PWS.L Regulatory News (PWS)

Pinewood Shepperton plc

Publication of the audited results for the year ended 31 March 2014

Pinewood Shepperton plc ("the Company"), a leading provider of services to the global film and television industry, today publishes its audited results for the year ended 31 March 2014 ("the year").

Key developments during the year

· In the United Kingdom:

o 45,000 sq ft studio facility at Pinewood, Q Stage, completed on time and on budget.

o Camelot operational in TV3 from September 2013.

o Exclusively appointed by the Welsh Government in February 2014 to advise, promote and market its new £30m Media Development Budget.

· In North America:

o Construction completed on phase 1 of Pinewood Atlanta Studios, a joint venture with Rivers Rock LLC.

o Pinewood Toronto Studios extended its sales and marketing agreement for a further five years.

· In Asia:

o Agreement with Seven Stars Media Limited signed in April 2013 to assess a number of business proposals in the growing entertainment market in China.

o Consultancy Services Agreement signed with the Dalian Wanda Group in February 2014.

Key developments since year end

· On 19 June 2014 the Secretary of State for Communities and Local Government allowed the Company's appeal and granted planning permission for the Pinewood Studios Development Framework.

Financial highlights

· Revenue £64.1m (year ended 31 March 2013 restated*: £55.0m).

· Operating profit £4.9m (year ended 31 March 2013 restated*: £3.8m).

· Operating profit from Media Services activities before exceptional items £9.2m (year ended 31 March 2013 restated*: £8.9m).

· Basic earnings per share 10.8p (year ended 31 March 2013: 3.6p).

· Basic earnings per share adjusted for exceptional items 11.5p (year ended 31 March 2013: 10.1p).

· Final dividend of 1.9p per share declared (year ended 31 March 2013: 1.5p).

· Net debt of £40.2m (31 March 2013 restated*: £33.1m) and gearing ratio, excluding fair value and loan issue costs, of 48.3% (31 March 2013 restated*: 41.8%).

* Certain of the prior year comparatives have been restated due to a change in accounting policy for the Group's joint ventures. See Note 5 for further details.

Commenting on today's results, Ivan Dunleavy, Chief Executive, said:

"During the year, the Company had a strong performance with significant revenue increases in every area of the business. This has resulted in total revenues going up by 16.5%."

"The Company has made an excellent start to the new financial year, enjoying good visibility for the year as a whole. Demand for the Studios' UK facilities is at an unprecedented level. We welcome the decision on 19 June 2014 by the Communities Secretary to grant permission for the Pinewood Studios Development Framework as recommended by the Planning Inspectorate. We will proceed quickly with the preparations for construction of this much needed additional capacity."

A copy of this announcement will shortly be available for inspection on the Company's website at www.pinewoodgroup.com.

Enquiries

Pinewood Shepperton plc +44 (0)1753 656732

Andrew M. Smith

Director of Strategy and Communications and Company Secretary

N+1 Singer +44 (0)207 496 3000

Richard Lindley / Nick Donovan

Notes to editors

· Pinewood Shepperton plc is Europe's largest provider of stage and studio space

· Pinewood, Shepperton and Teddington Studios together accommodate 34 stages, five dedicated digital television studios and five digital presentation studios

· Pinewood Studios is home to Europe's leading studio-based underwater filming stage, as well as one of the largest exterior water tanks in Europe

· Pinewood and Shepperton Studios have been home to over 1,500 films in more than 75 years

· Pinewood, Shepperton and Teddington Studios have hosted over 600 TV shows

· There are over 200 independent, media related companies based at Pinewood and Shepperton's Media Hub

· The Pinewood Group's international network of Studios includes Toronto, Canada; Berlin, Germany; Iskandar, Malaysia; the Dominican Republic; Atlanta, Georgia, USA and a joint venture established in China

· The Group offers financing to UK film and television production as part of its growing range of services

Forward looking statements

This announcement includes forward looking statements that are based on current expectations and assumptions. They involve risks and uncertainties and may differ, possibly materially, from actual results, performance and achievement. Neither the Company, nor any of its Directors, undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

For more information

www.pinewoodgroup.com

Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website, nor any other website, is incorporated into, or forms part of this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

Chairman's Statement

Pinewood Shepperton plc has once again delivered an outstanding performance. Revenues in all the key areas of the business have seen substantial increases, especially in television, with total revenue of £64.1m for the year ended 31 March 2014 (year ended 31 March 2013 restated: £55.0m).

Investment in its existing facilities continues to ensure that the Group remains the leading destination for producers of screen based content. A major upgrade to its television business has been completed, including the latest 45,000 sq ft multi-purpose facility at Pinewood Studios, Q Stage, completed on 27 September 2013. The new television studio, TV3, at Pinewood Studios became home to Camelot plc, operators of the National Lottery, who moved in under a five year contract on 9 September 2013.

Pinewood Pictures has broadened its investment advisory portfolio to include the Welsh Government's £30 million Media Investment Budget, alongside the £25 million Isle of Man Media Development Fund it has advised on since 2012.

During the period, the Group invested both its own resources and funds on behalf of the Isle of Man Media Development Fund in five (year ended 31 March 2013: three) UK film productions, Robot Overlords, The Riot Club, Pressure, Kill your Friends and Spooks: The Greater Good. Each of these projects are at different stages of completion and have yet to commence commercial exploitation. These projects represent a gross expenditure of £23.9m on independent film production (year ended 31 March 2013: £17.1m) in the UK. The Group qualified for an aggregate film tax credit of £3.1m on the expenditure from the above productions and from the completion of prior year projects. As expected this largely offsets the operating loss in the Media Investment segment in accordance with generally accepted accounting principles.

The Company's joint venture with River's Rock LLC is now operational under the brand "Pinewood Atlanta Studios", a full service film and entertainment studio complex comprising five sound stages within a 288 acre site. Strategic opportunities in other regions of the world include Pinewood Iskandar Malaysia Studios, which saw immediate occupation by The Weinstein Company for Netflix with the production of their TV series Marco Polo and also Pinewood Dominican Republic Studios, which opened in May 2014.  A Consultancy Services Agreement was signed with the Dalian Wanda Group to advise on the design and construction of a new film studio complex in China, as part of the 'Qingdao Oriental Movie Metropolis' opening in 2016.

