PWS.L Regulatory News (PWS)

Pinewood Group plc

(formerly "Pinewood Shepperton plc")

Audited results for the year ended 31 March 2015

Pinewood Group plc, the world leading studio and production services operator, delivered another year of record revenues and strong growth as it continued to build on its offer to the screen-based industries.

Today the Company publishes its audited results for the year ended 31 March 2015.

Financial highlights

· Revenue £75.0m (year ended 31 March 2014: £64.1m).

· Operating profit £5.8m (year ended 31 March 2014: £4.9m).

· Operating profit from Media Services activities before exceptional items £11.0m (year ended 31 March 2014: £9.2m).

· Basic earnings per share 16.4p (year ended 31 March 2014: 10.8p).

· Basic earnings per share adjusted for exceptional items 13.5p (year ended 31 March 2014: 11.5p).

· Final dividend of 2.8p per share declared (year ended 31 March 2014: 1.9p).

· Cash generated from operations of £18.4m (year ended 31 March 2014: £14.0m).

· Net debt of £71.9m (31 March 2014: £40.2m) with increase principally from the Shepperton Studios Property Partnership ("SSPP") acquisition.

· Media Services return on capital employed of 10.1% (31 March 2014: 9.6%).

Strategic progress

· Design & Build contract signed and full construction of Phase One of the Pinewood Studios Development Framework ("PSDF") has commenced.

· Completed the acquisition of the 50% interest in SSPP formerly owned by clients of Aviva Investors.

· A joint venture, Pinewood MBS Lighting Limited, established to become the provider of lighting to productions based at Pinewood Studios and Shepperton Studios.

· International activities growing at rapid pace.

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

"Pinewood is a uniquely positioned independent operator and has once again delivered strong growth.

"As our core business has grown we have expanded the range of services for the screen-based industries. We are seeing encouraging results from this strategy. Our growing presence internationally continues to deliver clear benefits.

"Following the successful share placing in April 2015, construction has begun on the first phase of the Pinewood expansion. This is an exciting development for the Group and we are pleased with the support and commitment given to us through the placing.

"Although we have hosted the three largest film productions of the year, being Star Wars: Episode VII - The Force Awakens, Avengers: Age of Ultron and the 24th Bond film Spectre, we continue to be unable to meet all the demand from large films. This will be partly addressed by the first phase of the Pinewood expansion.

"We are encouraged that the current financial year has got off to a strong start with good visibility into the coming year."

 Key developments since year end

· Initial drawing on the newly agreed £135m term and revolving credit facilities and £30m (before expenses) raised in a share placing, through the admission of 8m new ordinary shares to trading on AIM.

· Two new Independent Non-Executive Director appointments were made adding further complementary expertise to an already skilled Board.

· Extended the media investment offering to video games and high-end television.

A copy of this announcement will shortly be available for inspection on the Company's website at www.pinewoodgroup.com. The annual report will be posted to shareholders and made available on the Company's website on or around 7 July 2015. 

Enquiries

Pinewood Group 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 / James White

Notes to editors

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

· Pinewood Studios, Shepperton Studios and Pinewood Studio Wales together accommodate 37 stages and three dedicated digital television 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

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

· Pinewood Studios and Shepperton Studios have been home to over 2,000 films in more than 80 years

· Pinewood Studios and Shepperton Studios have hosted over 800 TV shows

· There are approximately 250 independent, media related companies based within the Pinewood, Shepperton and Wales Media Hub's

· The Pinewood Group's international network of studios includes Toronto, Canada; Iskandar, Malaysia; the Dominican Republic; Atlanta, Georgia, USA and activities in China and Ireland

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 Group plc has again delivered record revenues with strong margin growth. Consolidated revenues of £75.0m for the year ended 31 March 2015 (year ended 31 March 2014 £64.1m) were up 17% on the previous year. These results are despite being capacity constrained. Phase One of the Pinewood Studios Development Framework ("PSDF") is now underway and is scheduled for completion in the first half of 2016. This additional capacity will significantly increase Pinewood's offer to the global screen-based industries.

The Pinewood brand has global reach and enjoys a reputation for excellence. This has enabled the Group to develop a number of complementary new business opportunities in the UK such as the provision of lighting and 3D digital printing. The Company has extended its media investment offering to video games and high-end television. Internationally, new revenue streams have included production services and studio consultancy.

I would like to take this opportunity to thank all our customers for their continuing support and confidence in the Group.

