---------- ----------
The notes on pages 32 to 47 are an integral part of these
consolidated financial statements.
Group statement of financial position at 31 March 2016 and 31
March 2015
31 March 31 March
2016 2015
Notes GBP000 GBP000
------
Assets
----------------------------------- ------ --------- ---------
Non-current assets
---------
Property, plant and equipment 10 214,449 165,398
----------------------------------- ------ --------- ---------
Investment property 11 - 5,796
--------- ---------
Intangible assets 5,604 5,604
----------------------------------- ------ --------- ---------
Long-term assets 166 510
----------------------------------- ------ --------- ---------
Investment in joint ventures 6 6,552 4,026
----------------------------------- ------ --------- ---------
Deferred tax asset - 119
----------------------------------- ------ --------- ---------
226,771 181,453
----------------------------------- ------ --------- ---------
Current assets
---------
Inventories 47 50
----------------------------------- ------ --------- ---------
Trade receivables 11,391 5,690
---------
Prepayments and other receivables 7,175 6,912
----------------------------------- ------ --------- ---------
Cash and cash equivalents 1,383 6,357
----------------------------------- ------ --------- ---------
19,996 19,009
----------------------------------- ------ --------- ---------
Total assets 246,767 200,462
----------------------------------- ------ --------- ---------
Equity and liabilities
Equity attributable to equity
holders of parent
----------------------------------- ------ --------- ---------
Share capital 5,741 4,941
---------
Share premium 76,696 48,718
----------------------------------- ------ --------- ---------
Capital redemption reserve 135 135
---------
Merger reserve 348 348
----------------------------------- ------ --------- ---------
Retained earnings 43,436 37,381
----------------------------------- ------ --------- ---------
Total equity 126,356 91,523
----------------------------------- ------ --------- ---------
Non-current liabilities
---------
Interest-bearing loans and
borrowings 12 74,164 78,275
----------------------------------- ------ --------- ---------
Derivative financial instruments 3,122 310
----------------------------------- ------ --------- ---------
Deferred tax liabilities 384 -
----------------------------------- ------ --------- ---------
77,670 78,585
----------------------------------- ------ --------- ---------
Current liabilities
----------------------------------- ------ --------- ---------
Derivative financial instruments 70 13
----------------------------------- ------ --------- ---------
Trade and other payables 42,671 30,341
----------------------------------- ------ --------- ---------
Provisions - -
----------------------------------- ------ --------- ---------
42,741 30,354
----------------------------------- ------ --------- ---------
Total liabilities 120,411 108,939
----------------------------------- ------ --------- ---------
Total equity and liabilities 246,767 200,462
----------------------------------- ------ --------- ---------
The financial statements of Pinewood Group plc, Company number:
03889552, were approved and authorised for issue by the Board of
Directors on 10 July 2016. They were signed on its behalf by:
Christopher Naisby, FCCA
Finance Director
The notes on pages 32 to 47 are an integral part of these
consolidated financial statements
Group statement of cash flows for the year ended 31 March 2016
and 31 March 2015
Year Year
ended ended
31 March 31 March
2016 2015
Notes GBP000 GBP000
------------------------------------------- ------ ---------- ----------
Cash flow from operating activities:
----------
Profit before tax 7,828 4,969
------------------------------------------- ------ ---------- ----------
Adjustments to reconcile profit
before tax to net cash flows:
------------------------------------------- ------ ---------- ----------
Depreciation, impairment and amortisation 7,681 6,455
------------------------------------------- ------ ---------- ----------
Loss/(gain) on disposal of property,
plant and equipment 122 (41)
------------------------------------------- ------ ---------- ----------
Exceptional income 249 (2,318)
------------------------------------------- ------ ---------- ----------
Share of results of joint ventures 6 (1,102) (1,149)
------------------------------------------- ------ ---------- ----------
Finance costs 6,880 3,890
------------------------------------------- ------ ---------- ----------
Cash flow from operating activities
before changes in working capital 21,658 11,806
------------------------------------------- ------ ---------- ----------
(Increase)/decrease in trade and
other receivables (7,361) 5,909
------------------------------------------- ------ ---------- ----------
Decrease in inventories 3 262
------------------------------------------- ------ ---------- ----------
Increase in trade and other payables 7,373 899
------------------------------------------- ------ ---------- ----------
Decrease in provisions - (499)
------------------------------------------- ------ ---------- ----------
Cash generated from operations 21,673 18,377
------------------------------------------- ------ ---------- ----------
Finance costs paid (3,444) (2,463)
------------------------------------------- ------ ---------- ----------
Corporation tax received in respect
of FPC activity 3,344 1,402
------------------------------------------- ------ ---------- ----------
Corporation tax paid (1,151) (1,211)
------------------------------------------- ------ ---------- ----------
Net cash flow from operating activities 20,422 16,105
------------------------------------------- ------ ---------- ----------
Cash flow from/(used in) investing
activities:
------------------------------------------- ------ ---------- ----------
Proceeds from disposal of property,
plant and equipment 487 56
------------------------------------------- ------ ---------- ----------
Purchase of property, plant and
equipment (46,283) (7,074)
------------------------------------------- ------ ---------- ----------
Investment acquisitions - (36,800)
------------------------------------------- ------ ---------- ----------
Investment in joint ventures 6 (1,845) (2,588)
------------------------------------------- ------ ---------- ----------
Distributions from joint ventures 6 421 820
------------------------------------------- ------ ---------- ----------
Net cash flow used in investing
activities (47,220) (45,586)
------------------------------------------- ------ ---------- ----------
Cash flow (used in)/from financing
activities:
------------------------------------------- ------ ---------- ----------
Dividends paid 9 (2,066) (1,285)
------------------------------------------- ------ ---------- ----------
Proceeds from issue of shares 28,779 -
------ ---------- ----------
Repayment of asset financing obligations (1,024) (1,542)
------ ---------- ----------
Proceeds from asset financing - 1,152
------------------------------------------- ------ ---------- ----------
Repayment of bank borrowings (75,000) (4,500)
------------------------------------------- ------ ---------- ----------
Proceeds from bank borrowings 73,000 41,500
------------------------------------------- ------ ---------- ----------
Payment of loan issue fees (1,865) (262)
------------------------------------------- ------ ---------- ----------
Net cash flow from financing activities 21,824 35,063
------------------------------------------- ------ ---------- ----------
Net (decrease)/increase in cash
and cash equivalents (4,974) 5,582
------------------------------------------- ------ ---------- ----------
Cash and cash equivalents/(overdraft)
at the start of the year 6,357 775
------------------------------------------- ------ ---------- ----------
Cash and cash equivalents at the
end of the year 1,383 6,357
------------------------------------------- ------ ---------- ----------
Included within the cash and cash equivalents balance is a total
of GBP2,040,000 (year ended 31 March 2015: GBP550,000) which is
unavailable for general use.
