Annual Report & Accounts 2013 - Pinewood Studios

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.