We welcome the decision by the Secretary of State for Communities and Local Government to grant the outline planning permission for Pinewood Studios Development Framework ("PSDF") on 19 June 2014. PSDF is a long-term scheme of national significance which will address the increasing global demand for production facilities in the UK and deliver growth for the Company.

Christopher Naisby joined the Board as Finance Director on 30 September 2013. He has been with the Group since 2001.

The Board is committed to paying dividends in line with its policy of not less than three times cover and as a result the Board has decided to recommend a final dividend of 1.9p per share.

The Pinewood brand enjoys a reputation for excellence not just in the United Kingdom, but across the globe. This has enabled us to identify and win new business opportunities. On behalf of all our shareholders I am pleased to pay tribute to all of our staff and our leadership team for implementing the Board's strategy with such skill and success. We look forward to this continuing.

Lord Grade of Yarmouth, CBE

Chairman

25 June 2014

Strategic Report

This Strategic Report has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed.

The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

The Directors, in preparing this Strategic Report, have complied with Section 414C of the Companies Act 2006.

Prior year restatement

During the year ended 31 March 2014, the Company changed its accounting policy relating to joint ventures due to the adoption of certain new accounting standards (See Notes 2 and 5 for further details). This has necessitated a restatement of the primary financial statements and certain related notes for the comparative period, namely the year ended 31 March 2013. There has been no impact on profit after tax for the prior year.

Business model

Pinewood Shepperton plc is a leading provider of services to the global film and television industry. Our services support film production, filmed television and studio television recording, digital content services and facilities for media related business ("Media Hub").

The Group's unique selling point is the breadth of production related facilities and services available 'on the lot' which provides clients with a full service offering.

The Company currently has two reporting segments - Media Services, which provides studio and related services to the film, television and screen-based industries; and Media Investment, which provides investment funding and production services to the film and television industries.

The Media Services segment has principally three complementary operating streams - Film; Television; and Media Hub.

Within Film, operations are further divided into Stage and Ancillary, which provide production facilities to clients, Digital Content Services ("DCS") and International.

DCS offers picture and sound post production, media storage, management and distribution for original English language and internationally re-versioned content.

International operations, which leverage the Pinewood brand, include providing international sales, marketing, studio development and consultancy services in Canada, the Dominican Republic, Malaysia and China plus joint ventures in the United States of America and China.

The Company has a leading television business which provides a range of unique TV production facilities, often utilising its stages and DCS offerings to host and service large 'event' television productions. The television offering consists of a comprehensive range of production facilities such as high definition television studios, film stages and post production services to support all forms of television production.

The Media Hub is currently home to approximately 228 independent businesses representing and providing expertise, equipment and support to the film, television, video games, advertising and photographic industries. These companies come together to form a unique cluster and centre of excellence for the entire creative industry.

The Media Investment segment (known as "Pinewood Pictures") includes an agreement to source and advise on film and high-end television investment opportunities for the £25m Media Development Fund established by the Isle of Man Treasury ("IOMT"), and to monitor and capitalise on UK distribution rights in films and television programmes funded by the IOMT. On 17 February 2014, the Group also signed an agreement with the Welsh Government to advise on its new £30m television and film investment fund. The segment also involves identification and investment by the Group in British film and high end television productions.

Objectives and Strategy

The Group's mission is to:

• Continue to create the UK's leading film, television and media destination;

• Enhance our brand heritage;

• Exceed our customers' expectations through our commitment to professionalism, quality of service and offering sustainable advantage; and

• Increase value for all our stakeholders

Targeted strategic plans to achieve this mission include:

• Operational growth:

• Increase capacity through expansion of existing stage and studio facilities;

• Investment in digital activities; and

• Increased Media Investment activity

• Property development:

• Plan to increase overall capacity through PSDF; and

• Demand-led Media Hub expansion to limit speculative risk

• Leveraging the brand:

• Selective international growth through joint ventures with limited capital commitment;

• Lower risk film investment; and

• Provision of investment advice to third party 'content' funds

Key Performance Indicators

The Board uses a number of key performance indicators ("KPIs") to monitor the Company's performance, as well as to measure progress against the Company's objectives.

The KPIs used to measure performance, and which are discussed in further detail below for the year, are:

Media Services review

Total revenues within this segment were £50.4m for the year (year ended 31 March 2013 restated: £46.5m), including £1.2m of intersegment revenue (year ended 31 March 2013: £0.5m). Inter-segment revenues relate to revenue generated from the utilisation of the Company's core services by the Group's wholly owned Film Production Companies.

Film

Film revenues for the year ended 31 March 2014 were £37.4m (year ended 31 March 2013: £35.2m), an increase year on year of 6.3%, due to high levels of utilisation of existing facilities plus the addition of new facilities such as Q Stage.

The demand for the Company's facilities throughout the year has been strong, as reflected in stage occupancy of 81% (year ended 31 March 2013: 76%). As a result, the Company has not been able to accommodate several film productions. The new 45,000 sq ft studio facility, Q Stage, at Pinewood Studios was completed on time and on budget on 27 September 2013 and was 100% utilised for the remainder of the year to 31 March 2014.

The largest film production based at Pinewood Studios during the period was Cinderella (Disney) and the largest production at Shepperton Studios was Guardians of the Galaxy (Marvel).

Other major productions which were based at Pinewood and Shepperton during the year include Exodus (Fox) and Avengers: Age of Ultron (Marvel).

DCS revenues included within the total film revenue for the year ended 31 March 2014 were £6.5m (year ended 31 March 2013: £6.2m).

Notable sound post production work completed during the period included Kenneth Branagh's Jack Ryan: Shadow Recruit (Paramount Pictures) and Dexter Fletcher's musical Sunshine on Leith (DNA Films). The Company also successfully completed original sound work for the game's industry on Sega's Rome Total War and Shogun 2.

Digital Production Services ("DPS"); the secure management of the data generated from 2D and 3D digital film shoots on-set and on location including Guardians of the Galaxy (Marvel), The Woman in Black: Angel of Death (Exclusive Media/Hammer Film Productions) and Ex Machina (DNA).

DCS continues to enhance its offering to the growing number of feature films choosing to shoot with digital camera technology and television productions wishing to work in a digital file based environment at the Studios.