The notes on pages 32 to 47 are an integral part of these
consolidated financial statements.
Group reconciliation of movement in net debt for the year ended
31 March 2016 and 31 March 2015
Year Year
ended ended
31 March 31 March
2016 2015
Notes GBP000 GBP000
---------- ----------
Reconciliation of net cash flow
to movement in net debt:
--------------------------------------- ------- ---------- ----------
(Decrease)/increase in cash and
cash equivalents (4,974) 5,582
------------------------------------------------ ---------- ----------
Repayments of bank borrowings 75,000 4,500
------------------------------------------------ ---------- ----------
Proceeds from bank borrowings (73,000) (41,500)
------------------------------------------------ ---------- ----------
Repayments of asset financing
obligations 1,024 1,542
------------------------------------------------ ---------- ----------
Proceeds from asset financing - (1,152)
------------------------------------------------ ---------- ----------
Loan issue costs 1,865 262
------------------------------------------------ ---------- ----------
Amortisation of loan issue costs (778) (988)
------------------------------------------------ ---------- ----------
Movement in net debt (863) (31,754)
------------------------------------------------ ---------- ----------
Net debt at the start of the
year (71,918) (40,164)
------------------------------------------------ ---------- ----------
Net debt at the end of the year (72,781) (71,918)
------------------------------------------------ ---------- ----------
Attributable to:
--------------------------------------- ------- ---------- ----------
Cash and cash equivalents 1,383 6,357
------------------------------------------------ ---------- ----------
Non-current liabilities
--------------------------------------- ------- ---------- ----------
Term and revolving credit facilities (73,000) (75,000)
------------------------------------------------ ---------- ----------
Asset financing (2,251) (3,275)
------------------------------------------------ ---------- ----------
Unamortised loan issue costs 1,087 -
--------------------------------------- ------- ---------- ----------
Interest-bearing loans and borrowings (74,164) (78,275)
------------------------------------------------ ---------- ----------
Net debt at end of year (72,781) (71,918)
------------------------------------------------ ---------- ----------
Net debt at end of year excluding
restricted cash (74,821) (72,468)
------------------------------------------------ ---------- ----------
The notes on pages 32 to 47 are an integral part of these
consolidated financial statements.
Group statement of changes in equity
From 1 April 2015 to 31 March 2016
Capital
Share Share redemption Merger Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ --------- --------- ------------ --------- ---------- --------
At 1 April
2015 4,941 48,718 135 348 37,381 91,523
------------------ --------- --------- ------------ --------- ---------- --------
Equity issue 800 29,200 - - - 30,000
------------------
Costs of
equity placing - (1,222) - - - (1,222)
------------------ --------- --------- ------------ --------- ----------
Profit for
the year - - - - 8,121 8,121
------------------ --------- --------- ------------ --------- ---------- --------
Equity dividends
(Note 9) - - - - (2,066) (2,066)
------------------ --------- --------- ------------ --------- ---------- --------
At 31 March
2016 5,741 76,696 135 348 43,436 126,356
------------------ --------- --------- ------------ --------- ---------- --------
From 1 April 2014 to 31 March 2015
Capital
Share Share redemption Merger Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ --------- --------- ------------ --------- ---------- --------
At 1 April
2014 4,941 48,718 135 348 30,570 84,712
------------------ --------- --------- ------------ --------- ---------- --------
Profit for
the year - - - - 8,096 8,096
------------------ --------- --------- ------------ --------- ---------- --------
Equity dividends
(Note 9) - - - - (1,285) (1,285)
------------------ --------- --------- ------------ --------- ---------- --------
At 31 March
2015 4,941 48,718 135 348 37,381 91,523
------------------ --------- --------- ------------ --------- ---------- --------
The notes on pages 32 to 47 are an integral part of these
consolidated financial statements.
Publication of non-statutory accounts
The financial information set out in these condensed financial
statements does not constitute the Company's statutory accounts for
the years ended 31 March 2016 or 31 March 2015, but is derived from
those accounts. Statutory accounts for 2015 have been delivered to
the Registrar of Companies and those for 2016 will be delivered
following the Company's Annual General Meeting. The auditors have
reported on those accounts; their reports were unqualified, did not
draw attention to any matters by way of emphasis without qualifying
their report and did not contain statements under Sections 498(2)
or (3) Companies Act 2006.
Extract of notes to the consolidated financial statements for
the year ended 31 March 2016
1. Basis of preparation and statement of compliance
The consolidated financial statements of Pinewood Group plc and
all of its subsidiaries have been prepared in accordance with IFRS
as adopted by the EU as they apply to the financial statements of
the Group for the year ended 31 March 2016 and applied in
accordance with the Companies Act 2006.
The accounting policies which follow set out those policies
which apply in preparing the financial statements for the years
ended 31 March 2016 and 31 March 2015. The Group financial
statements are presented in UK sterling and all values are rounded
to the nearest thousand pounds (GBP000), except when otherwise
indicated. The Group financial statements have been prepared under
the historical cost convention, as modified by the revaluation of
certain financial assets and financial liabilities (including
derivative instruments) to fair value.
Going concern
In assessing the going concern basis, the Directors considered
the Group's business activities, the financial position of the
Group and the Group's financial risk management objectives and
policies. The Group meets its day-to-day working capital
requirements through its bank facilities. The Group's forecasts and
projections, taking account of reasonably possible changes in
trading performance, economic uncertainty and the results of the
European Referendum, show that the Group should be able to operate
within the level of its current facilities. Although the Group is
in a net current liability position of GBP22.7m, the Group
currently has GBP62.0m of undrawn committed loan facilities in
place. The Directors are confident these undrawn debt facilities
provide sufficient headroom to support continued trading.
