Annual Report & Accounts 2013 - Pinewood Studios

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Annual Report & Accounts 2013 - Pinewood Studios

Pinewood Shepperton plcAnnual Report & Accounts 2013


Pinewood Shepperton plc is a leading provider of studioand related services to the global film and televisionindustry. Our services support film production, filmedtelevision and studio television recording, digital contentservices and facilities for media related businesses.The Group’s strategy is to:• Optimise the use of existing facilities;• Enhance the Studios through improvement and expansion;and• Develop other opportunities that provide benefits tothe Group.ContentsHighlights 1Chairman’s statement 3Operating review 5Financial review 11Board of Directors 16Directors’ report 18Key business risks 23Corporate governance 25Employees 32Corporate responsibility 34Directors’ remuneration report 36Consolidated financial statementsIndependent auditor’s report 42Group income statement 44Group statement of othercomprehensive income 45Group statement of financialposition 46Group statement of cash flows 47Group reconciliation of movementin net debt 48Group statement of changesin equity 49Notes to the consolidated financialstatements 50Company financial statements(UK GAAP)Independent auditor’s report 96Parent Company balance sheet 98Notes to the financial statements 99Company information 112


Pinewood Shepperton plc 1Annual Report & Accounts 2013Highlights• Revenue £55.6m(15 month period ended 31 March 2012: £63.0m)• Operating profit £5.4m(15 month period ended 31 March 2012: £2.7m)• Operating profit before exceptional items £8.4m(15 month period ended 31 March 2012: £13.2m)• Operating profit from Media Services activities £10.5m(15 month period ended 31 March 2012: £13.9m)• Basic earnings per share 3.6p(15 month period ended 31 March 2012: 6.3p loss)• Basic earnings per share adjusted for exceptional items10.1p (15 month period ended 31 March 2012: 14.6p)• Final dividend of 1.5p per share declared(15 month period ended 31 March 2012: nil)• Net debt of £44.7m(31 March 2012: £50.4m)and gearing ratio of 55.8% (31 March 2012: 69.0%)


2 Pinewood Shepperton plcAnnual Report & Accounts 2013Dom Hemingway – Nick Wall © Recorded Picture Company


Pinewood Shepperton plc 3Annual Report & Accounts 2013Chairman’s statementPinewood Shepperton plc has again delivered a strong performance with revenues of £55.6m for the year ended31 March 2013 (15 month period ended 31 March 2012: £63.0m).The Company continued to invest in its facilities to ensure it remains the preferred destination for the screen-basedindustries. These investments have included a new 45,000 sq ft facility which will comprise a state-of-the art 30,000 sq ftstage, together with 15,000 sq ft of workshops and offices designed to accommodate television and film productions.The £7.5m facility will be completed by September 2013. The Company also completed a £2.1m investment programmeto expand its digital offering and high definition (“HD”) television facilities.The Company signed an agreement with the Isle of Man Treasury (“IOMT”) to source and advise on film investmentopportunities for the £25m fund established by the IOMT and to monitor and capitalise on UK distribution rights in filmsand television programmes funded by the IOMT. Since signing the agreement, the fund, known as Pinewood Pictures,has co-invested in three films, including one investment made post year end.South Bucks District Council Planning Committee refused planning permission for the Pinewood Studios DevelopmentFramework (“PSDF”), a £200m project expected to create 3,100 new jobs. The Company remains fully committed to thePSDF, a long-term scheme of national significance designed to address increasing global demand for capacity in the UKand deliver growth for the next 15 years. The Company lodged an appeal against the decision and a Public Inquiry willbegin on 19 November 2013.The Company’s international strategy has also continued to progress, announcing two major new initiatives in China andthe United States of America post year end. These new partnerships add to the Company’s existing presence in Canada,the Dominican Republic, Germany and Malaysia and give the Company access to regions of the world where contentproduction is growing.The Company completed a successful refinancing of its main banking facilities in May 2012. Pinewood’s shares weredelisted from the Official List and admitted to trading on AIM on 23 July 2012, alongside a £5.4m placing of new ordinaryshares. The Company now has three major shareholders, Goodweather Investment Management Limited (58.05%),Warren James Holdings Ltd (26.69%) and the Treasury Department of the Isle of Man Government (9.90%). All threemajor shareholders have independently stated their long-term support for the Company.On 25 October 2012, Steve Christian joined the Board as Executive Director responsible for coordinating the investmentadvice to the Isle of Man Treasury and on 27 November 2012, Ruth Prior joined the Board as an Independent Non-Executive Director and chairs the Audit Committee. Subsequent to the year end, on 29 April 2013, Thomas Allisonwas appointed to the Board as a Non-Executive Director replacing Mark Senior, as a Peel Holdings (the parent companyof Goodweather Investment Management Limited) nominated Non-Executive Director. Mark Senior was appointedas a Non-Executive Director in 2011. I would like to thank Mark for his valuable contribution to the Board.The Board is committed to paying dividends in line with its dividend policy of not less than three times cover and as aresult the Board has decided to recommend a dividend of 1.5p per share.Pinewood Shepperton’s results for the year were achieved following major contributions by my fellow Directorsand especially the staff. I thank them for their continued support.Lord Grade of Yarmouth, CBEChairman26 June 2013


4 Pinewood Shepperton plcAnnual Report & Accounts 2013Got To Dance, A Stage, Shepperton Studios – Justin Downing © Sky 1 HD 2013


Pinewood Shepperton plc 5Annual Report & Accounts 2013Operating reviewDuring the year ended 31 March 2013, the Company amended its operational reporting structure to improve itsmanagement of several new activities. As a result, the Company has identified 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.In addition, an analysis of the composition of operating profit between Media Services, Media Investment in respectof Film Production Companies, Media Investment in respect of activities excluding Film Production Companies andexceptional items has been included within the Group Income Statement to provide improved clarity of the constituentelements of the Group’s operating profit.MEDIA SERVICESThe Media Services segment has principally three complementary revenue streams – Film, Television and Media Hub.FilmFilm revenues for the year ended 31 March 2013 were £35.2m (15 month period ended 31 March 2012: £43.4m).The largest film production based at Pinewood Studios during the year was Maleficent (Disney) and at Shepperton Studioswas Thor: The Dark World (Marvel). Productions which used the Company’s facilities and services during the year includedFast and Furious 6 (Universal), Jack Ryan (Paramount), Muppets Most Wanted (Disney) and Kick-Ass 2 (Universal), plusadditional filming for 47 Ronin (Universal), Gravity (Warner Bros.) and World War Z (Plan B Entertainment).Digital Content Services (“DCS”) revenues included within the total film revenue for the year ended 31 March 2013were £6.2m (15 month period ended 31 March 2012: £8.0m).DCS provides sound and picture post production, media storage, management and distribution for original Englishlanguage and internationally re-versioned content. During the year a wide variety of creative and process-based serviceswere delivered to film, television and video game clients.Notable sound post production work completed during the period included the UK’s first Dolby Atmos mix ofDanny Boyle’s latest project Trance (Pathe/Fox) and also of Alfonso Cuaron’s Sci-Fi thriller Gravity (Warner Bros.).International re-versioning of sound-tracks and the long-term agreement with Disney Character Voices Internationalcontinues to perform well, as do established and growing relationships with many major film, television and video gamecompanies.A new product was launched during the period called Digital Production Services (“DPS”); the secure managementof the data generated from 2D and 3D digital film shoots on-set and on location. The inaugural client was Marvel’sThor: The Dark World, that was shot at Shepperton Studios.DCS continues to enhance its offering to the growing number of feature films choosing to shoot with digital cameratechnology and television productions wishing to work in a digital file based environment at the Studios. This has beenachieved by taking advantage of the investment in core networking infrastructure undertaken at the Studios overthe last four years, which now allows network speeds of 10Gb/s. This, in conjunction with the Data Centre, DigitalScreening Services, the Media Transfer Centre and additional high speed network services has led to increased demandfrom customers.


6 Pinewood Shepperton plcAnnual Report & Accounts 2013Operating review continuedPinewood Indomina Studios Horizon Water Tank, Dominican Republic © Pinewood Indomina Studios


Pinewood Shepperton plc 7Annual Report & Accounts 2013Operating review continuedInternationalInternational revenues for the year included within film, principally representing sales and marketing fees, were £1.0m(15 month period ended 31 March 2012: £1.2m).Pinewood is an expanding global brand, delivering premium services around the world. Its international initiatives,currently in six regions, are progressing well. The Company continues to actively explore strategic opportunitiesin other regions of the world.In the United States of America, post year end, the Company announced a new joint venture called Pinewood Atlanta LLC,which will work to initially develop 288 acres of land south of Atlanta, Georgia, into world-class studio facilities for theproduction of film, television, music and video games. The business will operate under the Pinewood trademark. Pinewoodhas received 40% of the shareholding in the joint venture, to which Pinewood will provide sales and marketing services.Phase 1 will comprise 100,000 sq ft of film stage space, 50,000 sq ft of workshops and 200,000 sq ft of production facilityand media campus space. Construction has commenced on the Pinewood Atlanta Studio build with completion scheduledin mid 2014.In China, the Group has entered into a 50:50 joint venture agreement with Seven Stars Media Limited, one of China’sleading private media groups, which provides content creation and distribution, media services and events. The jointventure, to be called ‘Song Lin’, initially will assess a number of business proposals in the growing entertainment marketin China. Under the terms of the joint venture, Pinewood will provide its expertise with limited capital investment.The Company has a sales and marketing agreement with Pinewood Toronto Studios (“PTS”). During the year, PTSattracted a number of high profile film and television productions which included Carrie (MGM/Screen Gems), RoboCop(MGM/Sony) and the Canadian television sitcom Spun Out (CTV).Pinewood Iskandar Malaysia Studios is in the final phase of construction with stages and associated facilities due forcompletion in July 2013, when film stages, workshops and offices will be operational. TV studios and post productionfacilities went live following completion of the technical installation and systems integration at year end. The facilityconsists of five film sound stages totalling 100,000 sq ft and two fully integrated TV studios totalling 24,000 sq ft.A full range of workshops, offices, art departments, artists’ facilities and technical space will also be available.Construction of the water tank, offices and ancillary space at Pinewood Indomina Studios in the Dominican Republic hasbeen completed. The tank and equipment have been tested and are now open. All special effects equipment has beenmanufactured and is on site. By the middle of 2014 the Company expects 53,000 sq ft of film stages will be completedalong with workshops, adding a further 90,000 sq ft of film and television facilities.TelevisionTelevision (“TV”) revenues for the year were £5.2m (15 month period ended 31 March 2012: £10.2m), which includesa four-month period where Pinewood’s television studios were closed for a £1.8m refurbishment.The Company has a leading television business which provides a range of unique TV production facilities, often utilising itsstages and DCS offerings to host and service large ‘event’ television productions, such as the recent semi-finals and finalsof the BBC’s The Voice.The Company has developed its television offering at Pinewood Studios by investing significantly to increase its abilityto provide a comprehensive range of production facilities to the TV community including high definition (“HD”) televisionstudios, film stages and post production services to support all genres of television production. The Company believesthis comprehensive range of facilities continues to give its business a competitive edge.


8 Pinewood Shepperton plcAnnual Report & Accounts 2013Operating review continuedPinewood and Teddington television studios played host to new and repeat business from Would I Lie To You (Zepperton),The Rob Brydon Show (talkbackTHAMES), Not Going Out (Avalon), Count Arthur Strong (talkbackTHAMES) and BedtimeLive (Twofour). During the year, television productions such as Got To Dance (Princess Productions), Love Machine(Shine) and I Love My Country (Avalon) utilised large film stages at Shepperton and Pinewood Studios.In addition, complete service packages – incorporating stages, sound and picture post production – were delivered toproductions such as the latest series of the BBC’s comedy panel show Would I Lie to You (Zepperton) and the perioddrama series The Paradise (BBC).In April 2013, the Company welcomed the introduction of new fiscal incentives for high-end filmed television drama.Pinewood was also pleased to welcome Camelot on-site in January 2013. Pinewood will broadcast the National Lottery liveeach week for a minimum of four years, with an option for a further two years, and is constructing a purpose built facility,TV3, for Camelot to take possession of from August 2013.Teddington Studios Limited has exercised an option to terminate its leasehold interest in Teddington Studios on24 December 2014. The Group has elected to consolidate the activity from this site with the activities at Pinewood during2013 and as a result has determined the lease on the Studio is an onerous contract. The estimated costs under theonerous lease are fully provided for in the income statement for the year ended 31 March 2013, although the estimatemay vary as a result of changes in the utilisation of the leased premises.Media HubDuring the year the Company’s Media Park offering was rebranded the ‘Media Hub’. Gross revenues for the year(including the Company’s 50% interest in the Shepperton Studios Property Partnership) were £6.3m (15 month periodended 31 March 2012: £8.0m).The total number of Media Hub companies accommodated during the year was 241 at Pinewood and Shepperton Studios;occupancy at the end of the 12 month period was 97% (15 month period ended 31 March 2012: 276 companies, 92%occupancy). The Company continued to rationalise and refurbish its stock of buildings available for both Media Huboccupiers and productions.The Pinewood Studios Development Framework (“PSDF”)PSDF is a £200m proposed long-term scheme of national significance designed to address increasing global demand forcapacity in the UK and deliver growth for the next 15 years. It comprises a substantial expansion of the existing PinewoodStudios by adding a total of 100,000 sq m of new facilities, including 15 studios and stages, workshops, production officesand streetscapes for filming. Once complete, this would make a major contribution to achieving Government priorityobjectives to grow the UK’s creative industries, promote growth and create an estimated 3,100 new jobs. South BucksDistrict Council Planning Committee rejected the application on 15 May 2013. The Company lodged an appeal againstthe decision on 31 May 2013 and the Public Inquiry will start on 19 November 2013.Total costs incurred since the inception of PSDF to 31 March 2013 were £1.8m, and have been capitalised within‘Property, plant and equipment’.


Pinewood Shepperton plc 9Annual Report & Accounts 2013Operating review continuedMEDIA INVESTMENTMedia Investment revenue for the year was £8.9m (15 month year to 31 March 2012: £1.4m).Pinewood Productions’ (formerly known as Pinewood Films) co-investment of selected UK independent films continuesto progress. Three further films were announced during the year, bringing the total to five, namely: A FantasticFear of Everything (Pinewood Films/Keel Films), Last Passenger (Pinewood Films/Future Films/BFI/Pathé Pictures),Belle (Pinewood Films/DJ Films/BFI/CinemaNX/Bankside), Dom Hemingway (Pinewood Films/Recorded PictureCo/CinemaNX/Hanway Films) and Camera Trap (Pinewood Productions/Pinewood Pictures/GasWorks Media).The Company announced on 1 October 2012 that it had signed an agreement with the Isle of Man Treasury (“IOMT”) tosource and advise on film investment opportunities for the £25m Media Development Fund established by the IOMT, andto monitor and capitalise on UK distribution rights in films and television programmes funded by the IOMT to be known as‘Pinewood Pictures’. On 22 October 2012, the Company further announced that it had received the consents required fromthe Financial Services Authority for the agreement to become unconditional and accordingly the agreement came intoeffect on 25 October 2012. During the year Pinewood Pictures advised on investments by IOMT in two films – CameraTrap (Pinewood Productions/Pinewood Pictures/GasWorks Media), a co-investment with Pinewood Productions, andThe Christmas Candle (Pinewood Pictures/Christmas Candle LLC). Under the agreement, the Company earned revenuefrom the IOMT of £0.2m during the year as an annual management fee.DividendThe Board is committed to pay dividends in line with its dividend policy of not less than three times cover and as a resultthe Board has recommended an increased final dividend of 1.5p (15 month period ended 31 March 2012: nil), makinga total dividend for the year of 2.0p (15 month period ended 31 March 2012: nil).Outlook2012/13 saw another year of strong growth in a globally competitive market. The trend for rising demand for the Studiosfacilities, especially in film, has continued.The Company has made a positive start to the new financial year. Since 1 April 2013, the Company has been experiencinghigh levels of utilisation in television, playing host to a number of productions and several film productions havecontracted stages.Our customers are concerned that the Company has sufficient capacity to meet their needs. On 31 May 2013, theCompany submitted to the Planning Inspectorate an appeal against the refusal of planning permission for the PinewoodStudios Development Framework (“PSDF”) by South Bucks District Council to create additional capacity at PinewoodStudios. The Public Inquiry is due to start on 19 November 2013. The need for further, effective infrastructure to meetdemand for the UK is a priority.The Board looks forward to the future with confidence.Ivan DunleavyChief Executive26 June 2013


10 Pinewood Shepperton plcAnnual Report & Accounts 2013Operating review continuedLes Misérables, The Richard Attenborough Stage, Pinewood Studios © Universal Pictures


Pinewood Shepperton plc 11Annual Report & Accounts 2013Financial reviewThe Board uses a number of key performance indicators (“KPIs”) to monitor Company performance, as well as tomeasure progress against the Company’s objectives. The KPIs used are revenue, profitability, return on capital employed,cash flow and net debt, all of which are discussed as part of the Financial review.Segment informationDuring the year ended 31 March 2013, the Company amended its operational reporting structure to improve itsmanagement of several new activities undertaken since the initial adoption of IFRS 8 Operating Segments (“IFRS 8”).As a result, the Company has identified two reportable segments – Media Services, which provides studio and relatedservices to the film, television and wider creative industries; and Media Investment, which provides content investmentand production services principally to the film industry.In addition, an analysis of the composition of operating profit between Media Services, Media Investment in respectof Film Production Companies, Media Investment in respect of activities excluding Film Production Companies andexceptional items has been included within the Group Income Statement to provide improved clarity of the constituentelements of the Group’s operating profit.RevenueTotal revenues for the year were £55.6m (15 month period ended 31 March 2012: £63.0m).Media ServicesThe Media Services segment has principally three complementary revenue streams – Film, Television and Media Hub.Total revenues within this segment were £47.2m for the year (15 month period ended 31 March 2012: £61.6m), including£0.5m of intersegment revenue (15 month period ended 31 March 2012: £nil).Film revenues for the period were £35.2m (15 month period ended 31 March 2012: £43.4m), reflecting high levels ofutilisation due to the Company’s ongoing success in winning business in a buoyant but highly competitive internationalmarket. Included in total film revenues are international revenues for the year of £1.0m (15 month period ended31 March 2012: £1.2m). These revenues were earned from providing international sales, marketing and studiodevelopment services in Canada, the Dominican Republic and Malaysia.Television revenues for the year were £5.2m (15 month period ended 31 March 2012: £10.2m), principally reflectingtough ongoing market conditions, a high level of facility utilisation by film customers, which has reduced the availabilityfor television production use, and a period of facility downtime associated with the TV refurbishment project.Media Hub revenues, inclusive of service, utility and facility charges for the year were £6.3m (15 month period ended31 March 2012: £8.0m). This includes the Group’s 50% interest in revenues from the Shepperton Studios PropertyPartnership of £0.7m (15 month period ended 31 March 2012: £0.8m).Media InvestmentThe Media Investment segment generates revenue from the provision of content investment and production services,principally to the film industry. In the prior period, revenue from these activities was included in the Media Servicesfilm sector.Total revenues within this segment were £8.9m for the year (15 month period ended 31 March 2012: £1.4m).The increase in revenue from this segment is due to additional Pinewood Productions (formerly known as PinewoodFilms) investments made during the year and the commencement of the Group’s management of the IOMT’s MediaDevelopment Fund from 25 October 2012.


12 Pinewood Shepperton plcAnnual Report & Accounts 2013Financial review continuedProfit performance and earnings per shareGross profit for the year was £17.8m (15 month period ended 31 March 2012: £24.9m). Of this total, the Media Servicessegment contributed gross profit of £19.2m and gross margin of 41% (15 month period ended 31 March 2012: grossprofit of £25.2m, margin 41%).Operating profit for the year was £5.4m (15 month period ended 31 March 2012: £2.7m).Operating profit from Media Services activities for the year was £10.5m (15 month period ended 31 March 2012: £13.9m)reflecting the production mix with reduced operating costs. Operating profit margin before exceptional items for MediaServices (excluding intersegment profit) for the year was 22% (15 month period ended 31 March 2012: 23%).Operating loss from Media Investment in respect of Film Production Companies (“FPC”) activities for the year was £1.5m(15 month period ended 31 March 2012: £0.3m) reflecting the accounting treatment of the Group’s FPC’s offset by theUK film tax relief available to FPC’s for qualifying film production expenditure on British qualifying films.Operating loss from Media Investment activities excluding Film Production Companies for the year was £0.6m (15 monthperiod ended 31 March 2012: £0.5m loss), principally reflecting the Group’s accounting policy for film investments.Net exceptional items for the year were £3.0m (15 month period ended 31 March 2012: £10.5m) as detailed below.Group reorganisationThe Group incurred exceptional reorganisation costs of £0.2m in the year (15 month period ended 31 March 2012:£0.3m) in relation to the restructuring of certain business areas.AIM listingAs a result of the admission of the Company’s ordinary shares to trading on AIM, the Group incurred £0.3mof non-recurring professional adviser fees during the year (15 month period ended 31 March 2012: £nil).Isle of Man Media Development FundThe Group incurred costs of £0.4m in the year (15 month period ended 31 March 2012: £nil) mainly in relation toprofessional fees as a result of signing an agreement with the Isle of Man Treasury (“IOMT”) to source and advise on filmand high-end television investment opportunities for the £25 million fund established by the IOMT and to monitor andcapitalise on UK distribution rights in films and television programmes funded by the IOMT.Teddington exitThe Group has announced plans to cease activity at the Teddington Studio site during 2013 and as a result hasestablished an onerous lease provision for £1.5m (15 month period ended 31 March 2012: £nil). Also included areaccelerated depreciation costs of £0.6m (15 month period ended 31 March 2012: £nil) arising from the revisionof the expected useful lives of plant and equipment in use at the site.Project PinewoodIn the 15 month period ended 31 March 2012, the Group incurred exceptional costs of £7.1m in relation to ProjectPinewood costs following the Secretary of State’s decision on 20 January 2012 to refuse planning permission for ProjectPinewood. No such Project Pinewood costs were incurred in the year ended 31 March 2013. Costs relating to PSDF havebeen capitalised within ‘Property, plant and equipment’.Exceptional income for the year was £nil (15 month period ended 31 March 2012: £0.5m of VAT refunds).


Pinewood Shepperton plc 13Annual Report & Accounts 2013Financial review continuedProfit performance and earnings per share continuedEBITDA (earnings before exceptional items, interest, tax, depreciation and amortisation) for the year was £13.2m(15 month period ended 31 March 2012: £17.9m).Profit before tax, after exceptional items, for the year was £1.3m (15 month period ended 31 March 2012: £1.9m loss).Basic earnings per share for the year were 3.6p (15 month period ended 31 March 2012: 6.3p loss). Basic earningsper share after adjusting for exceptional items for the year were 10.1p (15 month period ended 31 March 2012: 14.6p).See Note 12 for further details.The weighted average number of shares in issue at 31 March 2013 was 48.7m (31 March 2012: 46.9m). At 31 March2013, there are no shares potentially issuable as a result of employee share schemes and therefore the weighted averagediluted number of shares was also 48.7m (31 March 2012: 46.9m).AIM listing and share placingOn 23 July 2012, the Company’s ordinary shares were admitted to trading on AIM. The ordinary shares were removedfrom trading on the main market of the London Stock Exchange and their listing on the Official List was cancelled.In conjunction with the proposal to seek shareholder approval for the delisting and admission of the ordinary shares totrading on AIM, the Company also raised £5.4m (before expenses of £0.3m) of new equity capital by way of a placingof 2,160,000 new ordinary shares at a price of 250p per new ordinary share.Return on capital employedThe Group measures return on capital employed by reference to operating profit from Media Services before exceptionalitems, as a percentage of average capital employed, being total equity plus interest-bearing loans and borrowings,which for the year was 8.5% (15 month period ended 31 March 2012: 11.5%).DividendThe Board has declared a final dividend of 1.5p per share (15 month period ended 31 March 2012: nil). The dividend is tobe paid on 7 October 2013 to shareholders on the register at 6 September 2013 (ex-dividend date of 4 September 2013).The Board is committed to paying dividends in line with its dividend policy of not less than three times cover.Cash flow and net debtThe Company generated operating cash flow before changes in working capital for the year of £12.3m (15 month periodended 31 March 2012: £16.2m). After adjusting for movements in working capital, cash generated from operations forthe year was £13.5m (15 month period ended 31 March 2012: £16.1m), from which finance costs of £3.5m (15 monthperiod ended 31 March 2012: £4.1m) were paid and a net corporation tax refund of £0.9m (15 month period ended31 March 2012: £3.0m paid) was received.Cash outflow on capital expenditure during the year was £9.6m (15 month period ended 31 March 2012: £16.2m).The main areas of expenditure during the year were on the South Dock Stage redevelopment, £2.2m, TV studio upgrade,£1.8m, and Pinewood Studios Development Framework, £1.8m.Net debt at 31 March 2013 was £44.7m (31 March 2012: £50.4m) which included £12.0m (31 March 2012: £12.0m)relating to the Company’s 50% interest in the non-recourse Aviva loan to Shepperton Studios Property Partnership(“SSPP”). The decrease in net debt over the year is principally driven by the capital injection of £5.4m from the newshare issuance and £1.6m of cash being held by the FPCs for the sole and restricted purpose of completing the MediaInvestment productions of Last Passenger (Pinewood Films/Future Films/BFI/Pathé Pictures), Belle (Pinewood Films/DJFilms/BFI/CinemaNX/Bankside), Camera Trap (Pinewood Productions/Pinewood Pictures/GasWorks Media) andThe Christmas Candle (Pinewood Pictures/Christmas Candle LLC).