InternationalInternational revenues for the year included within film were £1.1m (year ended 31 March 2013: £1.0m) and principally relate to sales and marketing agreements in Toronto, Malaysia and Dominican Republic.

Pinewood Toronto Studios

The Company has a sales and marketing agreement with Pinewood Toronto Studios ("PTS"). During the year, PTS attracted a number of high profile film and television productions which included Poltergeist (MGM/Fox 2000), Crimson Peak (Legendary/ Universal), television series The Strain (FX) and the Canadian television series The Listener (CTV).

The original agreement was for a five year period from 26 May 2009. During the year, it was extended for a further five years, expiring in May 2019.

Pinewood Iskandar Malaysia Studios

Practical completion of the film sound stages and associated facilities at Pinewood Iskandar Malaysia Studios saw immediate occupation by The Weinstein Company for Netflix with the production of their TV series Marco Polo. The television studios have been completed and are presently in the final stages of systems integration.

The facility consists of five film sound stages totalling 100,000 sq ft and two fully integrated TV studios totalling 24,000 sq ft along with production support facilities. Additionally, a 56,000 sq ft blue screen paddock tank for water effects and marine filming has now been finished and is currently undergoing practical testing prior to official launch.

Pinewood Dominican Republic Studios

Pinewood Dominican Republic Studios achieved practical completion with three sound stages, workshops and production support facilities coming on line shortly after the year end in April 2014 to complement and support the completed water tank facility opened last year. The facility comprises 53,000 sq ft of sound stages and 85,000 sq ft of production support space along with the 8-acre water effects facility and its 56,000 sq ft natural horizon water tank. 

Pinewood Atlanta Studios

Pinewood Atlanta Studios achieved practical completion of the phase 1 build in January 2014 with five sound stages, production offices and workshops coming on stream.  

Phase 1 comprises 100,000 sq ft of film sound stages, 90,000 sq ft of workshops and 200,000 sq ft of production facility and media campus space. A sixth stage of 18,000 sq ft is currently under construction with completion anticipated in June 2014 for immediate occupation.

Tenant workshops are attracting interest with Home Depot opening for business on the studio lot in April 2014. A recycling centre opened in May 2014 and additional facilities are currently under construction. 

China

Song Lin, the Group's 50:50 joint operation with Seven Stars Media continues to explore a number of business proposals in the growing film and television market in China. The venture's current remit is to identify and develop opportunities to provide co-production services between Chinese and international film makers such as management of film funding and consultancy services to film and television studios in China.

Pinewood's consultancy with The Dalian Wanda Group for the Qingdao Oriental Movie Metropolis development commenced in February 2014 and a proposed master plan with associated analysis has been presented. It is anticipated that the studio complex will open in 2016.

Television

Television ("TV") revenues for the year were £6.2m (year ended 31 March 2013: £5.2m).

The Company has a leading television business which provides a range of unique TV production facilities, often utilising its stages and DCS offerings to host and service large 'event' television productions such as Channel 4's The Taste and BBC's The Voice. The television offering includes a comprehensive range of production facilities including high definition television studios, film stages and post production services to support all forms of television production.

Pinewood television studios and associated DCS services played host to new and repeat business including Would I Lie To You (Zeppotron), The Guess List (12 Yard) and 8 Out of 10 Cats (Endemol) during the year.

The National Lottery Live (Camelot) is broadcast from Pinewood TV3, a new purpose-built facility which opened in September 2013. Euromillions and Bingo Lotto are streamed live from the purpose built digital online studio.

High-end television tax relief

The Company has received a number of enquiries from high-end TV productions which are seeking to take advantage of newly introduced Government tax incentives. At present, however, the Company has not been able to accommodate these productions at either Pinewood or Shepperton due to capacity constraints.

Media Hub

Media Hub revenues inclusive of service, utility and facility charges for the year were £5.6m (year ending 31 March 2013 restated: £5.6m).  

The total number of Media Hub companies accommodated at the year end was 228 at Pinewood and Shepperton Studios with occupancy of 96% across a net lettable area of 349,000 sq ft (year ended 31 March 2013: 241 companies, 97% occupancy, 347,000 sq ft). 

Gross and operating margins

The Media Services segment gross margin, including intersegment revenues, for the year ended 31 March 2014 is 37.7% (year ended 31 March 2013 restated: 38.8%). The year on year variance is principally driven by the revenue mix and an increase in depreciation costs on facility and infrastructure expenditure.

The Media Services operating margin before exceptional items is 18.3% (year ended 31 March 2013 restated: 19.2%). The variance is principally due to factors noted above for gross margin.

Exceptional expenses

The Group discloses as exceptional items on the face of the income statement those items of expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate disclosure to allow users of the financial statements to better understand the elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial performance.

The Company has incurred exceptional charges of £0.5m during the year (year ended 31 March 2013: £3.0m) as detailed below.

Group reorganisation

The Group incurred exceptional reorganisation costs of £0.1m in the year (year ended 31 March 2013: £0.2m) in relation to the restructuring of certain business areas.

Transaction costs

The Group incurred exceptional transaction costs of £0.2m in the year (year ended 31 March 2013: £nil) in relation to a potential joint venture which has not progressed.

Teddington exit

The Group announced plans to cease activity at the Teddington Studio site during 2013 and as a result established an onerous lease provision of £1.5m at 31 March 2013, plus asset impairments and exit costs of £0.6m. During the year ending 31 March 2014, an additional provision of £0.2m has been recognised.

Isle of Man Media Development Fund

The Group incurred costs of £0.4m during the year ended 31 March 2013 mainly in relation to professional fees as a result of signing an agreement with the Isle of Man Treasury ("IOMT") to source and advise on film and high end television investment opportunities for the £25 million fund established by the IOMT and to monitor and capitalise on UK distribution rights in films and television programmes funded by the IOMT. No such costs were incurred in the current year.

AIM listing

As a result of the Company's ordinary shares admission to AIM in July 2012, the Group incurred £0.3m of non-recurring professional advisor fees during the year ended 31 March 2013.

Details of exceptional costs incurred in the year ended 31 March 2013 can be found in Note 4 of these accounts.

Return on capital employed

The Company measures return on capital employed ("ROCE") for the Media Services segment by reference to annualised operating profit before exceptional items, including intersegment profit, as a percentage of average capital employed, being total equity plus interest bearing loans and borrowings which for the twelve months ended 31 March 2014 was 8.7% (twelve months ended 31 March 2013 restated: 7.9%).