The Directors have specifically considered the level of capital
commitment at 31 March 2016 and the projected spend on the PSDF
compared with the existing financing and the additional financing
completed in April 2015 (see Note 12).
Information on the Group's risks, management and exposure are
set out in the "Principal Risks and Uncertainties" section of the
Annual Report. The Directors, having made appropriate enquiries,
consider that the Group has adequate resources to continue in the
operational business for the foreseeable future and have therefore
continued to adopt the going concern basis in preparing the
financial statements.
The Group's assessment of going concern is explained further in
the Strategic report on page 17 of the Annual Report.
Basis of consolidation
The Group consolidated financial statements comprise the
financial statements of Pinewood Group plc and its subsidiaries as
at 31 March 2016 and 31 March 2015. All intercompany transactions,
balances, income and expenses are eliminated in full on
consolidation. All subsidiaries are consolidated for the financial
year ending 31 March 2016 regardless of the individual entities
statutory reporting date.
Subsidiaries are consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group. Where there is a
loss of control of a subsidiary, the consolidated financial
statements include the results for the part of the reporting year
during which Pinewood Group plc has control.
2. Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the
previous financial year, with the exception of newly applicable
standards, amendments or interpretations issued by the
International Accounting Standards Board ("IASB") that are
mandatorily effective for annual periods beginning on or after 1
January 2015.
Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial
statements.
Annual Improvements to IFRSs 2010 - 2012 Cycle
Annual Improvements to IFRSs 2011 - 2013 Cycle
Standards in issue but not yet effective
At the date of authorisation of these financial statements, the
Group has not applied the following new and revised IFRSs that have
been issued but are not yet effective and in some cases had not yet
been adopted by the EU:
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IAS 16 and IAS 38 (amendments) Clarification of Acceptable
Methods of Depreciation and Amortisation
IAS 11 (amendments) Accounting for Acquisitions of Interests in Joint Operations
IAS 16 and IAS 41 (amendments) Agriculture: Bearer Plants
IAS 27 (amendments) Equity Method in Separate Financial Statements
IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
Annual Improvements to IFRSs:
2012-2014 cycle (amendments) IFRS 5 Non-current Assets Held for
Sale and Discontinued Operations, IFRS 7 Financial Instruments:
Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial
Reporting
The Directors do not expect that the adoption of the Standards
listed above will have a significant impact on the financial
statements of the Group in future periods, except that: IFRS 9 will
impact both the measurement and disclosures of financial
instruments; IFRS 15 may have an impact on revenue recognition and
related disclosures; and IFRS 16 may have an impact on the
accounting for leases. Beyond the information above, it is not
practicable to provide a reasonable estimate of the effect of IFRS
9, IFRS 15 or IFRS 16 until a detailed review has been
completed.
3. Segment information and revenue analysis
The Group identifies its operating segments based
on a combination of factors, including the nature
and type of service provided and differences
in regulatory environment. Operating segments
are aggregated where there is a high degree of
consistency across these factors, and the segments
have similar economic characteristics. Operating
segments are reported in a manner consistent
with the internal reporting provided to the chief
operating decision maker.
The Group has determined it has two reportable
segments, Media Services, which provides studio
and related services to the film, television
and wider creative industries, and Media Investment,
which provides content investment and production
services, principally to the film industry.
The Group accounts for intersegment sales and
transfers as if the sales or transfers were to
third parties, i.e. at current market price.
Segment data for the year ended 31 March 2016
and 2015 is presented below:
Revenue: Year Year
ended ended
31 March 31 March
2016 2015
--------------------------------------
GBP000 GBP000
--------------------------------------
Media Services:
Film 52,987 43,946
Inter-segment Film 856 1,256
Television 5,202 5,826
-------------------------------------- ---------- ----------
Media Hub 7,552 6,199
-------------------------------------- ---------- ----------
66,597 57,227
-------------------------------------- ---------- ----------
Media Investment:
-------------------------------------- ---------- ----------
Film Production Companies 15,451 17,752
-------------------------------------- ---------- ----------
Investment advisory 804 804
-------------------------------------- ---------- ----------
Investment recoupment 578 475
-------------------------------------- ---------- ----------
Other income and commissions 608 -
-------------------------------------- ---------- ----------
17,441 19,031
-------------------------------------- ---------- ----------
Total segmental revenue 84,038 76,258
-------------------------------------- ---------- ----------
Elimination of inter-segment revenue (856) (1,256)
-------------------------------------- ---------- ----------
Group revenue 83,182 75,002
-------------------------------------- ---------- ----------
Income statement: Year ended Year ended
31 March 2016 31 March 2015
Media Media Total Media Media Total
Services Invest-ment Services Invest-ment
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ ----------- ------------- --------- ----------- ------------- ---------
Segment revenue-
total 66,597 17,441 84,038 57,227 19,031 76,258
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Cost of sales (39,018) (19,339) (58,357) (35,933) (22,094) (58,027)
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Elimination of
inter-segment
revenue (856) - (856) (1,256) - (1,256)
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Gross profit/(loss) 26,723 (1,898) 24,825 20,038 (3,063) 16,975
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Selling and distribution
expenses (2,155) - (2,155) (2,036) - (2,036)
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Administrative
expenses:
------------------------------ ----------- ------------- --------- ----------- ------------- ---------
Recurring in the
ordinary course
of business (7,591) (1,767) (9,358) (7,000) (2,222) (9,222)
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Exceptional items 416 - 416 - - -
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Total administrative
expenses (7,175) (1,767) (8,942) (7,000) (2,222) (9,222)
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
(Loss)/profit
on disposal of
property, plant
and equipment (122) - (122) 41 - 41
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Operating profit/(loss) 17,271 (3,665) 13,606 11,043 (5,285) 5,758
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Operating profit/(loss)
before exceptional
expenses 16,855 (3,665) 13,190 11,043 (5,285) 5,758
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Exceptional income 1,952 - 1,952
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Share of results
of joint ventures 1,102 - 1,102 1,149 - 1,149
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Finance costs (6,880) - (6,880) (3,890) - (3,890)
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Profit/(loss)
before tax 11,493 (3,665) 7,828 10,254 (5,285) 4,969
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Corporation tax
(expense)/credit (3,574) 1,030 (2,544) (2,199) 385 (1,814)
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
UK film tax relief - 3,340 3,340 - 4,062 4,062
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Deferred tax credit/(charge) (206) (297) (503) 155 724 879
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Total corporation
tax (expense)/credit (3,780) 4,073 293 (2,044) 5,171 3,127
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
Profit/(loss)
after tax 7,713 408 8,121 8,210 (114) 8,096
------------------------------- ----------- ------------- --------- ----------- ------------- ---------
During the year, the Group provided film finance
totalling GBP1,445,000 to its wholly owned subsidiary
film production companies for the production
of Their Finest Hour and a Half and The Collection
(year ended 31 March 2015: GBP969,000 Take Down
and Genius).