On 6 March 2015, the Company agreed new banking facilities of up to £135 million with its two long-standing relationship banks, Lloyds Bank plc and The Royal Bank of Scotland plc, and also welcomes two new partners to its banking syndicate, HSBC Bank plc and Barclays Bank Plc.

On 31 March 2015, the Company announced details of a conditional placing by N+1 Singer to raise £30 million through the issue of 8,000,000 new ordinary shares at an issue price of 375 pence per share, which were admitted to trading on AIM on 17 April 2015. I would like to thank our shareholders, old and new, who made the placing possible and to welcome all the new shareholders who have invested in the Company.

In my letter to shareholders dated 31 March 2015, I wrote that it was "the Board's current intention to apply in due course for the admission of the ordinary shares to the premium segment of the Official List of the UK Listing Authority and to trading on the Main Market". The Company's shares are still tightly held, notwithstanding this the Board will continue to seek a full listing of the shares which is subject to satisfying the UK Listing Authority's eligibility criteria.

The Board has decided to recommend a final dividend of 2.8p per share recognising the strong performance in the year. We look forward to continuing to see further benefits from the strategy which has delivered these results.

In May 2015, Dr. Catherine Raines and Mary Teresa ("MT") Rainey joined the Board as Independent Non-Executive Directors. Both bring valuable experience and skills to the Board which will be of immense value to the Group in delivering its strategic objectives. Ruth Prior was also appointed the Senior Independent Director. Subsequent to year end, Tom Allison, Neil Lees and Steve Christian stood down as directors. I would like to record the Board's grateful thanks for their contribution.

These results would not have been achieved without the dedication and commitment of our staff and senior management.

Lord Grade of Yarmouth, CBE

Chairman

29 June 2015

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.

Business model

Pinewood Group plc is a leading provider of studio and related services to the global screen-based industries. Our services support film production, filmed television and studio television recording, digital content services and the provision of facilities to 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 screen-based industries; and Media Investment, which provides investment funding and production services to the screen-based 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 provides production facilities to clients, Digital Content Services ("DCS") and International.

DCS offers picture and sound post production, media storage and 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 a joint venture in the United States of America.

The Company's television ("TV") business 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 TV studios, film stages and post production services to support all forms of television production.

The Media Hub is currently home to 257 independent businesses representing and providing expertise, equipment and support to the film, television, 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 (trading as "Pinewood Pictures") includes an agreement to source and advise on film, high-end television and video game investment opportunities for two media development funds; a £25m fund established by the Isle of Man Treasury and a £30m fund established by the Welsh Government. In addition, the segment involves identification and investment by the Group in British qualifying 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 the Pinewood Studios Development Framework ("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 investment in screen content; 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 are:

Media Services review

Total revenues within this segment were £57.2m for the year (year ended 31 March 2014: £50.4m), including £1.3m of intersegment revenue (year ended 31 March 2014: £1.2m). 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 ("FPCs").

Film

Film revenues for the year ended 31 March 2015 were £43.9m (year ended 31 March 2014: £37.4m), a year on year increase of 17.5%. The increase is due to greater utilisation of ancillary studio space, expansion of the Group's offering in complementary activities, growth in DCS revenues and a higher level of international activity.

The demand for the Company's facilities throughout the year has been strong, as reflected in stage occupancy of 80% (year ended 31 March 2014: 81%); however this ongoing strong film demand has limited television occupancy opportunities over the year.

The largest film production based at Pinewood Studios during the period was Star Wars: Episode VII - The Force Awakens (Lucasfilm) and the largest production at Shepperton Studios was Alice Through the Looking Glass (Disney).

Other major productions which were based at Pinewood and Shepperton during the year include the 24th Bond film, Spectre (Eon) and Avengers: Age of Ultron (Marvel).

DCS revenues included within the total film revenue for the year ended 31 March 2015 were £7.2m (year ended 31 March 2014: £6.5m).

Notable sound post production work completed during the year included Kenneth Branagh's Cinderella (Disney), Ex Machina (DNA Films) and The Theory of Everything (Working Title Films). The Company also successfully completed original and international sound work for the video games industry on Microsoft Lionhead Fable Legends and Sega's Total War Attila.

Digital Production Services, the secure management of data generated from digital film shoots on-set and on location, continues to grow with services provided to productions including The Avengers: Age of Ultron (Marvel), Pride and Prejudice and Zombies (Cross Creek Pictures) and The Riot Club (Pinewood Productions/Blueprint Pictures).