The ROCE year on year is principally driven by significant capital investment during the current and previous year on projects which have either become fully revenue generating or generated earnings for at least part of the year. This includes the TV3 (£3.3m capital cost) and Q Stage (£6.5m capital cost) projects which came on line in September 2013, PSDF (£1.7m capital cost) and ongoing energy infrastructure upgrades (£2.2m capital cost).

Media Investment review

Media Investment revenue for the year was £14.9m (year ended 31 March 2013: £8.9m).

Investment advisory

Following the launch of Pinewood Pictures in October 2012, the Group has further built on opportunities to advise third party funds and to invest itself directly in filmed content. In February 2014, the Group announced the signature of a deal to advise upon the Media Investment Budget (£30m) for the Welsh Government. This deal also included a provision for Pinewood to lease a new studio facility close to Cardiff Bay to be known as Pinewood Studio Wales. The new facility will primarily be utilised to attract high end television drama and will be marketed in conjunction with the Media Investment Budget.

The combined advisory investment funds now advised by the Company total £55m making them a significant investment portal for British film and television content and providing the opportunity for the Welsh and Isle of Man Governments to co-invest in future productions.

Investment advisory revenue of £0.4m (year ended 31 March 2013: £0.2m) was earned from the Isle of Man Media Development Fund ("IOM-MDF").

During the year the IOM-MDF invested a total of £11.3m (year ended 31 March 2013: £1.5m) in Robot Overlords (Pinewood Pictures/Pinewood Productions/Tempo Productions), Pressure (Newscope Films/Pinewood Pictures/Pinewood Productions) and Spooks: The Greater Good (Pinewood Pictures/Pinewood Productions/BBC/Shine) following investment advice from Pinewood Pictures.

In addition to the investments made by the third party IOM-MDF, the Group provided further film finance totalling £1.9m to its wholly owned subsidiary film production companies for the production of Robot Overlords, The Riot Club (Pinewood Productions/Blueprint Pictures), Pressure, Kill Your Friends (Pinewood Productions/Icon/Altitude/Worlds End Television) andSpooks: The Greater Good (year ended 31 March 2013: £0.9m).

During the year the Company recouped £0.3m against film investments made to date and earned distribution commissions of £0.2m.

Film production companies

Revenue from film production companies ("FPCs") for the year totalled £14.0m (year ended 31 March 2013: £8.7m). The increase is due to investments in five independent productions during the year, Robot Overlords, The Riot Club, Pressure, Kill Your Friends and Spooks: The Greater Good, compared to three in 2013 (which were all still active for part of the current year). An FPC is considered active until the production is completed and delivered.

The operating loss from FPC activity of £3.5m (year ended 31 March 2013: £1.5m) is largely offset by UK film tax relief as expected.

Loss after tax

Results for the Media Investment segment are more meaningfully reviewed at the after tax level.

Loss after tax for the segment is £0.2m (year ended 31 March 2013: £0.2m loss).

Group performance

Total consolidated revenue for the year is £64.1m (year ended 31 March 2013 restated: £55.0m).

Profit after tax for the year ended 31 March 2014 was £5.4m (year ended 31 March 2013: £1.8m).

Basic and diluted earnings per share for the period were 10.8p (year ended 31 March 2013: 3.6p). Normalised basic and diluted earnings per share for the year (after adjusting for exceptional items) were11.5p (year ended 31 March 2013: 10.1p).

EBITDA (earnings before exceptional items, interest, tax, depreciation and amortisation) for the year was £9.9m (year ended 31 March 2013 restated: £10.9m), including £3.8m of Media Investment loss (year ended 31 March 2013: £2.1m loss).

Cash flow

The Company generated operating cash flow before changes in working capital for the year of £9.4m (year ended 31 March 2013 restated: £10.0m). After adjusting for movements in working capital, cash generated from operations for the year was £14.0m (year ended 31 March 2013 restated: £11.4m), from which finance costs of £2.1m (year ended 31 March 2013 restated: £2.7m) and net corporation tax of £0.2m (year ended 31 March 2013: £0.9m refund) were paid.

Cash outflow on property, plant and equipment during the year was £18.4m (year ended 31 March 2013: £9.3m). The main areas of expenditure during the year were on the Q Stage (£6.5m), TV3 (£3.3m), energy infrastructure upgrades (£2.2m), Pinewood Studios Development Framework (£1.7m) and versatile production space (£1.6m).

This capital expenditure supports the strategic goals of the Group by enhancing existing assets and creating new, state-of-the-art facilities to fulfil our customers' requirements.

The significant investment over the year in the Group's capital assets has been funded from core debt facility draw downs of £8.0m with the remaining £10.4m provided from the positive cash flow generating activities of the business.

Dividend

The Board is committed to pay dividends in line with its dividend policy of not less than three times cover and as a result the Board has recommended a final dividend of 1.9p (year ended 31 March 2013: 1.5p) for approval at the Annual General Meeting, making a total dividend for the year of 2.5p (year ended 31 March 2013: 2.0p).

The dividend is to be paid on 6 October 2014 to shareholders on the register at 5 September 2014 (ex-dividend date of 3 September 2014).

Net debt and financial gearing

At 31 March 2014,net debt, including restricted cash held for sole use by Pinewood Film Production Companies, was £40.2m (31 March 2013 restated: £33.1m). Financial gearing at 31 March 2014 excluding fair value and loan issue costs was 48.3% (31 March 2013 restated: 41.8%).

The Company has banking facilities of up to £55m which comprise a £35m revolving credit facility, 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 contains scheduled repayments of £1.5m on both 30 June 2015 and 30 June 2016 and matures in November 2016. The £5m overdraft facility is reviewed annually. These facilities were arranged in 2012 and there have been no changes since that date.

The revolving credit and term facilities have a range of covenants and events of default together with variable margins between 285 and 435 basis points over LIBOR.

The increase in net debt is principally driven by continued investment in the capital assets of the Group.

Taxation

The total corporation tax credit for the year, based on profit before tax of £3.6m, was £1.8m (year ended 31 March 2013: £0.4m).

The corporation tax credit for the year includes £3.1m of UK film tax relief for film production companies (year ended 31 March 2013: £1.5m) which reflects the accounting treatment of the Group's FPCs and largely offsets the operating loss from Media Investment in respect of FPCs.

