26 Nov 2013 07:00
Pinewood Shepperton plc
Publication of the Interim Results for the six months ended 30 September 2013
Pinewood Shepperton plc ("the Company"), a leading provider of services to the global film and television industry, today announces its unaudited interim consolidated results for the six months ended 30 September 2013.
Key developments during the period
· 45,000 sq ft studio facility, Q Stage, completed on time and on budget.
· Pinewood Indomina Studios in the Dominican Republic opened in September 2013.
· Camelot operational in TV3 from September 2013.
· Construction commenced on Pinewood Atlanta Studios.
· 50:50 joint venture agreement with Seven Stars Media Limited signed in April 2013 to assess a number of business proposals in the growing entertainment market in China.
· Film finance provided to 4 further British independent film productions.
Key developments after the period end
· Pinewood Studios Development Framework Public Inquiry commenced on 19 November 2013.
Financial highlights for the six months ended 30 September 2013
· Revenue £36.6m (six months ended 30 September 2012: £27.1m).
· Profit after tax £3.4m (six months ended 30 September 2012: £2.0m).
· Basic earnings per share 6.8p (six months ended 30 September 2012: 4.2p).
· Basic earnings per share adjusted for exceptional items 6.9p (six months ended 30 September 2012: 6.7p).
· Revenue from Media Services activities, including intersegment revenue, £25.9m (six months ended 30 September 2012: £24.5m).
· Operating profit from Media Services activities, excluding intersegment profit and exceptional items £6.0m (six months ended 30 September 2012: £6.6m).
· Interim dividend of 0.6p per share declared (six months ended 30 September 2012: 0.5p).
· Net debt of £55.1m (30 September 2012: £41.9m).
Commenting on today's results, Ivan Dunleavy, Chief Executive, said:
"We are very pleased with the overall earnings during the period which reflects a strong performance from media services, complemented by our strategic entry into media investment.
"The UK, and Pinewood Shepperton in particular, continue to be in great demand from international content producers. However, in order to continue growing the UK's market share, we will need more studios and related facilities."
Enquiries
Pinewood Shepperton plc +44 (0)1753 656732
Andrew Smith
Director of Strategy and Communications and Company Secretary
N+1 Singer +44 (0)207 496 3000
Richard Lindley
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 now 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.
Group Overview
MEDIA SERVICES
The Media Services segment has three principal complementary revenue streams - Film, Television and Media Hub.
Film
Film revenues for the six months to 30 September 2013 ("the period") were £19.6m, including £0.5m of intersegment revenues generated from Pinewood Film Production Companies utilising the Group's facilities (six months ended 30 September 2012: £18.9m, including £0.1m intersegment).
The demand for the Company's facilities continues to remain high. As a result, the Company has not been able to accommodate several film productions. The Company has also 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. The new 45,000 sq ft studio facility, Q Stage, at Pinewood Studio was completed on time and on budget on 27 September 2013.
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 productions to use the Company's facilities and services during the period included Into the Woods (Disney), Exodus (Fox), and ExMachina (DNA Films).
The Company generated Digital Content Services ("DCS") revenues during the period of £3.7m (six months ended 30 September 2012: £3.0m) which are included in the total film revenue.
DCS provides sound and picture post production, media storage, management and distribution for original English language and internationally re-versioned content. During the period a wide variety of creative and process-based services were delivered to film, television and video games clients which included Kick Ass 2 (Universal), The Paradise Series 2 (BBC) and the Sega/Creative Assembly title - Rome Total War. Pinewood has also provided sound post production for a range of Penguin audio books.
International re-versioning of soundtracks and the renewed long-term agreement with Disney Character Voices International continued to perform well as did similar services delivered to major video games production companies. Multiple language versions included Disney's family animation Planes and Sony's Cloudy With a Chance of Meatballs.
The preservation and restoration of a number of significant archive features was carried out during the period including 55 Days at Peking.
International
International film revenues for the period were £0.5m (six months ended 30 September 2012: £0.5m).