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. The Company now offers digital intermediate colour grading for Film and TV projects post producing on-the-lot with serviced projects including Spooks: The Greater Good (Kudos Films/Shine/Pinewood Pictures), Take Down (Pinewood Pictures) and I Live With Models (Comedy Central).

InternationalInternational revenues for the year included within film were £3.1m (year ended 31 March 2014: £1.1m) and relate to sales and marketing agreements in Toronto, Malaysia and Dominican Republic, with the increase driven by the newly operational Pinewood Atlanta Studios plus consultancy services provided in China, as further discussed below.

Pinewood Atlanta Studios

Pinewood Atlanta Studios ("PAS"), the Company's partnership with Rivers Rock LLC, is located on approximately 650 acres of land in Georgia, USA owned by the Partnership. Phase One of the development, comprising 118,000 sq ft of film sound stages (being six stages), 90,000 sq ft of workshops and 200,000 sq ft of offices, was completed in June 2014.

Marvel's Antman was the first production to shoot at PAS, moving in shortly after construction was completed and finishing principal photography in November 2014. Marvel's second feature to shoot at PAS commenced principal photography in April 2015. 

PAS has established several exclusive vendor relationships including MBS Lighting, Hollywood Trucks, Home Depot and The Rag Place. PAS also took over sales and management of the Pinewood Atlanta Studios Production Centre formerly managed by Rivers Rock LLC. 

China

The Company provides consultancy services to a number of leading Chinese film industry companies. During the year, the Company continued to provide advice on the design and construction of the Qingdao Oriental Movie Metropolis, a film facility comprising 45 stages for the Wanda Group. Construction on Phase One commenced in 2015 with the studio complex scheduled to open in 2017. In addition the Company commenced the provision of consultancy advice to the Shanghai Film Group on its studio facilities in Chidden. Both projects remain ongoing.

Television

TV revenues for the year were £5.8m (year ended 31 March 2014: £6.2m).

The Company's television business hosted a number of productions during the year, including Not Going Out (Avalon), Birds of a Feather (Freemantle Media) and Still Open All Hours (BBC). ITV, BBC and Sky expressed an interest in utilising the Company's dual purpose film stages for their large scale light entertainment formats but the Company was unable to accommodate these requests due to capacity constraints. The PSDF should enable Pinewood to accommodate these large format TV productions in the future. Tapeless workflow has increased the volume of TV work being facilitated in DCS.

The Group completed its exit from Teddington Studios on 24 December 2014.

Pinewood Studio Wales

In January 2015, Pinewood Studio Wales opened and is now home to 15 tenant companies and has hosted two productions, The Bastard Executioner (Fox) and The Crow (Relativity Media). The Company is targeting film and high-end TV drama productions to utilise the facility.

Media Hub

Media Hub revenues inclusive of service, utility and facility charges for the year were £6.2m (year ending 31 March 2014: £5.6m) with the increase principally due to the Shepperton Studios Property Partnership transaction as discussed below.

The total number of Media Hub companies accommodated at the year end was 242 at Pinewood Studios and Shepperton Studios, with occupancy of 97% across a net lettable area of 359,000 sq ft (year ended 31 March 2014: 228 companies, 96% occupancy, 349,000 sq ft).

Gross and operating margins

The Media Services segment gross margin, including intersegment revenues, for the year ended 31 March 2015 was 37.2% (year ended 31 March 2014: 37.7%). The year on year variance is principally driven by an increase in depreciation costs due to progression of a number of development projects.

The Media Services operating margin before exceptional items is 19.3% (year ended 31 March 2014: 18.3%), reflecting a Selling, Distribution and Administrative cost base capable of servicing the expanded revenue generated.

Exceptional items

The Group discloses as exceptional items on the face of the income statement those items 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 earned exceptional income of £2.0m (year ended 31 March 2014: £nil income, £0.5m charge) as detailed below.

Shepperton Studios Property Partnership ("SSPP") acquisition

Up until 3 December 2014, the Group held a 50% share in SSPP which was treated as a joint venture under IFRS 11 Joint Arrangements. On 3 December 2014, the Group acquired the 50% previously owned by clients of Aviva Investors, with the resultant 100% ownership leading to SSPP becoming a wholly-owned subsidiary undertaking of the Company. In accounting for this transaction, a net gain of £1,952,000 was realised (after accounting for loan break costs in SSPP of £366,000).

Details of exceptional items incurred in the year ended 31 March 2014 can be found in Note 7 of these financial statements.