The underlying rate of tax on profit before accounting for UK film tax relief from FPCs, prior year adjustments and exceptional items is 23% (year ended 31 March 2013: 26%).

Going concern

Having considered the performance of the Group for the year to 31 March 2014 above and future developments outlined below the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

The Group has primary banking facilities and an overdraft facility in place until November 2016. The overdraft is subject to an annual review. Although the Group is in a net current liability position of £11.4m, the Group has £17.8mof undrawn committed loan facilities in place. The Group also has £8.3m of asset financing available to be drawn upon including £1.6m of a pre-approved facility. The Directors are confident these undrawn debt facilities provide sufficient headroom to support continued trading.

In addition, Notes 21 and 28 to the Annual Report include the Group's objectives, policies and processes for managing 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 also has a strong brand and reputation in the marketplace with a wide number of customers and suppliers in the film and television industry. As a consequence, the Directors believe that the Group is well placed to manage its business risks and operations successfully.

Future developments

The Pinewood Studios Development Framework ("PSDF")

PSDF is a £200m proposed long-term scheme of national significance designed to address increasing global demand for production facilities in the UK and deliver growth for the next 15 years. It comprises a substantial expansion of the existing Pinewood Studios by adding a total of 100,000 sq m of new facilities including ten large stages with supporting workshops, production offices and infrastructure. The Secretary of State for Communities and Local Government approved the outline planning consent for the project on 19 June 2014. 

The carrying value of all PSDF related assets totals £8.8m which includes costs incurred during the planning process of £3.5m and land of £5.3m. The Company has commenced work on the preparations for the next phase of development of this long term project.

Teddington Studios

The Company will vacate Teddington Studios on 24 December 2014. The Company has elected to consolidate the activity from this site with the activities at Pinewood and during the year ended 31 March 2013 determined the lease on the Studio was an onerous contract. The estimated costs under the onerous lease were provided for in the income statement for the year ended 31 March 2013, however as a result of changes in the utilisation of the leased premises the estimate may be subject to revisions. The Company utilised £1.2m of the provision during the year ended 31 March 2014 and has recognised an additional provision of £0.2m.

InternationalThe Company continues to actively explore strategic opportunities in other regions of the world.

Media Investment

The Company has secured the advisory role for two media development investment funds to date and is actively considering further funds. Film finance, both in terms of fund advice and direct diversification opportunities, continues to be an important driver for the future. 

Pinewood Studio Wales

Initial designs for the conversion of the Wentloog Energy Centre, Cardiff have been submitted by Pinewood and are currently being evaluated by the Welsh Government's contractors and architects. Conversion of the building to four stages and associated facilities is expected to commence during the second half of 2014 for a calendar year-end completion.

Outlook

During the year, the Company had a strong performance with significant revenue increases in every area of the business. This has resulted in total revenues going up by 16.5%.

The Company has made an excellent start to the new financial year, enjoying good visibility for the year as a whole. Demand for the Studios' UK facilities is at an unprecedented level. We welcome the decision on 19 June 2014 by the Communities Secretary to grant permission for the Pinewood Studios Development Framework as recommended by the Planning Inspectorate. We will proceed quickly with the preparations for construction of this much needed additional capacity.

Principal risks and uncertainties

The Board views effective risk management as a primary part of the Group's wider strategy and is fully committed to the identification, evaluation and management of significant risks facing the Group. The table below outlines the key risks and uncertainties identified by the Board together with an outline of mitigation activities.

1. General risks

2. Financial risks

3. Operational Risks

Employees

The Company actively considers the position of its employees' rights through comprehensive and regularly reviewed employment practices in the areas of recruitment, training, welfare, remuneration and employee relations. The Director of Strategy and Communications has Board responsibility for these areas and regularly updates the Board on relevant issues.

At the Executive Management Team level, the Group Human Resources Manager maintains responsibility for all operational human resources issues and provides the Board with a monthly report.

In addition to a published Grievance policy, the Company maintains a 'Whistleblower' policy providing an opportunity for employees to raise grievances with senior management initially and then ultimately with the Independent Non-Executive Director, Ruth Prior.

The Company's stated policy on Equal Opportunities recognises the diversity of individuals and has procedures in place to ensure that recruitment and promotion recognises such diversity and is not biased by any consideration of age, gender, disability, colour, racial origin, religion or sexual orientation. The Company also seeks to provide employees with reasonable conditions of employment and career prospects.

Employees receive regular and relevant communication via the Company's intranet site Spotlight and staff briefings, regarding operational issues and trading performance and, where appropriate, the views of employees are sought in guiding business practices and strategy.

The Company has adopted a training policy whereby all members of staff are actively encouraged to contribute to their own development. The Company believes that personal development is a partnership between the individual and the Company 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's abilities and potential by extending knowledge, skills and influencing attitudes. During the period, 25% of training was health and safety related and 75% related to skills training and career progression. As part of the Pinewood Studios Group Apprenticeship Scheme, staff members completed NVQ Apprenticeships in customer service and business administration with a further six apprenticeships in Digital, IT, Drapes, Post Production and Maintenance and Plumbing. In 2013 the Company launched the first ever Studio Management Diploma which was a huge success.

Executive Management Team

The Executive Management Team members are the first line of support for the Board and their combined experience and backgrounds assist in delivering the Group's strategy and maximising stakeholder value. They are a key part of the succession plan for the Group and their training and development needs are reviewed regularly to ensure that the talent pool is developed and retained.

Details of the Executive Management Team can be found on the Group's website, www.pinewoodgroup.com/about-us/management-team.

Corporate Responsibility

The Company continues to combine financial support with innovative approaches for sharing business assets and knowledge to local charities and organisations and various national charities linked to the wider screen based industries. 

Support is given to the various BFI Academy groups by way of studio visits and the sourcing of industry professionals to give talks to the students.  

Pinewood has also joined the international jury for the 2014 Iris Prize Festival, Cardiff's International gay and lesbian short film prize launched at the BFI.  

The National Film and Television School (''NFTS") ran a residential course for the BFI Academy scheme and an exhibition of the work of students studying set design was held in the Pinewood Ballroom. The Company continues to provide a scholarship for an undergraduate at the NFTS.