Geographical information
Although revenues continue to arise predominantly
in the United Kingdom, being the Group's country
of domicile, the Group's international activity
continues to increase. For the year ended 31
March 2016, GBP3.5m of revenue was generated
from the Group's overseas activities, representing
4% of total revenue (year ended 31 March 2015:
GBP3.1m, 4%).
Information about major customers
Revenue from one Media Services customer, operating
through several separate subsidiaries, of GBP23.5m
(year ended 31 March 2015: one customer GBP22.6m)
was recognised in the year. No other single customer
contributed 10% or more of the Group's revenue
in either 2015 or 2016.
4. Exceptional administrative items
Exceptional administrative items relating to
the year ended 31 March 2016 totalled GBP416,000
and consisted of exceptional administrative expenses
of GBP322,000 and exceptional administrative
income of GBP738,000, as detailed below:
Strategic review
The Group incurred exceptional costs of GBP322,000
during the year in relation to a strategic review
which commenced in February 2016.
Technicolor lease surrender
During December 2015 Technicolor Limited, a tenant,
served notice to break its lease. After deducting
applicable costs, the net surrender premium of
GBP738,000 was accounted for as exceptional income.
The Group did not incur any exceptional administrative
expenses or income during the prior year ended
31 March 2015.
5. Exceptional income (after operating profit)
SSPP derecognition
In the prior year until 3 December 2014, the
Group held a 50% share in Shepperton Studios
Property Partnership ("SSPP") which was treated
as a joint venture under IFRS 11 Joint Arrangements.
On 3 December 2014, the Group acquired the 50%
previously owned by clients of Aviva Investors,
with the resultant 100% ownership leading to
SSPP becoming a subsidiary undertaking of the
Company. In accordance with IFRS 3 "Business
Combinations", the previous investment in the
venture was derecognised resulting in a net gain
of GBP1,952,000 (after accounting for transaction
costs of GBP974,000 and loan break costs in SSPP
of GBP366,000).
6. Interests in joint ventures
As at 31 March 2016, the Group had interests in the following
joint ventures:
Joint Venture Name Principal place of business % ownership interest % voting rights
---------------------------- ---------------------------- -------------------- ---------------
Pinewood Atlanta LLC USA 40 50
---------------------------- ---------------------------- -------------------- ---------------
PAS Holdings Fayette LLC USA 40 50
---------------------------- ---------------------------- -------------------- ---------------
Pinewood Television Limited UK 50 50
---------------------------- ---------------------------- -------------------- ---------------
As at 31 March 2015, the Group had the following interests in
joint ventures:
Joint Venture Name Principal place of business % ownership interest % voting rights
------------------------- ---------------------------- -------------------- ---------------
Pinewood Atlanta LLC USA 40 50
------------------------- ---------------------------- -------------------- ---------------
PAS Holdings Fayette LLC USA 40 50
------------------------- ---------------------------- -------------------- ---------------
Pinewood Atlanta LLC / PAS Holdings Fayette LLC (collectively
'Pinewood Atlanta Studios')
The Group has a 40% interest in a joint venture with River's
Rock LLC which has developed and operates a film studio, known as
Pinewood Atlanta Studios, in Atlanta, Georgia. The Group also
provides sales and marketing services to the joint venture.
Pinewood Atlanta Studios is strategic to the Group's business given
the similarity in nature to the Group's core Media Services
operations.
The summarised financial information below represents amounts in
Pinewood Atlanta Studios statement of financial position at that
date, prepared in accordance with IFRSs, adjusted by the Group for
equity accounting purposes.
Pinewood Atlanta Studios
31 March 2016 31 March 2015
GBP000 GBP000
---------------------------------------- --------------- --------------
Non-current assets 69,241 49,744
----------------------------------------------- --------------- --------------
Current assets 1,114 983
----------------------------------------------- --------------- --------------
Non-current liabilities (non-recourse) (41,017) (30,343)
----------------------------------------------- --------------- --------------
Current liabilities (5,969) (3,238)
----------------------------------------------- --------------- --------------
Equity attributable to owners 23,369 17,146
----------------------------------------------- --------------- --------------
Other joint venture interests
During the current year to 31 March 2016, the Group acquired a
50% interest in Pinewood Television Limited. As at the balance
sheet date, the entity was in start-up phase, having incurred
certain start-up costs and not yet commenced revenue
generation.
During the prior year to 31 March 2015, the Group acquired the
50% interest in SSPP previously held by the clients of Aviva
Investors as described in Note 5. As a result of the transaction,
the Group now owns 100% of SSPP which has given the Group full
control over the Shepperton site and future investment in the
facilities there. Fuller details of this prior year transaction are
included in the Annual Report and Accounts for the year ended 31
March 2015.
The summarised financial information below represents amounts in
Pinewood Atlanta Studios' and Pinewood Television Limited's income
statement for the year to 31 March 2016, and in SSPP's income
statement until 3 December 2014, being the date of disposal of the
Group's joint venture interest in the prior year.