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 and share of results of joint ventures, as a percentage of average capital employed, being total equity plus interest bearing loans and borrowings. ROCE for the twelve months ended 31 March 2015 was 10.1% (twelve months ended 31 March 2014 restated: 9.6%). The prior period has been restated to include the results of joint ventures.

The ROCE year on year is principally driven by significant capital investment during previous years now being fully revenue generating.

The PSDF is a capital intensive project with significant long-term infrastructure spend front-loaded. Capital employed at 31 March 2015 includes £6.1m of assets in the course of construction and land of £5.3m relating to this project, totalling £11.4m (31 March 2014: £8.8m) which are non-revenue generating, and are not expected to be so until the year ending 31 March 2017. Excluding these assets from average capital employed gives a ROCE of 11.2% for the year ended 31 March 2015 and 10.0% for the prior period.

Media Investment review

Media Investment revenue for the year was £19.0m (year ended 31 March 2014: £14.9m).

Investment advisory 

The combined investment funds advised by the Company total £55m (Wales - £30m; Isle of Man - £25m), making them a significant investment portal for British film, television and video games content. During the year the funds co-invested £6.4m in Take Down following advice from Pinewood Pictures.

Investment advisory revenue for the year was £0.8m (year ended 31 March 2014: £0.4m), with the year on year increase due to the commencement of the Welsh investment advisory agreement in March 2014.

In addition to the investment made by third party funds in Take Down, the Group also provided film finance totalling £1.0m to its wholly-owned subsidiary FPCs (year ended 31 March 2014: £1.9m).

During the year the Company earned other commissions and investment recoupment totalling £0.5m against film investments made in prior years (year ended 31 March 2014: £0.5m). The recoupment revenue has been generated from the theatrical release of Riot Club during the year and further receipts from Dom Hemingway.

Film production companies

Revenue from FPCs for the year totalled £17.8m (year ended 31 March 2014: £14.0m). An FPC is considered active from the close of film financing until the production is completed and delivered.

The operating loss from FPC activity of £4.3m (year ended 31 March 2014: £3.5m) is largely offset by UK film tax relief of £4.1m (year ended 31 March 2014: £3.1m) as expected.

Included in the Group cash balance of £6.4m is £0.6m (year ended 31 March 2014: £1.4m) restricted solely for use in the production of specific FPC operations. The Group trade receivables balance of £5.7m includes £0.7m (31 March 2014: £7.0m) consolidated from FPC activities whilst the Group trade and other payables balance of £30.3m includes £5.1m (31 March 2014: £9.5m) from FPCs. The year on year variance is driven by the stage of completion of active FPCs.

Result after tax

Results for the Media Investment segment are more meaningfully reviewed at the after tax level due to the impact of the UK Film Tax Relief.

The loss after tax for the segment is £0.1m (year ended 31 March 2014: £0.2m loss).

Group performance

Total consolidated revenue for the year is £75.0m (year ended 31 March 2014: £64.1m).

Profit after tax for the year ended 31 March 2015 was £8.1m (year ended 31 March 2014: £5.4m). This includes exceptional income of £2.0m and an associated tax charge of £0.4m (year ended 31 March 2014: £0.5m exceptional expense, £0.1m tax credit).

Basic and diluted earnings per share for the period were 16.4p (year ended 31 March 2014: 10.8p). Normalised basic and diluted earnings per share for the year (after adjusting for exceptional items) were 13.5p (year ended 31 March 2014: 11.5p).

EBITDA (earnings before exceptional items, interest, tax, depreciation and amortisation) for the year was £12.2m (year ended 31 March 2014: £9.9m), including £5.3m of Media Investment loss (year ended 31 March 2014: £3.8m loss) but excluding the EBITDA attributable to the Group's share of joint ventures. After adding back the FPC loss which is largely offset by the UK Film Tax Relief, adjusted EBITDA is £16.5m (year ended 31 March 2014: £13.4m).

Taxation

The total corporation tax credit for the period, based on profit before tax of £5.0m, was £3.1m (year ended 31 March 2014: £1.8m credit).

The Group qualified for an aggregate film tax credit of £4.1m (year ended 31 March 2014: £3.1m) on the expenditure from the film production companies that are group subsidiaries.

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 2014: 23%).

Liquidity management

The Company's cash balance increased by £5.6m over the year to 31 March 2015. Excluding restricted cash reserved solely for the use by specific film production companies, the Company's general cash balance increased by £6.5m.