Pinewood and Shepperton also work with local schools, colleges and Universities including Buckinghamshire New University, Amersham College, Chalfont Community College and the London Film School. 

Assistance may also be available to any production on site pursuing charitable purposes. 

Support continues to various industry organisations such as guilds including the British Society of Cinematographers, British Kinematograph, Sound and Television Society, Guild of Production Designers, Designers Guild, the Association of Motion Picture Sound and the trade union Bectu.  

Pinewood Studios gives support to local charities, Buckinghamshire County Council events and organisations in the Iver/Iver Heath area covering a wide spectrum of the community. Iver Heath Drama Club, Iver Heath Bowls club and Delaford Youth Football club have been supported and the Studio has also sponsored and/or hosted events in the Pinewood gardens such as the Emergency Services Day which provides a family day for the local police, fire and ambulance services.  

Shepperton Studios continues to support Littleton Church of England Infant School, St Mary Magdalene Church, Spelthorne Borough Council, Chertsey and Shepperton annual regatta together with various donations to local events.  

Sponsorship is given to South Bucks Riding for the Disabled, Spelthorne in Bloom, Spelthorne sports Awards and various local council events.  

Recycling anything left over from productions is high on the agenda and a scheme has been set up linking Pinewood and Shepperton with a set clearance company based at Pinewood to recycle any props to local schools and organisations. 

Events for staff and tenants are held on a regular basis including screenings of films with which Pinewood and Shepperton Studios have been involved and those invested in by the Company's Media Investment arm. Encouragement is given to staff members who wish to participate in charitable fundraising activities and various staff and tenant activities are held throughout the year. In addition, community outdoor screenings are arranged at Pinewood and Shepperton Studios.

Health and Safety issues

The Company is committed to building a safe working environment and improving on its already high standards of health and safety, acknowledging its responsibilities under the Health and Safety at Work Act 1974 and subordinate regulations.

The Company places the safety of all persons in high regard and has a detailed policy that clearly details each employee's responsibilities.

Progress continues to be made with raising the profile of health and safety in the Company. The Group Health, Safety and Fire Team are always available to provide advice supplemented by information on the Company's intranet, Spotlight, which is accessible to all staff and clients.

There was a slight rise in the number of minor staff accidents for 2013/2014 and a reduction in reportable injuries to two under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations ("RIDDOR").

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 issues each month.

Environmental issues

The Group's Environmental Policy seeks to minimise any adverse impact that our business activities may have on the environment to ensure compliance with regulatory requirements, reduce CO2 emissions and continuously improve our environmental performance.

Recycling

In line with Pinewood's ongoing commitment to provide further recycling opportunities for domestic waste our new recycling centre is now open. The Company is able to recycle the majority of domestic waste generated on the Pinewood site. The new process has been embraced by all customers and we have seen a significant uplift in rebateable material

driven by the elimination of all landfill waste. We are already reviewing the business model with a view to duplicating the system at Shepperton to realise further cost savings and material rebates.

Travel Plan

Travel Plan measures continue to be promoted to staff, tenants and productions to further reduce the number of vehicles arriving at the Studios, to cut the subsequent CO2 emissions and to promote sustainable travel options. The Travel Plan for Shepperton has recently been approved by Surrey County Council.

Some of these initiatives include participation in the Cycle to Work scheme, provision of cycle shelters, travel information points, travel surveys, video conferencing facilities and electric car charging points. The Guaranteed Lift Home Policy and a Season Ticket Loan Scheme are also used to encourage staff to choose more sustainable modes of transport.

The free Studio shuttle bus services to and from local railway stations have the greatest impact on reducing the number of car movements and associated CO2 emissions. The two hybrid pool cars that are available to staff when making a business journey are also proving popular.

Energy

The Company continues to participate in the Government's Carbon Reduction Commitment Energy Efficiency Scheme ("CRC") which aims to cut CO2 emissions by reducing energy consumption.

The Group's absolute CO2 emissions for 2013/14 are expected to be approximately 10% below the baseline figure from 2010/11 and approximately 5% lower than in 2012/13.

 Initiatives to reduce CO2 emissions and energy consumption include:

• the conversion of Pinewood from gas oil to gas;

• replacing existing gas oil boilers with more energy-efficient gas fired models

• measuring and monitoring of energy consumption;

• introduction of Building Management Systems;

• the identification of unnecessary energy consumption via the Automated Meter Reading system;

• extending the use of Automated Meter Reading System; and

• the installation of energy-efficient motors, devices and systems wherever possible - including stage lighting and boiler controls.

By order of the Board

Ivan Dunleavy

Chief Executive

25 June 2014

Group income statement for the year ended 31 March 2014 and 31 March 2013

* Please see Note 5 Interests in Joint Ventures for further details of the prior year restatement.

Group statement of other comprehensive income for the year ended 31 March 2014 and 31 March 2013

* Please see Note 5 Interests in Joint Ventures for further details of the prior year restatement.

Group statement of financial position at 31 March 2014 and 31 March 2013

* Please see Note 5 Interests in Joint Ventures for further details of the prior year restatement.

The financial statements of Pinewood Shepperton plc, Company number: 03889552, were approved and authorised for issue by the Board of Directors on 25 June 2014. They were signed on its behalf by:

Christopher Naisby, FCCA

Finance Director

Group statement of cash flows for the year ended 31 March 2014 and 31 March 2013

* Please see Note 5 Interests in Joint Ventures for further details of the prior year restatement.

Included within the cash and cash equivalents balance is a total of £1,426,000 (year ended 31 March 2013: £1,634,000) which is unavailable for general use. Please see Note 19 of the Annual Report.

Group reconciliation of movement in net debt for the year ended 31 March 2014 and 31 March 2013

Group statement of changes in equity

From 1 April 2013 to 31 March 2014

From 1 April 2012 to 31 March 2013

Publication of non-statutory accounts

The financial information set out in these condensed financial statements does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 31 March 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under Sections 498(2) or (3) Companies Act 2006.

Extract of notes to the consolidated financial statements for the year ended 31 March 2014

1. Basis of preparation and statement of compliance

The statutory accounts have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation and with those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS. The Group has applied all accounting standards and interpretations issued by the International Accounting Standards Board and International Financial Reporting Interpretations Committee as endorsed by the EU relevant to its operations and effective for accounting periods beginning on 1 April 2013.