14 Pinewood Shepperton plcAnnual Report & Accounts 2013Financial review continuedCash flow and net debt continuedOn 28 May 2012, the Company arranged new banking facilities of up to £55m which comprise a £35m revolving creditfacility, a £15m term facility and a £5m overdraft facility. These facilities are secured on certain of the Company’s assets.The revolving credit facility has no scheduled repayments and matures in November 2016. The term facility containsscheduled repayments of £1.5m on both 30 June 2015 and 30 June 2016, and matures in November 2016. The £5moverdraft facility is reviewed annually.The revolving credit and term facilities have a range of covenants and events of default, together with variable marginsbetween 285 and 435 basis points over LIBOR.In addition to the £55m banking facilities, there are non-recourse facilities provided to SSPP by the Company’s jointventure partner, Aviva, which total £40m, of which £24m was drawn at 31 March 2013 (31 March 2012: £24m).This loan, which is 50% consolidated at £12m (31 March 2012: £12m) is included in the Company’s statement offinancial position. These facilities, which are available until 2026, are covenant free with no scheduled repayments.Investment propertyInvestment property is recognised in accordance with International Accounting Standard 40 Investment Property (“IAS40”) as a category within assets in the Company’s statement of financial position. At 31 March 2013, investment propertywas recorded at depreciated cost of £6.1m (31 March 2012: £6.2m). This compares to the Directors’ assessment of thefair value of £7.3m (31 March 2012: £7.3m). Further information on the basis for the Directors’ fair value assessment canbe found in Note 15 to the financial statements.Capital commitmentsThe Company had total capital commitments of £7.8m at 31 March 2013 (31 March 2012: £2.5m) in relation to threelarge-scale redevelopment and construction projects in progress at Pinewood Studios.Financial gearingAt 31 March 2012, net debt including the Group’s share of the SSPP non-recourse drawn loan was £44.7m(31 March 2012: £50.4m). Financial gearing at 31 March 2013 excluding fair value and loan issue costs was 56.3%(31 March 2012: 68.3%).Finance costs and hedgingNet finance costs for the year were £4.0m (15 month period ended 31 March 2012: £4.6m) which includes £0.4m ofexceptional finance costs and £0.4m of swap termination costs as noted below. The Company has at its disposal undrawnfacilities for which it pays non-utilisation fees as a percentage of the margin. Net finance costs were covered 2.6 times byoperating profit before exceptional items for the year (15 month period ended 31 March 2012: 2.9 times). The Companycontinues to use interest rate derivatives to manage interest rate exposure.At 31 March 2013, £22.5m (31 March 2012: £22.5m) of the Company’s facilities were under interest rate swaps and£2.6m (31 March 2012: £1.1m) under a fixed interest rate asset financing facility.Exceptional finance and swap termination costsThe Company incurred £0.4m of exceptional finance costs and £0.4m of swap termination costs in the year (15 monthperiod ended 31 March 2012: £nil) in relation to the refinancing of its banking facilities. These costs are included withinfinance costs in the Group income statement.


Pinewood Shepperton plc 15Annual Report & Accounts 2013Financial review continuedTaxationThe total corporation tax credit for the year, based on profit before tax of £1.3m, was £0.4m (15 month period ended31 March 2012: £1.1m charge).The corporation tax credit for the year includes £1.5m of UK film tax relief for film production companies (15 month periodended 31 March 2012: £0.3m) which reflects the accounting treatment of the Group’s FPCs and offsets the operating lossfrom Media Investment in respect of Film Production Companies.The underlying rate of tax on profit before accounting for UK film tax relief from film production companies, prior yearadjustments and exceptional items is 26% (15 month period ended 31 March 2012: 23%).Going concernIn assessing the going concern basis, the Directors consider the Group’s business activities, the financial position of theCompany and the Company’s financial risk management objectives and policies. The Directors consider that the Companyhas adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriateto adopt the going concern basis in preparing these consolidated financial statements.The Business review contains forward-looking statements that are made by the Directors in good faith. This informationis based on the view of the Board of Directors at the date of approval of this Annual Report and based on knowledge andinformation at that time together with what are considered to be reasonable judgements. By their nature, forward-lookingstatements involve risks and uncertainties because they relate to events and depend on circumstances that will occur inthe future. There are a number of factors which could cause actual results and developments to differ materially fromthose expressed or implied by these forward-looking statements, including factors outside of the Group’s control. Anyforward-looking statements speak only as of the date that they are made, and the Group gives no undertaking to updateforward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events,conditions or circumstances on which any such statement is based.Ivan DunleavyChief Executive26 June 2013


16 Pinewood Shepperton plcAnnual Report & Accounts 2013Board of DirectorsNon-Executive ChairmanLord Grade of Yarmouth, CBE †# (70) began his career as a sports journalist; previous positions include Chief Executiveof Channel 4, Chairman and Chief Executive of First Leisure plc and Chairman of the Governors of the BBC and Chairmanand Chief Executive of ITV plc. He is a Non-Executive Director of WRG and a Director of National Angels Ltd. Lord Gradehas been Chairman of Pinewood Shepperton since February 2000. He was created a Peer in 2010.Executive DirectorsIvan Dunleavy, Chief Executive Ivan Dunleavy (53) has spent his career in media businesses initially in finance roles.Prior to his current role he was Chief Executive of VCI plc, until it was acquired by Kingfisher plc in November 1998.He is a Director of UK Screen Association Limited, the industry trade body, and has been Chief Executive of PinewoodShepperton since February 2000.Andrew M Smith, Director of Strategy and Communications (appointed 1 May 2012) and Company Secretary Andrew M.Smith (50) joined the Company in June 2008 as Group Director Corporate Affairs. He was appointed Company Secretaryon 20 December 2010 and was appointed to the Board in May 2012. Prior to this he was Managing Partner of The PolicyPartnership. He is a member of the Film Skills Council, the Skillset Craft and Technical Skills Academy Industry Board,the British Film Commission Advisory Board and the Buckinghamshire Thames Valley Local Enterprise Partnership.He is a Non-Executive Director of Bucks Business First Ltd.Nicholas Smith, Commercial Director Nicholas Smith (51) joined Pinewood Shepperton in May 2002 and was appointedto the Board in July 2005. In February 2012, Nicholas was appointed as a Non-Executive Director of Iskandar MalaysiaStudios SDN BHD.Steve Christian, ACA (appointed 25 October 2012) Steve Christian (49) is responsible for coordinating the investmentadvice to the Isle of Man Treasury Film and Television Fund. Prior to joining the Company he was responsible foroverseeing the development of the Isle of Man’s film investment programme. He is currently a Non-Executive Directorof the Isle of Man’s largest energy provider The Manx Electricity Authority and is also a Director of CinemaNX Limited,Fordex Limited, Agrimark Limited and Gasworks Media Limited.


Pinewood Shepperton plc 17Annual Report & Accounts 2013Board of Directors continuedNon-Executive DirectorsNeil Lees (49) was appointed Deputy Chairman of the Peel Group in March 2012 having been an Executive Director since2007. He began his career as a Company Secretary at Ferranti International and subsequently joined the Peel Groupin 1994. He chairs a number of Peel Group businesses and operating companies and is also Chairman of the Trusteesof Peel Ports Final Salary Pension Scheme. He was appointed to the Board of Pinewood Shepperton in 2011.Mark Senior (50) trained as a chartered accountant. He joined the Peel Group as Corporate Development Director forMedia in early 2011 and has been actively involved in managing Peel’s interests at MediaCityUk. He has spent most of hiscareer in Corporate Finance, latterly as a Merger & Acquisitions partner at Ernst & Young. He was appointed to the Boardof Pinewood Shepperton in 2011 and resigned in April 2013.Steven Underwood, ACA *†# (39) trained as a chartered accountant with Coopers & Lybrand. He joined the Board ofthe Peel Group as Corporate Development Director in March 2007 and was promoted to Chief Executive in April 2012.He previously spent eight years in Investment Banking with Rothschild. He represents the Peel Group on the Boardsof a number of its investee companies. He was appointed to the Board of Pinewood Shepperton in 2010.Ruth Prior *# (46) was Group Chief Operating Officer and Group Chief Financial Officer of the EMI group of companies(‘‘EMI”) (2010–2012) and Finance Director of Portfolio Business at Terra Firma Capital Partners Limited (‘‘Terra Firma”)(2002–2010). She was appointed to the Board of Pinewood Shepperton in 2012.Thomas Allison (65) is Chairman of Peel Ports and is the Non-Executive Chairman of Tulloch Homes Group, a Non-Executive Director of Sunseeker Yacht Group Ltd and Celtic plc, a partner in Kiltane Investments and a Council Memberof the CBI. Tom was, until recently, Chairman of Keepmoat and Chairman of Wood Mackenzie. He was appointed to theBoard of Pinewood Shepperton in April 2013.* Member of the Audit Committee† Member of the Remuneration Committee# Member of the Nomination Committee


18 Pinewood Shepperton plcAnnual Report & Accounts 2013Directors’ reportThe Directors present their Report together with the financial statements for the year ended 31 March 2013.Principal activity, business review and future developmentsThe principal activity of the Group is the provision of studio and related services to the global film and television industry.The Board considers the Group to be well-placed and views its future prospects with confidence.The information that fulfils the requirements of the business review can be found in the following sections, which areincorporated into this report by reference: Operating review, Financial review, Key business risks, Corporate governance,Employees and Corporate responsibility (pages 5 to 35).Future developments are discussed within the Chairman’s statement and Operating review (pages 5 to 9).The Directors, in preparing the Business review, have complied with Section 417 of the Companies Act 2006. They havealso sought to comply with the guidance set out in the Accounting Standards Board’s Reporting Statement: Operating andFinancial Review.Results and dividendProfit for the year ended 31 March 2013 after exceptional items of £3.0m was £1.8m (15 month period to 31 March 2012:loss after exceptional items of £10.5m was £2.9m).The Board has recommended a final dividend of 1.5p per share in respect of the year ended 31 March 2013 (15 monthperiod to 31 March 2012: no final dividend was declared).Directors and their interestsThe Directors who served during the year and their interests in the share capital of the Company were as follows:Number ofordinaryshares at31 March2012Acquiredduringthe yearDisposedof duringthe periodNumber ofordinaryshares at31 March2013Lord Grade of Yarmouth, CBE – 17,500 – 17,500Ivan Dunleavy – – – –Nicholas Smith – – – –Patrick Garner (resigned 30 April 2012) – – – –Andrew M. Smith (appointed 1 May 2012) – – – –Steve Christian (appointed 25 October 2012) – 10,000 – 10,000Steven Underwood – – – –Mark Senior (resigned 29 April 2013) – – – –Neil Lees – – – –John Whittaker* (resigned 23 July 2012) 33,574,817 – 4,891,582 28,683,235Peter Hosker (resigned 23 July 2012) – – – –Ruth Prior (appointed 27 November 2012) – – – –* Total beneficial interest includes shares held by Goodweather Investment Management Limited, a subsidiary of the Peel Group of which Mr Whittaker is theChairman and which is controlled by the Billown Trust, the beneficiaries of which are John Whittaker and other members of the Whittaker family.Since 31 March 2013, there has been no change in the Directors’ interests in shares. On 29 April 2013, Thomas Allison,who holds 8,000 shares in the Company, was appointed as a Director of the Company following the resignationof Mark Senior.


Pinewood Shepperton plc 19Annual Report & Accounts 2013Directors’ report continuedDirectors and their interests continuedAt the forthcoming Annual General Meeting to be held on 30 September 2013, Ivan Dunleavy will retire by rotation and,being eligible, will offer himself for re-election. In accordance with the Company’s Articles of Association, Ruth Prior,Steve Christian and Thomas Allison will offer themselves for election as they have been appointed to the Board sincethe Company’s last Annual General Meeting.Details of Directors’ service contracts are provided in the Directors’ remuneration report. Directors’ interests in contracts inthe Group’s business are disclosed as related party transactions in Note 28 to the accounts.The Company appoints and replaces Directors in accordance with the Company’s Articles of Association and has aprocess of selection and recruitment of replacements as noted in the Nomination Committee section of the CorporateGovernance Report.Corporate governanceDetails of the Company’s corporate governance policies are incorporated into the report by reference and can be foundon pages 34 to 35.Annual General MeetingThe notice convening the Annual General Meeting of the Company, to be held at the offices of Deloitte LLP, 2 HardmanStreet, Manchester M3 3HF at 10.30 a.m. on 30 September 2013, together with an explanation of the resolutions to beproposed at the meeting, will be contained in a circular to shareholders enclosed with the Annual Report.Share capitalThe Company’s share capital comprises one class of ordinary shares which carry no restrictions on the transfer of sharesor on voting rights (other than set out in the Company’s Articles of Association).Details of issued share capital are contained in Note 22 to the accounts. During the year, the Company issued 2,160,000ordinary shares with a nominal value of 10p per share.At 31 March 2013, the beneficial interests amounting to 3% or more of the issued share capital of the Company,as notified to the Company, comprised:Number ofsharesPercentageheldGoodweather Investment Management Limited 28,683,235 58.05%Warren James Holdings Limited 13,186,148 26.69%Treasury, a Department of the Isle of Man Government 4,891,582 9.9%No holder of shares in the Company has any special rights with regard to control of the Company.Save as set out below, there are no agreements known to the Company between holders of shares in the Company whichmay result in restrictions on the transfer of shares or on voting rights in relation to the Company.


20 Pinewood Shepperton plcAnnual Report & Accounts 2013Directors’ report continuedShare capital continuedIn connection with the cancellation of the listing of the Company’s shares on the Official List and the removal of suchshares from trading on the main market of the London Stock Exchange and the admission of the shares to trading onAIM, which took place on 23 July 2012 (“Admission”), each of Peel Holdings Limited (parent company of GoodweatherInvestment Management Limited) and Warren James Holdings Limited have given irrevocable undertakings that provide,inter alia:• in the case of Peel, that it will: (i) not acquire shares in the Company for two years from Admission (subject to certainexceptions including: pursuant to a general offer or scheme of arrangement or to maintain an aggregate holding of 50%of the Company’s issued share capital or at any time with N+1 Singer’s consent), (ii) vote in favour of the appointmentof one additional Non-Executive Independent Director and take all measures to ensure that the number of Peel Directorson the Board shall be less than the number of Independent Directors (being the Directors of the Company who are notaffiliates of Peel or Warren James, including both Executive and Non-Executive Directors), and (iii) not vote in favour ofany delisting from AIM for a period of three years from Admission.• in the case of Warren James Holdings Limited, that it will: (i) not acquire shares in the Company for two years fromAdmission (subject to certain exceptions including: pursuant to a general offer or scheme of arrangement or to maintainan aggregate holding of 25.1% of the Company’s issued share capital or at any time with N+1 Singer’s consent) and(ii) not vote in favour of any delisting from AIM for a period of three years from Admission.Creditor payment policyGroup trade creditors at 31 March 2013 were equivalent to 33 days (31 March 2012: 31 days) of purchases during theperiod in line with the Group policy; specific terms are agreed between operating companies and their respectivesuppliers, and that payments are made to suppliers in accordance with those terms.Charitable donationsThe Group continues to demonstrate its commitment to the support of various media-related charities, as well as localcharity initiatives and causes. During the year ended 31 March 2013, the Group donated £36,000 (15 month periodto 31 March 2012: £24,000) to charitable causes. Further details are contained in the Corporate responsibility reporton page 34. No political donations were made during the year.Financial instrumentsThe financial risk management objectives and policies of the Group are included in Note 29 to the accounts.Principals risks and analysis of key performance indicatorsThe principal risks to which the Group and Company are exposed are disclosed in the ‘key business risks’ section of theAnnual Report and in Note 29 to the accounts.In monitoring and assessing business performance, the Board uses a number of key performance indicators, which arecovered on pages 11 to 15 in the Financial review section of the Annual Report.Directors’ liabilitiesThe Company has granted an indemnity to all its Directors against liability brought by third parties, subject to theconditions set out in the Companies Act 2006. Such qualifying third party indemnity provision remains in force as at thedate of approving the Directors’ report.


Pinewood Shepperton plc 21Annual Report & Accounts 2013Directors’ report continuedGoing concernThe Group’s business activities, together with the key business risks that may impact its future development, performanceand position, are within the following sections: Operating review, Financial review, Key business risks, Corporategovernance and Corporate responsibility, which form part of the Business review within the Directors’ report. The reviewcovers the financial position of the Group and its cash flows, liquidity position and borrowing facilities on pages 11 to 15.In addition, Notes 23 and 29 to the financial statements include the Group’s objectives, policies and processes formanaging its capital; its financial risk management objectives; details of its financial instruments and hedging activities;and its exposure to credit risk and liquidity risk.The Group has primary banking facilities and an overdraft facility in place until November 2016. The overdraft is subject toan annual review. In addition, the Shepperton Studios Property Partnership joint venture partnership with Aviva has anon-recourse facility in place until 2026. Although the Group is in a net current liability position of £12.8m, the Group has£32.5m of undrawn committed loan facilities in place which the Directors are confident provides sufficient headroom tosupport continued trading.The Group also has a strong brand and reputation in the marketplace, with a wide number of customers and suppliersin the film and television industry. As a consequence, the Directors believe that the Group is well placed to manage itsbusiness risks and operations successfully, despite the current economic environment.The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existencefor the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financialstatements, as there are no material uncertainties related to events or conditions that may cast significant doubt on theability of the Group to continue as a going concern. The going concern assessment has been prepared in accordance with‘Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009’, published by the Financial ReportingCouncil in 2009.Directors’ statement as to disclosure of information to auditorsThe Directors who were members of the Board at the time of approving the Directors’ report are listed on pages 16and 17.Having made enquiries of fellow Directors and of the Group’s auditors, each of these Directors confirms that:(1) so far as they are aware, there is no relevant information of which the Group’s auditors are unaware; and(2) they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of anyrelevant audit information and to establish that the Group’s auditors are aware of that information.This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the CompaniesAct 2006.Registered auditorsDeloitte LLP is the auditor of the Company. In accordance with Section 489 and Section 492 of the Companies Act 2006,resolutions proposing the reappointment of Deloitte as auditors to the Company, at a level of remuneration to be agreedby the Directors, will be proposed at the Annual General Meeting to be held on 30 September 2013.


22 Pinewood Shepperton plcAnnual Report & Accounts 2013Directors’ report continuedStatement of Directors’ responsibilitiesThe Directors are responsible for preparing the Annual Report and the Group financial statements in accordancewith applicable UK law and International Financial Reporting Standards (“IFRS”) as adopted by the European Union.The Directors are required to prepare Group financial statements for each financial year which present fairly the financialposition of the Group and the financial performance and cash flows of the Group for that period. In preparing those Groupfinancial statements, the Directors are required to:• select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates andErrors and then apply them consistently;• make judgements and estimates that are reasonable and prudent;• present information, including accounting policies, in a manner that provides relevant, reliable, comparable andunderstandable information;• provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users tounderstand the impact of particular transactions, other events and conditions on the Group’s financial position andfinancial performance; and• state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financialstatements.The Directors are responsible for keeping proper accounting records which disclose, with reasonable accuracy at any time,the financial position of the Group and parent company and enable them to ensure that the Group financial statementscomply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding theassets of the Group and, hence, for taking reasonable steps for the prevention and detection of fraud and otherirregularities.Each of the Directors, whose names and functions are listed on pages 16 and 17, confirms that, to the best of theirknowledge:• the Group financial statements, prepared in accordance with International Financial Reporting Standards as adopted bythe European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and• the Chairman’s statement, Operating review, Financial review and the Directors’ report, when taken together, include atrue and fair review of the development and performance of the business and the position of the Group, together with adescription of the principal risks and uncertainties that it faces.By order of the BoardAndrew M. SmithCompany Secretary26 June 2013


Pinewood Shepperton plc 23Annual Report & Accounts 2013Key business risksThe Board views effective risk management as a primary part of the Group’s wider strategy and is fully committed to theidentification, evaluation and management of significant risks facing the Group. The table below outlines the key risks anduncertainties identified by the Board together with an outline of mitigation activities.1. General risksRisk Description MitigationImportance of keycustomers and bigbudget filmsLoss of reputationGuild/UniondisruptionsDelay in therecovery of theeconomyInternationalagreementsThe Group’s largest customers account for ahigh percentage of revenues. If ‘big budget’filmmakers cease to choose the Group’s facilitiesthis would reduce revenues.Providing services to the worldwide film industryand representing studios internationally requiresa robust reputation. Damage to the reputationcould have an adverse impact on the Group.Members of the various trade guilds/unionswork on a high proportion of UK inwardinvestment films.A delay in the recovery of the economicenvironment may lead to a reduction incustomers and revenue.Less direct and indirect control.Maintaining strong, longstanding relationshipsthrough consistent levels of service and retainingemployees to offer continuity. Diversification ofrevenues through the development of theGroup’s strategy. Maintaining strong relationshipswith key industry decision-makers atGovernment level to continue to highlight theimportance of the tax credit regime and thebenefits of a widening of this regime to televisionand animation.Maintaining strong relationships and open lines ofcommunication with customers and international‘partners’ through the Directors and ExecutiveManagement Team. Investing in a site-wideupgrade to locks at Pinewood Studios andadapting security across all three sites tomaintain high levels of security. Continuingto focus closely on safeguarding confidentialityby introducing new procedures for visitorsto all three sites.No direct mitigating actions can be taken.The Board monitors the external environmentand its impact on the industry and has a numberof strategic initiatives to respond to anticipatedchanges.The Board regularly monitors the performance ofthe entities it has agreements with and the widergeopolitical context.


24 Pinewood Shepperton plcAnnual Report & Accounts 2013Key business risks continued2. Financial risksRisk Description MitigationFiscal incentivesExchange ratesTreasuryIncreases tobusiness rates andvaluationThe UK’s film and high end television taxincentives help ensure the UK is a key locationfor film production.The majority of international film customers arein the US and an adverse movement in exchangerates may result in a reduction in the Group’scompetitive edge versus other European orinternational locations.Risk is in a number of areas including credit risk,liquidity risk, interest rate risk and market risk.Potential increase in business rates and valuationwould adversely impact the business.3. Operational risksRisk Description MitigationHealth and safety,environmental anddisaster recoveryProperty planningFailure of keysuppliersHealth risk ofpandemics, actsof terrorism andnatural disastersRising energypricesA significant incident could put people and/or theenvironment at risk as well as damage theGroup’s reputation. A major incident such as afire or explosion may result in a number of issuesincluding revenue loss and reputational damage.The Group has exposure to risk if not able tocommercially exploit existing and proposedplanning consents to the fullest potential inaccordance with long range plans.The current economic climate could result in keysuppliers to the Group being unable to maintainan effective supply chain.Diseases, terrorist threats and natural disastersmay reduce the appeal to customers of traveland may impact local operational capability.A general climate of increasing prices for allforms of energy.No direct mitigating actions can be taken.Reasoned evidence-based arguments continueto be put forward to the Government highlightingthe cultural and economic contribution that filmmakes to the economy.No direct mitigating actions can be takenhowever, the reputation of the Group andlongstanding relationships assist in reducingthis risk.These are discussed in detail in Note 29 to theAnnual Report.No direct mitigating actions can be taken albeitrepresentations would be made to Government.A dedicated health, safety and fire team carriesout regular risk evaluation. Further details canbe found in the Corporate responsibility sectionof the Annual Report.A Business Continuity Team has been establishedand a policy is in place to ensure that theoperational business continues as far as possiblein the event of a major incident.The Group would assess alternative uses thatare in line with the wider Group strategy shouldsuch a situation occur.The Group retains good supplier relationshipsand alternative suppliers for generic servicescould be sourced in the medium term.With UK-based studios and operational partnersin a number of international locations the Groupconsider that the availability of location optionswould reduce the risk in this area.The Group engages energy consultantswho monitor, and provide advice on, theenergy markets.


Pinewood Shepperton plc 25Annual Report & Accounts 2013Corporate governanceOn 23 July 2012, the Company’s ordinary shares were admitted to trading on AIM (a market operated by the LondonStock Exchange) and delisted from the Official List and removed from trading on the main market of the London StockExchange. Prior to 23 July 2012, the principal corporate governance rules the Company was required to comply with werethose set out in the UK Corporate Governance Code published by the Financial Reporting Council in June 2010 (the ‘‘UKCorporate Governance Code”), the UK Financial Conduct Authority (‘‘FCA”) Listing Rules and the FCA’s Disclosure andTransparency Rules.Since the admission of the Company’s shares to trading on AIM on 23 July 2012, the Company has not been requiredto follow the UK Corporate Governance Code. Although not required to do so by the AIM Rules, the Directors havedecided to continue to provide corporate governance disclosures comparable with those required of a company listedon the Official List.Statement of compliance with the CodeThroughout the year ended 31 March 2013, the Company has been in compliance with the Code provisions set out in theUK Corporate Governance Code, except for the following matters:• During the year under review, the Company has not complied with the requirement set out in B.1.2 of the UK CorporateGovernance Code that a smaller company should have at least two independent Non-Executive Directors.• During the year under review, the Nomination Committee was not in compliance with the requirement set out in B.2.1 ofthe UK Corporate Governance Code as it was not made up of a majority of independent Non-Executive Directors.The Board continues to review the composition of the Nomination Committee and does not anticipate making changesto its composition in the foreseeable future.• During the year under review, the Audit Committee has not complied with the requirement set out in C.3.1 of the UKCorporate Governance Code that an Audit Committee of a smaller company should have at least two independentNon-Executive Directors. The Board continues to review the composition of the Audit Committee and does not anticipatemaking changes to its composition in the foreseeable future.• During the year under review, the Remuneration Committee has not complied with the requirement set out in D.2.1of the UK Corporate Governance Code that a Remuneration Committee of a smaller company should have at least twoindependent Non-Executive Directors. The Board continues to review the composition of the Remuneration Committeeand does not anticipate making changes to its composition in the foreseeable future.Statement about applying the principles of the CodeThe Company has applied the principles set out in the Code, including both the main principles and the supportingprinciples, by complying with the Code save as reported above. Further explanations of how the principles and supportingprinciples have been applied are set out below and in the Directors’ remuneration report.Membership of the BoardAs at 31 March 2013, the Board comprised the Non-Executive Chairman, Lord Grade of Yarmouth; four ExecutiveDirectors: Ivan Dunleavy (Chief Executive), Nicholas Smith, Andrew Smith and Steve Christian; and four Non-ExecutiveDirectors: Mark Senior, Neil Lees, Steven Underwood and Ruth Prior (Senior Independent Director). On 29 April 2012,Thomas Allison was appointed to the Board as a Peel Holding’s nominated Non-Executive Director, replacing Mark Senior.Further details of the Board members can be found on pages 16 and 17 of the Annual Report.