The main drivers of this cash inflow is an increase in underlying profitability as demonstrated by the £2.4m improvement in cash from operating activities, coupled with a favourable working capital movement of £6.6m, including a £2.1m Media Services deferred income movement and a £2.6m Media Services trade payables movement, alongside a reduction in capital expenditure (as explained below).

Capital expenditure (excluding acquisition activity) has decreased from £18.4m in the comparative period to £7.1m as a number of large scale investment projects have been completed. The Company has invested a further £2.6m (year ended 31 March 2014: £1.0m) in its Pinewood Atlanta Studios joint venture.

The Company's acquisition of the 50% of SSPP previously owned by clients of Aviva Investors resulted in a cash outflow totalling £36.8m, which was funded by an extension to the existing bank facility of £35m plus internal resources.

Net debt at 31 March 2015 was £71.9m including restricted FPC cash and £72.5m excluding FPC cash (31 March 2015: £40.2m including FPC cash; £41.6m excluding FPC cash). The increase in net debt year on year is driven by the SSPP acquisition on 3 December 2014. This has led to an increase in gearing to 78.6% compared to 48.3% at 31 March 2014, excluding fair value and loan issue costs.

As at the balance sheet date, the Company had banking facilities of up to £85m which comprised a £35m revolving credit facility, a £15m term facility and a £35m acquisition facility.

On 17 April 2015, these banking facilities were fully repaid and terminated and replaced by a £135m term and revolving facilities agreement, which comprises a £35m revolving credit facility and a £100m term facility.

These facilities are secured on certain of the Company's assets. The new revolving credit facility has no scheduled repayments and matures on 30 April 2019. The new term facility contains scheduled repayments of £2.5m on both 30 June 2017 and 31 December 2017, and of £5m on both 30 June 2018 and 31 December 2018 and matures on 30 April 2019.

The Company has retained its £5m overdraft facility.

The revolving credit and term facilities have a range of standard covenants and events of default together with variable margins ranging between 175 and 375 basis points over LIBOR.

Dividend

The Board is committed to paying 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 2.8p (year ended 31 March 2014: 1.9p) for approval at the Annual General Meeting, making a total dividend for the year of 3.5p (year ended 31 March 2014: 2.5p). This represents a 40% increase year on year.

The dividend is to be paid on 5 October 2015 to shareholders on the register at 4 September 2015 (ex-dividend date of 3 September 2015).

Going concern

Having considered the performance of the Group for the year to 31 March 2015 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 in place until 30 April 2019. Although the Group is in a net current liability position of £11.3m, principally driven by the deferred income balance which arises as a result of the Group's billing profile on major contracts, the Group has £71.4m of undrawn committed loan facilities in place following the refinancing drawn upon in April 2015. The Group also has £8.7m 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 have specifically considered the level of capital commitment at 31 March 2015 (see Note 27) and the projected spend on the PSDF compared with the existing financing and the additional financing completed in April 2015 (see Note 22).

In addition, Notes 22 and 29 to the financial statements 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 growing 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

The PSDF comprises a substantial expansion of the existing Pinewood Studios by ultimately adding a total of 1,000,000 sq ft of new facilities including 10 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. Detailed planning permission for Phase One of PSDF was granted by South Bucks District Council on 23 December 2014.

Phase One of the scheme incorporates five sound stages totalling 150,000 sq ft, 140,000 sq ft of workshops across 10 buildings and two office buildings totalling 55,000 sq ft. This first phase of development will be completed in the first half of 2016.

A Design and Build contract for Phase One was signed on 19 May 2015 with Sir Robert McAlpine Limited. The cost of development is to be funded by a combination of the £135m banking facilities agreed on 6 March 2015 and £30m (before expenses) of equity raised through the issuance of 8m new ordinary shares on 17 April 2015.

The carrying value of all PSDF related assets totals £11.1m which includes costs incurred during the planning process and initial construction of £6.1m and land of £5.0m.

Media Investment

The Company is considering possible further media investment funds. Both in terms of fund advice and direct diversification opportunities, this segment continues to be an important driver for the future. 

Outlook

Pinewood has once again delivered strong growth.

As the Group's core business has grown, the range of services for the screen-based industries has expanded. The Group is seeing encouraging results from this strategy. The Group's growing presence internationally continues to deliver clear benefits.

Following the successful share placing in April 2015, construction has begun on the first phase of the Pinewood expansion. This is an exciting development for the Group and the Board are pleased with the support and commitment given to the Company through the placing.

Although the Group has hosted the three largest film productions of the year, being Star Wars: Episode VII - The Force Awakens, Avengers: Age of Ultron and the 24th Bond film Spectre, the Group continues to be unable to meet demand for all large films. This will be partly addressed by the first phase of the Pinewood expansion.