Total
Pinewood Atlanta Studios Other joint venture interests joint ventures
31 31 31 31 31 31
March 2016 March 2015 March 2016 March 2015 March 2016 March 2015
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ------------- ------------ -------------- --------------- -------------- ------------
Revenue 11,203 5,814 - 645 11,203 6,459
---------------- ------------- ------------ -------------- --------------- -------------- ------------
Profit/(loss)
and total
comprehensive
income 2,987 1,255 (196) 1,498 2,791 2,753
---------------- ------------- ------------ -------------- --------------- -------------- ------------
Group's share
of results of
joint ventures 1,200 400 (98) 749 1,102 1,149
---------------- ------------- ------------ -------------- --------------- -------------- ------------
Distributions
received from
joint venture
during the
year 421 - - 820 421 820
---------------- ------------- ------------ -------------- --------------- -------------- ------------
Reconciliation of the above summarised financial information to
the carrying amount of the interest in Pinewood Atlanta Studios
recognised in the consolidated financial statements:
Total
joint
Pinewood Atlanta Studios Other joint venture interests ventures
31 31 31 31 31 31
March 2016 March 2015 March 2016 March 2015 March 2016 March 2015
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------------- ------------ -------------- -------------- ------------- ------------
Net assets of
joint venture 23,369 17,146 304 - 23,673 17,146
------------------ ------------- ------------ -------------- -------------- ------------- ------------
Proportion of
Group's
ownership
interest in the
joint ventures (14,021) (10,288) (152) - (14,173) (10,288)
------------------ ------------- ------------ -------------- -------------- ------------- ------------
Other
adjustments:
----------------- ------------- ------------ -------------- -------------- ------------- ------------
Equity
contribution
from partner (2,948) (2,832) - - (2,948) (2,832)
------------------ ------------- ------------ -------------- -------------- ------------- ------------
Carrying amount
of the Group's
interest in the
joint venture 6,400 4,026 152 - 6,552 4,026
------------------ ------------- ------------ -------------- -------------- ------------- ------------
Reconciliation of movement in investment in joint ventures:
31 March 2016 31 March 2015
GBP000 GBP000
------------------------------------------------- -------------- --------------
Investment in joint ventures at 1 April 4,026 7,394
-------------------------------------------------- -------------- --------------
Additional investment in joint ventures 1,845 2,588
-------------------------------------------------- -------------- --------------
Share of results of joint ventures 1,102 1,149
-------------------------------------------------- -------------- --------------
Less disposal of joint ventures - (6,285)
-------------------------------------------------- -------------- --------------
Less distributions received from joint ventures (421) (820)
-------------------------------------------------- -------------- --------------
Investment in joint ventures at 31 March 6,552 4,026
-------------------------------------------------- -------------- --------------
7. Finance costs
Year Year
ended ended
31 March 31 March
2016 2015
GBP000 GBP000
------------------------------------- ---------- ----------
Bank loans and overdrafts 2,733 2,376
-------------------------------------- ---------- ----------
Interest rate hedging 362 233
-------------------------------------- ---------- ----------
Finance fee amortisation 778 989
-------------------------------------- ---------- ----------
Finance charges payable under asset
financing 137 145
-------------------------------------- ---------- ----------
Other finance charges - 18
-------------------------------------- ---------- ----------
Fair value movements of derivative
financial instruments 2,870 129
-------------------------------------- ---------- ----------
6,880 3,890
------------------------------------- ---------- ----------
8. Taxation
The major components of corporation tax expense are:
Year Year
ended ended
31 March 31 March
2016 2015
GBP000 GBP000
Consolidated income statement:
---------- ----------
Current corporation tax:
----------
UK corporation tax charge 2,212 1,646
----------------------------------------- ---------- ----------
Foreign Tax suffered 224 49
----------------------------------------- ---------- ----------
UK Film Tax Relief (3,340) (4,062)
----------------------------------------- ---------- ----------
Tax adjustments in respect of
disposals - 413
----------------------------------------- ---------- ----------
Amounts over/(under) provided
in previous years 108 (294)
----------------------------------------- ---------- ----------
Total current corporation tax
credit (796) (2,248)
----------------------------------------- ---------- ----------
Deferred tax:
------------------------------------ --- ---------- ----------
Relating to origination and
reversal of temporary differences 45 (313)
----------------------------------------- ---------- ----------
Effect of change in deferred 2 -
tax rates
------------------------------------ --- ---------- ----------
Amounts over/(under) provided
in previous years 456 (566)
----------------------------------------- ---------- ----------
Total deferred tax charge/(credit) 503 (879)
----------------------------------------- ---------- ----------
Tax credit in the income statement (293) (3,127)
----------------------------------------- ---------- ----------
The tax credit in the income
statement comprises:
------------------------------------ --- ---------- ----------
Tax on profit before exceptional
items 2,976 1,417
----------------------------------------- ---------- ----------
UK Film Tax Relief (3,340) (4,062)
))
---------------------------------------- ---------- ----------
Tax over/(under) provided in
previous years 564 (860)
----------------------------------------- ---------- ----------
Tax provision adjustments relating
to exceptional items (493) 378
----------------------------------------- ---------- ----------
Tax credit in the income statement (293) (3,127)
----------------------------------------- ---------- ----------
The Group statement of changes in equity is set
out on page 31.
9. Earnings per ordinary share and dividend
Earnings per ordinary share
Basic earnings per ordinary share are calculated by dividing
profit for the period attributable to the holders of ordinary
equity of the parent by the weighted average number of ordinary
shares outstanding during the period.
There are no potential ordinary shares outstanding from employee
share schemes and therefore basic earnings per share are equivalent
to diluted earnings per share.
The Group presents as exceptional items on the face of the
income statement those items where the cost is of such size or
incidence that the additional disclosure is required for the reader
to understand the financial statements.
Basic and diluted earnings per share are also presented
adjusting for the combined effect of any such exceptional items and
fair value movements on financial derivatives.