26 Pinewood Shepperton plcAnnual Report & Accounts 2013Corporate governance continuedIndependence of DirectorsThomas Allison, Neil Lees and Steven Underwood are executives of the Peel Group which currently indirectly holds58.05% of the Company’s issued share capital. As a consequence of the Peel Group’s holding in the Company, the Boardconsiders Ruth Prior to be the only independent Non-Executive Director for the purposes of the UK Corporate GovernanceCode and therefore, during the 12 months under review the Company has not complied with the requirement set out inB.1.2 of the UK Corporate Governance Code that a smaller company should have at least two independentNon-Executive Directors.Notwithstanding that the Non-Executive Directors (other than Ruth Prior) are not independent, the Board is of theview that all the Non-Executive Directors contribute significantly to the Group’s strategic direction and that their levelof experience makes a significant and valuable contribution to the Board. The terms and conditions of appointmentof Non-Executive Directors is available for inspection upon request from the Company Secretary.Conflicts of interestIn accordance with Section 175 of the Companies Act 2006, procedures have been put into place for the disclosure byDirectors of potential and/or actual conflicts of interest, and these have been operated effectively. Each potential and/oractual conflict is disclosed as it arises and is considered by an appropriate quorum of Directors. Directors leave a Boardmeeting when matters relating to them, or which may constitute a conflict of interest, are being discussed.Prior to 23 July 2012, the Group complied with the Model Code on share dealings and it extended beyond Directors toPersons Discharging Managerial Responsibilities (‘‘PDMRs”). In connection with the admission of the Company’s ordinaryshares to trading on AIM on 23 July 2012, the Group adopted a share dealing code for dealings in shares by Directorsand senior employees which is appropriate for an AIM-listed company. The Directors comply with Rule 21 of the AIM Rulesfor Companies relating to Directors’ dealing and take all reasonable steps to ensure compliance by the Group’s applicableemployees.Role and responsibility of the BoardThe Board is responsible for determining corporate strategy, treasury policy, approval of capital expenditure projectsin excess of £50,000, dividend policy, interim and annual financial statements, all regulatory communications requiredby the Group and appointments to the Board. In the continuing challenging economic climate, the Board continues tomaintain and, where it considers necessary, enhance the financial disciplines across the Group.In advance of the monthly Board meeting, the Board members are provided with comprehensive historic and forwardlookingfinancial and operational information to support their understanding of the business and related strategic andoperational issues, and to enable them to fulfil their responsibilities accordingly. Where there are specific items thatrequire Board approval, additional reports and supporting information is circulated. Directors are provided with regularaccess to the Company Secretary and to the Executive Management Team to facilitate their understanding of significantoperational issues and assessment of the Group’s prospects, including the ongoing consideration of succession planning.This also ensures that the Directors can make further enquiries on financial, operational and strategic matters as andwhen required. There are also procedures in place to enable Board members to take independent professional adviceas necessary.Board evaluationThe Board regularly conducts evaluations of its performance. The Chairman reviews individual Board members’contributions to the Board and its committees. The Chairman’s performance is likewise reviewed by other membersof the Board. These evaluations are carried out on a rolling basis.


Pinewood Shepperton plc 27Annual Report & Accounts 2013Corporate governance continuedDirectors’ trainingPrior to their appointment to the Board, all Directors are provided with a detailed understanding of the Group, by meetingwith existing Directors, and being provided with comprehensive financial and operational information. Additionally,Directors are fully briefed and kept up to date on issues impacting their role and responsibilities as Directors.Directors continue to be updated on significant financial and operational issues via Board meetings and regularcommunications from the Group, as well as being provided with direct access to the Group’s ExecutiveManagement Team.Meetings of DirectorsDuring the year under review, the Board held 9 scheduled Board meetings and 6 further full meetings to discuss variouscorporate matters. The following table sets out attendance of the Directors at the Board and Committee meetings duringthe year ended 31 March 2013:BoardmeetingsAuditCommitteemeetingsRemunerationCommitteemeetingsNominationCommitteemeetingsChairmanLord Grade of Yarmouth 15 – 2 –Executive DirectorsIvan Dunleavy 14 – – –Nicholas Smith 11 – – –Patrick Garner (resigned 30 April 2012) 0 – – –Steve Christian (appointed 25 October 2012) 5 – – –Andrew M. Smith (appointed 1 May 2012) 13 – – –Non-Executive DirectorsSteven Underwood 12 2 2 –John Whittaker (resigned 23 July 2012) 1 – – –Mark Senior 12 – – –Peter Hosker (resigned 23 July 2012) 4 1 – –Neil Lees 10 – – –Ruth Prior (appointed 27 November 2012) 3 1 – –Executive Directors maintain regular and structured dialogue with major shareholders via direct scheduled meetings andcommunication in response to ad hoc queries and requests from shareholders. In addition, the Chairman is available tomeet significant shareholders, as required.Share capitalThe information about share capital required to be included in this statement can be found on pages 19 and 20 in theDirectors’ report.


28 Pinewood Shepperton plcAnnual Report & Accounts 2013Corporate governance continuedBoard CommitteesThe Board has established three committees – Audit, Nomination and Remuneration. The Chairman and membersof these committees are appointed by the Board, following consultation with the appropriate committee’s chairman.During the period 1 April 2012 until 19 July 2012, there was no Nomination Committee and the Board as a wholeconsidered the matters to be reviewed by that committee. The Company was therefore, for this period, not in compliancewith the requirements set out in B.2.1 of the UK Corporate Governance Code that there should be a NominationCommittee which should lead the process for Board appointments and make recommendations to the Board. As setout below, on 19 July 2012, the Board reinstated the Nomination Committee with Lord Grade as the Chairman andSteven Underwood as member, with Ruth Prior joining on 27 November 2012.The terms of reference of the Audit, Nomination and Remuneration Committees are contained in the ‘Corporategovernance’ sub-section of the ‘Board of Directors’ section of the Company’s Investor Relations website atwww.pinewoodgroup.com/investor-relations. Further details of the committees are set out below.Audit CommitteeSteven Underwood – Chairman (until 27 November 2012) and memberPeter Hosker – appointed 19 July 2011, resigned 23 July 2012Ruth Prior – appointed as Chairman with effect from 27 November 2012The Audit Committee is responsible for:• Monitoring the integrity of the financial statements of the Group and any formal announcements relating to the Group’sfinancial performance and reviewing significant financial reporting judgements contained therein;• Reviewing the Group’s internal financial controls and the Group’s internal control and risk management systems,including consideration of the need for an internal audit function;• Making recommendations to the Board for a resolution to be put to the shareholders for their approval in generalmeetings on the appointment of the external auditor and the approval of the remuneration and terms of engagementof the external auditor; and• Reviewing and monitoring the external auditor’s independence and objectivity and the effectiveness of the auditprocess, and implementing a policy on the engagement of the external auditor to supply non-audit services as describedfurther below.During the financial year ended 31 March 2013, the Audit Committee has not complied with the requirement set out inC.3.1 of the UK Corporate Governance Code that an Audit Committee of a smaller company should have at least twoindependent Non-Executive Directors. Notwithstanding that he is not independent; the Board is satisfied that StevenUnderwood has recent and relevant financial experience.The Audit Committee has written terms of reference reflecting the requirements of the UK Corporate Governance Code,which have been approved by the Board. The Audit Committee provides the Board with assurance in respect of theintegrity of the Group’s financial reporting procedures, policies and controls. A copy of the Audit Committee’s termsof reference is available upon request from the Company Secretary or can be downloaded from the Group’s website,www.pinewoodgroup.com/investor-relations.The Group’s external auditors meet directly with the Audit Committee in advance of full year and interim results,and on other occasions as required.


Pinewood Shepperton plc 29Annual Report & Accounts 2013Corporate governance continuedBoard Committees continuedAudit Committee continuedThe Audit Committee reports to the full Board of the Company. The Audit Committee also reviews the effectiveness ofthe external audit process including the issue of auditor independence. In line with best practice, the Audit Committeeintroduced a policy that defines non-audit services that the Group’s auditors may or may not provide. The key point of thepolicy is that the Audit Committee will not support the use of the appointed audit firm for book-keeping services and anyother services deemed incompatible with auditor independence by professional or government regulations. For certainother types of work including, but not limited to, taxation, governance, accounting advice and consultancy services thepolicy allows for a review of a range of suppliers and costs above a predetermined level are required to be approved bythe Audit Committee.Further unscheduled communication between the members of the Audit Committee is conducted as required. The AuditCommittee continues to consider that, given the size of the Company, an internal audit function is not currently required.The Audit Committee met on two occasions during the year ended 31 March 2013.Nomination CommitteeSteven Underwood – ChairmanLord Grade of YarmouthRuth Prior – appointed 27 November 2012As outlined above, the Nomination Committee was re-established (with Lord Grade of Yarmouth as the Chairman andSteven Underwood as a member) on 19 July 2012.During the period 1 April 2012 to 19 July 2012 the Company was not in compliance with the requirements of B.2.1 of theUK Corporate Governance Code as there was no Nomination Committee to lead the process for Board appointments andmake recommendations to the Board. During the financial year ended 31 March 2013, the Nomination Committee was notin compliance with the requirements of B.2.1 of the UK Corporate Governance Code as it was not made up of a majorityof independent Non-Executive Directors.In accordance with its terms of reference, the Nomination Committee’s nomination duties are to make recommendationsto the Board and on all proposed appointments of Directors, to review succession plans for the Group and to review Boardeffectiveness. A copy of the Nomination Committee’s terms of reference is available upon request from the CompanySecretary or can be downloaded from the Group’s website, www.pinewoodgroup.com/investor-relations.When the need arises to recruit a Director, a role profile will be prepared that identifies the requirements of the roleand the experience and background of a candidate. This will then be used to assess the applicants. External searchconsultants will be engaged as necessary to undertake the identification of appropriate candidates. Should the need ariseto appoint a successor to the Chairman of the Nomination Committee, then the Chairman of the Nomination Committeewould not be permitted to chair relevant meetings.During the year under review, the Board appointed one Non-Executive Director: Ruth Prior and two Executive Directors:Andrew Smith and Steve Christian. In the case of Ruth Prior, this appointment was made by means of an external searchconsultancy. In the case of the Executive Directors, Andrew Smith was appointed as a result of an internal appointmentand Steve Christian was appointed in connection with the agreement to advise the Isle of Man Treasury on filminvestment opportunities and, as a consequence, neither an external search consultancy nor open advertising was used.The Executive Management Team are a key component of effective succession planning within the Group. The team hasbeen selected based on experience, background and ability to support the Board in delivering the Group strategy andmaximising stakeholder value. Their training and development needs are regularly reviewed as this is a critical partof the succession plan for the wider business to ensure that a pipeline of talent and knowledge is developed and retained.An overview of the Executive Management Team can be found under the ‘Employees’ section of the Annual Report.


30 Pinewood Shepperton plcAnnual Report & Accounts 2013Corporate governance continuedBoard Committees continuedRemuneration CommitteeSteven Underwood – ChairmanLord GradeRuth Prior – appointed 27 November 2012During the year under review, the Remuneration Committee has not complied with the requirement set out in D.2.1 of theUK Corporate Governance Code that a Remuneration Committee of a smaller company should have at leasttwo independent Non-Executive Directors.A detailed report on the Remuneration Committee’s activities is contained within the Directors’ remuneration report.The Committee met on two occasions during the year ended 31 March 2013.Internal controlThe Board acknowledges that it is responsible for the Group’s system of internal control and has reviewed its effectivenessin accordance with the provisions of the UK Corporate Governance Code. The Audit Committee, in accordance with theterms of reference, has reviewed the effectiveness of the internal control systems and has found the systems to beeffective. The internal control systems implemented at the Company for the year under review, and continuing, isstructured in order that the Group’s risks are effectively identified, evaluated and managed to provide reasonably, but notabsolute, reassurance that there is no material misstatement or loss. This process is consistent with the requirements ofthe Turnbull Guidance.The main elements of the Group’s internal control system, including risk identification, are as follows:BoardThe Board of Directors is ultimately responsible for internal control procedures, with an organisational structure thatsupports clearly defined authority levels. The primary responsibility for the operation of the internal control systems lieswith the Executive Directors and the Executive Management Team. Board meetings include consideration of strategic,financial, operational and compliance issues, which are endorsed through assessment by the Audit Committee of theeffectiveness of the internal, financial and operating control environment.Operating Company controlsThe identification and mitigation of major business risks is the responsibility of the Executive Directors and ExecutiveManagement Team, who have ongoing operational responsibility. A part of this remit includes the maintenance andregular review of procedures to identify and mitigate potential areas of risk, supported by the Group’s in-house legalcounsel, in addition to external adviser guidance. This process and review also ensures that procedures comply withGroup policies and guidelines.Authorisation proceduresThe authorisation procedures in respect of matters such as purchase commitments, capital expenditure, investment limitsand treasury transactions are clearly defined within the Group.InsuranceThe Company has granted an indemnity to all its Directors against liability brought by third parties, subject to theconditions set out in the Companies Act 2006. The continuing adequacy of insurance cover for the Group is evaluatedon an annual basis and the Board concluded that the insurance cover for the Group is currently adequate.


Pinewood Shepperton plc 31Annual Report & Accounts 2013Corporate governance continuedInternal control continuedFinancial reportingIn advance of each financial year, the Board approves a comprehensive budget, incorporating a detailed appraisal ofunderlying assumptions and business risks. The Board is provided with financial information on a monthly basis, detailinghistorical and forecast results against budget and prior year, incorporating monthly and year to date trading results,statement of financial position and summary notes, cash flow statements, capital expenditure, levels of indebtednessand covenant compliance. In addition, monthly Board meetings include an appraisal of current forecasts, treasury policy,financial resources, borrowing facilities and hedging strategy. The Executive Management Team is also provided withkey financial data on a monthly basis, to assess performance against budgets and provide explanations on the resultsto the Board.Treasury managementThe treasury function is managed in accordance with guidance approved by the Board and procedures are regularlyreviewed to ensure that they remain suitable. Appropriate segregation of duties is in place and significant transactions areauthorised by the Board. Financial reports and analysis are provided to the Board on a monthly basis as noted in financialreporting above.Shareholder communicationPinewood Shepperton plc maintains a strong communication strategy with its shareholders. The Company alsocommunicates regularly with the employees of the Group. All Company announcements are posted on the investorrelations website, www.pinewoodgroup.com/investor-relations, as they are released. The Company’s dedicated investorrelations website includes historic financial and share price information, as well as a link to ‘About us', which providesinformation on the business and the services and facilities available.Additionally, the Annual General Meeting, to be held this year on 30 September 2013, will provide shareholders with afurther opportunity to meet and question the Company’s Board, and to review the results and business during the yearended 31 March 2013.By order of the BoardAndrew M. SmithCompany Secretary26 June 2013


32 Pinewood Shepperton plcAnnual Report & Accounts 2013EmployeesThe Company actively considers the position of its employees’ rights through comprehensive and regularly reviewedemployment practices in the areas of recruitment, training, welfare, remuneration and employee relations. The Directorof Strategy and Communications has Board responsibility for these areas and regularly updates the Board onrelevant issues.At the Executive Management Team level, the Group Human Resources Manager maintains responsibility for alloperational 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 opportunityfor employees to raise grievances with senior management initially and then ultimately with Non-Executive Director,Steven Underwood.The Company’s stated policy on Equal Opportunities recognises the diversity of individuals and has procedures in placeto 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. The Company also seeks to provide employees withreasonable conditions of employment and career prospects.Employees also receive regular and relevant communication via the Company’s intranet site Spotlight and staff briefings,in terms of operational issues and trading performance and, where appropriate, the views of employees are sought inguiding business practices and strategy.The Company has adopted a training policy whereby all members of staff are actively encouraged to contribute to theirown development. The Company believes that personal development is a partnership between the individual and theCompany, and the attitude of the individual to their own development is a key element of this process.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’sabilities and potential by extending knowledge, skills and influencing attitudes. During the period 25% of training washealth and safety related and 75% related to skills training and career progression. As part of the Pinewood StudiosGroup Apprenticeship Scheme, staff members completed NVQ Apprenticeships in customer service and businessadministration with a further six apprenticeships in Digital, IT, Drapes, Post Production and Maintenance and Plumbing.The Company has now launched the first ever Studio Management Diploma and is being piloted by eight Pinewoodemployees throughout 2013.Executive Management TeamThe Executive Management Team members are the first line of support for the Board and their combined experienceand backgrounds assist in delivering the Group’s strategy and maximising stakeholder value. They are a key part of thesuccession plan for the Group and their training and development needs are reviewed regularly to ensure that the talentpool is developed and retained.Nigel Bennett, Operations Director Post Production – Digital Content Services Nigel Bennett joined the Company in 1998.In 2007 Nigel was appointed Pinewood Operations Manager Post Production and in 2010 was made responsible for thedaily operations of its post production facilities. In April 2012 he was appointed Operations Director Post Production –Digital Content Services.Paul Darbyshire, Broadcast Director Paul Darbyshire joined Teddington Studios in 1998 and is responsible for the Group’stelevision and channel hosting facilities. In addition he oversees operational responsibilities for all television studios andrelated facilities across the Group. Before joining, Paul worked for BTTV as a Channel Development Manager and laterOperations Director. In April 2012 he was appointed Broadcast Director.


Pinewood Shepperton plc 33Annual Report & Accounts 2013Employees continuedExecutive management team continuedMagdalena Duke, Legal Counsel Magdalena Duke joined in October 2010 as solicitor responsible for the Company’s legalmatters, including negotiation of stage, studio and post production agreements, Pinewood Pictures and PinewoodProductions transactions and litigation. She joined the Company from media law firm Davenport Lyons following a careeras a broadcast journalist with the BBC.Mark Hackett, Sales Director – Television Mark Hackett joined as a TV Sales Executive in 2005 and was promoted to Headof TV Sales in 2010. Prior to 2005, Mark was employed as a Sales and Business Development Executive for a number ofmedia related organisations including Universal Sound. In April 2012 he was appointed Sales Director – Television.Giles Farley, Managing Director, Group Digital Content Services Giles Farley joined in 2000 to start up the dedicatedInternational re-versioning facility at Shepperton and then in 2010, was promoted to Managing Director, Group DigitalContent Services. He was previously responsible for training, installations and technical sales at Avid and DigiDesign.David Godfrey, FCMI, Director International Operations David Godfrey FCMI joined in 1985 and has held positions asAssistant Studio Manager, Television and Commercials Manager, Studio Manager and Head of Group Studio Operations.He was appointed Director of International Operations for the Group in 2010 with responsibility to develop internationalstudio offerings worldwide.Peter Hicks, UK Operations Director Peter Hicks joined in 1991 and has held positions at Shepperton such as AssistantStudio Manager and Studio Manager. He was appointed Group Studio Manager in June 2010 and is responsible for theoperational running of both Pinewood and Shepperton studios. In April 2012, he was appointed UK Operations Director.He is also responsible for Group Health and Safety and Maintenance functions.Chris Naisby FCCA, Group Finance Director Chris Naisby joined Pinewood in 2001 as Finance Manager, having previouslyworked in financial roles in construction and media companies, including Reed Elsevier. Following promotion to FinancialController in April 2008 he was appointed Group Finance Director of the Pinewood Studios Group in April 2012.Noel Tovey, Sales Director – Film Noel Tovey joined in 1989 and in 1992 was appointed Site Manager at SheppertonStudios. Since 1999 he has held sales focused positions including Group Commercials Manager, Sales Executive forPinewood Toronto Studios in 2009 and Head of Film Sales Europe from 2010. In April 2012 he was appointed SalesDirector – Film.Andy Weltman, Executive Vice President, Pinewood USA Inc Andy Weltman joined Pinewood in 2012 as Executive VicePresident, Pinewood USA Inc. having had an extensive background in feature film production. Prior to his current role,he oversaw the British Film Commission in the US, was Director of Development for several independent feature filmcompanies and Director of Studio Operations at WGBH.David Wight MA (Cantab) PG Dip MRICS, Group Director Property David Wight is responsible for the Company’s realestate portfolio of land, buildings and Media Hub occupiers, property development and planning. He joined in 2003 asStudio Manager of Pinewood Studios. Prior to this he was Operations Director in the independent sector of the cinemaindustry after a career as an officer in the Royal Navy.Darren Woolfson, Group Director Technology Darren Woolfson joined in October 2007 having held a number of technicalroles in the film and television post production industry. He is responsible for the co-ordination and delivery of the Group’sstrategy of enhancing its technology infrastructure. Previously he was the Technical Director at Molinare Limited.


34 Pinewood Shepperton plcAnnual Report & Accounts 2013Corporate responsibilityThe Company continues to support local initiatives in the Iver, Iver Heath and Shepperton areas along with variousnational charitable organisations linked to film, television and the wider screen based industries.First Light is now combining with Film Club, under the new heading of Film Nation UK supported by funding from theBFI. The Company is providing support to Second Light, which is aimed at 17 to 25 year olds, providing work placements,courses and mentoring. Further discussions are taking place with Second Light to see how else we can support youngpeople entering into the film and television industries.During the period the Nottingham and Trent University held their annual end of term exhibition at Pinewood andShepperton Studios and the National Film and Television School (‘‘NFTS”) also held an exhibition of students’ workstudying set design.The Company continues to provide a scholarship for an undergraduate at the NFTS.Pinewood Studios hosted the BFI Film Academy. The students taking part in the BFI programme got the opportunityto listen to various presentations and were taken for a tour around the Studios.Support continues to various industry organisations, a number of guilds such as the British Society of Cinematographers,British Kinematograph, Sound and Television Society, Guild of Production Designers, Designers Guild, the Association ofMotion Picture Sound and the trade union, Bectu, are given rooms free of charge to hold meetings.Pinewood Studios continues to support Riding for the Disabled along with a cash donation. The Company has also suppliedkits once again for the Thames Valley Youth Football Club. Local community clubs that cater for the young and the elderlyincluding the Iver Heath Bowls Club, Iver Drama Club, schools, colleges, universities and local councils close to theStudios also receive support.Shepperton Studios continues to support Littleton Church of England Infant School, St Mary Magdalene Church,Spelthorne Borough Council, a local nursing home and Chertsey and Shepperton annual regatta along with variousdonations to local spring and summer fayres.Encouragement is given to staff members who wish to participate in charitable fundraising activities, for which theCompany offers donations and a further group activity is planned for later on this year.Health and Safety issuesThe Company is committed to building a safe working environment and improving on its already high standards of healthand safety, acknowledging its responsibilities under the Health and Safety at Work Act and subordinate regulations.The Company places the safety of all persons in high regard and has a detailed policy that clearly details each employee’sresponsibilities.Progress continues to be made on raising the profile of health and safety in the Company with the Group Health, Safetyand Fire Team always available for advice which is supplemented by information on the Company’s intranet, Spotlight,which can be accessed by all staff.The Health and Safety Executive (“HSE”) made two visits to the Studios during 2012 and four visits to productions andcontractors on-site. On the back of a productions enforcement notice for use of construction vehicles in a pedestrian area,the Company received an improvement notice regarding pedestrian segregation at Pinewood. The notice was satisfied byadditional walkway barriers being erected.In February 2013, during an inspection of Liquid Petroleum Gas (“LPG”) installations by the HSE a notice was issued withregard to the location of LPG installation pipe work. The pipework was rerouted and the notice satisfied within two weeks.


Pinewood Shepperton plc 35Annual Report & Accounts 2013Corporate responsibility continuedHealth and Safety issues continuedThe downward trend in staff accidents for 2012/2013 continued with a total of 18 accidents of which three werereportable under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (“RIDDOR”) for the yearended 31 March 2013.Neil Lees, Non-Executive Director, has Board accountability for health and safety issues, supported by Nicholas Smith,Commercial Director and the Executive Management Team. The Board monitors relevant health and safety issueseach month.Environmental issuesThe Group’s Environmental Policy seeks to minimise any adverse impact that our business activities may have on theenvironment, to ensure compliance with regulatory requirements, to reduce CO 2 emissions and continuously improveour environmental performance.A number of measures in support of this policy have been implemented.RecyclingThe recycling facilities at both Pinewood and Shepperton Studios divert large amounts of waste away from landfill, reducethe number of lorry movements and ensure the Studios comply with the ‘Waste Hierarchy’. The different waste streamsthat are currently recycled include electrical equipment, printer cartridges, paper, cardboard, glass, tins, plastic,fluorescent tubes and metal. Over half a ton of batteries collected from across Pinewood were recently sent for recyclingand a new scheme for the recycling of textile waste is now also being tested.Travel PlanTravel Plan measures continue to be promoted to further reduce the number of vehicles arriving at the Studios, to cut thesubsequent CO 2 emissions and to promote sustainable travel options.Some of the initiatives include the participation in the Cycle to Work scheme, provision of cycle shelters, travel informationpoints, travel surveys, video conferencing facilities and electric car charging points. The Guaranteed Lift Home Policy and aSeason Ticket Loan Scheme are also used to encourage staff to choose more sustainable modes of transport.The free Studios’ shuttle bus services to and from the local railway stations have the greatest impact on reducing cartravel and the associated CO 2 emissions. In a further commitment to reducing emissions, two new hybrid pool carsare now available for staff to use for any business journey.EnergyThe Company continues to participate in the Government’s Carbon Reduction Commitment Energy Efficiency Scheme(“CRC”) which aims to cut CO 2 emissions by reducing energy consumption.Initiatives to control CO 2 emissions include:• The measuring and monitoring of all energy consumption• Replacing existing gas oil boilers with more energy-efficient gas fired models – many of which are managed andcentrally controlled by a Building Management system• The identification of unnecessary energy consumption via the Automated Meter Reading system• The installation of energy-efficient motors, devices and systems wherever possible – including stage lighting andboiler controls.Sustainability CoordinatorThe recent appointment of the Group’s first Sustainability Coordinator is intended to provide a link between the Studiosand their customers, to share best practice and to work in partnership to help create a sustainable working environment.


36 Pinewood Shepperton plcAnnual Report & Accounts 2013Directors’ remuneration reportPlease note that the information contained in this report is unaudited except where otherwise stated.Remuneration CommitteeThe Board presents its remuneration report to shareholders of the Company. The Board has established a RemunerationCommittee (“the Committee”) to advise it on appropriate policies and procedures in determining suitable remunerationpackages for Executive Directors and senior management, and continues to take advice from external advisers asconsidered necessary by the Committee. During the year under review, the Remuneration Committee has not compliedwith the requirement set out in D.2.1 of the Combined Code that a Remuneration Committee of a smaller company shouldhave at least two independent Non-Executive Directors.The Committee comprised of Steven Underwood (Chairman), Lord Grade of Yarmouth and from 27 November 2012,Ruth Prior. During the year, the Committee met on two separate occasions. All members of the Committee at the relevanttime were present on each occasion.The Committee’s responsibilities include the monitoring, review and recommendation to the Board on the Group’s broadpolicy for the remuneration of all Executive Directors, and to determine, and thereafter review at least annually, theremuneration packages of all Executive Directors, including basic salary, pension arrangements and annual and long-termincentives, and, as appropriate, make recommendations in respect of other senior management. In addition, theCommittee reviews the corporate targets and objectives relating to the Executive Directors’ compensation, including anevaluation of their performance. The Committee’s terms of reference are contained in the ‘Corporate governance’ sectionof the Company’s Investor Relations website at www.pinewoodshepperton.com.The Committee continues to take advice, where appropriate, in order to support its up to date understanding of currentmarket trends, comparable remuneration packages in similar organisations, and general issues for consideration indetermining appropriate rewards.In addition, appropriate legal advice relating to contractual issues is taken as necessary to ensure compliance withbest practice.General policyThe Group’s remuneration policy is to provide remuneration packages to Executive Directors and senior managementwhich align their interests to those of shareholders, whilst retaining appropriate flexibility to cater for potential futurechanges in remuneration policy best practice and the environment in which the Group operates. Group policy aims toprovide competitive rewards based on the achievement of recognised short-term and long-term performance basedtargets, recognising that the value of awards to Executive Directors and employees should be commensurate withindividual responsibilities within the Group.The Committee reviews on an annual basis whether its remuneration policy remains appropriate for the relevant financialyear. Factors taken into account by the Committee include: market conditions affecting the Group; current financialmacroeconomic conditions; the recruitment market in the Group’s sector; changing market practice; and the changingviews of institutional shareholders and their representative bodies.The Committee has concluded that the remuneration policy remains valid for 2013.