The Company continues to actively explore strategic opportunitiesin other regions of the world. The Company has a sales and marketing agreement with Pinewood Toronto Studios ("PTS") which was renewed on 14 October 2013 for a further 5 years with effect from 26 May 2014. During the period, PTS attracted a number of high profile film and television productions which included Poltergeist (MGM/Fox 2000), Carrie (MGM/Screen Gems)and theCanadian television sitcom Spun Out (CTV).
On 29 April 2013, the Company announced a new joint venture called Pinewood Atlanta LLC, which will work to initially develop 288 acres of land south of Atlanta, Georgia, into production facilities for film, television, music and video games. The business will operate under the Pinewood trademark. Pinewoodhas received 40% of the shareholding in the joint venture, to which Pinewood will provide sales and marketing services. Phase 1 will comprise 100,000 sq ft of film stage space, 90,000 sq ft of workshops and 200,000 sq ft of production facility and media campus space. Construction has commenced on the Pinewood Atlanta Studios build with completion scheduled by March 2014.
In China, the Group has entered into a 50:50 joint venture agreement with Seven Stars Media Limited, one of China's leading private media groups, which provides content creation and distribution, media services and events. The jointventure, called 'Song Lin', is actively assessing a number of business proposals in the growing entertainment market in China.
Construction of the film facilities at Pinewood Iskandar Malaysia Studios is now complete. The TV studios and post productionfacilities are in the final stages of technical fit out and systems integration and are expected to be operational by January 2014. The facility consists of five film sound stages totalling 100,000 sq ft and two fully integrated TV studios totalling 24,000 sq ft. The first production moves into the Malaysia offices in November 2013 with production to commence in March 2014.
Construction of the water tank and marine facilities at Pinewood Indomina Studios in the Dominican Republic has been completed and were opened in June 2013.
Television
The Company's television revenues in the period were £3.2m (six months ended 30 September 2012: £2.5m).
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 the recent semi-finals and finals of the 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 and Teddington television studios played host to new and repeat business from Would I Lie To You (Zeppetron), The Chase (ITVS), and Keith Lemon Through the Keyhole (Talkback). During the period, television productions such as Got To Dance (Princess Productions) and The Voice (Wall to Wall) utilised large film stages at Shepperton and Pinewood Studios. In addition, complete service packages - incorporating stages, sound and picture post production - were delivered to productions such as Staying in with Greg and Russell (Talkback) and the period drama series The Paradise (BBC).
The National Lottery Live is broadcast from Pinewood each week. Camelot took possession of its new purpose built facility, TV3, on 9 September 2013.
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 during the financial year ended 31 March 2014 and as a result has determined the lease on the Studio is an onerous contract. The estimated costs under the onerous lease were provided for in the income statement for the year ended 31 March 2013, although as a result of changes in the utilisation of the leased premises the estimate may be subject to revisions. The Company has utilised £740,000 of the provision in the six months ended 30 September 2013.
Media Hub
Media Hub revenues (including the Group's 50% interest in the Shepperton Studios Property Partnership) for the period were £3.1m (six months ended 30 September 2012: £3.1m).
The total number of Media Hub companies accommodated during the period was 229 at Pinewood and Shepperton Studios; occupancy at the end of the 6 month period across both Studios was 97% (6 month period ended 30 September 2012: 266 companies, 96% occupancy).
MEDIA INVESTMENT
Media Investment revenues for the period were £11.2m (6 months ended 30 September 2012: £2.7m).
Pinewood Productions' (formerly known as Pinewood Films) co-investment of selected UK independent films continues to progress. Four further films were in production during the period, bringing the total to nine, namely: Powder Room (Pinewood Productions/DJ Films/ Universal), Our Robot Overlords (Pinewood Productions/Pinewood Pictures/Tempo Productions), Posh (Pinewood Productions/Blueprint Pictures) and Pressure (Newscope Films/Pinewood Productions/Pinewood Pictures).