The following reflects the profit and number of shares used in
the basic and diluted earnings per ordinary share computations:
Year Year
ended ended
31 March 31 March
2016 2015
GBP000 GBP000
---------------------------------------- ---------- ----------
Profit attributable to equity
holders of the parent 8,121 8,096
----------------------------------------- ---------- ----------
Adjustments to profit for calculation
of normalised earnings per share:
---------------------------------------- ---------- ----------
Exceptional items (416) -
---------------------------------------- ---------- ----------
Exceptional income (after operating
profit) - (1,952)
----------------------------------------- ---------- ----------
Fair value movements of derivative
financial instruments 2,870 129
----------------------------------------- ---------- ----------
Taxation adjustments on non-recurring
items and fair value movements (493) 378
----------------------------------------- ---------- ----------
Adjusted profit for normalised
earnings per share 10,082 6,651
----------------------------------------- ---------- ----------
Thousands Thousands
---------------------------------------- ---------- ----------
Basic and diluted weighted average
number of ordinary shares 57,038 49,410
----------------------------------------- ---------- ----------
Year Year
ended ended
31 March 31 March
2016 2015
---------------------------------------- ---------- ----------
Earnings per share:
---------------------------------------- ---------- ----------
Basic and diluted for result
for the year 14.2p 16.4p
----------------------------------------- ---------- ----------
Basic and diluted for result
for the year adjusted for exceptional
items 17.7p 13.5p
----------------------------------------- ---------- ----------
Dividend paid
Year Year
ended ended
31 March 31 March
2016 2015
GBP000 GBP000
---------------------------------- ---------- ----------
Final dividend for year ending
31 March 2014 paid at 1.9p per
share - 939
----------------------------------- ---------- ----------
Interim dividend for year ending
31 March 2015 paid at 0.7p per
share - 346
----------------------------------- ---------- ----------
Final dividend for year ending
31 March 2015 paid at 2.8p per
share 1,607 -
---------------------------------- ---------- ----------
Interim dividend for year ending
31 March 2016 paid at 0.8p per
share 459 -
---------------------------------- ---------- ----------
2,066 1,285
---------------------------------- ---------- ----------
The Board is recommending a final dividend of 3.2p per share for
approval at the Annual General Meeting to be paid on 3 October 2016
to shareholders on the register at close of business on 2 September
2016 (ex-dividend date of 1 September 2016). Based on the shares in
issue at the date the Board approved the Group financial
statements, this would amount to a final dividend payment of
GBP1,837,000 (year ended 31 March 2015: GBP1,607,000).
10. Property, plant and equipment
Freehold Fixtures,
buildings and Leasehold fittings and Assets under
Freehold land improve-ments improve-ments equipment construc-tion Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Cost:
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 1 April 2014 56,684 66,913 3,379 35,919 3,467 166,362
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Acquisition of JV
interest - 46,030 - - - 46,030
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Additions 31 2,431 406 1,578 2,671 7,117
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Disposals - - (226) (1,651) - (1,877)
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 31 March 2015 56,715 115,374 3,559 35,846 6,138 217,632
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Additions - 2,080 75 1,779 47,572 51,506
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Disposals - (1,009) - (1,064) - (2,073)
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Transfer from
investment
property - 6,330 - - - 6,330
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Reclassification - 3,407 (3,407) - - -
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 31 March 2016 56,715 126,182 227 36,561 53,710 273,395
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Depreciation:
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 1 April 2014 7,690 14,757 1,991 23,697 - 48,135
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Provided during
the year - 3,175 201 2,585 - 5,961
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Depreciation on
disposals - - (226) (1,636) - (1,862)
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 31 March 2015 7,690 17,932 1,966 24,646 - 52,234
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Provided during
the year - 5,007 14 2,217 - 7,238
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Depreciation on
disposals - (374) - (1,034) - (1,408)
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Transfer from
investment
property - 882 - - - 882
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Reclassification - 1,966 (1,966) - - -
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 31 March 2016 7,690 25,413 14 25,829 - 58,946
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Net book value:
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 31 March 2016 49,025 100,769 213 10,732 53,710 214,449
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
At 31 March 2015 49,025 97,442 1,593 11,200 6,138 165,398
------------------ -------------- ---------------- ---------------- ---------------- ---------------- --------
Assets under construction at 31 March 2016 and 2015 relate to costs capitalised under the
Pinewood Studio Development Framework. These are not depreciated. Land at 31 March 2016 and
2015 includes GBP5.3m of land for use in the PSDF. Construction of Phase One of the development
continued during the year ended 31 March 2016 and became operational on 30 June 2016.
No borrowing costs were capitalised during the current or prior year.
The Group's long-term loan is secured by a floating charge over the Group's assets.
Fixtures, fittings and equipment include the following amounts where the Group is a lessee
under non-cancellable finance lease agreements:
31 March 31 March
2016 2015
GBP000 GBP000
Cost - capitalised finance leases 5,227 5,227
------------------------------------ --------- ---------
Accumulated depreciation (1,593) (873)
------------------------------------ --------- ---------
Net book value 3,634 4,354
------------------------------------ --------- ---------
The lease terms are 5 years, and ownership of the assets lies
within the Group. Lease rentals amounting to GBP1,024,000 (year
ended 31 March 2015: GBP1,384,000) relating to the lease of this
equipment are included in the income statement.
11. Investment property
GBP000
--------------------------------- --------
Cost:
--------------------------------- --------
At 31 March 2015 and 31 March
2014 6,615
---------------------------------- --------
Disposals (285)
---------------------------------- --------
Transfer to property, plant and
equipment (6,330)
---------------------------------- --------
At 31 March 2016 -
--------------------------------- --------
Depreciation:
--------------------------------- --------
At 31 March 2014 686
---------------------------------- --------
Provided during the year 133
---------------------------------- --------
At 31 March 2015 819
---------------------------------- --------
Provided during the year 99
---------------------------------- --------
Depreciation on disposal (36)
---------------------------------- --------
Transfer to property, plant and
equipment (882)
---------------------------------- --------
At 31 March 2016 -
--------------------------------- --------
Net book value:
--------------------------------- --------
At 31 March 2016 -
--------------------------------- --------
At 31 March 2015 5,796
---------------------------------- --------
As at 31 March 2015, the Group's investment property
related to a long-term single building tenancy
at Pinewood Studios. During the year to 31 March
2016, the lease was surrendered, and the building
is being reconfigured for use by the Pinewood
business. Consequently, the asset has been reclassified
from Investment Property to Property, Plant and
Equipment.