Pinewood Shepperton plc 37Annual Report & Accounts 2013Directors’ remuneration report continuedBalance between fixed and variable elements of remunerationThe following table shows the balance between fixed and variable performance based compensation for the year, wherethe fixed component is made up of salary, benefits and pension contributions and the variable component comprises:• the maximum potential bonus, and• the maximum Long Term Incentive Plan bonus payable which would accrue if all relevant performance conditions arefully met.Fixed%Variable%Ivan Dunleavy 44 56Nicholas Smith 44 56Andrew M Smith 71 29Steve Christian 62 38Components of the Executive Directors’ remunerationThe key components of the Executive Directors’ remuneration are:Basic salary and benefits in kindThe basic salary for each Executive Director reflects the Committee’s assessment of performance, responsibilities andmarket value for comparable positions, as guided by independent advice. The Committee has access to informationon the pay and conditions of other employees in the Group when determining the remuneration packages for ExecutiveDirectors. The Committee actively considers the relationship between general changes to employee pay and conditionsand any proposed changes in the remuneration packages for Executive Directors to ensure it can be sufficiently robust inits determinations in light of the position of the Company as a whole. The basic salary and benefits in kind of all ExecutiveDirectors were reviewed on 1 April 2013.Benefits in kind include provision of a car allowance, pension, medical and life insurance and permanent health insurance.Annual bonusThe Executive Directors participate in an annual bonus scheme, which is linked to the achievement of annual financialtargets set by the Committee, based on the Group’s budget approved prior to the commencement of the financial year.For the year ended 31 March 2013, a bonus was payable on the achievement of 100% of budgeted earnings beforeinterest and tax (“EBIT”) performance and at this level of earnings, bonus payable was 25% of salary. The maximumbonus entitlement for the Executive Directors was 100% of salary, payable on the achievement of 120% of budgetedEBIT performance, with a straight line mechanism operating between 100% and 120% of budgeted EBIT performance.In approving the year ended 31 March 2013 bonus levels, the Committee measured the level of achievement against theperformance targets set and also the contribution of the individual Executive Directors.The targets for the annual bonus scheme and the maximum annual bonus potential are reviewed and agreed by theCommittee at the beginning of each year to ensure that they are appropriate to the current market conditions andposition of the Group in order to ensure that they continue to remain challenging.


38 Pinewood Shepperton plcAnnual Report & Accounts 2013Directors’ remuneration report continuedLong-Term Incentive Plan (“LTIP”)The Executive Directors, and certain members of the Executive Management Team, participate in an LTIP scheme, whichis linked to the achievement of annual financial targets set by the Committee, based on the Group’s long range plan.Contributions will be made, by the Company, to the LTIP scheme over a five year period, commencing 1 April 2012,providing the target EBITDA (Earnings before interest, tax, depreciation and amortisation) is achieved in each of therelevant years.In the event that each of the EBITDA milestones is achieved the LTIP scheme at the end of the fifth year will be £5m.From year two, LTIP contributions will be adjusted where the EBITDA falls within the range of 95% to 110% of target.The adjustments will be on a straight-line basis ranging from a 0% contribution for achieving 95% of target up to anadditional 20% for achieving 110% of the targeted EBITDA.The maximum theoretical contribution to the scheme therefore is £6m over the five year period.The first payment from the LTIP to employees will be made of the cumulative award after three years. The secondpayment will be made at the end of the fourth year and the third and final payment will be made at the end of thefifth year.For the year ended 31 March 2013, LTIP was accrued on the achievement of 100% of target EBITDA and at this levelof earnings the total LTIP accrued was £0.5m, which will be paid after a two year deferral period.Pension arrangementsFor Executive Directors, only basic salary is pensionable. All Executive Directors are eligible to become members of thepersonal pension plan arranged by the Group, which is a defined contribution scheme. The Company’s contribution forthe Executive Directors is set at a maximum of 12.5% of basic salary. All other employer contributions for the ExecutiveManagement Team and employees reflect longevity of service with the Group but are capped at a maximum of 10% ofbasic salary.Executive Directors’ service agreementsThe Executive Directors have rolling service agreements which are subject to 12 months’ notice which the Committeeregards as appropriate in the event of termination of an Executive Director’s service agreement. The service agreementsof the Executive Directors (other than for Nicholas Smith) specify the compensation which must be paid to the ExecutiveDirector where the Company terminates the agreement either without notice or without cause, which is limited to salaryand benefits payable during the Executive Director’s notice period (salary only in the case of Andrew Smith). The serviceagreement of Nicholas Smith provides that the Company may opt to terminate the agreement with notice or a paymentin lieu of notice, and provides for inherent mitigation. The Committee will ensure that there have been no unjustifiedpayments for failure upon an Executive Director’s termination of employment. There are no special provisions inthe service agreements extending notice periods on a change of control, liquidation of the Company or terminationof employment.


Pinewood Shepperton plc 39Annual Report & Accounts 2013Directors’ remuneration report continuedExecutive Directors’ service agreements continuedThe dates of Executive Directors’ service agreements are:Ivan Dunleavy 20 April 2004Patrick Garner 20 April 2004 (resigned 30 April 2012)Nicholas Smith 1 July 2005Andrew M. Smith 1 June 2008 (appointed 1 May 2012)Steve Christian 25 October 2012 (appointed 25 October 2012)Chairman and Non-Executive Directors’ service agreements and remunerationThe Chairman and Non-Executive Directors have specific letters of engagement, the dates of which are:Michael Grade 19 April 2004Steven Underwood 25 June 2010John Whittaker 12 July 2011 (resigned 23 July 2012)Mark Senior 12 July 2011 (resigned 29 April 2013)Peter Hosker 12 July 2011 (resigned 23 July 2012)Neil Lees 12 July 2011Ruth Prior appointed 27 November 2012Thomas Allison appointed 29 April 2013The Chairman is appointed for an initial term of one year and thereafter on a rolling basis with notice to terminate ofsix months (or immediately by the Company in certain circumstances such as breach of terms). The Non-ExecutiveDirectors, other than Ruth Prior, are appointed for a rolling term of 12 months subject to normal provisions ofappointment at the Company’s first Annual General Meeting following their appointment and retirement by rotationwith immediate right of termination by the Company in specific circumstances including breach of terms. Ruth Prior isappointed for an initial term of three years unless terminated earlier by, and at the discretion of, either party upon onemonth’s written notice subject to reappointment at the 2013 Annual General Meeting and retirement by rotation withimmediate right of termination by the Company in specific circumstances including breach of terms. Retirements byrotation are noted in the Directors’ report. The appointment and reappointment of the Chairman and Non-ExecutiveDirectors’ are matters reserved for the full Board.With the exception of the Chairman and Ruth Prior, the Non-Executive Directors are not entitled to receive any feespursuant to their Service Agreements. The fees of the Chairman and Ruth Prior are determined by the RemunerationCommittee, reflecting market practice, levels of service, together with their contribution of time and expertise in supportof the Group, and are reviewed annually. The Chairman and Non-Executive Directors are not eligible for pension schememembership and do not participate in any of the Group’s bonus or Long Term Incentive Plan.


40 Pinewood Shepperton plcAnnual Report & Accounts 2013Directors’ remuneration report continuedChairman and Non-Executive Directors’ service agreements and remuneration continuedThe Company has entered into an agreement with Peel Acquisitions pursuant to which Peel Acquisitions has agreedto supply the Company with Non-Executive Directors (currently: Steven Underwood, Thomas Allison and Neil Lees).As consideration for the supply of the Non-Executive Directors, the Company has agreed to pay a fee of £40,000 perannum for each Non-Executive Director that is supplied (exclusive of VAT where applicable). Either party may terminatethe agreement by giving three months’ prior written notice.The fees of the Chairman were last adjusted with effect 1 January 2011. The fee paid to the Chairman, Lord Gradeof Yarmouth increased by 2.5% to £105,000.Copies of the terms and conditions of appointment of the Chairman and each of the Non-Executive Directors are availablefor inspection at the Company’s registered office during normal business hours and will be available for inspection at theplace of the Annual General Meeting for at least 15 minutes prior to and during the Annual General Meeting.Any remuneration received by a Director under their directorship of unrelated companies is retained by the Director.Directors’ remuneration for the year ended 31 March 2013 (audited)Basic salaryand fees£Benefitsin kind£Annualbonus£Year ended 31 March 2013Pensioncontributions£Totalremuneration£15 monthsended31 March2012Totalremuneration£ChairmanLord Grade of Yarmouth 105,000 n/a n/a n/a 105,000 131,279Executive DirectorsIvan Dunleavy* 362,750 8,721 nil 37,302 408,773 562,476Nicholas Smith 228,000 6,793 nil 27,500 262,293 377,023Andrew M. Smith 145,000 4,823 nil 11,550 161,373 nilSteve Christian** 16,667 nil nil nil 16,667 nilPatrick Garner 91,233 844 nil 2,146 94,223 312,220Non-Executive DirectorsSteven Underwood nil nil nil nil nil nilMark Senior nil nil nil nil nil nilNeil Lees nil nil nil nil nil nilRuth Prior 15,400 308 nil nil 15,708 nilPeter Hosker nil nil nil nil nil nilJohn Whittaker nil nil nil nil nil nil* Highest paid Director** During the year the Group signed a consultancy agreement for services related to the Isle of Man Investment Advisory Agreement with Gasworks MediaLimited, a company incorporated in the Isle of Man, whose sole shareholder, Steve Christian, is also an Executive Director of the Group. The total value ofthe transactions during the year was £120,000.The Executive Directors participate in a LTIP scheme where contributions will be made by the Company to the schemeover a five year period, commencing 1 April 2012, providing the target EBITDA (Earnings before interest, tax,depreciation and amortisation) is achieved in each of the relevant years. The first payment from the LTIP to employeeswill be made of the cumulative award after three years.


Pinewood Shepperton plc 41Annual Report & Accounts 2013Directors’ remuneration report continuedDirectors’ remuneration for the year ended 31 March 2013 (audited) continuedLTIP:1 April2012£Awardedduring the year£31 March2013£Highest paid Director – 165,000 165,000Aggregate for all Directors – 330,000 330,000The Company Sharesave Scheme closed on 8 July 2011 and accordingly no shares were subject to option at31 March 2013.None of the above Directors received reimbursement for expenses during the year requiring separate disclosureas required by The Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008.The remuneration report will be subject to shareholder approval at the Annual General Meeting.On behalf of the BoardSteven UnderwoodChairman of the Remuneration Committee26 June 2013


42 Pinewood Shepperton plcAnnual Report & Accounts 2013Independent auditor’s reportto the members of Pinewood Shepperton plcWe have audited the Group financial statements of Pinewood Shepperton plc for the year ended 31 March 2013 whichcomprise the Group Income Statement, the Group Statement of other Comprehensive Income, the Group Statementof Financial Position, the Group Statement of Cash Flows, the Group reconciliation of movement in net debt, the GroupStatement of Changes in Equity and the related Notes 1 to 30. The financial reporting framework that has beenapplied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adoptedby the European Union.This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members thosematters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permittedby law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members asa body, for our audit work, for this report, or for the opinions we have formed.Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation ofthe Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit andexpress an opinion on the group financial statements in accordance with applicable law and International Standards onAuditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standardsfor Auditors.Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to givereasonable assurance that the financial statements are free from material misstatement, whether caused by fraud orerror. This includes an assessment of: whether the accounting policies are appropriate to the Group’s circumstancesand have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimatesmade by the directors; and the overall presentation of the financial statements. In addition, we read all the financialand non-financial information in the annual report to identify material inconsistencies with the audited financialstatements and to identify any information that is apparently materially incorrect based on, or materially inconsistentwith, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent materialmisstatements or inconsistencies we consider the implications for our report.Opinion on financial statementsIn our opinion the Group financial statements:• give a true and fair view of the state of the Group’s affairs as at 31 March 2013 and of its profit for the year then ended;• have been properly prepared in accordance with IFRSs as adopted by the European Union; and• have been prepared in accordance with the requirements of the Companies Act 2006.


Pinewood Shepperton plc 43Annual Report & Accounts 2013Independent auditor’s report continuedSeparate opinion in relation to IFRSs as issued by the IASBAs explained in Note 1 to the Group financial statements, the Group in addition to complying with its legal obligationto apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International AccountingStandards Board (IASB).In our opinion the Group financial statements comply with IFRSs as issued by the IASB.Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Directors’ report for the financial year for which the Group financial statementsare prepared is consistent with the Group financial statements.Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to youif, in our opinion:• certain disclosures of Directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.Other matterWe have reported separately on the parent Company financial statements of Pinewood Shepperton plc for the year ended31 March 2013 and on the information in the Directors’ remuneration report that is described as having been audited.Although not required to do so, the Directors have voluntarily chosen to make a corporate governance statement detailingthe extent of their compliance with the UK Corporate Governance Code. We reviewed:• the Directors’ statement, contained within the Directors’ report, in relation to going concern; and• the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of theUK Corporate Governance Code specified for our review; and• certain elements of the report to shareholders by the Board on Directors’ remuneration.Alan Fendall (Senior statutory auditor)for and on behalf of Deloitte LLPChartered Accountants and Statutory AuditorManchester, UK26 June 2013


44 Pinewood Shepperton plcAnnual Report & Accounts 2013Group income statement for the year ended 31 March 2013and 15 month period ended 31 March 2012NotesYearended31 March2013£00015 monthsended31 March2012£000Revenue – continuing operations 3 55,642 62,991Cost of sales (37,823) (38,105)Gross profit 17,819 24,886Selling and distribution expenses (1,699) (2,237)Administrative expenses:– Recurring activities in the ordinary course of business (7,156) (9,498)– Exceptional expenses 8 (2,997) (11,025)– Exceptional income 7 – 541Total Administrative expenses (10,153) (19,982)Loss on disposal of property, plant and equipment (600) –Operating profit 4 5,367 2,667Comprising:– Operating profit from Media Services activities, before exceptional items 10,510 13,930– Operating loss from Media Investment in respect of Film Production Companies (1,522) (250)– Operating loss from Media Investment activities, excluding FilmProduction Companies (624) (529)– Exceptional expenses 8 (2,997) (11,025)– Exceptional income 7 – 5415,367 2,667Finance costs 9 (4,048) (4,558)Profit/(loss) before tax 1,319 (1,891)Current corporation tax expense (1,545) (1,686)UK Film Tax Relief from Film Production Companies 1,522 297Deferred tax credit 472 333Total tax credit/(expense) 11 449 (1,056)Profit/(loss) for the year/period 1,768 (2,947)Attributable to:Equity holders of the parent 1,768 (2,947)Earnings/(loss) per share– basic and diluted for result for the year/period 12 3.6p (6.3p)The notes on pages 50 to 95 are an integral part of these consolidated financial statements.


Pinewood Shepperton plc 45Annual Report & Accounts 2013Group statement of other comprehensive income for the yearended 31 March 2013 and 15 month period ended 31 March 2012Yearended31 March2013£00015 monthsended31 March2012£000Profit/(loss) for the year/period 1,768 (2,947)Net loss on cash flow hedges (281) (331)Transfer of cash flow hedge interest to income statement 774 990Taxation through income statement (92) –Taxation through statement of changes in equity 3 (205)Other comprehensive income for the year/period, net of tax 404 454Total comprehensive income/(loss) for the year/period, net of tax 2,172 (2,493)Attributable to:Equity holders of the parent 2,172 (2,493)The notes on pages 50 to 95 are an integral part of these consolidated financial statements.


46 Pinewood Shepperton plcAnnual Report & Accounts 2013Group statement of financial position at 31 March 2013and 31 March 2012Notes31 March2013£00031 March2012£000AssetsNon-current assetsProperty, plant and equipment 14 125,792 119,571Investment property 15 6,062 6,195Intangible assets 16 5,604 5,604Long-term assets 17 369 320137,827 131,690Current assetsInventories 18 459 486Trade receivables 19 6,830 4,376Prepayments and other receivables 20 1,954 2,323Cash and cash equivalents 21 – 4089,243 7,593Total assets 147,070 139,283Equity and liabilitiesEquity attributable to equity holders of parentShare capital 22 4,941 4,725Share premium 22 48,718 43,847Capital redemption reserve 22 135 135Merger reserve 22 348 348Fair value of cash flow hedge 22 (328) (732)Retained earnings 26,255 24,734Total equity 80,069 73,057Non-current liabilitiesInterest-bearing loans and borrowings 23 44,213 50,850Deferred tax liabilities 11 727 1,20244,940 52,052Current liabilitiesInterest-bearing loans and borrowings 23 460 –Trade and other payables 24 19,619 14,174Provisions 25 1,538 –Tax payable 444 –22,061 14,174Total liabilities 67,001 66,226Total equity and liabilities 147,070 139,283The financial statements of Pinewood Shepperton plc, Company number: 03889552, were approved and authorisedfor issue by the Board of Directors on 26 June 2013. They were signed on its behalf by:Ivan DunleavyChief ExecutiveThe notes on pages 50 to 95 are an integral part of these consolidated financial statement.


Pinewood Shepperton plc 47Annual Report & Accounts 2013Group statement of cash flows for the year ended 31 March 2013and 15 month period ended 31 March 2012Yearended31 March2013£00015 monthsended31 March2012£000NotesCash flow from operating activities:Profit/(loss) before tax 1,319 (1,891)Adjustments to reconcile profit/(loss) before tax to net cash flows:Exceptional items 7,8 2,091 8,606Depreciation and amortisation 4 4,208 4,712Loss on disposal of property, plant and equipment 4 600 –Share-based payment charges – 204Finance costs 9 4,048 4,558Cash flow from operating activities before changes in working capital 12,266 16,189(Increase)/decrease in trade and other receivables (2,611) 1,162Decrease in inventories 27 5Increase/(decrease) in trade and other payables 3,784 (1,287)Cash generated from operations 13,466 16,069Finance costs paid (3,455) (4,088)Corporation tax received in respect of FPC activity 1,198 227Corporation tax paid (296) (3,215)Net cash flow from operating activities 10,913 8,993Cash flow used in investing activities:Purchase of property, plant and equipment (9,552) (16,153)Additions to long-term assets (63) –Net cash flow used in investing activities (9,615) (16,153)Cash flow from/(used in) financing activities:Proceeds from the issue of shares 22 5,087 257Dividends paid 12 (247) (1,156)Repayment of asset financing obligations (570) (528)Proceeds from asset financing 1,849 –Repayment of bank borrowings 23 (37,000) –Proceeds from bank borrowings 23 30,000 8,500Payment of loan issue fees (1,285) –Net cash flow (used in)/from financing activities (2,166) 7,073Net decrease in cash and cash equivalents (868) (87)Cash and cash equivalents at the start of the year/period 408 495(Overdraft)/cash and cash equivalents at the end of the year/period 21 (460) 408Included within the overdraft balance are cash and cash equivalents of £1,634,000 (15 month period ended 31 March2012: £161,000) which is unavailable for general use. Please see Note 21.The notes on pages 50 to 95 are an integral part of these consolidated financial statements.


Pinewood Shepperton plc 49Annual Report & Accounts 2013Group statement of changes in equityFrom 1 April 2012 to 31 March 2013Sharecapital£000Sharepremium£000Capitalredemptionreserve£000Mergerreserve£000Fair valueof cash flowhedgereserve£000Retainedearnings£000At 1 April 2012 4,725 43,847 135 348 (732) 24,734 73,057Profit for the year – – – – – 1,768 1,768Totalequity£000Other comprehensive income,net of tax – – – – 404 – 404Total comprehensiveincome, net of tax – – – – 404 1,768 2,172Equity dividends (Note 12) – – – – – (247) (247)New shares issued (Note 22) 216 4,871 – – – – 5,087At 31 March 2013 4,941 48,718 135 348 (328) 26,255 80,069From 1 January 2011 to 31 March 2012Sharecapital£000Sharepremium£000Capitalredemptionreserve£000Mergerreserve£000Fair valueof cash flowhedgereserve£000Retainedearnings£000At 1 January 2011 4,623 43,692 135 348 (1,186) 27,448 75,060Loss for the period – – – – – (2,947) (2,947)Other comprehensive income,net of tax – – – – 454 – 454Total comprehensiveincome, net of tax – – – – 454 (2,947) (2,493)Equity dividends (Note 12) – – – – – (1,156) (1,156)New shares issued (Note 22) 102 155 – – – (86) 171Vesting of LTIP grants – – – – – 86 86Vesting of LTIP grants – – – – – (86) (86)Share-based payments – – – – – 1,475 1,475At 31 March 2012 4,725 43,847 135 348 (732) 24,734 73,057The notes on pages 50 to 95 are an integral part of these consolidated financial statements.Totalequity£000


50 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements at 31 March 20131. Authorisation of financial statements and statement of compliance with IFRSThe Group financial statements of Pinewood Shepperton plc for the year ended 31 March 2013 were authorised for issueby the Board of the Directors on 26 June 2013 and the statement of financial position was signed on the Board’s behalfby the Chief Executive. Pinewood Shepperton plc is a public limited company incorporated and domiciled in England andWales. The registered office is located at Pinewood Studios, Pinewood Road, Iver Heath, Buckinghamshire SL0 0NH,United Kingdom. The Company’s ordinary shares are traded on the AIM market of the London Stock Exchange.The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards(“IFRS”) as adopted by the European Union as they apply to the financial statements of the Group for year ended31 March 2013. The Group’s financial statements are also consistent with IFRSs as issued by the International AccountingStandards Board (“IASB”). The principal accounting policies adopted by the Group are set out in Note 2.2. Accounting policiesBasis of preparation and statement of complianceThe consolidated financial statements of Pinewood Shepperton plc and all of its subsidiaries and joint ventures have beenprepared in accordance with IFRS as adopted by the European Union (“EU”) as they apply to the financial statements ofthe Group for the year ended 31 March 2013 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 yearended 31 March 2013. The Group financial statements are presented in UK sterling and all values are rounded to thenearest thousand pounds (£000), except when otherwise indicated. The Group financial statements have been preparedunder the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities(including derivative instruments) to fair value.Going concernIn assessing the going concern basis, the Directors considered the Group’s business activities, the financial position of theGroup and the Group’s financial risk management objectives and policies. The Group meets its day-to-day working capitalrequirements through its bank facilities. The Group’s forecasts and projections, taking account of reasonably possiblechanges in trading performance and economic uncertainty, show that the Group should be able to operate within thelevel of its current facilities. Although the Group is in a net current liability position of £12.8m, the Group has £32.5mof undrawn committed loan facilities in place which the Directors are confident provides sufficient headroom to supportcontinued trading. The Directors therefore consider that the Group has adequate resources to continue in operationalexistence for the foreseeable future and as such it is appropriate to adopt the going concern basis in preparing thesefinancial statements.The Group’s assessment of going concern is explained further in the Directors’ report on page 21 of the Annual Reportand further information on the Group’s borrowings is given in Note 23.Basis of consolidationThe Group consolidated financial statements comprise the financial statements of Pinewood Shepperton plc and itssubsidiaries and joint ventures as at 31 March 2013 and 31 March 2012. All intercompany transactions, balances,income and expenses are eliminated in full on consolidation. All subsidiaries are consolidated for the financial yearending 31 March 2013 regardless of the individual entities statutory reporting date.Subsidiaries and joint ventures are consolidated from the date on which control is transferred to the Group and ceaseto be consolidated from the date on which control is transferred out of the Group. Where there is a loss of control of asubsidiary or joint venture, the consolidated financial statements include the results for the part of the reporting yearduring which Pinewood Shepperton plc has control.


Pinewood Shepperton plc 51Annual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedChanges in accounting policy and disclosuresThe accounting policies adopted are consistent with those of the previous financial year with the exception of disclosuresrequired under IFRS 8 Operating segments (“IFRS 8”) following the Group’s amendment to its operational financialreporting structure (see Note 3 “Segment information and revenue analysis”) and the newly applicable accountingstandard detailed below:IFRS 7 Financial instruments: Disclosures on transfers of assets (Amendment)The IASB has issued an amendment to IFRS 7 Financial instruments: Disclosures, which increases the requireddisclosures in respect of risk exposures arising from transferred financial assets. The adoption of the amendmentdid not have any impact on the financial position or performance of the Group.The following are not effective at the date of these accounts but we expect them to have a material impact once theyhave been adopted:In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued,including IFRS 10 Consolidated financial statements, IFRS 11 Joint arrangements, IFRS 12 Disclosures of interestsin other entities, IAS 27 Separate financial statements (as revised in 2011) and IAS 28 Investments in Associatesand Joint Ventures (as revised in 2011). The standards and amendments are effective for annual periods beginningon or after 1 January 2014 for companies preparing financial statements under IFRS as adopted by the EU, with earlierapplication permitted provided all these standards are applied at the same time.The key requirements of these five Standards are described below:IFRS 10 Consolidated financial statementsIFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financialstatements and builds on existing principles by identifying the concept of control as the determining factor in whetheran entity should be included within the consolidated financial statements. In addition, IFRS 10 includes a new definitionof control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns fromits involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of theinvestor’s return.IFRS 11 Joint arrangementsIFRS 11 replaces IAS 31 Interests in Joint Ventures and provides for a more realistic reflection of joint arrangementsby focusing on the rights and obligations of the arrangement, rather than its legal form. There are two types of jointarrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to theassets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenueand expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and henceequity accounts for its interest. Proportional consolidation of joint ventures will no longer be permitted.IFRS 12 Disclosures of interests in other entitiesIFRS 12 includes the disclosure requirements for all forms of interests in other entities, including joint arrangements,associates, special purpose vehicles and other off-balance-sheet vehicles.Amendments to IFRS 10, 11 and 12 on transition guidanceThese amendments provide additional transition relief relating to the first time application of IFRSs 10, 11 and 12, limitingthe requirement to provide adjusted comparative information to only the preceding comparative period. For disclosuresrelated to unconsolidated structured entities, the amendments will remove the requirement to present comparativeinformation for periods before IFRS 12 is first applied.