The Board are encouraged that the current financial year has got off to a strong start with good visibility into the coming year. 

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 Senior 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. The Company's Studio Management Diploma has been expanded with 36 employees and 10 external students having been enrolled on the course since inception in 2013.

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 support and encourage the next generation of employees in the British screen-based industries. By giving training and work experience, the Company seeks to develop the skilled production resource base in order to maintain the high degree of excellence that draws overseas productions to this country.

Support is given to the National Film and Television School by way of a scholarship for two undergraduates, the Rye Studio School with visits to the studios and the BFI Academy schemes which introduce young people across the country to film and television production.

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

We continue to support local charities and organisations to encourage residents to embrace the studios as an advantage to their environment with the impact on providing jobs in the surrounding areas and sustainable growth within their communities for local shops and businesses.

All staff are encouraged to participate in charity fund raising either individually or as a group, thus promoting good working relationships and a sense of achievement.

Staff and tenant film screenings and other social events are also held throughout the year to maintain and develop community relationships.

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 reduction in the number of minor staff accidents for 2014/2015 and no reportable injuries under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations ("RIDDOR").

Neil Lees, Non-Executive Director, had Board accountability during the year for health and safety issues supported by Nicholas Smith, Commercial Director and the Executive Management Team. Board accountability has transferred to Dr. Catherine Raines subsequent to year end. 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, the Company is now able to recycle the majority of domestic waste generated across its UK sites. The new process has been embraced by all customers and over the past year has seen the elimination of all landfill waste realising further cost savings and creating recyclable 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.

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 two hybrid pool cars that are available to staff when making business journeys also helps to reduce CO2 emissions and encourages staff to share their journeys. 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. 2014 saw nearly 94,000 passenger journeys being made, which was the highest figure since the service began in 2008.

Energy

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

The Group's absolute (or total) CO2 emissions for 2014/15 were 8.5% below those from the baseline year of 2010/11 but approximately 1% higher than those in 2013/14. This small annual increase is a reflection of the increased level of Group activity. However, the 'benchmark' CO2 figure which shows a company's 'carbon intensity' by allowing a comparison to be made between the annual emissions figures and the associated levels of revenue shows a 7% reduction in 2014/15 over 2013/14 and a 23% reduction from the benchmark year of 2010/11. The significant reductions in CO2 benchmark figures are achieved by the continuing investment and focus on the Group's energy saving measures and procedures.

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;

· management of Building Management Systems (BMS);

· the identification of unnecessary energy consumption via the automated meter reading system;

· extending the use of the Automated Meter Reading system (AMR); 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

29 June 2015

Group income statement for the year ended 31 March 2015 and 31 March 2014

Group statement of other comprehensive income for the year ended 31 March 2015 and 31 March 2014

Group statement of financial position at 31 March 2015 and 31 March 2014

The financial statements of Pinewood Group plc, Company number: 03889552, were approved and authorised for issue by the Board of Directors on 29 June 2015. They were signed on its behalf by:

Christopher Naisby, FCCA

Finance Director

Group statement of cash flows for the year ended 31 March 2015 and 31 March 2014

Included within the cash and cash equivalents balance is a total of £550,000 (year ended 31 March 2014: £1,426,000) which is unavailable for general use. See Note 20 of the consolidated Group financial statements.

Group reconciliation of movement in net debt for the year ended 31 March 2015 and 31 March 2014

Group statement of changes in equity

From 1 April 2014 to 31 March 2015

From 1 April 2013 to 31 March 2014

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 2015 or 31 March 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 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 2015

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 2014.

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 £11.3m, the Group has £71.4m of undrawn committed loan facilities in place following the refinancing in April 2015. The Group also has £8.7m 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 have specifically considered the level of capital commitment at 31 March 2015 and the projected spend on the PSDF compared with the existing financing and the additional financing completed in April 2015 (see Note 11).

The Group's assessment of going concern is explained further in the Strategic report of 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 Group plc and its subsidiaries as at 31 March 2015 and 31 March 2014. All intercompany transactions, balances, income and expenses are eliminated in full on consolidation. All subsidiaries are consolidated for the financial year ending 31 March 2015 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 Group plc has control.

During the year the Company's interest in Shepperton Studios Property Partnership increased from 50% to 100% on 3 December 2014. Prior to this date, the investment was accounted for using the equity method, with the Company recognising its ownership interest within 'Investments in joint ventures' on the statement of financial position and its interest in the profits of the joint venture as 'Share of results of joint ventures' on the income statement. Following the transaction, the investment is fully consolidated as a wholly owned subsidiary.

2. Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year, with the exception of newly applicable standards, amendments or interpretations issued by the International Accounting Standards Board ("IASB") that are mandatorily effective for annual periods beginning on or after 1 April 2014.

Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

IFRIC 21 Levies

IAS 32 (amendments) Offsetting financial assets and financial liabilities

IAS 36 (amendments) Recoverable Amount Disclosures for Non-Financial Assets

IAS 39 (amendments) Novation of Derivatives and Continuation of Hedge

 Accounting

Standards in issue but not yet effective

At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRSs that have been issued but are not yet effective and in some cases had not yet been adopted by the EU:

IFRS 9 Financial Instruments 

IFRS 15 Revenue from Contracts with Customers 

IAS 16 and IAS 38 (amendments) Clarification of Acceptable Methods of Depreciation and Amortisation 

IAS 16 and IAS 41 (amendments) Agriculture: Bearer Plants

IAS 19 (amendments) Defined Benefit Plans: Employee Contributions 

IAS 27 (amendments) Equity Method in Separate Financial Statements

IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Annual Improvements to IFRSs:

2010-2012 cycle (amendments) IFRS 2 Share-based Payments, IFRS 3 Business Combinations, IFRS 8 Operating Segments, IFRS 13 Fair Value Measurement, IAS 16 Property, Plant and Equipment,  IAS 24 Related Party Disclosures and IAS 38 Intangible Assets

2011-2013 cycle (amendments) IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 3 Business Combinations, IFRS 13 Fair Value Measurement and IAS 40 Investment Property

2012-2014 cycle (amendments) IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting

The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods, except that IFRS 9 will impact both the measurement and disclosures of financial instruments and IFRS 15 may have an impact on revenue recognition and related disclosures. Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 and IFRS 15 until a detailed review has been completed.

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, "Accounting policies".

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 2015 and 2014 is presented below:

During the year, the Group provided film finance totalling £969,000 to its wholly owned subsidiary film production companies for the production of Take Down and Genius (year ended 31 March 2014: £1,885,000 Robot Overlords, The Riot Club, Pressure, Kill Your Friends and Spooks: The Greater Good).

Geographical information

Although revenues continue to arise predominantly in the United Kingdom, being the Group's country of domicile, the Group's international activity continues to increase. For the year ended 31 March 2015, £3.1m of revenue was generated from the Group's overseas activities, representing 4% of total revenue (year ended 31 March 2014: £1.1m, 2%).

Information about major customers

Revenue from one Media Services customer, operating through several separate subsidiaries, of £22.6m (year ended 31 March 2014: one customer £17.5m) was recognised in the year. No other single customer contributed 10% or more of the Group's revenue in either 2014 or 2015.

4. Exceptional income

Up until 3 December 2014, the Group held a 50% share in Shepperton Studios Property Partnership ("SSPP") which was treated as a joint venture under IFRS 11 Joint Arrangements. On 3 December 2014, the Group acquired the 50% previously owned by clients of Aviva Investors, with the resultant 100% ownership leading to SSPP becoming a subsidiary undertaking of the Company. In accordance with IFRS 3 "Business Combinations", the previous investment in the venture was derecognised resulting in a net gain of £1,952,000 (after accounting for transaction costs of £974,000 and loan break costs in SSPP of £366,000).

There were no such amounts recognised in the prior year.

5. Interests in joint ventures

As at 31 March 2015, the Group has interests in the following joint ventures:

As at 31 March 2014, the Group had the following interests in joint ventures:

Shepperton Studios Property Partnership

Up until 3 December 2014, the Group had a 50% interest in SSPP, an entity controlled jointly with a third party, Aviva Investors. SSPP is strategic to the Group's business, as it holds a 995 year lease on the Shepperton Studios property. On 3 December 2014, the Group acquired the 50% interest in SSPP previously held by clients of Aviva Investors for a total cash consideration of £36.8m, including the full termination of a £24m loan facility provided by Aviva. As a result of the transaction, the Group now owns 100% of SSPP and has given the Group full control over the Shepperton site and future investment in the facilities there, which was the primary reason for the transaction. The acquisition price relative to the value of the assets acquired did not generate any goodwill.

Up to date of this transaction, the Group received distributions from SSPP totalling £820,000 from SSPP (year ended 31 March 2014: £1,931,000).

Details of assets acquired and liabilities assumed:

Financial assets acquired includes £777,000 of receivables at fair value, which is equivalent to the gross contractual amounts receivable and the best estimate on the acquisition date of the contractual cash flow expected to be collected.

Since the date of the transaction to 31 March 2015, revenue of £450,000 and operating profit of £16,000 has been recognised in the Group's consolidated income statement.

Had SSPP been 100% consolidated from 1 April 2014, the consolidated income statement would have included approximate revenue of £1,740,000 and profit before tax of £400,000 including the impact of net rental savings to the Group.

Shepperton Studios (General Partner) Limited

The Group also had a 50% interest in Shepperton Studios (General Partner) Limited until 3 December 2014. On that date, the Group acquired a 100% interest as part of the SSPP transaction outlined above. There are no material amounts consolidated for this joint venture in either period.

Pinewood Studio Berlin Film Services GmbH

Pinewood Germany Limited previously held a 50% interest in Pinewood Studio Berlin Film Services GmbH, a joint venture with Studio Hamburg GmbH to market their studio facilities in Germany. On 10 September 2014, the Group purchased Studio Hamburg GmbH's 50% shareholding for a total cash consideration of EUR50,000. The acquisition price represents market value and accordingly no goodwill has been recognised. The name of the entity was subsequently amended to Pinewood Film Services GmbH. The Company is not actively trading and there are no material amounts consolidated for this entity in either period.

Pinewood Atlanta LLC / PAS Holdings Fayette LLC (collectively 'Pinewood Atlanta Studios')

During the year ended 31 March 2014, Pinewood USA Inc. 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, known as Pinewood Atlanta Studios. The Group also provides sales and marketing services. Pinewood Atlanta Studios are strategic to the Group's business given the similarity in nature to the Group's core Media Services operations.

Pinewood Atlanta Studios was the Group's only remaining joint venture as at 31 March 2015. The summarised financial information below represents amounts in Pinewood Atlanta Studios statement of financial position at that date, prepared in accordance with IFRSs, adjusted by the Group for equity accounting purposes.

The summarised financial information below represents amounts in SSPP's income statement until 3 December 2014, being the date of disposal of the Group's joint venture interest, and in Pinewood Atlanta Studios' income statement for the year to 31 March 2015.

*For the period to 3 December 2014 only

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

Reconciliation of movement in investment in joint ventures:

6. Finance costs

7. Taxation

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

Amounts over provided in previous years includes £428,000 relating to an increase in the deferred tax asset which has been recognised on the construction of Q Stage at Pinewood.

 (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 2015 and 2014 is as follows:

(c) Deferred tax

Deferred tax relates to the following:

The deferred tax assets are shown net against the non-current deferred tax liability in the statement of financial position.

The main rate of UK corporation tax reduced to 20% from 1 April 2015. No further rate changes have been announced. Deferred tax balances have been calculated at 20%.

 (d) Potential unrecognised deferred tax assets

A potential deferred tax asset of £7,000 (31 March 2014: £106,000) in respect of £9,000 (31 March 2014: £9,000) non-trading losses in Sauls Farm Limited and £27,000 (31 March 2014: £27,000) trading losses in Teddington Studios Limited has not been recognised as it is not anticipated that suitable gains will arise to enable them to be offset against taxable profits. £501,000 of capital losses in Pinewood-Shepperton Studios Limited have been utilised in the year where the deferred tax asset was previously unrecognised (31 March 2014: £501,000). No further deferred tax assets relating to these capital losses remains.

8. Earnings per ordinary share and dividend

Earnings per ordinary share

Basic earnings per ordinary share are calculated by dividing profit for the period attributable to the holders of ordinary equity of the parent by the weighted average number of ordinary shares outstanding during the period.

There are no potential ordinary shares outstanding from employee share schemes and therefore basic earnings per share are equivalent to diluted earnings per share.

The Group presents as exceptional items on the face of the income statement those items where the cost is of 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 any such exceptional items.

The following reflects the profit and number of shares used in the basic and diluted earnings per ordinary share computations:

Dividend paid

The Board is recommending a final dividend of 2.8p per share for approval at the Annual General Meeting to be paid on 5 October 2015 to shareholders on the register on 4 September 2015 (ex-dividend date of 3 September 2015). Based on the shares in issue at the date the Board approved the Group financial statements, this would amount to a final dividend payment of £1,607,000 (year ended 31 March 2014: £939,000).

9. Property, plant and equipment