12. Interest-bearing loans and borrowings
Effective
interest 31 March 31 March
rate Maturity 2016 2015
% GBP000 GBP000
------------------------ ---------- ------------ --------- ---------
Current borrowings
------------------------ ---------- ------------ --------- ---------
Bank overdraft Base rate Annual 657 -
+ 2.5% renewal
margin
------------------------ ---------- ------------ --------- ---------
Non-current borrowings
------------------------ ---------- ------------ --------- ---------
Term loan facility LIBOR + 29 May 73,000 -
variable 2019
margin
------------------------ ---------- ------------ --------- ---------
LIBOR +
Revolving credit variable 20 November
facility margin 2019 - 75,000
------------------------ ---------- ------------ --------- ---------
5 November
Asset financing 6.20% 2019 2,251 3,275
------------------------ ---------- ------------ --------- ---------
Non-current drawn
loan facilities 75,251 78,275
------------------------ ---------- ------------ --------- ---------
Secured bank loan (1,087) -
arrangement costs
------------------------ ---------- ------------ --------- ---------
74,164 78,275
------------------------ ---------- ------------ --------- ---------
Total current and non-current
interest-bearing loans
and borrowings 74,821 78,275
------------------------------------ ------------ --------- ---------
Banking facilities On 6 March 2015, the Company conditionally agreed
proposed new banking facilities of up to GBP135.0
million with Lloyds Bank plc, The Royal Bank
of Scotland plc, HSBC Bank plc and Barclays Bank
Plc, comprising:
- a GBP100.0 million term loan facility committed
to 29 May 2019, GBP45.0 million of which was
utilised to refinance the Company's existing
committed debt facilities and the remaining GBP55
million (the "Development Tranche") available
to draw down prior to 30 September 2016 to fund
phase one of the PSDF, with scheduled repayments
commencing in June 2017; and
- a GBP35.0 million multicurrency revolving credit
facility, which will be available to draw down
until 30 April 2019.
The Group has also retained its GBP5.0m overdraft
facility which is subject to annual review.
On 17 April 2015, the Group fully repaid and
terminated its previous banking facility and
drew under the new agreement for the first time.
These facilities are secured on certain of the
principal assets of the Group.
The term facility contains scheduled repayments
of GBP2.5m on 30 June 2017 and 31 December 2017,
increasing to GBP5.0m on each of 30 June 2018
and 31 December 2018. The revolving credit facility
has no scheduled repayments. On 25 January 2016
and 17 February 2016 the Company made payments
of GBP5.0 million and GBP4.0 million respectively
against previous term loan drawdowns. The Company's
banks have agreed that these payments do not
represent repayments.
The facility has a range of covenants and events
of default together with variable margins between
175 and 375 basis points over LIBOR.
Covenants
The banking agreements contain a range of covenants.
The Group was covenant compliant at 31 March
2016.
Asset financing facility
The asset financing facility comprises of both
a sterling chattel mortgage facility and a finance
lease facility which are over a fixed term with
fixed monthly payments and are secured over identifiable
assets of an equal value. These assets are classified
as 'Fixtures, fittings and equipment' within
'Property, plant and equipment' in the statement
of financial position.
13. Related party disclosures
The Group consists of a parent company, Pinewood Group plc,
incorporated in the UK and a number of subsidiaries and joint
ventures held directly and indirectly by Pinewood Group plc. Listed
below are details of the interests in subsidiaries, including the
country of incorporation which is also equivalent to each entity's
operating territory. Details of joint ventures are included in Note
6.
Subsidiaries
% equity interest
-------------------------------- --------------- ---------------------------
Country of 31 March
Company Name incorporation 31 March 2016 2015
-------------------------------- --------------- ----------------- --------
Pinewood Studios Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Shepperton Studios Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood-Shepperton Studios
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Teddington Studios Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood PSB Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Film Advisors
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Film Advisors
(W) Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Saul's Farm Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Shepperton Studios (General
Partner) Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Shepperton Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Baltray No.1 Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
The Studios Unit Trust Jersey 100 100
-------------------------------- --------------- ----------------- --------
Shepperton Studios Property
Partnership United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Baltray No.2 Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Shepperton Management
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Shepperton Facilities
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
PSL Consulting Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Studio Wales
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Germany Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Film Services
GmbH
Pinewood Proddd Germany 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Dominican Republic
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Malaysia Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood China Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Atlanta Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood USA Inc. USA 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Film Production
Studios Canada Inc. Canada 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Production Services
Canada Inc. Canada 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Last Passenger
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Belle Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Camera Trap
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Christmas Candle
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Robot Overlords
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Riot Club Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Pressure Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood KYF Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films No.10
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films No.11
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films No.12
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films No.13
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films No.14
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films No.15
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Films No.16
Limited United Kingdom 100 100
-------------------------------- --------------- ----------------- --------
Pinewood Media Development
Limited United Kingdom 100 -
-------------------------------- --------------- ----------------- --------
Pinewood Productions
Ireland Ireland 100 -
-------------------------------- --------------- ----------------- --------
Spacebear IR DAC Ireland 100 -
-------------------------------- --------------- ----------------- --------
There are no significant restrictions on the ability
of the Group to access or use assets and settle
liabilities, with the exception of the cash restrictions
relating to several film production company subsidiaries
("Pinewood Films No.X Limited").
Pinewood Group plc has committed to provide financial
support to several of its wholly owned subsidiaries
in a net current liability position to an amount
as may be required to enable each subsidiary to
fulfil its operational commitments to meet liabilities
as and when they fall due and carry on their business
as a going concern. Pinewood Group plc intends
to extend such support for a further 12 months
from the date the current commitments expire as
shown below.