52 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedChanges in accounting policy and disclosures continuedIAS 27 (revised 2011) Separate financial statementsAs a consequence of the new IFRS 10, IAS 27 has been revised and now includes the provisions on separate financialstatements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 Investments in Associates and JointVentures, and describes the application of the equity method to investments in joint ventures in addition to associates.The Group anticipates that the application of these five standards will have a significant impact on amounts reported inthe consolidated financial statements. The application of IFRS 11 in particular is expected to be material as it will changethe accounting of the Group’s three joint ventures (see Note 28) which are currently accounted for using the proportionalconsolidation method. Under IFRS 11, these will be accounted for under the equity method, resulting in the aggregation ofthe Group’s proportionate share of the joint ventures net assets and items of profit and loss and other comprehensiveincome into a single line item which will be presented in the consolidated statement of financial position and incomestatement as ‘investment in joint ventures’ and ‘share of profits of joint ventures’ respectively.The following are not effective at the date of these accounts and we do not expect them to have a material impact oncethey have been adopted:IAS 1 Financial Statement Presentation – Presentation of Items of Other Comprehensive IncomeThe amendments to IAS 1 change the grouping of items presented in OCI and introduce new terminology for thestatement of comprehensive income and income statement. Items that could be reclassified (or “recycled”) to profit orloss at a future point in time (for example, upon derecognition or settlement) would be presented separately from itemsthat will never be reclassified. The amendment affects presentation only and there will be no impact on the Group’sfinancial position or performance. The amendment becomes effective for annual periods beginning on or after 1 July 2012for companies preparing financial statements under IFRS as adopted by the EU.IFRS 9 Financial Instruments: Classification and MeasurementIFRS 9 as issued reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification andmeasurement of financial assets and financial liabilities as defined in IAS 39. The standard is effective for annual periodsbeginning on or after 1 January 2015 for companies preparing financial statements under IFRS as adopted by the EU.In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of thefirst phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but willpotentially have no impact on classification and measurements of financial liabilities. The Group will quantify the effectin conjunction with the other phases, when issued, to present a comprehensive picture.IFRS 13 Fair Value MeasurementIFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not changewhen an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS whenfair value is required or permitted. The Group anticipates that the application of the new standard may affect certainamounts reported in the financial statements and result in more extensive disclosures. This standard becomes effectivefor annual periods beginning on or after 1 January 2013 for preparing financial statements under IFRS as adopted bythe EU.


Pinewood Shepperton plc 53Annual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedChanges in accounting policy and disclosures continuedAmendments to IFRSs Annual improvements to IFRS 2009–2011These annual improvements, address six issues in the 2009–2011 reporting cycle. It includes changes to:• IFRS 1 First time adoption• IAS 1 Financial statement presentation• IAS 16 Property plant and equipment• IAS 32 Financial instruments; Presentation• IAS 34 Interim financial reportingThese amendments become effective for annual periods beginning on or after 1 January 2013 for companies preparingfinancial statements under IFRS as adopted by the EU.There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a materialimpact on the Group.Summary of significant accounting policiesInterest in a joint ventureThe Group has interests in joint ventures which are jointly controlled entities. A joint venture is a contractual arrangementwhereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entityis a joint venture that involves the establishment of a separate entity in which each venture has an interest.The Group recognises its joint ventures interests using the proportionate consolidation method. The Group combinesits share of each of the assets, liabilities, income and expenses of the joint venture with the similar items, line-by-line,in its consolidated financial statements. Accounting policies are consistent with the exception that the joint venturescarries its property, plant and equipment at valuation rather than cost. Adjustments are made to bring such dissimilaraccounting policies into line with the Group accounting policies. If the Group purchases assets from the joint ventures,the Group does not recognise its share of the profits of the joint venture from the transaction until it resells the assetsto an independent party.Foreign currency translationThe functional and presentation currency of Pinewood Shepperton plc and its subsidiaries is UK sterling (UK £).Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the datesof transactions. Exchange differences resulting from the settlement of such transactions and from the translationat exchange rates ruling at the statement of financial position date of monetary assets and liabilities denominatedin currencies other than the functional currency are recognised in the consolidated income statement.


54 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedSummary of significant accounting policies continuedRevenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenuecan be reliably measured. Revenue is measured at the fair value of the consideration receivable, net of discounts, rebates,VAT and other sales taxes or duty. The Group has assessed its revenue arrangements and has concluded that it is actingas a principal in all of its revenue arrangements. Where a contract spans an accounting cut off date, the value of therevenue recognised is the time proportion of the total value of the contract completed by the cut off date. The followingspecific recognition criteria apply:Media Services:• Film customers utilise services for a period of time. Film revenues are also derived from international agreementsto provide sales and marketing services. Revenue is recognised as the Group earns the right to consideration for theservice provided and this is time apportioned and earned as time elapses.• Television revenue is derived from the provision of services and is recognised on a time apportioned basis in relationto the television production process.• Media Hub revenue, which includes revenue from investment property, is derived from customers contracting to usethe Group’s facilities for a period of time. Revenue is recognised on a straight line basis over the term of the agreement.• Royalty revenue is recognised on an accruals basis in accordance with the relevant contracted agreement. Revenue isrecognised as the Group earns the right to consideration for the royalty and this is time apportioned and earned as timeelapses.Media Investment:• External investment management revenue is derived from the provision of services on a per film investment basis,with revenue from an annual management fee recognised on a straight line basis over the course of the year.• Film Production Companies revenue relates to the funding provided from the various financiers (excluding loans againsttax credit, which are recognised as a liability on the balance sheet). Revenue recognised is the proportion of completionof the relevant project.Film investmentsFilm investments are classified as investments at fair value with any impairment in the investment expensed in theincome statement. The Company reviews the fair value at least annually. Any net changes in fair value are recognisedin the income statement.TaxDeferred taxDeferred corporation tax is provided, using the liability method, on all temporary differences at the statement of financialposition date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.Deferred corporation tax liabilities are recognised for all taxable temporary differences:• except where the deferred corporation tax liability arises from the initial recognition of an asset or liability in atransaction that is not a business combination and, at the time of the transaction, affects neither the accountingprofit nor taxable profit or loss; and• in respect of taxable temporary differences associated with investments in subsidiaries and interests in joint venturesexcept where the timing of the reversal of the temporary differences can be controlled and it is probable that thetemporary differences will not reverse in the foreseeable future.


Pinewood Shepperton plc 55Annual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedTax continuedDeferred tax continuedDeferred corporation tax assets are recognised for all deductible temporary differences, carry-forward of unusedtax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against whichthe deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can beutilised except:• where the deferred corporation tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,affects neither the accounting profit nor taxable profit or loss; and• in respect of deductible temporary differences associated with investments in subsidiaries deferred tax assets are onlyrecognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future andtaxable profit will be available against which the temporary differences can be utilised.The carrying amount of deferred corporation tax assets is reviewed at each statement of financial position date andreduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part ofthe deferred corporation tax asset to be utilised.Deferred corporation tax assets and liabilities are measured at the tax rates that are expected to apply to the year whenthe asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantivelyenacted at the statement of financial position date.Corporation taxCorporation tax relating to items recognised directly in equity is recognised in other comprehensive income and thestatement of changes in equity and not in the income statement.Film tax creditsFilm tax credits are recognised in line with the cost incurred over the period of a film project. Where the rateof expenditure incurred is not proportionate to the rate of qualifying expenditure, the difference in film tax creditsis accrued or deferred on the balance sheet.Value added taxThe net amount of value added tax recoverable from, or payable to, the taxation authority is included as partof receivables or payables in the statement of financial position.Revenues, expenses and assets are recognised net of the amount of value added tax except:• where the value added tax incurred on a purchase of goods and services is not recoverable from the taxation authority,in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expenseitem as applicable; and• receivables and payables are stated with the amount of value added tax included.Pensions and other post-employment benefitsThe Group operates a defined contribution scheme. Contributions are charged to the income statement as they becomepayable in accordance with the rules of the schemes.Share-based payment transactionsEmployees (including Directors) of the Group may receive part of their remuneration in the form of share-based paymenttransactions, whereby employees render their services in exchange for shares or rights over shares (‘‘equity-settledtransactions”).


56 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedShare-based payment transactions continuedThe cost of equity-settled transactions with employees is measured by reference to the fair value at the date at whichthey are granted. The fair value is determined by an external valuer using the binomial method. In valuing equity-settledtransactions, no account is taken of any performance conditions, other than the conditions linked to the price of theshares of Pinewood Shepperton plc (‘‘market conditions”).The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period inwhich the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitledto the award (‘‘vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting dateuntil the vesting date reflects the extent to which the vesting period has expired and the number of awards that, inthe opinion of the Directors of the Group at that date based on the best available estimate of the number of equityinstruments, will ultimately vest.No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upona market condition and in circumstances where holders of awards with no performance conditions attached cancel theirawards whilst remaining in the employment of the Group. These are treated as vesting irrespective of whether or notthe market condition is satisfied, provided that all other performance conditions are satisfied.Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms hadnot been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result ofthe modification.Where an equity-settled award is cancelled by the award holder whilst remaining in the employment of the Group, it istreated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognisedimmediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award onthe date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award,as described in the previous paragraph.Where an equity-settled award is cancelled due to the holder of the award no longer remaining in the employment of theGroup, no expense is recognised.The dilutive effect of outstanding issuable awards is reflected as additional share dilution in the computation of earningsper share. Awards that are contingently issuable are not considered dilutive unless the performance conditions forultimate vesting are met.Cash and cash equivalentsCash and short-term deposits in the statement of financial position comprise cash at bank and in hand. For the purposeof the Group statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as described above,net of outstanding bank overdrafts.Interest-bearing loans and borrowingsObligations for loans and borrowings are recognised when the Group becomes party to the related contracts and aremeasured initially at the fair values of consideration received less directly attributable transaction costs. After initialrecognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effectiveinterest method, allocating the interest income or interest expense over the relevant period. The loan issue costs areamortised in the income statement over the remaining maturity of the loans at a constant carrying amount and arereviewed for changes in circumstances that may indicate that the loans will not be held to maturity.


Pinewood Shepperton plc 57Annual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedDerivative financial instrumentsThe Group has interest rate swaps to hedge against risks associated with interest rate fluctuations. These derivativefinancial instruments are stated at fair value.The fair values of the interest rate swap contracts are determined by reference to market values for similar instruments.The interest rate swaps are cash flow hedges which hedge exposure to variability in cash flows that are attributable tothe interest rate risk on the Group’s external borrowings.The portion of the gain or loss on the hedging instruments that is determined to be an effective hedge is recogniseddirectly in other comprehensive income and the statement of changes in equity in a cash flow hedge reserve and theineffective portion is recognised in the Group income statement in finance costs. Amounts taken to other comprehensiveincome and the statement of changes in equity are transferred to the income statement when the hedged transactionaffects Group income.Hedge accounting is discontinued when the hedging instruments expire, or are sold, terminated or exercised, or no longerqualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instruments recognisedin other comprehensive income and the statement of changes in equity is kept in other comprehensive income and thestatement of changes in equity until the forecasted transactions occur. If a hedged transaction is no longer expected tooccur, the net cumulative gain or loss recognised in other comprehensive income and the statement of changes in equityis transferred to the Group income statement for that year.ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can bemade of the amount of the obligation. If the effect of the time value of money is material, provisions are determined bydiscounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value ofmoney and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provisiondue to the passage of time is recognised as a finance cost.LeasesThe determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangementsat the inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or thearrangement conveys a right to use the asset. Finance leases, which transfer to the Group substantially all the risks andbenefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair valueof the leased item, or if lower, at the present value of the minimum lease payments. Lease payments are apportionedbetween the finance charges and the reduction of the lease liability so as to achieve a constant rate of interest on theremaining balance of the liability, using the effective interest rate method. Finance charges are recognised in the incomestatement on a straight-line basis.Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.Leases, where the lessor retains substantially all the risks and benefits of ownership of the asset, are classified asoperating leases. Operating lease payments are recognised as an expense in the income statement on a straight linebasis over the lease term.Operating lease income is recognised as Media Hub revenue in the income statement on a straight-line basis over thelease term.


58 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedProperty, plant and equipmentProperty, plant and equipment are stated at cost to the Group less accumulated depreciation and any impairment loss.Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset andincludes costs directly attributable to making the asset capable of operating as intended. Depreciation is calculated on allproperty, plant and equipment, other than land, from the time they are available for use on a straight-line basis over theestimated useful life as follows:Freehold buildingsFreehold improvementsFixtures, fittings and equipmentLeasehold improvements– 50 years– 25 years– 3 to 10 years– shorter of 25 years or the term of the leaseLand and assets under construction are not depreciated.The carrying value of freehold land and buildings within ‘Property, plant and equipment’ in the statement of financialposition is based on external valuations undertaken by an independent firm of Chartered Surveyors in February 2000(as amended in January 2001) and November 2000, on each occasion to establish the fair values of the PinewoodStudios and Shepperton Studios businesses acquired. Subsequent to these valuations, which established the cost tothe Group of freehold land and buildings, additions, disposals and depreciation have been recorded in line with Groupaccounting policies.The carrying value of property, plant and equipment is reviewed for impairment if events or changes in circumstancesindicate the carrying value may not be recoverable, and is written down immediately to the recoverable amount. Usefullives and residual values are reviewed annually and where adjustments are required, these are made prospectively.An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits areexpected to arise from the continued use of the asset. Any gain or loss arising in de-recognition of the asset (calculatedas the difference between the net disposal proceeds and the carrying amount of the item) is included in the incomestatement in the year the item is derecognised.Borrowing costsBorrowing costs that are directly attributable to the acquisition, construction or development of certain investment capitalexpenditure projects that necessarily take a substantial period of time to get ready for their intended use, or sale, arecapitalised as part of the cost of the respective assets. All other borrowing costs are recognised as an expense in theperiod in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connectionwith the borrowing of funds.The Group has capitalised borrowing costs for all eligible assets where development or construction was commenced onor after 1 January 2007. No charges have been made for borrowing costs incurred prior to this date that have beenexpensed.Investment propertyAs defined by IAS 40 Investment property (“IAS 40”), investment property is property held to earn rental income and/orfor capital appreciation. Assets classified as investment property are carried at cost (including transaction costs) lessaccumulated depreciation and any recognised impairment in value, and exclude the costs of the day to day servicing ofan investment property. The depreciation policies for investment property are in accordance with the Group depreciationpolicy, as defined within the ‘Property, plant and equipment’ accounting policy. In accordance with IAS 40, the Group hasdetermined the fair value of assets classified as investment. The key assumptions used in arriving at the fair value and thefair value are contained in Note 15, ‘Investment property’.


Pinewood Shepperton plc 59Annual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedImpairment of assetsThe Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any suchindication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’srecoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair valueless costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cashinflows that are largely independent of those from other assets or groups of assets. Where the carrying amount ofan asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverableamount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-taxdiscount rate that reflects current market assessments of the time value of money and the risks specific to the asset.In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroboratedby valuation multiples, quoted share price for the publicly traded Pinewood Shepperton plc or other fair value indicators.Impairment losses of continuing operations are recognised in the income statement in those expense categoriesconsistent with the function of the impaired asset. An assessment is made at each reporting date as to whether thereis any indication that previously recognised impairment losses may no longer exist or may have decreased. If suchindication exists, the Group estimates assets or CGUs recoverable amount. A previously recognised impairment loss isreversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since thelast impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverableamount. That increased amount cannot exceed the carrying amount that would have been determined, net ofdepreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in theincome statement. After such reversal the depreciation charge is adjusted in future periods to allocate the asset’s revisedcarrying amount, less any residual value, on a systematic basis over the remaining useful life.GoodwillGoodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over theacquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initialrecognition, goodwill is measured at cost less any accumulated impairment loss. Goodwill is reviewed for impairmentannually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.For the purpose of impairment testing, goodwill is allocated to the related cash-generating unit monitored bymanagement. Where the recoverable amount of the cash-generating unit is less than the carrying amount, includinggoodwill, an impairment loss is recognised in the income statement.Intangible assetsIntangible assets, when identified, are capitalised at cost and subsequently amortised over their useful economic life.Long-term assetsCosts incurred in the establishment of long-term agreements are capitalised on the statement of financial position andcategorised as long-term assets.These costs are reviewed at least annually for any impairment in their carrying value and once the long-term agreementbecomes operational the costs are amortised over the term of the agreement.Impairment costs and amortisation are expensed to the Group Income Statement.


60 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedInventoriesInventories are valued at the lower of cost and net realisable value. Cost includes all costs incurred in bringing eachproduct to its present location and condition. Net realisable value is based on the estimated selling price less anyestimated further costs expected to be incurred to completion and disposal.Trade and other receivablesTrade receivables are recognised and carried at the lower of their original invoice value and recoverable amount.An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-offwhen identified and are determined using business knowledge and individual circumstances specific to each customer.Exceptional items of income and expenseThe Group discloses as exceptional items on the face of the income statement those material items of income andexpense which, because of the nature and expected infrequency of the events giving rise to them, merit separatedisclosure to allow users of the financial statements to better understand the elements of financial performance inthe year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.DividendsThe equity transaction is recognised when the shareholders’ right to receive payment is established.Share issue costsCosts directly attributable to the raising of equity are charged to the share premium account.Significant accounting judgements, estimates and assumptionsEstimatesThe preparation of the Group’s consolidated financial statements requires management to make judgements, estimatesand assumptions that affect reported amounts at the end of the year.JudgementsThe key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date arediscussed below.Impairment of goodwillThe carrying amount of goodwill at 31 March 2013 was £5,604,000 (31 March 2012: £5,604,000) and wholly relates tothe Media Services cash-generating unit. The Group determines whether goodwill is impaired at least on an annual basis.This requires an estimation of the value in use of the cash-generating unit to which the goodwill is allocated.Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the MediaServices cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of thosecash flows. The cash flows are derived from the Board approved budget for the next year and the Board approved longrange plan for the Media Services segment only, and do not include non-cash generating assets, any activities that theGroup is not yet committed to or significant future investments that will enhance the asset’s performance of the MediaServices cash-generating unit. This calculation is sensitive to the discount rate used for the calculation of present valuesof cash flows.The key assumptions used to determine the value in use are further explained in Note 16.


Pinewood Shepperton plc 61Annual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedSignificant accounting judgements, estimates and assumptions continuedPinewood Studios Development FrameworkThe costs incurred to 31 March 2013 of £1.8m on Pinewood Studios Development Framework (“PSDF”) have beencapitalised and classified within ‘Property, plant and equipment’ on the statement of financial position. Capitalisation ofcosts is based on the Board’s judgement that the economic benefits expected from the asset will exceed the carryingcosts of PSDF. Costs are reviewed monthly by the Board. Taking into consideration all aspects of the project, the Boardviews the carrying value of the capitalised expenditure incurred up to 31 March 2013 to be appropriate.Going concernInformation on the Group’s risks, management and exposure are set out in the ‘Key business risks’ section of the AnnualReport and Note 29 ‘Financial risk management, objectives and policies’ of these Accounts. The Directors, having madeappropriate enquiries, consider that the Group has adequate resources to continue in the operational business for theforeseeable future and have therefore continued to adopt the going concern basis in preparing the financial statements.3. Segment information and revenue analysisThe Group identifies its operating segments based on a combination of factors, including the nature and type of serviceprovided and differences in regulatory environment. Operating segments are reported in a manner consistent with theinternal reporting provided to the chief operating decision-maker. Operating segments are aggregated where there is ahigh degree of consistency across these factors, and the segments have similar economic characteristics.During the year ended 31 March 2013, the Group has amended its operational reporting structure to enable the chiefoperating decision-maker to improve its management of several new activities undertaken since the initial adoption ofIFRS 8 Operating Segments (“IFRS 8”). As a result of this reporting restructure, the Group has determined it now has tworeportable segments, Media Services, which provides studio and related services to the film, television and wider creativeindustries, and Media Investment, which provides content investment and production services principally to the filmindustry. Following this change to the composition of reportable segments, the prior period figures shown below havebeen restated as required by IFRS 8.The accounting policies of all operating segments are the same as those described in Note 2, ‘Accounting Policies’.The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, i.e. at currentmarket price.


62 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued3. Segment information and revenue analysis continuedSegment data for the year ended 31 March 2013 and the 15 month period ended 31 March 2012 (restated)is presented below:Yearended31 March201315 monthsended31 March2012(restated)£000£000Media Services:External Film 35,203 43,428External Television 5,239 10,153External Media Hub 6,272 7,969Intersegment Film 466 –47,180 61,550Media Investment:Film Production Companies 8,736 1,441External investment management 192 –Intersegment – –8,928 1,441Total segment revenue 56,108 62,991Elimination of intersegment revenue (466) –Group revenue 55,642 62,991Year ended 31 March 2013:MediaServices£000MediaInvestment£000Segment profit/(loss) 19,617 (1,332) 18,285Elimination of intersegment profit (466) – (466)Gross profit/(loss) 19,151 (1,332) 17,819Selling and distribution expenses (1,699) – (1,699)Administrative expenses (6,342) (814) (7,156)Exceptional administrative expenses (2,997) – (2,997)Loss on disposal of property, plant and equipment (600) – (600)Operating profit/(loss) 7,513 (2,146) 5,367Finance costs (3,911) (137) (4,048)Profit/(loss) before tax 3,602 (2,283) 1,319Total£000


Pinewood Shepperton plc 63Annual Report & Accounts 2013Notes to the consolidated financial statements continued3. Segment information and revenue analysis continued15 month period ended 31 March 2012 (restated):MediaServices£000MediaInvestment£000Segment profit/(loss) 25,197 (311) 24,886Elimination of intersegment profit – – –Gross profit/(loss) 25,197 (311) 24,886Selling and distribution expenses (2,237) – (2,237)Administrative expenses (9,030) (468) (9,498)Exceptional administrative expenses (11,025) – (11,025)Exceptional income 541 – 541Operating profit/(loss) 3,446 (779) 2,667Finance costs (4,558) – (4,558)Profit/(loss) before tax (1,112) (779) (1,891)The Group evaluates the performance of reportable segments based on a measure of profit before tax.Geographical informationAll revenues continue to arise primarily in the United Kingdom, being the Group’s country of domicile, except for £1.0m(15 month period ended 31 March 2012: £1.2m) of revenue generated from the Group’s overseas activities.Information about major customersRevenue from one Media Services customer, operating through several separate subsidiaries, of £15.6m (15 monthperiod ended 31 March 2012: two customers £8.8m and £7.4m) was recognised in the year.4. Operating profitThis is stated after charging:Yearended31 March2013£000Total£00015 monthsended31 March2012£000Cost of inventories recognised as an expense 1,699 2,702Staff costs (See Note 10 for further details) 10,235 13,098Depreciation of property, plant and equipment 4,051 4,520Depreciation of investment property 133 165Loss on disposal of property, plant and equipment 600 –Operating lease payments 1,889 2,144Amortisation of long-term assets 24 24Operating lease payments relating to the cost to the Group of the operating lease of the Shepperton Studios premiseswere £1,227,000 (15 month period ended 31 March 2012: £1,317,000) and relating to the Teddington Studios premiseswere £662,000 (15 month period ended 31 March 2012: £827,000).


64 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued5. Auditor’s remunerationYearended31 March2013£00015 monthsended31 March2012(restated)£000Fees payable to Company’s auditor for the audit of parent Company and Groupfinancial statements 54 70Fees payable to the Company’s auditor and its associatesfor the audit of the Company’s subsidiaries 34 57Total audit fees 88 127Fees payable to the Company’s auditor and its associatesfor other services:Audit-related assurance services* 28 58Taxation compliance services* – 30Taxation advisory services * 60 39Total fees for other services 88 127Total fees 176 254* The figures presented for the 15 month period ended 31 March 2012 were paid to Ernst & Young, the Group’s previous auditor who resigned on14 April 2012.The figures presented for the 15 month period ended 31 March 2012 have been restated to include comparativeremuneration costs for the additional disclosure items now required under IFRS.


Pinewood Shepperton plc 65Annual Report & Accounts 2013Notes to the consolidated financial statements continued6. Interests in joint ventures(a) The Group has a 50% interest in Shepperton Studios Property Partnership, an entity controlled jointly with a thirdparty, Aviva Group, which holds a 995-year lease on the Shepperton Studios property. The Group’s share of the jointventure’s assets, liabilities and results, which are proportionately consolidated in the Group financial statements,are as follows:Yearended31 March2013£00015 monthsended31 March2012£000Share of joint venture statement of financial positionProperty, plant and equipment 19,429 19,870Current assets 405 25919,834 20,129Interest-bearing loans and borrowings (12,002) (12,002)Current liabilities (667) (263)(12,669) (12,265)Share of joint venture income and expensesRevenue 666 787Cost of sales (1,166) (1,455)Administrative expenses 74 (16)Finance costs (780) (975)Net loss (1,206) (1,659)The Group’s share of the capital commitments in respect of property, plant and equipment was £nil (15 month periodended 31 March 2012: £nil).(b) The Group also has a 50% interest in Pinewood Studio Berlin Film Services GmbH in Germany. The Group’s shareof this joint venture’s assets, liabilities and results are proportionately consolidated in the Group financial statementsas follows:Yearended31 March2013£00015 monthsended31 March2012£000Share of joint venture statement of financial positionCurrent assets 40 10Share of joint venture income and expensesRevenue – –Cost of sales – –Selling and distribution expenses – –Overheads – (111)Net loss – (111)


66 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued6. Interests in joint ventures continuedThe Group’s share of the capital commitments in respect of property, plant and equipment was £nil (15 month periodended 31 March 2012: £nil).(c) The Group also has a 50% interest in Shepperton Studios (General Partner) Limited. There are no material amountsconsolidated for this joint venture in either period.7. Exceptional incomeItems that are material either because of their size or their nature, or that are non-recurring are considered as exceptionalitems. Exceptional income was £nil for the year (15 month period ended 31 March 2012: £541,000). Exceptional incomein the prior year consisted of:VAT claimThe Group successfully agreed VAT refunds for the 15 month period ended 31 March 2012 of £541,000 relating to priorperiods. This benefit was treated in the income statement as exceptional. No such refunds were received in the year to31 March 2013.8. Exceptional administrative expensesExceptional administrative expenses for the year were £2,997,000 (15 month period ended 31 March 2012: £11,025,000)and consist of:Teddington exitThe Group has announced plans to cease activity at the Teddington Studio site during 2013 and as a result hasestablished an onerous lease provision for £1,538,000 at 31 March 2013 (15 month period ended 31 March 2012: £nil).Also included are accelerated depreciation costs of £553,000 (15 month period ended 31 March 2012: £nil) arising fromthe revision of the expected useful lives of plant and equipment in use at the site and £28,000 of initial site exit expenses.Isle of Man Media Development FundThe Group incurred costs of £361,000 in the year (15 month period ended 31 March 2012: £nil) mainly in relation toprofessional fees as a result of signing an agreement with the Isle of Man Treasury (“IOMT”) to source and advise on filminvestment opportunities for the £25m fund established by the IOMT and to monitor and capitalise on UK distributionrights in films and television programmes funded by the IOMT.AIM listingAs a result of the Company’s ordinary shares admission to AIM, the Group incurred £337,000 of non-recurringprofessional advisor fees during the year (15 month period ended 31 March 2012: £nil).Group reorganisationThe Group incurred exceptional reorganisation costs of £180,000 in the year (15 month period ended 31 March 2012:£287,000) in relation to the restructuring of certain business areas.Project PinewoodThe Company wrote off £7,070,000 of Project Pinewood costs in the 15 month period ended 31 March 2012 followingthe Secretary of State’s decision on 20 January 2012 to refuse planning permission for Project Pinewood, previouslycapitalised within ‘Property, plant and equipment’ in the Group statement of financial position. No such costs have beenexpensed in the year to 31 March 2013.Acquisition by PeelThe Group incurred exceptional costs of £2,400,000 in the 15 month period ended 31 March 2012 relating to bid defencecosts incurred in relation to the acquisition of a majority shareholding in the Company by Peel Acquisitions. No such costshave been incurred in the year to 31 March 2013.


Pinewood Shepperton plc 67Annual Report & Accounts 2013Notes to the consolidated financial statements continued8. Exceptional administrative expenses continuedAccelerated share option costs due to the acquisition by Peel AcquisitionsThe Group also incurred share option costs of £1,268,000 in the 15 month period ended 31 March 2012 relating toaccelerated share-based charges as a result of the acquisition of a majority shareholding in the Company by PeelAcquisitions becoming unconditional on 21 June 2011. No such costs have been incurred in the year to 31 March 2013.9. Finance costsYearended31 March2013£00015 monthsended31 March2012£000Bank loans and overdrafts 1,527 1,899Interest rate hedging 372 990Share of joint venture loan 780 975Bank charges 285 578Finance charges payable under asset financing 117 94Other finance charges 154 22Swap termination costs 402 –Exceptional finance costs 411 –4,048 4,558During the year, the Group has capitalised borrowing costs amounting to £81,000 (15 month period ended 31 March2012: £nil) on qualifying assets. Borrowing costs were capitalised at a weighted average rate of general borrowingof 4.5%.Exceptional finance costsThe Company incurred £411,000 of exceptional finance costs in the year (15 month period ended 31 March 2012: £nil)in relation to the refinancing of its banking facilities.


68 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued10. Staff costs and Directors’ emoluments(a) Staff costs including DirectorsYearended31 March2013£00015 monthsended31 March2012£000Wages and salaries 8,114 10,766Social security costs 843 1,158Pension costs 490 633Share-based payments – 204Long-Term Incentive Plan 500 –Other employee benefits 288 33710,235 13,098(b) Average monthly number of employees, including Directors:Yearended31 March2013No.15 monthsended31 March2012No.Management 17 18Administration 66 62Operating and technical 117 126Details of Directors’ remuneration are included in the audited portion of the Directors’ remuneration report withinthe Annual Report.200 206


Pinewood Shepperton plc 69Annual Report & Accounts 2013Notes to the consolidated financial statements continued11. Taxation(a) The major components of corporation tax expense are:Yearended31 March201315 monthsended31 March2012(restated)£000£000Consolidated income statement:Current corporation tax:UK corporation tax 1,088 1,746UK Film Tax Relief (1,522) (297)Amounts under/(over) provided in previous years 457 (60)Total current corporation tax charge 23 1,389Deferred tax:Relating to origination and reversal of temporary differences (342) 287Amounts over provided in previous years (130) (620)Total deferred tax credit (472) (333)Tax (credit)/charge in the income statement (449) 1,056The tax (credit)/charge in the income statement comprises:Tax on profit before exceptional items 1,399 2,093UK Film Tax Relief (1,522) (297)Tax under/(over) provided in previous years 327 (60)Tax provision adjustments relating to exceptional items and swap termination costs (653) (680)Tax (credit)/charge in the income statement (449) 1,056Tax relating to items charged or credited to equity:Deferred tax:Deferred tax (credit)/charge on movements in provisions for cash flow hedges (3) 205Deferred tax reported in equity on share-based payments – 24Tax (credit)/charge in the statement of changes in equity (3) 229The comparative figures presented for the 15 month period ended 31 March 2012 are restated to separately identify theUK Film Tax Relief previously included within the UK corporation tax line item.The Group statement of changes in equity is set out on page 49.


70 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued11. Taxation continued(b) Reconciliation of the total tax (credit)/chargeA reconciliation between the tax (credit)/charge and the product of accounting profit multiplied by the standard rate ofcorporation tax in the UK for the year ended 31 March 2013 and 15 month period ended 31 March 2012 is as follows:Yearended31 March2013£00015 monthsended31 March2012£000Accounting profit/(loss) before corporation tax 1,319 (1,891)Profit/(loss) on ordinary activities multiplied by UK rate of 24% (2012: 26.4%) 317 (499)Adjustments in respect of:UK Film Tax Relief (1,522) (297)Corporation tax under/(over) provided in previous years 457 (60)Deferred tax over provided in previous years (130) (620)Non-allowable depreciation on buildings 179 305Other non-allowable expenses 337 2,384Overseas tax at higher rate 23 –Utilisation of previously unrecognised tax losses (173) –Industrial buildings allowances – (24)Effect of taxation rate change on provision for deferred taxation (29) (133)Cash flow hedges 92 –Corporation tax (credit)/charge reported in the Group income statement (449) 1,056(c) Deferred taxDeferred tax relates to the following:Consolidated income statementYearended31 March2013£00015 monthsended31 March2012£000Deferred tax credit arising on accelerated capital allowances (120) (385)Short-term temporary differences (116) –Tax losses (328) –Cash flow hedge 92 –Deferred tax expense arising on share-based payments – 52Net deferred tax credit (472) (333)


Pinewood Shepperton plc 71Annual Report & Accounts 2013Notes to the consolidated financial statements continued11. Taxation continued(c) Deferred tax continuedConsolidated statement of financial position31 March2012£000Charged toincomestatement£000Charged toequity£00031 March2013£000Accelerated capital allowances 1,436 (120) – 1,316Short-term temporary differences – (116) – (116)Tax losses – (328) – (328)Fair value of the cash flow hedge (234) 92 (3) (145)Net deferred tax liability 1,202 (472) (3) 727The deferred tax assets are shown net against the non-current deferred tax liability in the statement of financial position.The Government has announced a reduction in the main rate of corporation tax to 21% from 1 April 2014, although thisis not expected to be substantively enacted until July 2014. A further 1% reduction in the main rate of corporation taxwas announced in the 2013 budget and is due to take effect from 1 April 2015.Deferred tax has been calculated at 23%, which is the rate enacted by the Finance Act 2012. The future 2% mainreduction is not expected to have a material impact on the Group financial statements.(d) Potential unrecognised deferred tax assetsA potential deferred tax asset of £122,000 (31 March 2012: £138,000) in respect of £4,000 (31 March 2012: £4,000)non-trading losses and £501,000 (31 March 2012: £501,000) capital losses in Pinewood-Shepperton Studios Limitedand £27,000 (31 March 2012: £27,000) trading losses in Teddington Studios Limited has not been recognised as it isnot anticipated that suitable gains will arise to enable the reversal of these temporary differences.12. Earnings per ordinary share and dividendEarnings per ordinary shareBasic earnings per ordinary share are calculated by dividing profit for the period attributable to the holders of ordinaryequity of the parent by the weighted average number of ordinary shares outstanding during the period.Diluted earnings per ordinary share are calculated by dividing profit for the period attributable to the holders of ordinaryequity of the parent by the weighted average number of ordinary shares outstanding during the period adjusted for theeffects of the dilution of potential ordinary shares resulting from employee share schemes.The Group presents as exceptional items on the face of the income statement those items where the cost or income isof 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 the exceptional items.


72 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued12. Earnings per ordinary share and dividend continuedEarnings per ordinary share continuedThe following reflects the profit and number of shares used in the basic and diluted earnings per ordinary sharecomputations:Yearended31 March2013£00015 monthsended31 March2012£000Profit /(loss) attributable to equity holders of the parent 1,768 (2,947)Adjustments to profit /(loss) for calculation of adjusted earnings per share:Exceptional income – (541)Exceptional administrative expenses 2,997 11,025Exceptional finance costs 411 –Swap termination costs 402 –Taxation adjustments on exceptional items and swap termination costs (653) (680)Adjusted profit for adjusted earnings per share 4,925 6,857Thousands ThousandsBasic and diluted weighted average number of ordinary shares 48,735 46,865Earnings/(loss) per shareYearended31 March201315 monthsended31 March2012Basic and diluted for result for the year 3.6p (6.3p)Basic and diluted for result for the year adjusted for exceptional items 10.1p 14.6pDividend paidYearended31 March2013£00015 monthsended31 March2012£000Final dividend for year ending 31 December 2010 paid at 2.5p per share – 1,156Interim dividend for year ending 31 March 2013 paid at 0.5p per share 247 –247 1,156The Board is recommending a final dividend for approval at the Annual General Meeting and, based on the sharesin issue at the date the Board approved the Group financial statements, this would amount to a total dividend paymentof £741,000 (15 month period ended 31 March 2012: £nil).


Pinewood Shepperton plc 73Annual Report & Accounts 2013Notes to the consolidated financial statements continued13. Share-based payment plansCompany Sharesave Scheme (“SAYE”)The Group had an SAYE scheme which has now matured, under which options to subscribe for the Group’s shares hadbeen granted to employees wishing to participate in the scheme. Options had been granted at a discount of 20% to themarket value on the date of grant. The contractual lives of options are three and a half and five and a half years.The options are equity-settled and there are no cash settlement alternatives.As a result of the Offer by Peel Acquisitions becoming unconditional on 21 June 2011, 155,785 shares were issuedon 8 July 2011 under this scheme and the scheme closed.The following table illustrates the number (“No.”) and weighted average exercise prices (“WAEP”) of, and movementsin, SAYE options during the year:Yearended31 March2013No.Yearended31 March2013WAEP15 monthsended31 March2012No.15 monthsended31 March2012WAEPOutstanding at the beginning of the year – – 352,898 112.6pForfeited during the year – – (197,113) 115.1pExercised during the year – – (155,785) 109.5pOutstanding at the end of the year – – – –Company Long-Term Incentive Plan (“LTIP”)The Group had an LTIP, which closed in the 15 month period ended 31 March 2012, under which Executive Directors andsenior managers could be granted annual equity awards up to a maximum value of 250%, and 100% respectively, ofbasic salary. Awards issued vested subject to performance criteria, based 50% on Total Shareholder Return and 50%on annual average return on capital employed and minimum performance criteria. The contractual life of each awardwas ten years. The awards were equity-settled and there were no cash settlement alternatives.As a result of the Offer by Peel Acquisitions becoming unconditional on 21 June 2011, 987,992 shares were issued on8 July 2011 under this scheme and the scheme closed.The following table illustrates the number (“No.”) and movements in LTIP awards.Yearended31 March2013No.15 monthsended31 March2012No.Outstanding at the beginning of the year – 1,882,448Forfeited during the year – (1,341,808)Exercised during the year – (987,992)Granted during the year – 447,352Outstanding at the end of the year – –The weighted average fair value of the awards granted during the year was nil (15 month period ended31 March 2012: 111p).The fair value of equity-settled options and grants were estimated at the date of grant using binomial and Monte Carlomodels taking into account the terms and conditions upon which the options or grants were awarded.


74 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued14. Property, plant and equipmentCost:Freeholdland£000Freeholdbuildings andimprovements£000Leaseholdimprovements£000Fixtures,fittings andequipment£000Assets underconstruction£000At 1 January 2011 54,151 62,140 1,970 27,740 1,754 147,755Additions 2,320 9,975 390 3,711 – 16,396Disposals – – – (130) – (130)Transfers – 720 270 352 (1,342) –At 31 March 2012 56,471 72,835 2,630 31,673 412 164,021Additions – 6,516 330 2,795 1,784 11,425Disposals – (832) – (145) – (977)Transfers – – 412 – (412) –At 31 March 2013 56,471 78,519 3,372 34,323 1,784 174,469Depreciation:At 1 January 2011 – 12,151 836 19,383 – 32,370Provided during the 15 month period – 2,318 204 1,998 – 4,520Impairment for the 15 month period 7,690 – – – – 7,690Depreciation on disposals – – – (130) – (130)At 31 March 2012 7,690 14,469 1,040 21,251 – 44,450Provided during the year – 2,133 177 1,741 – 4,051Impairment for the year – – 528 25 – 553Depreciation on disposals – (246) – (131) – (377)At 31 March 2013 7,690 16,356 1,745 22,886 – 48,677Net book value:At 31 March 2013 48,781 62,163 1,627 11,437 1,784 125,792At 31 March 2012 48,781 58,366 1,590 10,422 412 119,571Assets under construction at 31 March 2013 relate to costs capitalised under the Pinewood Studio DevelopmentFramework. These are not depreciated.During the year, the Group has capitalised borrowing costs amounting to £81,000 (15 month period ended 31 March2012: £nil) on qualifying assets. Borrowing costs were capitalised at a weighted average rate of general borrowingof 4.5%.The Group’s long-term loan is secured by a floating charge over the Group’s assets.An impairment of leasehold improvements and fixtures, fittings and equipment has been recognised during the yearon obsolete assets at the Teddington site.Total£000


Pinewood Shepperton plc 75Annual Report & Accounts 2013Notes to the consolidated financial statements continued14. Property, plant and equipment continuedFixtures, fittings and equipment include the following amounts where the Group is a lessee under non-cancellable financelease agreements:Yearended31 March2013£00015 monthsended31 March2012£000Cost-capitalised finance lease 1,850 –Accumulated depreciation (82) –Net book value 1,768 –The lease terms are three to five years, and ownership of the assets lies within the Group. Lease rentals amountingto £205,000 (15 months ended 31 March 2012: £nil) relating to the lease of this equipment are included in theincome statement.Shepperton Studios Property Partnership’s (“SSPP”) long leasehold interest in the Shepperton Studios site was valuedat £39,520,000 by an independent firm of Chartered Surveyors at 31 March 2013 (31 March 2012: £37,065,000).The Group carries its 50% interest in the property, plant and equipment of SSPP at £19,205,000 (31 March 2012:£19,805,000), being depreciated cost.15. Investment propertyCost:At 31 March 2013, 31 March 2012 and 31 December 2010 6,615Depreciation:At 31 December 2010 255Provided during the 15 month period 165At 31 March 2012 420Provided during the year 133At 31 March 2013 553Net book value:At 31 March 2013 6,062At 31 March 2012 6,195No independent valuation has been undertaken at the year end. A Directors’ valuation was carried out in accordancewith the ‘Red Book’ to determine the fair value of the investment property. A yield-based valuation has been used whichprovided a fair value of £7,300,000 at 31 March 2013 using a 7.50% yield on annual rental income of £562,000 andallowing for purchasers costs of 5.76%. The previous valuation was performed at 31 December 2011 and also used theyield-based valuation method which provided a fair value of £7,300,000, assuming a 7.25% yield and allowing forpurchaser’s costs of 5.76%.£000


76 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued16. Intangible assetsGoodwill£000At 31 March 2013 and 31 March 2012 5,604Goodwill has been acquired through business combinations and has been allocated to the Group’s Media Servicescash-generating unit.The recoverable amount of the cash-generating unit is based on a value in use calculation and is tested at least annuallyfor impairment. Other than goodwill there are no intangible assets with indefinite lives.Outcome of impairment reviewThe recoverable amount of the Group’s Media Services cash-generating unit exceeds its carrying value and no impairmentcharge has been recognised (15 month period ended 31 March 2012: no impairment charge recognised).Key assumptionsThe value in use calculations use five-year cash flow projections derived from the Board approved budget for the nextyear and the Board approved long range plan and do not include non-cash generating assets, any activities that theGroup is not yet committed to or significant future investments that will enhance the asset’s performance of the cashgeneratingunit. The key assumptions used in the value in use calculations are:Discount rateThe discount rate reflects the current market assessment of the risks specific to the cash-generating unit. The discountrate was calculated using the Group’s cost of debt together with an estimate based on the average cost of equity forthe industry, adjusted to reflect the market assessment of any risk specific to the cash-generating unit for which futureestimates of cash flows have not been adjusted. The pre-tax discount rate used for the year ended 31 March 2013is 6.7% (15 month period ended 31 March 2012: 6.6%).Perpetuity growth rateThe cash flows subsequent to the Board approved period are based on the long-term growth rate prospectsof the industry in which the Group operates. The perpetuity growth rate used is 2.5% (15 month period ended31 March 2012: 2.5%).Cash flow from operationsCash flow projections have been estimated using a combination of assumptions including, but not limited to, facilityutilisation, income growth and Media Hub void ratios and rent increases. Considering previously achieved trading levelsand the anticipated future operating environment for the business and taking into account any cost efficiencies whichmay be achieved, the Company has retained the assumptions used in its Board approved budget and its long range plan.SensitivitiesThe Group’s impairment review is sensitive to a change in the key assumptions used, notably the discount rate.The discount rate would need to move to 11.6% to result in a breakeven position and, should the discount rate remainat 6.7%, the perpetuity growth rate would need to be a negative 4.0% to reach a break even point. Based on the Group’ssensitivity analysis, a reasonably possible change in a single factor would not cause an impairment charge.


Pinewood Shepperton plc 77Annual Report & Accounts 2013Notes to the consolidated financial statements continued17. Long-term assetsCost:Torontolong-termagreement£000Malaysialong-termagreement£000DominicanRepubliclong-termagreement£000Atlanta jointventureagreement£000China jointventureagreement£000At 1 January 2011 94 188 65 – – 347Additions – – – – – –At 31 March 2012 94 188 65 – – 347Additions – 10 – 24 39 73At 31 March 2013 94 198 65 24 39 420Amortisation:At 1 January 2011 – – – – – –Provided during the 15 month period 27 – – – – 27At 31 March 2012 27 – – – – 27Provided during the year 24 – – – – 24At 31 March 2013 51 – – – 51Carrying value:At 31 March 2013 43 198 65 24 39 369At 31 March 2012 67 188 65 – – 320The Group signed a ten-year sales and marketing agreement with Pinewood Toronto Studios on 26 May 2009. Transactioncosts in relation to this agreement have been recognised as a long-term asset and are being amortised over the termof the agreement.Pinewood Malaysia Limited signed a long-term agreement on 16 December 2009 until the ten-year anniversary of theopening of Pinewood Iskandar Malaysia Studios to provide marketing, operations and management support. Transactioncosts of £198,000 in relation to this agreement have been recognised as a long-term asset. The costs will be amortisedover the period of the agreement commencing when the Studio opens for business.Pinewood Dominican Republic Limited signed an agreement on 20 May 2010 with a term of 15 years to provide sales,marketing and operations support to Pinewood Dominican Republic Studios. Transaction costs of £65,000 in relation tothis agreement have been recognised as a long-term asset. The costs will be amortised over the period of the agreementcommencing when the Studio opens for business.On 29 April 2013, the Group announced it had entered into a joint venture (Pinewood Atlanta LLC), with River’s Rock LLC.The joint venture will work to initially develop 288 acres of land south of Atlanta, Georgia, USA, into world-class studiofacilities for the production of film, television, music and video games. The business will operate under the Pinewoodtrademark and Pinewood has received 40% of the shareholding in the joint venture. Pinewood will provide the jointventure with sales and marketing services. Transaction costs of £24,000 in relation to this joint venture have beenrecognised as a long-term asset. The costs will be amortised over the first three years of the Studio’s operations,commencing when the Studio opens for business.On 17 April 2013, the Group signed a 50:50 joint venture agreement (Song Lin) with Seven Stars Media Limited, partof China’s leading private media group which provides content creation and distribution, media services and events.Transaction costs of £39,000 in relation to this joint venture have been recognised as a long-term asset. The costswill be amortised upon commencement of the agreement over the first two years of the joint ventures operations.Total£000


78 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued18. InventoriesYearended31 March2013£00015 monthsended31 March2012£000Finished goods 459 48619. Trade receivablesYearended31 March2013£00015 monthsended31 March2012£000Trade receivables 6,830 4,376As at 31 March 2013 and 31 March 2012, the ageing analysis of trade receivables is as follows:Total£000Neither pastdue norimpaired£000


Pinewood Shepperton plc 79Annual Report & Accounts 2013Notes to the consolidated financial statements continued21. Cash and cash equivalentsIncluded within the overdraft balance per the statement of financial position at the year end are amounts which are cashand cash equivalents unavailable for general use. These amounts relate to funds reserved solely for use in the productionof specific Pinewood Productions and/or Pinewood Pictures operations.The reconciliation below shows the breakdown of total cash per the statement of financial position at the year end:31 March2013£00031 March2012£000Net cash available for general use (2,094) 247Restricted cash and cash equivalents 1,634 161Total (overdraft)/cash and cash equivalents (460) 40822. Share capital and reservesAuthorised£000As at 31 March 2013 and 31 March 2012:Ordinary shares of 10p each 7,000Issued, called up and fully paid31 March 2013 31 March 2012No. £000 No. £000Ordinary shares of 10p each 47,249,926 4,725 46,232,006 4,623Shares issued under the Company Share Option schemes:10p ordinary shares issued on 21 June 2011 – – 800,000 8010p ordinary shares issued on 8 July 2011 – – 60,892 610p ordinary shares issued on 8 July 2011 – – 155,785 1610p ordinary shares issued on 28 December 2011 – – 1,243 –New shares issued: – –10p ordinary shares issued on 23 July 2012 2,160,000 216 – –As at 31 March 2013 and 31 March 2012 49,409,926 4,941 47,249,926 4,725The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one voteper share at the general meetings of the Company.Share option schemesThe Company had one share-based payment plan under which options to subscribe for the Company’s shares weregranted. As a result of the Offer by Peel Acquisitions becoming unconditional on 21 June 2011, 155,785 shares wereissued on 8 July 2011 under this scheme and the scheme closed.Long-Term Incentive PlanThe Company had a Long-Term Incentive Plan under which awards for the Company’s shares were granted to certainexecutives and senior employees. As a result of the Offer by Peel Acquisitions becoming unconditional on 21 June 2011,860,892 shares were issued on 21 June 2011 and 8 July 2011 under this scheme and the scheme closed.


80 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued22. Share capital and reserves continuedNature and purpose of other reservesShare premium reserveThe share premium increased by £4,871,000 in the year ended 31 March 2013 as a result of the new shares issued,at 250p per share on 23 July 2012.Capital redemption reserveThe capital redemption reserve arose as a result of the repurchase of shares in 2001.Merger reserveOn acquiring Shepperton Studios Limited the Company issued ordinary shares as part of the consideration. Merger reliefwas taken in accordance with Section 131 of the Companies Act 1985 (since succeeded by Section 612 of the CompaniesAct 2006), and hence £348,000 was credited to the merger reserve.Fair value of cash flow hedge reserveThe cash flow hedge reserve is used to record the fair value gains or losses, and related deferred tax, on the hedginginstruments used by the Group to manage interest rate risk. The cash flow hedges are determined to be effective hedges.23. Interest-bearing loans and borrowingsEffectiveinterestrate% Maturity31 March2013£00031 March2012£000Current borrowingsBank overdraft Base rate + 2.5% margin Annual renewal 460 –Non-current borrowingsRevolving credit facility LIBOR + variable margin 15 August 2013 – 30,500Revolving credit facility LIBOR + variable margin 28 November 2016 30,000 –Pre-let development facility LIBOR + variable margin 15 August 2013 – 6,500Total drawn facility loan 30,000 37,000Asset financing Implicit rate of 5.8% 31 March 2018 2,592 1,313Share of joint venture loan Base rate + 2% margin 30 September 2026 12,002 12,002Non-current drawn loan facilities 44,594 50,315Cash flow hedge (£7.5m) 2.89% + variable margin 1 July 2013 – 181Cash flow hedge (£15m) 5.195% + variable margin 1 July 2013 – 792Cash flow hedge (£7.5m) 2.27% + variable margin 1 July 2013 35 –Cash flow hedge (£15m) 1.66% + variable margin 28 November 2016 596 –Secured bank loan arrangement costs (1,012) (438)44,213 50,850Total current and non-currentinterest-bearing loansand borrowings 44,673 50,850


Pinewood Shepperton plc 81Annual Report & Accounts 2013Notes to the consolidated financial statements continued23. Interest-bearing loans and borrowings continuedBanking facilitiesOn 28 May 2012, the Company arranged replacement banking facilities of up to £55m which comprise a £50m revolvingfacility, of which £15m is a term facility, and a £5m overdraft facility subject to annual review.These facilities are secured on certain of the principal assets of the Group.The term facility contains scheduled repayments of £1.5m on 30 June 2015 and 30 June 2016 and matures in November2016. The revolving credit facility has no scheduled repayments and matures in November 2016.The £5m overdraft facility is reviewed annually.The revolving facility has a range of covenants and events of default together with variable margins between 435 and285 basis points over LIBOR.The banking facilities become repayable on demand following a change of control in the Group if the Group and thesyndicate of banks’ agent are unable to agree alternative terms within thirty days of the Group’s notification of achange of control.CovenantsThe banking agreements contain a range of covenants appropriate for the revolving facility and overdraft facility.The Group was covenant compliant at 31 March 2013.Cash flow hedgeAt 31 March 2013, the Group held interest rate swaps designated as hedges against drawn debt obligations amountingto £22,500,000 (31 March 2012: £22,500,000). Further information can be found in Note 29.Asset financing facilityThe asset financing facility comprises of both a sterling chattel mortgage facility and a finance lease facility which are overa fixed term with fixed monthly payments and are secured over identifiable assets of an equal value. These assets areclassified as ‘Fixtures, fittings and equipment’ within ‘Property, plant and equipment’ in the statement of financial position.Share of joint venture loanThis relates to the Group’s 50% interest, £12,002,000 (31 March 2012: £12,002,000) of the joint venture’s £24,004,000investor and development loan (31 March 2012: £24,004,000). These loans which have no financial covenants attachedto them are secured by a fixed charge on the assets of Shepperton Studios Property Partnership, are non-recourse to theGroup and are repayable in full on 30 September 2026. Interest on the loans is at base rate plus 2% with an interest ratefloor of 6.5%. The interest rate floor is an embedded derivative in the loan agreement; however the derivative has notbeen separated from the loan agreement as it satisfies the criteria for non-separation in IAS 39 Financial Instruments:Recognition and Measurement.