These financial statements are presented in Pounds Sterling, and rounded to the nearest thousand pounds (£000) except when otherwise stated, because that is the currency of the primary economic environment in which the Company operates.

Subject to changes of accounting policy noted below, the accounts are prepared on the basis of the accounting policies as set out in the previous annual financial statements.

Going concern

In assessing the going concern basis, the Directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The Group meets its day-to-day working capital requirements through its bank facilities. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance and economic uncertainty, show that the Group should be able to operate within the level of its current facilities. Although the Group is in a net current liability position of £11.4m, the Group has £17.8mof undrawn committed loan facilities in place. The Group also has £8.3m of asset financing available to be drawn upon including £1.6m of a pre-approved facility. The Directors are confident these undrawn debt facilities provide sufficient headroom to support continued trading. The Directors therefore consider that the Group has adequate resources to continue in operational existence for the foreseeable future and as such it is appropriate to adopt the going concern basis in preparing these financial statements.

The Group's assessment of going concern is explained further in the Strategic report within the Annual Report and further information on the Group's borrowings is given in Note 11.

Basis of consolidation

The Group consolidated financial statements comprise the financial statements of Pinewood Shepperton plc and its subsidiaries as at 31 March 2014 and 31 March 2013. All intercompany transactions, balances, income and expenses are eliminated in full on consolidation. All subsidiaries are consolidated for the financial year ending 31 March 2014 regardless of the individual entities statutory reporting date.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is a loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting year during which Pinewood Shepperton plc has control.

2. Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year with the exception of:

· a change from hedge accounting under International Accounting Standard 39 Financial Instruments: Recognition and Measurement ("IAS 39") to reporting the movement in fair value through profit or loss as permitted in IAS 39;

· early adopted standards on consolidation, joint arrangements, associates and disclosure; and

· newly applicable standards effective for annual periods beginning on or after 1 January 2013.

New and revised standards on consolidation, joint arrangements, associates and disclosure

In May 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was issued comprising IFRS 10 Consolidated financial statements ("IFRS 10"), IFRS 11 Joint arrangements ("IFRS 11"), IFRS 12 Disclosures of interests in other entities ("IFRS 12"), IAS 27 (revised 2011) Separate financial statements ("IAS 27") andIAS 28 Investments in Associates and Joint Ventures (as revised in 2011) ("IAS 28"). Subsequent to the issue of these standards, amendments to IFRS 10, 11 and 12 were issued to clarify certain transitional guidance on the first time application of the standards.  

In the current year, the Group has early-adopted these standards and for the first time has applied IFRS 10, 11 and 12, and IAS 28 (as revised in 2011), together with the amendments to IFRS 10, 11 and 12 regarding the transitional guidance. IAS 27 (as revised in 2011) has also been applied and it deals only with separate financial statements.

The impact of the application of these standards is set out below.

IFRS 10 Consolidated financial statements

In IFRS 10, the term "control" is redefined. If one entity controls another entity, the parent company shall include the subsidiary in full in its consolidated financial statements. Under the new definition, control is established if the potential parent entity has power over the potential subsidiary (investee) as a result of voting rights or other rights and actual circumstances, is exposed or has rights to positive or negative variable returns from its involvement with the investee, and above all has the ability to use its power over the investee to affect significantly the amount of its returns.

There has been no material impact from the adoption of IFRS 10 as, with the exception of joint ventures discussed below, the Company holds 100% ownership interests only.

IFRS 11 Joint arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest.

Under IFRS 11, the proportional consolidation of joint controlled entities is no longer possible and equity method of accounting is required. Following the early adoption of IFRS 11, the Group's joint control interests in Shepperton Studios Property Partnership, Shepperton Studios (General Partner) Limited, Pinewood Studio Berlin Film Services GmbH, Pinewood Atlanta LLC and PAS Holdings Fayette LLC have been accounted for under the equity method and prior year information has been restated accordingly.

The adoption of IFRS 11 has materially impacted the Group financial statements and the comparative figures for 31 March 2013 have been restated accordingly and as required under the transition provisions. Under the transition provisions, the initial investment in the joint venture is measured as the aggregate of the carrying amounts of the assets and liabilities that were previously proportionally consolidated. The transition provisions state the standard is only required to be applied at the beginning of the immediately preceding period to that in which it is adopted (rather than the beginning of the earliest period presented). After initial recognition, investments in joint ventures are accounted for using the equity method in accordance with IAS 28 (as amended in 2011)

The impact of adopting IFRS 11 is fully detailed in Note 5.

IFRS 12 Disclosures of interests in other entities

IFRS 12 sets out the disclosure requirements for interests in other entities. This standard requires a much wider range of disclosures than previously required by the rules set out in IAS 27, IAS 28 and IAS 31.

The application of IFRS 12 has resulted in more extensive disclosures in the consolidated financial statements (see Note 27 of the Annual Report).

Other newly applicable accounting standards

The following standards are now effective but have not had a material impact on the Group's financial statements:

IAS 1 Financial Statement Presentation - Presentation of Items of Other Comprehensive Income

The amendments to IAS 1 change the grouping of items presented in OCI and introduced new terminology for the statement of comprehensive income and income statement. Items that could be reclassified (or "recycled") to profit or loss at a future point in time (for example, upon derecognition or settlement) must now be presented separately from items that will never be reclassified. The amendment affects presentation only and there has been no impact on the Group's financial position or performance.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted.

IFRS 13 requires prospective application for accounting periods commencing on or after 1 January 2013. The Standard includes specific transitional provisions such that the disclosure requirements need not be applied to comparative information provided.

In accordance with these transitional provisions, the Group has not made any new disclosures required by IFRS 13 for the 2013 comparative period. Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the consolidated financial statements.

Amendments to IFRS 7 Disclosures

The Group has applied the amendments to IFRS 7 Disclosures - Offsetting Financial assets and financial liabilities for the first time in the current year. The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements for financial instruments under and enforceable master netting agreement or similar arrangement.

As the Group does not have any offsetting arrangements in place, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the consolidated financial statements.

Amendments to IFRSs Annual improvements to IFRS 2009-2011

These annual improvementsaddressed six issues in the 2009-2011 reporting cycle and included changes to:

· IFRS 1, First time adoption;

· IAS 1, Financial statement presentation;

· IAS 16, Property plant and equipment;

· IAS 32, Financial instruments; Presentation; and

· IAS 34, Interim financial reporting.

