Pinewood Studios: Business Case and Economic Impact Assessment

More documents

Recommendations

Info

Pinewood Studios LtdPinewood Studios: Business Case and Economic Impact AssessmentJanuary 20132.5.7 Film revenues form the largest proportion of Group sales representing more than 70% of totalGroup income in 2012 compared to 56% in 2007. Film revenues are of increasing importance tothe financial performance of the Group with Pinewood being the key source of film revenues.Figure 2.1 illustrates the importance of film revenues to the Group which is growing year-onyearas a percentage of total Group sales.Figure 2.1: Group revenue analysis (%) - 2007 and 20112007 - Film accounts for 56% oftotal Group revenues2011 - Film accounts for 71% oftotal group revenuesTV30%Tenants14%Film56%TV16%Tenants13%Film71%2.5.8 Film revenues are typically derived from several sources including:sound stage revenues which are driven by occupancy levels, with PSL currently achieving inexcess of 90% in recent years for stages which is considered to be at full capacity andcreates difficulties in managing the production pipeline. Revenues are based upon a rentalcharge adjusted for discount rates offered to clients;ancillary income such as workshop and office accommodation sales which are essential tosupport major productions (driven by space used charged on a weekly basis);digital services such as post production, digital and physical media storage, managementand distribution of content); andinternational sales which are principally fees from overseas activities.2.5.9 Film revenues are primarily generated from a small number of large projects with a majorproduction expected to generate revenues in the region of £5 million. This means that filmrevenues can vary significantly each year due to the timing of these productions. Occupancylevels in 2011/12 have been in excess of 90% for stages, which is exceptionally high for theindustry with studios typically basing occupancy across its facilities on 70%. Such high levels ofoccupancy can create issues with regards to availability of the required stages, availability ofancillary space, vehicle access, security and uncertainty on the availability of productionservices, as well as general overcrowding.10
Pinewood Studios LtdPinewood Studios: Business Case and Economic Impact AssessmentJanuary 20132.5.10 Television income is traditionally more stable year-on-year compared to film. It is typicallycyclical in line with the economy, reflecting wider pressures on budgets and advertising spend -which is reflected in the annual television revenues. Revenues have been fairly flat in recentyears, decreasing from a high of £12.7 million in 2007 to £8.3 million in 2010 reflecting theeconomic downturn and reduced advertising spend. However, television income increased in2011 to £10.2 million. An upgrade of television specific facilities such as HD equipment isconsidered to be a high growth area for the Group. In addition, television revenues associatedwith high-end dramas may significantly benefit from the outcome of the current review of taxincentives to support high-end television productions.2.5.11 Tenant revenues form a steady income stream for the Group and are derived from rental andservice charge income for use of facilities on site. Revenues have remained fairly static in recentyears due to space constraints. Tenants represent just less than 13% of total Group incomecompared to almost 14% in 2007.2.5.12 PSL continues to be the most significant of the Group’s subsidiaries contributing 53% of totalGroup revenues. Film revenues continue to be the major income source and a high growth areafor PSL. Over the last five years PSL’s film (including post production) revenues have increasedby almost 84% from £12.8 million in 2007 to £23.6 million in 2011 13 . Film revenue growth is,and continues to be, a major driver of the Group’s financial performance with investmentessential to continue to provide the quality and range of facilities to complete on a global scale.Table 2.3 details PSL revenues over the last five years.Table 2.3: Pinewood Studios Ltd Revenue Analysis for the year ending 31 st December2006 2007 2008 2009 2010 2011Film services (inc post production) 12.3 12.8 15.1 15.6 16.3 23.6TV studios and services 4.3 4.6 4.4 4.6 4.4 4.5Tenants 4.9 4.9 4.9 5.5 4.9 5.4Total 21.5 22.3 24.4 25.7 25.6 33.52.5.13 Average stage occupancy has been in excess of 90% in recent years (with a peak of 95% in2011), which combined with the timing (commencement and completion) of a number of majorproductions has generated significant film revenues at Pinewood. Pipeline management iscritical to sustaining occupancy and revenues and such high levels of occupancy make this verychallenging.2.5.14 The Group has increased its EBITDA year-on-year and has a good track record of managing itsoperating and other costs. Its operating cash flows are strong, with customers paying apercentage of stage fees on booking and a further percentage when production commences. Asignificant feature of the Group’s cash flow is its capex with high levels of variation year-on-yeardepending upon its investment schedule.£m13Based upon 15 month period and prorated over a 12 month period for comparison purposes (the Group changed its year end from 31 stDecember to 31 st March in 2011)11
Page 1 and 2: Pinewood Studios: Business Case and
Page 3 and 4: Executive SummaryIntroductionPinewo
Page 5 and 6: Pinewood Studios LtdPinewood Studio
Page 21: Pinewood Studios LtdPinewood Studio
Page 73 and 74:
Pinewood Studios LtdPinewood Studio
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85:
show all

Pinewood Studios: Business Case and Economic Impact Assessment

Create successful ePaper yourself

Delete template?

Save as template?