82 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued23. Interest-bearing loans and borrowings continuedBorrowing facilitiesThe available but undrawn committed facilities are as follows:31 March 2013Within 1 year£0001–2 years£0002–3 years£0003–4 years£0004–5 years£000More than5 years£000Facilities:Bank overdraft 5,000 – – – – – 5,000Revolving credit facility – – – 50,000 – – 50,000Asset financing facility – 950 1,321 – 321 – 2,592Share of joint venture loan – – – – – 20,000 20,000Total facilities 5,000 950 1,321 50,000 321 20,000 77,592Total£000Drawn loans:Bank overdraft (460) – – – – – (460)Revolving credit facility – – – (30,000) – – (30,000)Asset financing facility – (950) (1,321) – (321) – (2,592)Share of joint venture loan – – – – (12,002) (12,002)Total drawn loans (460) (950) (1,321) (30,000) (321) (12,002) (45,054)Undrawn facilities:Bank overdraft 4,540 – – – – – 4,540Revolving credit facility – – – 20,000 – – 20,000Asset financing facility – – – – – – –Share of joint venture loan – – – – – 7,998 7,998Undrawn committed facilities 4,540 – – 20,000 – 7,998 32,538


Pinewood Shepperton plc 83Annual Report & Accounts 2013Notes to the consolidated financial statements continued23. Interest-bearing loans and borrowings continuedBorrowing facilities31 March 2012Within 1 year£0001–2 years£0002–3 years£0003–4 years£0004–5 years£000More than5 years£000Facilities:Bank overdraft 5,000 – – – – – 5,000Revolving credit facility – 40,500 – – – – 40,500Pre-let development facility – 6,500 – – – – 6,500Asset financing facility – – 1,313 – – – 1,313Share of joint venture loan – – – – – 20,000 20,000Total facilities 5,000 47,000 1,313 – – 20,000 73,313Total£000Drawn loans:Bank overdraft – – – – – – –Revolving credit facility – (30,500) – – – – (30,500)Pre-let development facility – (6,500) – – – – (6,500)Asset financing facility – – (1,313) – – – (1,313)Share of joint venture loan – – – – – (12,002) (12,002)Total drawn loans – (37,000) (1,313) – – (12,002) (50,315)Undrawn facilities:Bank overdraft 5,000 – – – – 5,000Revolving credit facility – 10,000 – – – – 10,000Pre-let development facility – – – – – – –Asset financing facility – – – – – – –Share of joint venture loan – – – – – 7,998 7,998Total undrawn committed facilities 5,000 10,000 – – – 7,998 22,998


84 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued24. Trade and other payables31 March2013£00031 March2012£000Trade payables 5,042 4,127Value added tax 161 503Other payables 1,227 757Accruals 4,086 3,196Capital expenditure related payables 2,425 1,383Deferred income 6,678 4,20819,619 14,174Terms and conditions of the above financial liabilities:• Group trade creditors are non-interest bearing and at 31 March 2013 were equivalent to 33 days (31 March 2012:31 days) of purchases.• Other payables are non-interest-bearing and are settled as they become due.• Accruals are non-interest-bearing and are settled as they become due.• Deferred income is recognised as it is earned.25. ProvisionsTeddington Studios Limited previously exercised an option to terminate its leasehold interest in Teddington Studioson 24 December 2014. The Group has elected to cease activity at the site during 2013 and as a result has determinedthe lease on the Studio is an onerous contract. The provision for onerous lease contracts represents the present valueof the future lease payments and unavoidable costs that the Group is presently obliged to make under the non-cancellableonerous operating lease contract for Teddington Studios, less net revenue expected to be earned on the lease fromtenants and productions. The estimate may vary as a result of changes in the utilisation of the leased premises.These estimated costs are fully provided for in the income statement for the year ended 31 March 2013. The provisionis expected to be fully utilised during within two years.OnerousLeaseProvision£000Balance at 1 April 2012 –Provision recognised 1,538Balance at 31 March 2013 1,538


Pinewood Shepperton plc 85Annual Report & Accounts 2013Notes to the consolidated financial statements continued26. Obligations under leasesOperating lease commitments – Company as a lesseeTeddington StudiosTeddington Studios Limited previously exercised an option to terminate its leasehold interest in Teddington Studios on24 December 2014 and the Group has determined the lease is an onerous contract as activities are scheduled to ceaseat the site during 2013. See Note 25 for further details.Future minimum rentals payable on the non-cancellable Teddington Studios onerous operating lease as at 31 March 2013and 31 March 2012 are as follows:31 March2013£00031 March2012£000Within one year 662 662After one year but not more than five years 484 9931,146 1,655Shepperton StudiosShepperton Studios Limited entered into a commercial property lease on the Shepperton Studios property withShepperton Studios Property Partnership, its 50% owned joint venture partnership. The lease term expires on 18 August2026, with no break clause.Under the terms of the agreement the tenant may not assign the lease until 18 August 2016.The net cost to the Company of future minimum rentals payable under the non-cancellable Shepperton Studios propertyoperating lease as at 31 March 2013 and 31 March 2012 is as follows:31 March 31 March20132012£000£000Within one year 1,145 1,122After one year but not more than five years 4,580 4,488After five years but not more than 20 years 9,599 9,36815,324 14,978Operating lease commitments – Group as a lessorThe Group granted a 15-year Full Repairing and Insuring lease to Technicolor Limited, the occupier of the propertyclassified as investment property, with the tenant’s first option to break on 11 June 2016; principal rent is subjectto upwards-only annual reviews in line with RPI capped at 4%.Future minimum rentals receivable under non-cancellable operating leases as at 31 March 2013 and 31 March 2012are as follows:31 March 31 March20132012£000£000Within one year 572 562After one year but not more than five years 2,292 2,248After five years but not more than 20 years 572 7023,436 3,512


86 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued27. Commitments and contingenciesCapital commitmentsAt 31 March 2013, the Group had total capital commitments contracted for, but not provided in the accounts,of £7,790,000 (31 March 2012: £2,500,000) in relation to the South Dock Stage development, £5,408,000,the completion of the Camelot project, £2,042,000 and energy infrastructure upgrades of £340,000.GuaranteesAt 31 March 2013, the Group had guarantees in place, in the form of documentary credits, that were not providedfor in the accounts totalling £155,000 (31 March 2012: £155,000) in relation to certain Section 278 highwaysrelated infrastructure.28. Related party disclosuresThe consolidated financial statements include the financial statements of Pinewood Shepperton plc, its subsidiaries and its50% interest in the joint ventures listed in the following table.% equity interestCompany name Country of incorporation 31 March 2013 31 March 2012Pinewood Studios Limited United Kingdom 100 100Shepperton Studios Limited United Kingdom 100 100Pinewood-Shepperton Studios Limited United Kingdom 100 100Teddington Studios Limited United Kingdom 100 100Pinewood Shepperton Facilities Limited United Kingdom 100 100Baltray No.1 Limited United Kingdom 100 100Baltray No.2 Limited United Kingdom 100 100Shepperton Management Limited United Kingdom 100 100Pinewood PSB Limited(previously Project Pinewood Property Limited) United Kingdom 100 100Saul’s Farm Limited United Kingdom 100 100Pinewood Malaysia Limited United Kingdom 100 100Pinewood Germany Limited United Kingdom 100 100Pinewood Dominican Republic Limited United Kingdom 100 100Pinewood USA Inc. USA 100 100Pinewood Film Production Studios Canada Inc. Canada 100 100Pinewood China Limited (Note 30) United Kingdom 100 –Pinewood Atlanta Limited (Note 30) United Kingdom 100 –Pinewood Films Limited United Kingdom 100 100Pinewood Films No.2 Limited United Kingdom 100 100Pinewood Films No.3 Limited United Kingdom 100 –Pinewood Films No.4 Limited United Kingdom 100 –Pinewood Films No.5 Limited United Kingdom 100 –Pinewood Films No.6 Limited United Kingdom 100 –Pinewood Films No.7 Limited United Kingdom 100 –Pinewood Film Advisors Limited United Kingdom 100 –Pinewood Shepperton plc is the parent entity of the Group.


Pinewood Shepperton plc 87Annual Report & Accounts 2013Notes to the consolidated financial statements continued28. Related party disclosures continuedJoint ventures% Joint venture interestCompany name Country of incorporation 31 March 2013 31 March 2012Shepperton Studios (General Partner) Limited United Kingdom 50 50Shepperton Studios Property Partnership United Kingdom 50 50Pinewood Studio Berlin Film Services GmbH Germany 50 50Shepperton Studios Limited has a commercial property lease on the Shepperton Studios property. The net cost to theGroup of principal lease rentals for the year ended 31 March 2013 was £1,145,000 (15 month period ended 31 March2012: £1,317,000). In addition, the Group pays a top up rent to the joint venture partnership based on certain of itstrading activities at the Shepperton Studios site. The net cost to the Group of the top up rent for the year was £82,000(15 month period ended 31 March 2012: £200,000).Shepperton Management Limited manages the assets of the joint venture partnership and charges an asset managementfee based on independent valuations of the Shepperton Studios site. Asset management fees charged during the yearended 31 March 2013 were £320,000 (15 month period ended 31 March 2012: £145,000). The Group’s share of amountsowed by the 50% joint venture partnership at 31 March 2013 was £667,000 (31 March 2012: £263,000).Pinewood Germany Limited has entered into a 50/50 joint venture with Studio Hamburg GmbH, to market their existingstudio facilities in Hamburg and Berlin.Offer by Peel AcquisitionsOn 8 July 2011 the Recommended Cash Offer (“the Offer”) by Peel Acquisitions (Pegasus) Limited (“Peel Acquisitions”)for the Company closed. Peel Acquisitions is the largest shareholder with 58.05% of the Company. Warren JamesHoldings Ltd (“Warren James”) is the second largest shareholder with 26.69% of the Company. Both major shareholdershave independently stated their long-term support of the Company following conclusion of the Offer.Board changesAs part of the transfer to AIM, Peel Holdings Limited (“Peel”), whose subsidiary Goodweather Investment ManagementLimited held circa 68% of the ordinary shares following Admission, gave an undertaking to take all measures to ensurethat the number of Peel Directors on the Board of the Company shall be less than the number of Independent Directors(being the Directors of the Company who are not affiliates of Peel, or affiliates of the Company’s other major shareholder,Warren James Holdings Limited). Accordingly, John Whittaker and Peter Hosker resigned from the Board on 23 July 2012.Peel Management feeOn 16 August 2012, the Group agreed an Advisory and Non-Executive Directors Services fee of £120,000 per annum withPeel Acquisitions (Pegasus) Limited. Fees charged in relation to these services during the year were £230,000 (15 monthperiod ended 31 March 2012: £nil), which includes £80,000 of fees incurred in relation to the AIM listing and newshare placement.Transaction with DirectorDuring the year, the Group signed a consultancy agreement for services related to the Isle of Man InvestmentAdvisory Agreement with Gasworks Media Limited, a company incorporated in the Isle of Man, whose sole shareholder,Steve Christian, is also an Executive Director of the Group. The total value of the transactions during the year is£120,000, of which £19,000 remains outstanding for payment by the Group at 31 March 2013 (15 month period ended31 March 2012: nil transactions). The balance owing is unsecured, interest free and payable in cash upon invoicing.


88 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued28. Related party disclosures continuedAudit exemptionPinewood Shepperton plc has given statutory guarantees against all the outstanding liabilities of the below listed whollyownedsubsidiaries at 31 March 2013 under Section 479C of the Companies Act 2006, thereby allowing these subsidiariesto be exempt from the annual audit requirement for the year ended 31 March 2013.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 2013 are set out below. At 31 March 2012,no such guarantees were in place.Book valueof liabilitiesCompany nameCompanyRegistrationNumber31 March2013£’000Pinewood Shepperton Facilities Limited 07527390 –Baltray No.1 Limited 05776674 342Baltray No.2 Limited 05778635 –Shepperton Management Limited 05907027 43Pinewood PSB Limited(previously Project Pinewood Property Limited) 06300755 485Saul’s Farm Limited 06233879 –Pinewood Malaysia Limited 07074446 152Pinewood Germany Limited 07079399 –Pinewood Dominican Republic Limited 07096246 26Pinewood Films Limited 07660856 2629. Financial risk management, objectives and policiesThe Group’s principal financial liabilities, other than derivatives, comprise loans and borrowings, chattel mortgages,finance leases and trade and other payables. The main purpose of these financial liabilities is to provide finance for theGroup’s operations. The Group has financial assets such as trade and other receivables and cash that arise directly fromits operations.The Group is exposed to market risk, credit risk and liquidity risk. The Board of Directors oversee the management ofthese risks and are supported by the appropriate members of the Executive Management Team together with specialistadvisors as required. All derivative activities for risk management purposes are carried out with specialists involved whohave the appropriate skills and experience. It is the Group’s policy that no trading in derivatives for speculative purposesshall be undertaken.The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.Market riskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changesin market prices. Market prices comprise three types of risk: interest rate risk, currency risk and other price risk, suchas equity risk. The Group’s financial instruments affected by market risk include loans and borrowings and derivativefinancial instruments.


Pinewood Shepperton plc 89Annual Report & Accounts 2013Notes to the consolidated financial statements continued29. Financial risk management, objectives and policies continuedInterest rate riskInterest rate risk is the risk that the fair value or future values of a financial instrument will fluctuate because of changesin market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to theGroup’s long-term debt obligations with floating interest rates. In order to manage its interest rate risk the Group’s policyis to have 50% (31 March 2012: 50%) of its borrowings at fixed rates of interest. To manage this, the Group entersinto interest rate swaps, in which the Group agrees to exchange, at specific intervals, the difference between fixedand variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swapsare designated to hedge debt obligations and are monitored to ensure continued effectiveness.At 31 March 2013, the Group had the following interest rate swaps in place to minimise the volatility in cash flowsfrom a change in LIBOR:Effective interest rate %MaturityYearended31 March2013£00015 monthsended31 March2012£000Cash flow hedge 2.89% + variable margin 28 May 2012 – 1,700Cash flow hedge 5.195% + variable margin 28 May 2012 – 3,400Cash flow hedge 2.89% + variable margin 1 July 2013 – 5,800Cash flow hedge 5.195% + variable margin 1 July 2013 – 11,600Cash flow hedge 2.27% + variable margin 1 July 2013 7,500 –Cash flow hedge 1.66% + variable margin 28 November 2016 15,000 –22,500 22,500The interest rate swaps held are determined to be effective hedges and the interest swap finance costs are charged to theGroup income statement when they are payable. These are payable on a quarterly basis in March, June, September andDecember. The change in the fair value is recognised in Other Comprehensive Income.At 31 March 2013, £30,460,000 of the Group’s revolving facility and overdraft facility (31 March 2012: £37,000,000including pre-let development facility) and £12,002,000 (31 March 2012: £12,002,000) of the joint venture loan had beendrawn (Note 23). £19,502,000 (31 March 2012: £26,502,000) of drawn facility is at a floating interest rate of LIBOR plusa margin, or UK Bank base rate plus a margin, and is therefore subject to market risk through interest rate fluctuations.The remaining drawn loan of £22,500,000 (31 March 2012: £22,500,000) has been converted to a fixed rate with interestrate swaps.The Group has entered asset financing facilities over a fixed term with fixed monthly payments and which are securedover identifiable assets of an equal value. These assets are classified as ‘Fixtures, fittings and equipment’ within ‘Property,plant and equipment’ on the statement of financial position. At 31 March 2013, the balance payable was £2,592,000(31 March 2012: £1,313,000).Taking into consideration the fixed rate instruments in place, a one percentage point increase in LIBOR would increasethe interest charge, and reduce the Group profit before taxation, by £195,000 (31 March 2012: £265,000).At 31 March 2013, after taking into account the effect of interest rate swaps and the asset finance facility, approximately56% (31 March 2012: 48%) of the Group’s borrowings are at a fixed rate of interest.Following the renewal of its banking facilities the Company is reviewing appropriate hedging in line with its hedging policy.


90 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued29. Financial risk management, objectives and policies continuedInterest rate risk continuedA summary of fixed and floating rate debt at 31 March 2013 is as follows:31 March 2013Within1 year£0001–2 years£0002–3 years£0003–4 years£0004–5 years£000More than5 years£000Secured bank loanat floating rate – – – (30,000) – – (30,000)Portion of secured loaneffectively convertedto fixed rate with aninterest rate swap – – – (22,500) – – (22,500)Effective floating portion ofsecured loan at floating rate – – – (7,500) – – (7,500)Share of joint venture loanat floating rate – – – – – (12,002) (12,002)Total£000Fixed rate asset financing – (950) (1,321) – (321) – (2,592)Fixed rate drawn loan – – – (22,500) – – (22,500)Floating rate drawn loans – – – (7,500) – (12,002) (19,502)Bank overdraft (460) – – – – – (460)Total drawn loans (460) (950) (1,321) (30,000) (321) (12,002) (45,054)31 March 2012Within1 year£0001–2 years£0002–3 years£0003–4 years£0004–5 years£000More than5 years£000Secured bank loanat floating rate – (37,000) – – – – (37,000)Portion of loan effectivelyconverted to fixed rate withan interest rate swap – (22,500) – – – – (22,500)Effective floating portion ofsecured loan at floating rate – (14,500) – – – – (14,500)Share of joint venture loan – – – – – (12,002) (12,002)Total£000Fixed rate asset financing – – (1,313) – – – (1,313)Fixed rate drawn loan – (22,500) – – – (22,500)Floating rate drawn loans – (14,500) – – – (12,002) (26,502)Total drawn loans – (37,000) (1,313) – – (12,002) (50,315)


Pinewood Shepperton plc 91Annual Report & Accounts 2013Notes to the consolidated financial statements continued29. Financial risk management, objectives and policies continuedForeign currency riskThe Group does not hedge against foreign currency exposure due to its minimal exposure to foreign currency movementsas its business is conducted primarily in UK sterling. The Board continues to review this area to identify any potentialexposure with the increase in international arrangements.Equity price riskThe Group does not hedge against equity price risk as it does not have exposure in this area.Credit riskCredit risk is the risk that a counterparty will not meet its obligation under a financial instrument or customer contract,leading to a financial loss. The Group is exposed to credit risk from its operating activities, primarily trade receivables,and financial instruments.Credit risks related to receivablesCustomer credit risk is managed across the Group in accordance with policy, procedures and controls relating to customercredit risk management. The Group trades with recognised, creditworthy third parties and it is the Group’s policy that allcustomers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balancesare monitored on an ongoing basis to manage the Group’s exposure to bad debts. The requirement for impairment isreviewed each month on an individual customer basis and not on a collective basis. The review to assess the need forimpairment is not dependent on the age of the receivable and is determined using business knowledge and individualcircumstances specific to each customer. There were no changes to the Group policy during the year. As at 31 March2013 the Group’s maximum exposure to credit risk was £6,937,000 (31 March 2012: £4,540,000), of which £107,000(31 March 2012: £164,000) is considered to be potentially impaired and £911,000 (31 March 2012: £1,052,000) hasexceeded credit terms but has not been impaired. Note 19 provides further details of the ageing profile of receivables.Credit risks related to financial instrumentsWith respect to credit risk relating to cash, cash equivalents and other financial instruments the Group’s exposure to creditarises from default of the counterparty, with the maximum exposure equal to the carrying amount of these instruments.At 31 March 2013 the Group has a negative cash balance (31 March 2012: positive cash balance) and has a total of£22,500,000 interest rate swaps (31 March 2012: £22,500,000) and a £2,592,000 (31 March 2012: £1,313,000) assetfinancing facility agreement.Liquidity riskThe Group’s objective is to maintain a balance between the continuity of operating and development funding andflexibility through the use of an overdraft facility, a revolving facility and a share of a joint venture loan. Short-termflexibility is achieved by the overdraft facility of £5,000,000 (31 March 2012: £5,000,000) which is available to theGroup for drawdown until 28 November 2016 (subject to an annual review).The revolving credit facility, which supports the operating activities of the Group, is available for drawdown until28 November 2016.The joint venture loan has a maturity date of 30 September 2026.The Board has reviewed the Group’s banking facilities and current levels of headroom on those facilities and considersthat there is sufficient capacity going forward.


92 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued29. Financial risk management, objectives and policies continuedLiquidity risk continuedThe table below summarises the maturity profile of the Group’s main financial liabilities based on contractual undiscountedpayments at 31 March 2013 and 31 March 2012:At 31 March 2013On demand£000Less than3 months£0003–12 months£0001–5 years£000> 5 years£000Drawn facility loans – 278 834 41,567 – 42,679Share of joint venture loan – 195 585 3,120 9,307 13,207Cash flow hedge – 76 129 426 – 631Asset financing – 285 856 1,641 – 2,782Trade and other payables 12,941 – – – – 12,94112,941 834 2,404 46,754 9,307 72,240At 31 March 2012On demand£000Less than3 months£0003–12 months£0001–5 years£000> 5 years£000Drawn facility loans – 239 684 50,920 – 51,843Share of joint venture loan – 195 585 3,120 14,290 18,190Cash flow hedge – 185 555 233 973Asset financing – 133 399 863 – 1,395Trade and other payables 9,966 – – – – 9,9669,966 752 2,223 55,136 14,290 82,367Total£000Total£000


Pinewood Shepperton plc 93Annual Report & Accounts 2013Notes to the consolidated financial statements continued29. Financial risk management, objectives and policies continuedFair valuesSet out below is a comparison by category of book values and fair values of all the Group’s financial assets and liabilitiesas at 31 March 2013 and 31 March 2012:Book valueFair value31 March2013£00031 March2012£00031 March2013£00031 March2012£000Financial assetsCash and cash equivalents – 408 – 408Trade receivables 6,830 4,376 6,830 4,376Financial assets 6,830 4,784 6,830 4,784Financial liabilitiesBank overdraft 460 – 460 –Interest-bearing loans and borrowings:– Floating rate borrowings 7,500 6,500 7,500 6,500– Floating rate borrowings converted to fixed rate 22,500 30,500 22,500 30,500– Asset financing 2,592 1,313 2,782 1,395– Share of joint venture loan 12,002 12,002 13,207 18,190Total interest-bearing loans and borrowings 44,594 50,315 45,989 56,585Trade and other payables 19,619 14,174 19,619 14,174Financial liabilities 64,673 64,489 66,068 70,759Derivative financial instruments held tomanage the interest rate profile:Cash flow hedge (£7.5m at 2.89% + variable margin) – 181 – 181Cash flow hedge (£15.0m at 5.195% + variable margin) – 792 – 792Cash flow hedge (£7.5m at 2.27% + variable margin) 35 – 35 –Cash flow hedge (£15.0m at 1.66% + variable margin) 596 – 596 –Interest rate swaps – fair value of liability 631 973 631 973The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchangedin a current transaction between willing parties, other than in a forced or liquidation sale.


94 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued29. Financial risk management, objectives and policies continuedFair values continuedThe Group uses the following hierarchy for determining and disclosing the fair value of financial instrumentsby valuation technique:• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities.• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,either directly or indirectly.• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based onobservable market data.At 31 March 2013, the Group held interest rate swap contracts, an asset financing liability and a share of a joint ventureloan. The fair value of these contracts is valued using a Level 2 technique as it is determined by reference to marketvalues for similar instruments. During the year ended 31 March 2013, there were no transfers between the differentfair value measurement levels.Capital managementThe primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthycapital ratios in order to support its business and maximise shareholder value.The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capitalto shareholders or issue new shares. No changes were made in the objectives, policies or processes during the yearended 31 March 2013 and 15 month period ended 31 March 2012.The Group monitors capital using a gearing ratio, which is net debt divided by total equity. The Group includes within netdebt, interest-bearing loans and borrowings (excluding the fair value of the cash flow hedge and loan costs), joint ventureloans and cash. This ratio is reviewed regularly by management with the appropriate measures (noted above) beingconsidered to maintain a capital structure to support the business.


Pinewood Shepperton plc 95Annual Report & Accounts 2013Notes to the consolidated financial statements continued29. Financial risk management, objectives and policies continuedCapital management continued31 March2013£00031 March2012£000Non-current liabilitiesNon-current drawn loan facilities 44,594 50,315Fair value of cash flow hedge 631 973Secured bank loan arrangement costs (1,012) (438)Interest-bearing loans and borrowings 44,213 50,850Current liabilitiesBank overdraft 460 –Current assetsCash – (408)Net debt 44,673 50,442Total equity 80,069 73,057Gearing ratio 55.8% 69.0%Net debt excluding fair value and loan costs 45,054 49,907Gearing ratio 56.3% 68.3%30. Events after the reporting periodOn 17 April 2013, the Group announced that it had entered into a 50:50 joint venture agreement with Seven Stars MediaLimited, one of China’s leading private media groups which provides content creation and distribution, media servicesand events. The joint venture, to be called ‘Song Lin’, initially will assess a number of business proposals in the growingentertainment market in China. Under the terms of the joint venture, Pinewood will provide its expertise with limitedcapital investment and therefore there will be limited financial impact to the Group from the venture.On 29 April 2013, the Group announced a new joint venture, Pinewood Atlanta LLC, which will work to initially develop288 acres of land south of Atlanta, Georgia, USA, into world-class studio facilities for the production of film, television,music and video games. The business will operate under the Pinewood trademark and Pinewood has received 40% of theshareholding in the joint venture. Pinewood will provide the joint venture with sales and marketing services. Constructionhas commenced on the Pinewood Atlanta Studio build. Phase 1 will comprise 100,000 sq ft of film stage space,50,000 sq ft of workshops and 200,000 sq ft of production facility and media campus space. Phase one is scheduled forcompletion in mid 2014.Transaction costs incurred in relation to these two new joint ventures have been capitalised as long-term assets.See Note 17 for further details.


96 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statementsIndependent auditor’s reportto the members of Pinewood Shepperton plcWe have audited the parent Company financial statements of Pinewood Shepperton plc for the year ended 31 March 2013which comprise the parent Company Balance Sheet and the related Notes 1 to 16. The financial reporting framework thathas been applied in their preparation is applicable law and United Kingdom Accounting Standards (United KingdomGenerally Accepted Accounting Practice).This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members thosematters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permittedby law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as abody, for our audit work, for this report, or for the opinions we have formed.Respective responsibilities of Directors and auditorAs explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation ofthe parent Company financial statements and for being satisfied that they give a true and fair view. Our responsibilityis to audit and express an opinion on the parent Company financial statements in accordance with applicable law andInternational Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing PracticesBoard’s Ethical Standards for Auditors.Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to givereasonable assurance that the financial statements are free from material misstatement, whether caused by fraud orerror. This includes an assessment of: whether the accounting policies are appropriate to the parent Company’scircumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accountingestimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all thefinancial and non-financial information in the annual report to identify material inconsistencies with the audited financialstatements. If we become aware of any apparent material misstatements or inconsistencies we consider the implicationsfor our report.Opinion on financial statementsIn our opinion the parent Company financial statements:• give a true and fair view of the state of the Company’s affairs as at 31 March 2013 and of its profit for the yearthen ended;• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and• have been prepared in accordance with the requirements of the Companies Act 2006.


Pinewood Shepperton plc 97Annual Report & Accounts 2013Company UK GAAP financial statements continuedOpinion on other matters prescribed by the Companies Act 2006In our opinion:• the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with theCompanies Act 2006; and• the information given in the Directors’ report for the financial year for which the financial statements are preparedis consistent with the parent Company financial statements.Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to youif, in our opinion:• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have notbeen received from branches not visited by us; or• the parent Company financial statements and the part of the Directors’ remuneration report to be audited are notin agreement with the accounting records and returns; or• certain disclosures of Directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.Other matterWe have reported separately on the Group financial statements of Pinewood Shepperton plc for the year ended31 March 2013.Alan Fendall (Senior statutory auditor)For and on behalf of Deloitte LLPChartered Accountants and Statutory AuditorManchester, UK26 June 2013


98 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statements continuedParent Company balance sheetat 31 March 2013Notes31 March2013£00031 March2012£000Fixed assetsInvestments 6 32,705 32,705Long-term assets 8 106 6732,811 32,772Current assetsDebtors:Amounts falling due after more than one year 9 137,857 66,759Amounts falling due within one year 9 275 201138,132 66,960Creditors: amounts falling due within one year 10 (85,237) (12,492)Net current assets 52,895 54,468Total assets less current liabilities 85,706 87,240Creditors: amounts falling due after more than one year 11 (31,191) (38,405)54,515 48,835Capital and reservesCalled up share capital 12 4,941 4,725Share premium account 13 48,718 43,847Capital redemption reserve 13 135 135Merger reserve 13 348 348Fair value of cash flow hedge 13 (328) (732)Retained earnings 13 701 512Equity shareholders’ funds 13 54,515 48,835The financial statements of Pinewood Shepperton plc, Company number: 03889552, were approved and authorised forissue by the Board of Directors on 26 June 2013. They were signed on its behalf by:Ivan DunleavyChief ExecutiveThe notes on pages 99 to 111 are an integral part of these financial statements.