Adoption of these amendments has not had a material impact on the Group.

Standards in issue but not yet effective

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

· IFRS 9, Financial instruments

IFRS 9 will impact both the measurement and disclosures of financial instruments but its adoption is not expected to have a material impact on the Group's financial statements.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

3. Segment information and revenue analysis

The Group identifies its operating segments based on a combination of factors, including the nature and type of service provided and differences in regulatory environment. Operating segments are aggregated where there is a high degree of consistency across these factors, and the segments have similar economic characteristics. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Group has determined it has two reportable segments, Media Services, which provides studio and related services to the film, television and wider creative industries, and Media Investment, which provides content investment and production services, principally to the film industry.

The accounting policies of all operating segments are the same as those described in Note 2, "Basis of preparation and accounting policies" in the Annual Report.

The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, i.e. at current market price.

Segment data for the year ended 31 March 2014 and 2013 (restated) is presented below:

During the period, the Group provided film finance totalling £1,885,000 to its wholly owned subsidiary film production companies for the production of Robot Overlords, The Riot Club (formerly Posh), Pressure, Kill Your Friends and Spooks: The Greater Good (year ended 31 March 2013: £870,000 Belle and Camera Trap).

Geographical information

All revenues continue to arise primarily in the United Kingdom, being the Group's country of domicile, except for £1.1m (year ended 31 March 2013: £1.0m) of revenue generated from the Group's overseas activities.

Information about major customers

Revenue from one Media Services customer, operating through several separate subsidiaries, of £17.5m (year ended 31 March 2013: one customer £15.6m) wasrecognised in the year. No other single customer contribution 10% or more of the Group's revenue in either 2013 or 2014.

4. Exceptional administrative expenses

Exceptional administrative expenses for the year were £548,000 (year ended 31 March 2013: £2,997,000) and consist of:

Group reorganisation

The Group incurred exceptional reorganisation costs of £190,000 in the year (year ended 31 March 2013: £180,000) in relation to the restructuring of certain business areas.

Teddington exit

The Group announced plans to cease activity at the Teddington Studio site during 2013 and as a result established an onerous lease provision of £1,538,000 at 31 March 2013, plus asset impairments of £553,000 and exit costs of £28,000. During the year ending 31 March 2014, an additional provision of £172,000 has been recognised.

Transaction costs

The Group incurred exceptional transaction costs of £170,000 in the year (year ended 31 March 2013: £nil) in relation to a potential joint venture which has not progressed.

AIM listing

As a result of the Company's ordinary shares admission to AIM in July 2012, the Group incurred £337,000 of non-recurring professional advisor fees during the year ended 31 March 2013. Final costs incurred in the year ended 31 March 2014 not previously provided for total £16,000.

Isle of Man Media Development Fund

The Group incurred costs of £361,000 in the year ended 31 March 2013 mainly in relation to professional fees as a result of signing an agreement with the Isle of Man Treasury ("IOMT")to source and advise on film investment opportunities for the £25 million fund established by the IOMT and to monitor and capitalise on UK distribution rights in films and television programmes funded by the IOMT. No such costs have been incurred in the year to 31 March 2014.

5. Interests in joint ventures

The Group has interests in the following joint ventures:

Shepperton Studios Property Partnership

The Group has a 50% interest in Shepperton Studios Property Partnership ("SSPP"), an entity controlled jointly with a third party, Aviva Group, which holds a 995 year lease on the Shepperton Studios property. Shepperton Studios Property Partnership is strategic to the Group's business as it holds the lease to the Shepperton Studios site.

During the year the Group received distributions of £1,931,000 from SSPP (year ended 31 March 2013: £801,000).

Shepperton Studios (General Partner) Limited

The Group also has a 50% interest in Shepperton Studios (General Partner) Limited. There are no material amounts consolidated for this joint venture in either period.

Pinewood Studio Berlin Film Services GmbH

Pinewood Germany Limited has entered into a 50:50 joint venture with Studio Hamburg GmbH, to market their existing studio facilities in Hamburg and Berlin. Pinewood Studio Berlin Film Services GmbH is strategic to the Group's business given the similarity in nature to the Group's core Media Services operations. There are no material amounts consolidated for this joint venture in either period.

Pinewood Atlanta LLC / PAS Holdings Fayette LLC

During the current year, Pinewood Atlanta Limited entered into a 40:60 joint venture with River's Rock LLC to develop land south of Atlanta, Georgia, USA into world class studio facilities. Pinewood will also provide sales and marketing facilities. The Group has a 50% voting interest in both joint venture entities. Pinewood Atlanta LLC and PAS Holdings Fayette LLC are strategic to the Group's business given the similarity in nature to the Group's core Media Services operations.

Following the adoption of IFRS 11 during the year ended 31 March 2014, all joint ventures are now measured using the equity method. None of the joint ventures are listed and therefore quoted market prices are not available.

The table below illustrates the impact on the income statement, statement of financial position and cash flow statement upon the adoption of IFRS 11. In accordance with the transitional provisions of IFRS 11, this information is given for the comparative period only.

Summarised financial information in respect of each of the Group's material joint ventures is set out below. The summarised financial information below represents amounts in associates financial statements prepared in accordance with IFRSs adjusted by the Group for equity accounting purposes.

Reconciliation of the above summarised financial information to the carrying amount of the interest in SSPP and Pinewood Atlanta Studios LLC recognised in the consolidated financial statements:

Reconciliation of movement in investment in joint ventures:

6. Finance costs

During the year, the Group has capitalised borrowing costs amounting to £115,000 (year ended 31 March 2013: £81,000) on qualifying assets. Borrowing costs were capitalised at a weighted average rate of general borrowing of 4.5%.

Exceptional finance costs

The Company incurred £411,000 of exceptional finance costs in the year ended 31 March 2013 in relation to the refinancing of its banking facilities. No such costs were incurred in the current year.

7. Taxation

(a) The major components of corporation tax expense are:

(b) Reconciliation of the total tax credit

A reconciliation between the tax credit and the product of accounting profit multiplied by the standard rate of corporation tax in the UK for the year ended 31 March 2014 and 2013 is as follows:

(c) Deferred tax

Deferred tax relates to the following: