Pinewood Studios: Business Case and Economic Impact Assessment

More documents

Recommendations

Info

Pinewood Studios LtdPinewood Studios: Business Case and Economic Impact AssessmentJanuary 2013demand in 2032 under the base case and 25% under the 17% market share case. Officeaccommodation for tenants serving production is anticipated to increase pro-rata with thegrowth in production-related accommodation and thus the current ratio of production to tenantaccommodation will be broadly maintained.23. The PSDF will result in the creation of 99,030 sq m 4 of new stages, workshops and offices. Thedevelopment of PSDF is anticipated to start in April 2015 and will be delivered in three phases.The projected capital expenditure for PSDF is currently in the region of £194 million 5 . Thefollowing changes have formed the basis for the financial projections.Table ES2: Additional facilities within PSDFExisting site (West Area)- 2 new stages (totalling 4,645 sq m)- Additional workshops of 4,679 sq m- 16,730 sq m of offices for productions andtenants within the creative industriesbusinesses- A new multi-storey car park with 450 spacesNew site (East Area)- 10 new stages (totalling 25,005 sq m) rangingfrom 2,780 – 3,750 sq m- 27,914 sq m of workshops- 17,725 sq m of offices for productions andtenants within the creative industries businesses- Four streetscapes- Surface car parking24. Current turnover at PSL is running at approximately £57 million per annum, which is based onbeing able to film in the region of 4-5 major feature films per annum and a range of smallerproductions. With the expansion of Pinewood, there will be a two-fold increase in productionfacilities which will have a significant impact on turnover and profitability. The financialmodelling undertaken for PSDF illustrates that:the development delivers a positive ROCE (return on capital employed);the project will deliver an improved return to shareholders; andthere is a reasonable internal rate of return (IRR) by the end of the 20 year period.25. Moreover they demonstrate that the development is a commercially attractive proposition that,subject to assumptions, is likely to be able to secure finance to enable it to progress.26. For financial planning purposes, the model assumes an average occupancy across all facilities of70% reaching 76% by 2032, which is considered conservative as occupancy levels for stages inrecent years has been in excess of 90%. Sensitivity analysis has been performed on theoccupancy levels, as they are a major driver for stage revenues. This illustrates that with loweroccupancy levels of 60%, PSDF continues to be financially viable.27. Without the development of a new site at Pinewood Studios, the Group would still wish to useits global brand and expertise to continue to grow its business for stakeholders and look toinvest elsewhere beyond the UK in building up its facilities. The diversion of this scale of plannedinvestment, spin off benefits and the inward investment it would otherwise sustain would be asignificant loss to the UK economy.4 This includes 2,332 sq m of other accommodation, comprising small buildings to house energy and recycling.5 Based on estimates provided by Davis Langdon, cost consultantsvi
Pinewood Studios LtdPinewood Studios: Business Case and Economic Impact AssessmentJanuary 2013Economic impacts and contribution to policy objectives28. PSDF will generate a range of significant benefits for the local and wider UK economy – some ofwhich are difficult to quantify with certainty. As a result, the impact assessment considers thebroad economic contribution that Pinewood and PSDF will make to the UK and the morenarrowly defined quantified economic impacts of the existing studios and the PSDF – focusing inparticular on the employment and economic impact at a range of different spatial levels.29. The core UK film industry 6 alone makes a substantial contribution to the national economy,directly generating an estimated 43,900 full-time equivalent (FTE) jobs and contributing £1.6billion to national Gross Domestic Product (GDP). In employment terms, this makes it largerthan fund management and the pharmaceutical sectors. If the core UK film industry’sprocurement, spending effects from those directly and indirectly employed and its contributionto UK tourism, trade and merchandise sales are taken into account, it is estimated that overallthe core UK film industry supports a total of 117,400 FTE jobs, generating over £4.6 billion ofGDP. 730. Pinewood is an essential component of this industry. London and adjoining areas haveestablished themselves as a global centre for film and screen-based activity and Pinewood is atthe heart of this cluster. The studios attract substantial investment to the UK, with projectionsindicating that in 2013 Pinewood Studio based productions are expected to result in £395million of UK film production expenditure. Without Pinewood, other facilities within the widercluster would be expected to underperform or fail.31. Through the delivery of the PSDF, it is expected that the economic and employment impact ofPinewood will increase substantially.It is anticipated that the PSDF will:secure private sector investment of some £194 million (2012 prices), and the creation of99,000 sq m of new sound stages, workshops, production suites and associatedproduction tenant office accommodation;support over 8,100 full time jobs in the economy including multiplier and other widereffects, compared with almost 4,600 full time jobs at present;assist in the creation of some 3,100 net additional jobs at the national level;produce £392 million (2012 prices) in Gross Value Added (GVA) 8 per annum once fullydeveloped of which £149 million (2012 prices) per annum will be net additional at theUK level;result in contributions to the Exchequer of £94 million (2012 prices) per annum, with netadditional contributions of £36 million (2012 prices) per annum; and678The core UK film industry includes companies and individuals involved in all film production in the UK, but only includes the activities in thedistribution and exhibition sector associated with UK-made films.Source: Oxford Economics (September 2012), The Economic Impact of the UK Film Industry.GVA is a key measure of economic performance. It is defined by the ONS as “the difference between output and intermediate consumptionfor any given sector/industry. That is the difference between the value of goods and services produced and the cost of raw materials andother inputs which are used up in production.”vii
Page 1 and 2: Pinewood Studios: Business Case and
Page 3 and 4: Executive SummaryIntroductionPinewo
Page 5 and 6: Pinewood Studios LtdPinewood Studio
Page 7: Pinewood Studios LtdPinewood Studio
Page 59 and 60:
Pinewood Studios LtdPinewood Studio
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
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

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?