Pinewood Shepperton plc 99Annual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements1. Authorisation of financial statementsThe Company’s ordinary shares are traded on the Alternative Investment Market of the London Stock Exchange.The financial statements of Pinewood Shepperton plc for the year ended 31 March 2013 were authorised for issue bythe Board of the Directors on 26 June 2013, and the statement of financial position was signed on the Board’s behalf bythe Chief Executive. Pinewood Shepperton plc is a public limited company incorporated and domiciled in England andWales. The registered office is located at Pinewood Studios, Pinewood Road, Iver Heath, Buckinghamshire SL0 0NH,United Kingdom.2. Accounting policiesAccounting conventionThe financial statements are prepared under the historical cost convention and in accordance with applicable accountingstandards.Basis of preparationThe Company has taken advantage of the exemption available under Section 408 of the Companies Act 2006 not topresent its own profit and loss account. The profit of the Company for the year was £436,000 (15 month period ended31 March 2013: £781,000 loss). The Company accounts have been prepared in accordance with UK Generally AcceptedAccounting Policies as they apply to the financial statements of the Company for the year ended 31 March 2013 andapplied in accordance with the Companies Act 2006.The Company has taken advantage of the exemption in paragraph 2D of FRS 29 Financial Instruments: Disclosures andhas not disclosed information required by that standard, as the Group’s consolidated financial statements, in which theCompany is included, provide equivalent disclosures for the Group under IFRS 7 Financial Instruments: Disclosures.Going concernThe Group’s assessment of going concern is explained in the Directors’ report on page 21 of the Annual Report.Fixed asset investmentsInvestments in subsidiaries are stated initially at cost. The carrying values are reviewed for impairment if eventsor changes in circumstances indicate the carrying values may not be recoverable.Loan issue costsLoans are initially recorded at their net proceeds. The loan issue costs are amortised in the profit and loss account overthe remaining maturity of the loans at a constant carrying amount and are reviewed for changes in circumstances thatmay indicate that the loans will not be held to maturity.Share issue costsCosts directly attributable to the raising of equity are offset against share premium arising on share issuance.Share-based payment transactionsEmployees (including Directors) of the Group may receive part of their remuneration in the form of share-based paymenttransactions, whereby employees render their services in exchange for shares or rights over shares (“equity-settledtransactions”).The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at whichthey are granted. The fair value is determined by an external valuer using the binomial method. In valuing equity-settledtransactions, no account is taken of any performance conditions, other than the conditions linked to the price of theshares of Pinewood Shepperton plc (“market conditions”).


100 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued2. Accounting policies continuedShare-based payment transactions continuedThe cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period inwhich the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitledto the award (“vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting dateuntil the vesting date reflects the extent to which the vesting period has expired and the number of awards that, in theopinion of the Directors of the Company at that date based on the best available estimate of the number of equityinstruments, will ultimately vest.No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upona market condition and in circumstances where holders of awards with no performance conditions attached cancel theirawards whilst remaining in the employment of the Group. These are treated as vesting irrespective of whether or notthe market condition is satisfied, provided that all other performance conditions are satisfied.Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had notbeen modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of themodification.Where an equity-settled award is cancelled by the award holder whilst remaining in the employment of the Group, it istreated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognisedimmediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award onthe date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award,as described in the previous paragraph.Where an equity-settled award is cancelled due to the holder of the award no longer remaining in the employment of theGroup, no expense is recognised.The dilutive effect of outstanding issuable awards is reflected as additional share dilution in the computation of earningsper share. Awards that are contingently issuable are not considered dilutive unless the performance conditions forultimate vest are met.The financial effect of awards by the parent Company of options over its equity shares to the employees of subsidiaryundertakings are recognised by the parent Company in its individual financial statements. In particular the parentCompany records an increase in its investment in subsidiaries with a credit to equity equivalent to the FRS 20 SharebasedPayment cost in the subsidiary undertakings.Financial assetsFinancial assets in the scope of FRS 26 Financial Instruments: Recognition and Measurement are classified as financialassets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or as available-for-salefinancial assets, as appropriate. The Company determines the classification of its financial assets at initial recognition andre-evaluates this designation at each financial year end. When financial assets are recognised initially, they are measuredat fair value.All regular way purchases and sales of financial assets are recognised on the trade date, being the date that the Companycommits to purchase or sell the asset. Regular way transactions require delivery of assets within the timeframe generallyestablished by regulation or convention in the marketplace. The subsequent measurement of financial assets depends ontheir classification, as follows:Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in anactive market, do not qualify as trading assets and have not been designated as either fair value through profit and lossor available-for-sale. Such assets are carried at amortised cost using the effective interest method if the time value ofmoney is significant. Gains and losses are recognised in profit when the loans and receivables are derecognised orimpaired, as well as through the amortisation process.


Pinewood Shepperton plc 101Annual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued2. Accounting policies continuedLoans and receivables continuedIf there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has beenincurred, the carrying amount of the asset is reduced, with the amount of the loss recognised in administration costs.If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively toan event occurring after the impairment was recognised, the previously recognised impairment loss is reversed.Any subsequent reversal of an impairment loss is recognised in the profit and loss account, to the extent that the carryingvalue of the asset does not exceed its amortised cost at the reversal date.Derivative financial instrumentsThe Company has interest rate swaps to hedge against risks associated with interest rate fluctuations. These derivativefinancial instruments are stated at fair value.The fair values of the interest rate swap contracts are determined by reference to market values for similar instruments.The interest rate swaps are cash flow hedges which hedge exposure to variability in cash flows that are attributable to theinterest rate risk on the Company’s external borrowings.The portion of the gain or loss on the hedging instruments that is determined to be an effective hedge is recogniseddirectly in other comprehensive income and the statement of changes in equity in a cash flow hedge reserve and theineffective portion is recognised in the income statement in finance costs. Amounts taken to other comprehensiveincome and the statement of changes in equity are transferred to the income statement when the hedged transactionaffects income.Hedge accounting is discontinued when the hedging instruments expire, or are sold, terminated or exercised, or no longerqualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instruments recognisedin other comprehensive income and the statement of changes in equity is kept in other comprehensive income and thestatement of changes in equity until the forecasted transactions occur. If a hedged transaction is no longer expected tooccur, the net cumulative gain or loss recognised in other comprehensive income and the statement of changes in equityis transferred to the income statement for that year.PensionsThe Company operates defined contribution schemes. Contributions are charged to the profit and loss account as theybecome payable in accordance with the rules of the schemes.Corporation taxesCurrent tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxationauthorities, based on tax rates and laws that are enacted or substantively enacted by the statement of financialposition date.Deferred tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and theircarrying amounts in the financial statements, with the following exception:• Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that therewill be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.• Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in whichtiming differences reverse, based on tax rates and laws enacted or substantively enacted at the statement of financialposition dates.


102 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued3. Auditor’s remunerationYearended31 March2013£00015 monthsended31 March2012£000Audit of the financial statements 5 5Other fees to auditors:– taxation services 5 510 104. Directors’ remunerationBasic salaryand fees forthe yearended31 March2013£Benefitsin kindfor the yearended31 March2013£Annualbonusfor the yearended31 March2013£Pensioncontributionsfor theyear ended31 March2013£Totalremunerationfor theyear ended31 March2013£Totalremuneration15 monthsended31 March2012£ChairmanLord Grade of Yarmouth 105,000 n/a n/a n/a 105,000 131,279Executive DirectorsIvan Dunleavy 362,750 8,721 nil 37,302 408,773 562,476Nicholas Smith 228,000 6,793 nil 27,500 262,293 377,023Andrew Smith 145,000 4,823 nil 11,550 161,373 nilSteve Christian 16,667 nil nil nil 16,667 nilPatrick Garner 91,233 844 nil 2,146 94,223 312,220Non-Executive DirectorsSteven Underwood nil nil nil nil nil nilMark Senior nil nil nil nil nil nilNeil Lees nil nil nil nil nil nilRuth Prior 15,400 308 nil nil 15,708 nilAdrian Burn nil n/a n/a n/a nil 44,881Nigel Hall nil n/a n/a n/a nil 44,881James Donald nil n/a n/a n/a nil 40,786Peter Hosker nil nil nil nil nil nilJohn Whittaker nil nil nil nil nil nilNone of the above Directors received reimbursement for expenses during the year requiring separate disclosureas required by The Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008.The Company had no employees other than the Directors above in either the current or previous period.


Pinewood Shepperton plc 103Annual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued5. Taxation(a) Analysis of charge for the year:Yearended31 March2013£00015 monthsended31 March2012£000Current tax:UK corporation tax –Prior year adjustments 47 –Total current corporation tax 47 –Deferred tax:Origination and reversal of timing differences (92) 52Cash flow hedge 92 –Total deferred tax –Total tax charge 47 52Tax relating to items charged or credited to equityDeferred tax:Deferred tax charge reported in equity on cash flow hedges (3) 205Deferred tax charge reported in equity on share-based payments – 24Tax charge in the statement of changes in equity (3) 229(b) Factors affecting current tax charge for the year:Yearended31 March2013£00015 monthsended31 March2012£000Accounting profit/(loss) before corporation tax 483 (781)Profit/(loss) on ordinary activities multiplied by UK rate of 24%(2012: 26.4%) 116 (206)Non-deductible expenses 77 188Non-taxable amounts – 52Other short-term timing differences 28Group relief claimed (313) 18Cash flow hedge 92 –Adjustments in respect of prior period 47 –Corporation tax expense reported in the income statement 47 52


104 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued6. InvestmentsCost:At 31 March 2013 and 31 March 2012 32,705Details of the investments in which the Group and the Company (unless indicated) holds 20% or more of the nominalvalue of any class of share capital or Joint Venture interests are as follows:£000Company nameCountry ofincorporation31 March2013% equity interest31 March2012Pinewood Studios Limited* United Kingdom 100 100Shepperton Studios Limited* United Kingdom 100 100Pinewood-Shepperton Studios Limited United Kingdom 100 100Teddington Studios Limited United Kingdom 100 100Pinewood Shepperton Facilities Limited United Kingdom 100 100Baltray No.1 Limited* United Kingdom 100 100Baltray No.2 Limited* United Kingdom 100 100Shepperton Management Limited* United Kingdom 100 100Pinewood PSB Limited (previously Project Pinewood Property Limited) United Kingdom 100 100Saul’s Farm Limited United Kingdom 100 100Pinewood Malaysia Limited* United Kingdom 100 100Pinewood Germany Limited* United Kingdom 100 100Pinewood Dominican Republic Limited* United Kingdom 100 100Pinewood USA Inc* USA 100 100Pinewood Film Production Studios Canada Inc* Canada 100 100Pinewood China Limited United Kingdom 100 –Pinewood Atlanta Limited United Kingdom 100 –Pinewood Films Limited United Kingdom 100 100Pinewood Films No. 2 Limited United Kingdom 100 100Pinewood Films No. 3 Limited United Kingdom 100 –Pinewood Films No. 4 Limited United Kingdom 100 –Pinewood Films No. 5 Limited United Kingdom 100 –Pinewood Films No. 6 Limited United Kingdom 100 –Pinewood Films No. 7 Limited United Kingdom 100 –Pinewood Film Advisors Limited United Kingdom 100 –Shepperton Studios Property Partnership United Kingdom 50 50Shepperton Studios (General Partner) Limited United Kingdom 50 50Pinewood Studios Berlin Film Services GmbH Germany 50 50* Held by Pinewood-Shepperton Studios LimitedThe accounting reference date for Shepperton Studios Property Partnership and Shepperton Studios (General Partner)Limited is 31 December.


Pinewood Shepperton plc 105Annual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued6. Investments continuedThe Company accounts for its investments in subsidiaries using the cost model.Audit exemptionPinewood Shepperton plc has given statutory guarantees against all the outstanding liabilities of the below listed whollyownedsubsidiaries at 31 March 2013 under Section 479C of the Companies Act 2006, thereby allowing these subsidiariesto be exempt from the annual audit requirement for the year ended 31 March 2013.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 2013 are set out below. At 31 March 2012, nosuch guarantees were in place.Company nameCompanyRegistrationNumberBook valueof liabilities31 March2013£’000Pinewood Shepperton Facilities Limited 07527390 –Baltray No.1 Limited 05776674 342Baltray No.2 Limited 05778635 –Shepperton Management Limited 05907027 43Pinewood PSB Limited06300755 485(previously Project Pinewood Property Limited)Saul’s Farm Limited 06233879 –Pinewood Malaysia Limited 07074446 152Pinewood Germany Limited 07079399 –Pinewood Dominican Republic Limited 07096246 26Pinewood Films Limited 07660856 267. DividendsYearended31 March2013£00015 monthsended31 March2012£000Final dividend for year ended 31 December 2010 paid at 2.5p per share – 1,156Interim dividend for year ended 31 March 2013 paid at 0.5p per share 247 –247 1,156The Board has recommended a dividend in respect of the year to 31 March 2013, resulting in interim dividends paid forthe year (15 month period ended 31 March 2012: nil). The Board is committed to pay dividends in line with its dividendpolicy of not less than three times cover.


106 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued8. Long-term assetsCost:Torontolong-termagreement£000Atlantajoint ventureagreement£000Chinajoint ventureagreement£000At 1 January 2011 94 – – 94Additions – – – –At 31 March 2012 94 – – 94Additions – 24 39 63At 31 March 2013 94 24 39 157Amortisation:At 1 January 2011 – – – –Provided during the 15 month period 27 – – 27At 31 March 2012 27 – – 27Provided during the year 24 – – 24At 31 March 2013 51 – 51Carrying value:At 31 March 2013 43 24 39 106At 31 March 2012 67 – – 67The Group signed a ten year sales and marketing agreement with Pinewood Toronto Studios on 26 May 2009. Transactioncosts in relation to this agreement have been recognised as a long-term asset and are being amortised over the term ofthe agreement. The costs relating to the 50/50 JV agreements with Seven Stars Media in China, and River Rock LLC inAtlanta, have also been classed as long-term assets to be amortised over the terms of the respective agreements.On 29 April 2013, the Group announced it had entered into a joint venture (Pinewood Atlanta LLC), with River's Rock LLC.The joint venture will work to initially develop 288 acres of land south of Atlanta, Georgia, USA, into world-class studiofacilities for the production of film, television, music and video games. The business will operate under the Pinewoodtrademark and Pinewood has received 40% of the shareholding in the joint venture. Pinewood will provide the jointventure with sales and marketing services. Transaction costs of £24,000 in relation to this joint venture have beenrecognised as a long-term asset. The costs will be amortised over the first three years of the Studio’s operations,commencing when the Studio opens for business.On 17 April 2013, the Group signed a 50:50 joint venture agreement (Song Lin) with Seven Stars Media Limited, partof China’s leading private media group which provides content creation and distribution, media services and events.Transaction costs of £39,000 in relation to this joint venture have been recognised as a long-term asset. The costs willbe amortised upon commencement of the agreement over the first two years of the joint ventures operations.Total£000


Pinewood Shepperton plc 107Annual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued9. Debtors31 March2013£00031 March2012£000Due from subsidiary undertakings 137,857 66,759Prepayments and accrued income 275 201138,132 66,960Amounts falling due after more than one year included above are:Due from subsidiary undertakings 137,857 66,75910. Creditors: amounts falling due within one year31 March2013£00031 March2012£000Amounts due to subsidiary undertakings 81,257 10,313Other creditors 2,219 1,422Asset financing 1,020 443Bank overdraft 741 31485,237 12,49211. Creditors: amounts falling due after more than one year31 March2013£00031 March2012£000Revolving credit facility 30,000 30,500Pre-let development facility – 6,500Secured bank loan arrangement costs (1,012) (438)Asset financing 1,572 870Fair value of cash flow hedge 631 97331,191 38,405Amounts falling due:– in more than one year but not more than two years 1,020 443– in more than two years but not more than five years 30,171 37,96231,191 38,405Banking facilitiesOne of the pre-conditions of the Offer by Peel Acquisitions for Pinewood Shepperton plc was that the current bankingfacilities remained in place to August 2013. The Board was required to agree a waiver of a change of control clause withinthe banking documentation. The variations to the banking documentation required the Company to pay a fee to the banksof £235,000 which was included in exceptional costs in the 15 month period ended 31 March 2012. In addition, there wasan increase in the margin by 25 basis points which took effect from 12 July 2011. The Board also cancelled £18.0m of theundrawn pre-let development facility.


108 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued11. Creditors: amounts falling due after more than one year continuedBanking facilities continuedOn 28 May 2012, the Company arranged replacement banking facilities of up to £55m which comprise a £35m revolvingcredit facility, a £15m term facility and a £5m overdraft facility subject to annual review.These facilities are secured on certain of the principal assets of the Group.The term facility contains scheduled repayments of £1.5m on 30 June 2015 and 30 June 2016 and matures inNovember 2016. The revolving credit facility has no scheduled repayments and matures in November 2016.The £5m overdraft facility is reviewed annually.The revolving credit and term facilities have a range of covenants and events of default together with variable marginsbetween 435 and 285 basis points over LIBOR.The banking facilities become repayable on demand following a change of control in the Group if the Group and thesyndicate of banks’ agent are unable to agree alternative terms within 30 days of the Group’s notification of a changeof control.CovenantsThe banking agreements contain a range of covenants appropriate for the revolving facility, term facility and overdraftfacility. The Group was covenant compliant at 31 March 2013.Cash flow hedgeAt 31 March 2013, the Group held interest rate swaps designated as hedges against drawn debt obligations amountingto £22,500,000 (31 March 2012: £22,500,000). Further information can be found in Note 29 of the Group accounts.Asset financing facilityThe asset financing facility is a sterling chattel mortgage facility over a fixed term with fixed monthly payments and issecured 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.At 31 March 2013, the Group had the following interest rate swaps in place to minimise the volatility in cash flows froma change in LIBOR:Effective interestrate% Maturity31 March2013£00031 March2012£000Cash flow hedge 2.89% + variable margin 28 May 2012 – 1,700Cash flow hedge 5.195% + variable margin 28 May 2012 – 3,400Cash flow hedge 2.89% + variable margin 1 July 2013 – 5,800Cash flow hedge 5.195% + variable margin 1 July 2013 – 11,600Cash flow hedge 2.27% + variable margin 1 July 2013 7,500 –Cash flow hedge 1.66% + variable margin 28 November 2016 15,000 –22,500 22,500The interest rate swaps held are determined to be effective hedges and the interest swap finance costs are chargedto the income statement when they are payable. These are payable on a quarterly basis in March, June, Septemberand December.


Pinewood Shepperton plc 109Annual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued12. Share capitalAuthorisedAs at 31 March 2013 and 31 March 2012:Ordinary shares of 10p each 7,000Issued, called up and fully paid31 March 2013 31 March 2012No. £000 No. £000Ordinary shares of 10p each 47,249,926 4,725 46,232,006 4,623Shares issued under the Company Share Option schemes:10p ordinary shares issued on 21 June 2011 – – 800,000 8010p ordinary shares issued on 8 July 2011 – – 60,892 610p ordinary shares issued on 8 July 2011 – – 155,785 1610p ordinary shares issued on 28 December 2011 – – 1,243 –New shares issued: – –10p ordinary shares issued on 23 July 2012 2,160,000 216 – –As at 31 March 2013 and 31 March 2012 49,409,926 4,941 47,249,926 4,725Company Sharesave Scheme (“SAYE”)The Group had an SAYE under which options to subscribe for the Group’s shares have been granted to employeeswishing to participate in the scheme. Options were granted at a discount of 20% to the market value on the date of grant.The contractual lives of options were three and a half and five and a half years. The options were equity-settled and therewere no cash settlement alternatives.As a result of the Offer by Peel Acquisitions becoming unconditional on 21 June 2011, 155,785 shares were issued on8 July 2011 under this scheme and the scheme closed.The following table illustrates the number (“No.”) and weighted average exercise prices (“WAEP”) of, and movements in,SAYE options during the year:Yearended31 March2013No.Yearended31 March2013WAEP15 monthsended31 March2012No.£00015 monthsended31 March2012WAEPOutstanding at the beginning of the year – – 352,898 112.6pForfeited during the year – – (197,113) 115.1pExercised during the year – – (155,785) 109.5pOutstanding at the end of the year – – – –The fair value of equity-settled options granted is estimated as at the date of grant using a binomial model taking intoaccount the terms and conditions upon which the options were granted.


110 Pinewood Shepperton plcAnnual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued12. Share capital continuedCompany Long-Term Incentive Plan (“LTIP”)The Group had an LTIP under which Executive Directors and senior managers were granted annual equity awards upto a maximum value of 250%, and 100% respectively, of basic salary. Please see the Director’s report on page 18 foradditional information. Awards issued vested subject to performance criteria, based 50% on Total Shareholder Returnand 50% on annual average Return on Capital Employed and minimum performance criteria. The contractual life of eachaward was ten years. The awards were equity-settled and there were no cash settlement alternatives.The following table illustrates the number (“No.”) and movements in LTIP awards during the year.Yearended31 March2013No.15 monthsended31 March2012No.Outstanding at the beginning of the year – 1,882,448Forfeited during the year – (1,341,808)Exercised during the year – (987,992)Granted during the year – 447,352Outstanding at the end of the year – –The weighted average fair value of the awards granted during the year was £nil (15 month period ended31 March 2012: 111p).As a result of the Offer by Peel Acquisitions becoming unconditional on 21 June 2011, 987,992 shares were issuedon 8 July 2011 under this scheme and the scheme closed.The fair value of equity-settled options and grants were estimated as at the date of grant using binomial and Monte Carlomodels taking into account the terms and conditions upon which the options or grants were awarded.13. Reconciliation of shareholders’ funds and movements on reservesSharecapital£000Sharepremium£000Capitalredemptionreserve£000Mergerreserve£000Fair value ofcash flowhedgereserve£000Retainedearnings£000Total equity£000At 1 January 2011 4,623 43,692 135 348 (1,186) 2,535 50,147Profit for the period – – – – – (781) (781)Dividend paid (Note 7) – – – – – (1,156) (1,156)New shares issued 102 155 – – – (86) 171Fair value of cash flow hedges – – – – 454 – 454At 31 March 2012 4,725 43,847 135 348 (732) 512 48,835Profit for the year – – – – 436 436Dividend paid (Note 7) – – – – – (247) (247)New shares issued 216 4,871 – – – – 5,087Fair value of cash flow hedges – – – – 404 – 404At 31 March 2013 4,941 48,718 135 348 (328) 701 54,515


Pinewood Shepperton plc 111Annual Report & Accounts 2013Company UK GAAP financial statements continuedNotes to the financial statements continued14. Related party disclosuresThe Company has taken the exemption available to it under FRS 8 Related party disclosures not to disclose itstransactions with related parties as the disclosures are included in the financial statements of the consolidated Group.15. Ultimate parent undertakingThe ultimate holding company in the year to 31 March 2013 was Tokenhouse Limited, a company incorporated in theIsle of Man.Tokenhouse Limited is controlled by the 1997 Billown settlement trust.The largest group of companies, of which the company is a member that produces consolidated accounts is Peel HoldingsGroup Limited, a company incorporated in the Isle of Man.The smallest group of companies, of which the company is a member that produces consolidated accounts isGoodweather Holdings Limited, a company incorporated in the Isle of Man.16. Post balance sheet eventsOn 17 April 2013, the Group announced that it had entered into a 50:50 joint venture agreement with Seven Stars MediaLimited, one of China’s leading private media groups which provides content creation and distribution, media services andevents. The joint venture, to be called ‘Song Lin’, initially will assess a number of business proposals in the growingentertainment market in China. Under the terms of the joint venture, Pinewood will provide its expertise with limitedcapital investment and therefore there will be limited financial impact to the Group from the venture.On 29 April 2013, the Group announced a new joint venture, Pinewood Atlanta LLC, which will work to initially develop288 acres of land south of Atlanta, Georgia, USA, into world-class studio facilities for the production of film, television,music and video games. The business will operate under the Pinewood trademark and Pinewood has received 40%of the shareholding in the joint venture. Pinewood will provide the joint venture with sales and marketing services.Construction has commenced on the Pinewood Atlanta Studio build. Phase 1 will comprise 100,000 sq ft of film stagespace, 50,000 sq ft of workshops and 200,000 sq ft of production facility and media campus space. Phase one scheduledfor completion in mid 2014.Transaction costs incurred in relation to these two new joint ventures have been capitalised as long-term assets.See Note 8 for further details.


112 Pinewood Shepperton plcAnnual Report & Accounts 2013Company informationCompany SecretaryA M SmithHead Office, Registered officeand Directors’ addressPinewood Shepperton plcPinewood RoadIver HeathBuckinghamshire SL0 0NHCompany registration number3889552Investor relations websiteavailable at www.pinewoodgroup.comFinancial AdviserN M Rothschild and Sons1 Park RowLeeds LS1 5NRAuditorsDeloitte LLP2 Hardman StreetManchester M3 3HFRegistrars and Receiving AgentsEquiniti LimitedApsect HouseSpencer RoadLancingWest Sussex BN99 6DAPrincipal BankersThe Royal Bank of Scotland plc135 BishopsgateLondon EC2M 3URLloyds TSB Bank plc25 Gresham StreetLondon EC2V 7HNProposed Nominated Adviser and BrokerN H Brewin34 Lisbon StreetLeeds LS1 4LXLegal Advisers to the CompanyTravers Smith LLP10 Snow HillLondon EC1A 2ALAnnual General MeetingThe notice convening the Annual General Meeting of the Company, to be held at the offices of Deloitte LLP, 2 HardmanStreet, Manchester M3 3HF at 10.30am on 30 September 2013, together with an explanation of the resolutions to beproposed at the meeting, will be contained in a circular to shareholders enclosed with the Annual Report.


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Pinewood Shepperton plcPinewood RoadIver HeathBuckinghamshireSL0 0NHUnited KingdomRegistered number: 03889552tel: +44 (0) 1753 651700fax: +44 (0) 1753 656936www.pinewoodgroup.com

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