Company Name Expiration date of financial support
Baltray No.1 Limited 20 October 2016
----------------------------------- ------------------------------------
Pinewood Shepperton Studios Limited 29 September 2016
----------------------------------- ------------------------------------
Pinewood Film Advisors (W) Limited 20 October 2016
----------------------------------- ------------------------------------
Pinewood PSB Limited 20 October 2016
----------------------------------- ------------------------------------
Pinewood Germany Limited 20 October 2016
----------------------------------- ------------------------------------
Sauls Farm Limited 20 October 2016
----------------------------------- ------------------------------------
Pinewood Films Limited 20 October 2016
----------------------------------- ------------------------------------
Pinewood Studio Wales Limited 22 October 2016
----------------------------------- ------------------------------------
Shepperton Studios Limited has a commercial property
lease on the Shepperton Studios property, owned
by Shepperton Studios Property Partnership, which
became a wholly owned subsidiary on 3 December
2014. In the prior year, the net cost to the
Group of principal lease rentals for the period
up to 3 December 2015 was GBP834,000. In addition,
the Group paid a top up rent to the partnership
based on certain of its trading activities at
the Shepperton Studios site for which the net
cost to the Group in the prior year for the period
to 3 December 2014 was GBP55,000.
Shepperton Management Limited manages the assets
of the partnership and until 3 December 2014
charged an asset management fee based on independent
valuations of the Shepperton Studios site. Asset
management fees charged in the prior year during
the period to 3 December 2014 were GBP279,000.
Peel Management fee
On 16 August 2012, the Group agreed an Advisory
and Non-Executive Directors Services fee of GBP40,000
per Director per annum with Peel Acquisitions
(Pegasus) Limited. Fees charged in relation to
these services during the year were GBP50,000
(year ended 31 March 2015: GBP120,000) of which
GBPnil remains outstanding for payment by the
Group at 31 March 2016 (31 March 2015: GBPnil).
Transaction with Director
The Group had a consultancy agreement with Gasworks
Media Limited, a company incorporated in the
Isle of Man, whose sole shareholder, Steve Christian,
was also an Executive Director of the Group until
his resignation on 5 May 2015. The total value
of the transactions during the year was GBP26,000
(year ended 31 March 2015: GBP384,000), of which
GBPnil remains outstanding for payment by the
Group at 31 March 2016 (31 March 2015: GBPnil).
Audit exemption
Pinewood Group plc has given statutory guarantees
against all the outstanding liabilities of the
below listed wholly-owned subsidiaries at 31
March 2016 under Section 479A of the Companies
Act 2006, thereby allowing these subsidiaries
to be exempt from the annual audit requirement
for the year ended 31 March 2016.
Although the Company does not anticipate the
guarantees to be called upon, the book values
of the guaranteed liabilities, excluding intercompany
balances, for each relevant subsidiary at 31
March 2016 are set out below.
Company Registration Number Book value of liabilities
Company Name 31 March 2016
---------------------------
GBP000
--------------------------------------------- --------------------------- -------------------------
Baltray No.1 Limited 05776674 178
--------------------------------------------- --------------------------- -------------------------
Baltray No.2 Limited 05778635 -
--------------------------------------------- --------------------------- -------------------------
Pinewood Dominican Republic Limited 07096246 668
--------------------------------------------- --------------------------- -------------------------
Pinewood Film Advisors (W) Limited 08864165 73
--------------------------------------------- --------------------------- -------------------------
Pinewood Films Limited 07660856 -
--------------------------------------------- --------------------------- -------------------------
Pinewood Germany Limited 07079399 -
--------------------------------------------- --------------------------- -------------------------
Pinewood Malaysia Limited 07074446 70
--------------------------------------------- --------------------------- -------------------------
Pinewood PSB Limited 06300755 6,374
--------------------------------------------- --------------------------- -------------------------
Pinewood Studio Wales Limited 08863162 768
--------------------------------------------- --------------------------- -------------------------
PSL Consulting Limited 08655214 882
--------------------------------------------- --------------------------- -------------------------
Saul's Farm Limited 06233879 -
--------------------------------------------- --------------------------- -------------------------
Shepperton Management Limited 05907027 -
--------------------------------------------- --------------------------- -------------------------
Shepperton Studios (General Partner) Limited 05913009 -
--------------------------------------------- --------------------------- -------------------------
Teddington Studios Limited 05365850 -
--------------------------------------------- --------------------------- -------------------------
Pinewood Media Development Limited 09592018 8
--------------------------------------------- --------------------------- -------------------------
Pinewood Robot Overlords Limited
Pinewood Riot Club Limited 08370083 2
--------------------------------------------- --------------------------- -------------------------
Pinewood Riot Club Limited 08446929 1
--------------------------------------------- --------------------------- -------------------------
Pinewood Pressure Limited 08519564 1
--------------------------------------------- --------------------------- -------------------------
Pinewood KYF Limited 08599286 3
--------------------------------------------- --------------------------- -------------------------
Pinewood Films No. 10 Limited 08818148 87
--------------------------------------------- --------------------------- -------------------------
Pinewood Films No. 12 Limited 08865668 493
--------------------------------------------- --------------------------- -------------------------
14. Date of approval of the preliminary announcement
The preliminary announcement was approved by the Board of
Directors on 10 July 2016.
15. Responsibility statement
We confirm that to the best of our knowledge:
(a) the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the
issue and the undertakings included in the consolidation taken as a
whole; and
(b) the management report includes a fair review of the
development and performance of the business and the position of the
issuer and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board on 10 July 2016:
Ivan Dunleavy Christopher Naisby
Chief Executive Finance Director
Company Secretary
A. M. Smith
Head Office, Registered office
and Director's address
Pinewood Group plc
Pinewood Road
Iver Heath
Buckinghamshire SL0 0NH
Company registration number
03889552
Investor relations website
available at www.pinewoodgroup.com
Auditors
Deloitte LLP
2 Hardman Street
Manchester
M60 2AT
Legal Advisers to the Company Financial Adviser
N.M. Rothschild and
Travers Smith LLP Sons Limited
10 Snow Hill 1 Park Row
London Leeds
EC1A 2AL LS1 5NR
Registrars and Receiving
Nominated Adviser and Broker Agents
Peel Hunt LLP
Moor House
120 London Wall
London
EC2Y 5ET Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Principal Bankers
The Royal Bank of Scotland
Lloyds Bank plc plc
25 Gresham Street 5-10 Great Tower Street
London London
EC2V 7HN EC3P 3HX
Barclays Bank Plc HSBC Bank plc
1 Churchill Place 8 Canada Square
London London
E14 5HP E14 5HQ
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URONRNAABAAR
(END) Dow Jones Newswires
July 11, 2016 02:00 ET (06:00 GMT)
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