The Company announced on 1 October 2012 that it had signed an Agreement with the Isle of Man Treasury ("IOMT") to source and advise on film investment opportunities for the £25m Media Development Fund established by the IOMT, and to monitor and capitalise on UK distribution rights in films and television programmes funded by the IOMT to be known as 'Pinewood Pictures'.
During the period Pinewood Pictures advised on investments by IOMT in two further films: Our Robot Overlords and Pressure, bringing the total to four to date.
Pinewood Studios Development Framework
On 15 May 2013, South Bucks District Council Planning Committee rejected the Pinewood Studios Development Framework ("PSDF") planning application. PSDF is a £200m proposed long-term scheme of national significance designed to address increasing global demand for capacity 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 10 studios and stages, workshops, production offices and streetscapes for filming. The Company lodged an appeal against the decision on 31 May 2013. The Public Inquiry started on 19 November 2013 and the Inspector is expected to submit his report to the Secretary of State for Communities and Local Government on or before 7 April 2014.
Total costs incurred since the inception of PSDF to 30 September 2013 were £2.5m, and have been capitalised within 'Property, plant and equipment'. Taking into consideration all aspects of the project, the Board views the carrying value of the capitalised expenditure incurred up to 31 March 2013 to be appropriate.
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 an interim dividend for the period of 0.6p per share (six months ended 30 September 2012: 0.5p).
The dividend is to be paid on 7 February 2014 to Shareholders on the register at 10 January 2014 (ex-dividend date of 8 January 2014).
Outlook
The Company continues to benefit from high utilisation across its three main revenue streams: Film, Television and Media Hub. Film investment is progressing well and making a meaningful contribution to revenue.
The Pinewood Studios Development Framework Public Inquiry started on 19 November 2013 and the Planning Inspectorate is expected to submit its report to the Secretary of State for Communities and Local Government on or before 7 April 2014.
The Company's international strategy continues to progress. Further to the announcement on 29 April 2013, Pinewood Atlanta Studios, a new purpose built film studio, is scheduled to open in March 2014.
The results for the media strategy are very encouraging and we are actively looking to manage additional funds.
The Board looks forward to the future with confidence.
Ivan DunleavyChief Executive
Financial Review
The Board uses a number of key performance indicators ("KPIs") to monitor Company performance, as well as to measure progress against the Company's objectives. Following the amendment to the Company's operational reporting structure in the prior period as discussed below, and the impact of the Media Investment segment on earnings before tax, the Board has updated the KPIs it uses to measure performance to; revenue, Media Services operating profit before exceptional items, profit after tax, earnings per share adjusted for exceptional items, return on capital employed for Media Services, cash flow and net debt. These are all discussed as part of the Financial Review.
Segment information
During the year ended 31 March 2013, the Director's amended the Group's operational reporting structure to improve its management of several new activities undertaken since the initial adoption of International Financial Reporting Standard 8 Operating Segments. As a result, the Company has identified 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 film industry.
In addition, an analysis of the composition of operating profit between Media Services, Media Investment in respect of Film Production Companies ("FPC"), Media Investment in respect of activities excluding Film Production Companies and exceptional items has been included within the Group Income Statement to provide improved clarity of the constituent elements of the Group's operating profit.
Revenue
Total revenues for the period were £36.6m (six months ended 30 September 2012: £27.1m).
Media Services
The Media Services segment has three principal complementary revenue streams - Film, Television and Media Hub.
Total revenues within this segment were £25.9m for the period (six months ended 30 September 2012: £24.5m), including £0.5m of intersegment revenue (six months ended 30 September 2012: £0.1m).
Film revenues for the period within this segment were £19.6m (six months ended 30 September 2012: £18.9m), including £0.5m of intersegment revenues generated from Pinewood Film Production Companies utilising the Group's facilities (six months ended 30 September 2012: £0.1m). The film revenue reflects high facility and service utilisation. Included in Film are international revenues of £0.5m (six months ended 30 September 2012: £0.5m). These revenues were earned from providing international sales, marketing and studio development services in Canada, the Dominican Republic and Malaysia.
Television revenues for the period were £3.2m (six months ended 30 September 2012: £2.5m) reflecting a high level of activity following the TV refurbishment project in the prior period.
Media Hub revenues, inclusive of service, utility and facility charges for the period were £3.1m (six months ended 30 September 2012: £3.1m). The results for the period include the Company's 50% interest in revenues from the Shepperton Studios Property Partnership ("SSPP") of £0.4m (six months ended 30 September 2012: £0.3m).
Media Investment
The Media Investment segment generates revenue from the provision of content investment and production services, principally to the film industry.
Total revenues within this segment were £11.2m for the period (six months ended 30 September 2012: £2.7m). The increase in revenue from this segment is due to additional Film Production Company activity, £11.1m (six months ended 30 September 2012: £2.7m) and the commencement of the Group's management of the IOMT's Media Development Fund from 25 October 2012.
Profit performance and earnings per share
Profit after tax for the six months ended 30 September 2013 was £3.4m (six months ended 30 September 2012: £2.0m).
Basic and diluted earnings per share for the period were 6.8p (six months ended 30 September 2012: 4.2p). Normalised basic and diluted earnings per share for the period (after adjusting for exceptional items) were6.9p (six months ended 30 September 2012: 6.7p).
The diluted and weighted average number of shares in issue at 30 September 2013 was 49.4m (30 September 2012: 48.1m).
EBITDA (earnings before exceptional items, interest, tax, depreciation and amortisation) for the period was £5.7m (six months ended 30 September 2012: £8.1m), including £2.7m of Media Investment loss (six months ended 30 September 2012: £0.4m loss).
Gross margin of 23% (six months ended 30 September 2012: 39%) includes a Media Investment gross loss of 19% (six months ended 30 September 2012: 14% loss). The Media Services segment gross margin of 43%, including intersegment profit, for the six months ended 30 September 2013 is in line with the full year segment margin at 31 March 2013. However, segment gross margin of 45% was generated for the six months ended 30 September 2012. The year on year variance is principally driven by the revenue mix and an increase in depreciation costs on facility and infrastructure expenditure.
Operating profit margin before exceptional items is 9% for the six months ended 30 September 2013. The variance against the margin for the six months ended 30 September 2012, 22%, is driven by the increased operating loss from FPC activity of £2.3m (six months ended 30 September 2012: £0.4m). The operating loss from FPC activity is expected and is offset by UK film tax relief. The Media Services operating margin before exceptional items is 24% (six months ended 30 September 2012: 27%). The variance is due to factors noted above for gross margin.
Exceptional expenses
The Group discloses as exceptional items on the face of the income statement those material items of income and 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 assess better trends in financial performance.
The Company has incurred exceptional charges of £0.1m during the period, detailed as follows:
Group reorganisation
The Company incurred exceptional reorganisation costs of £0.1m in the period (six months ended 30 September 2012: £0.1m) in relation to the restructuring of certain business areas.
AIM listing
As a result of the admission of the Company's ordinary shares to trading on AIM in 2012, the Company incurred £0.3m of professional advisor fees during the six month period to 30 September 2012. No such fees were incurred in the current period.
Isle of Man Media Development Fund
The Company incurred costs of £0.4m in the six month period to 30 September 2012 in relation to professional fees and integration costs as a result of signing an agreement with the Isle of Man Treasury ("IOMT") to source and advise on film investment opportunities for the £25.0m 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 current period.
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, excluding Pinewood Atlanta net debt, which for the twelve months ended 30 September 2013 was 8.2% (twelve months ended 30 September 2012: 9.8%). The reduction in ROCE year on year is principally driven by significant capital investment in the TV3, PSDF and Q Stage projects during the period which did not generate earnings during the twelve months ended 30 September 2013.
Dividend
The Board has declared an interim dividend of 0.6p (six months ended 30 September 2012: 0.5p). The dividend is to be paid on 7 February 2014 to shareholders on the register at 10 January 2014 (ex-dividend date of 8 January 2014).
Cash flow and net debt
The Company generated operating cash flow for the period of £5.7m (six months ended 30 September 2012: £7.2m). After adjusting for movements in working capital, cash generated from operations for the period was £9.0m (six months ended 30 September 2012: £10.0m), from which finance costs of £0.9m (six months ended 30 September 2012: £1.9m) were paid. UK film tax relief of £0.6m was received (six months ended 30 September 2012: £0.3m) and corporation tax of £1.3m was paid (six months ended 30 September 2012: £0.1m).
Cash outflow on capital expenditure during the period was £17.7m (six months ended 30 September 2012: £4.4m). The main areas of expenditure during the period were relating to the new Q Stage, £5.9m, the Group's share of the new studio currently being constructed in Atlanta, Georgia, £4.8m, the TV3 project, £2.8m, temporary workshops, £1.5m and PSDF, £0.7m.
Net debt at 30 September 2013 was £55.1m (30 September 2012: £41.9m) which included £12.0m (30 September 2012: £12.0m) relating to the Company's 50% interest in the non-recourse Aviva loan to SSPP and £2.5m relating to the Company's 40% interest in the non-recourse bank loan held by Pinewood Atlanta LLC (30 September 2012: £nil). The increase in net debt over the period is principally driven by the on-going large capital projects including Q Stage and TV3, plus the proportional consolidation of the Pinewood Atlanta loan for the first time.
The Company has primary banking facilities of up to £55.0m which comprise a £35.0m revolving credit facility, a £15.0m term facility and a £5.0m overdraft facility, as well as permitted other indebtedness capacity of up to £12.0m. 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 £5.0m overdraft facility is reviewed annually.
The revolving credit and term facilities have a range of covenants and events of default, together with variable margins between 435 and 285 basis points over LIBOR.
In addition to the £55.0m banking facilities, there are non-recourse facilities provided to SSPP by the Company's joint venture partner, Aviva, which total £40.0m, of which £24.0m was drawn at 30 September 2013 (30 September 2012: £24.0m). This loan, which is 50% consolidated at £12.0m (30 September 2012: £12.0m) is included in the Group's statement of financial position. These facilities, which are available until 2026, are covenant free with no scheduled repayments.
The Company has also proportionally consolidated its 40% share of a non recourse banking facility provided to Pinewood Atlanta LLC, totalling £2.5m at 30 September 2013 (30 September 2012: £nil). The loan is guaranteed by the joint venture partner and is ring-fenced from the Group.
Investment property
Investment property is recognised in accordance with International Accounting Standard 40 Investment Property as a category within assets in the Company's statement of financial position. At 30 September 2013, the investment property was recorded at the depreciated cost of £6.0m (30 September 2012: £6.1m).
Capital commitments
The Company had capital commitments of £0.6m at 30 September 2013 (30 September 2012: £nil) relating to the Q Stage, TV3 and energy infrastructure upgrade projects.
Related party transactions
The related party transactions which have taken place are set out in Note 15 to the condensed set of financial statements, together with any changes to related party transactions disclosed in the annual report for the year ended 31 March 2013 that could have a material effect on the financial position or performance of the Company.
Financial gearing
At 30 September 2013net debt, including the Company's share of the SSPP and Pinewood Atlanta non-recourse drawn loans and the restricted cash held for sole use by Pinewood Film Production Companies, was £55.1m (30 September 2012: £41.9m). Financial gearing at 30 September 2013,excluding fair value and loan issue costs, was 67.4% (30 September 2012: 52.7%).
Finance costs and hedging
Net finance costs for the period were £1.6m (six months ended 30 September 2012: £2.3m). The Company has at its disposal undrawn facilities for which it pays non-utilisation fees as a percentage of the margin. Net finance costs were covered 2.0 times by operating profit before exceptional items for the period (six months ended 30 September 2012: 2.7 times). The Company continued to use interest rate derivatives to manage interest rate exposure.
At 30 September 2013, £22.5m (30 September 2012: £22.5m) of the Company's facilities were under interest rate swaps and £2.1m (30 September 2012: £1.1m) under a fixed interest rate asset financing facility. The total fair value of these derivative financial instrument liabilities is £0.3m (30 September 2012: £0.7m). Following a change in accounting policy during the period from hedge accounting to reporting the movement in fair value through profit or loss as permitted under IAS 39 Financial Instruments: Recognition and Measurement, a £0.3m charge has been transferred from the cash flow hedge reserve to finance costs . A further charge of £0.3m is included within finance costs relating to the movement in fair value of these instruments during the period.
Exceptional finance costs
The Company incurred £0.6m of exceptional finance costs in the six months ended 30 September 2012 in relation to the refinancing of its banking facilities. These costs are included within finance costs in the group income statement. No such costs were incurred in the period to 30 September 2013.
Taxation
The total corporation tax credit for the six month period, based on profit before tax of £1.6m, was £1.8m (six months ended 30 September 2012: £0.9m charge).
The corporation tax credit for the year includes £2.4m of UK film tax relief for film production companies (six months ended 30 September 2012: £0.4m) which reflects the accounting treatment of the Group's FPCs and offsets the operating loss from Media Investment in respect of Film Production Companies.
The underlying rate of tax on profit before accounting for UK film tax relief from film production companies, prior year adjustments and exceptional items is 23% (six months ended 30 September 2012: 24%).
Going concern
In assessing the going concern basis, the Directors consider the Group's business activities, the financial position of the Company and the Company's financial risk management objectives and policies. The Directors considered that the Company has adequate resources to continue in operational existence for the foreseeable future, despite current economic uncertainty, and that it is therefore appropriate to adopt the going concern basis in preparing these consolidated financial statements.
Chris NaisbyFinance Director
INDEPENDENT REVIEW REPORT TO PINEWOOD SHEPPERTON PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 which comprises the condensed group income statement, the condensed group statement of other comprehensive income, the condensed group statement of financial position, the condensed group statement of cash flows, the condensed group reconciliation of movement in net debt, the condensed group statement of changes in equity and the related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules of the London Stock Exchange.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester, United Kingdom
25 November 2013
Condensed group income statement for the six months ended 30 September 2013
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | ||
Unaudited | Unaudited | Audited | ||
Note | £000 | £000 | £000 | |
Revenue- continuing operations | 3 | 36,571 | 27,104 | 55,642 |
Cost of sales | (27,995) | (16,609) | (37,823) | |
Gross profit | 8,576 | 10,495 | 17,819 | |
Selling and distribution expenses | (924) | (867) | (1,699) | |
Administration expenses:
|
| |||
- Recurring activities in the ordinary course of business | (4,267) | (3,558) | (7,156) | |
− - Exceptional expenses | 4 | (58) | (820) | (2,997) |
Total Administrative expenses | (4,325) | (4,378) | (10,153) | |
Loss on disposal of property, plant and equipment | (121) | - | (600) | |
Operating profit | 3,206 | 5,250 | 5,367 | |
Comprising: | ||||
- Operating profit from Media Services activities, before exceptional items | 6,013 | 6,553 | 10,510 | |
- Operating loss from Media Investment in respect of Film Production Companies | (2,267) | (397) | (1,522) | |
- Operating loss from other Media Investment activities | (482) | (86) | (624) | |
- Exceptional expenses | 4 | (58) | (820) | (2,997) |
3,206 | 5,250 | 5,367 | ||
Finance costs | (1,605) | (2,281) | (4,048) | |
Profit before tax | 1,601 | 2,969 | 1,319 | |
Current tax expense | (1,218) | (1,547) | (1,545) | |
UK Film Tax Relief from Film Production Companies | 2,378 | 440 | 1,522 | |
Deferred tax credit | 610 | 168 | 472 | |
Total tax credit/(expense) | 5 | 1,770 | (939) | 449 |
Profit for the period/year | 3,371 | 2,030 | 1,768 | |
Attributable to: | ||||
Equity holders of the parent | 3,371 | 2,030 | 1,768 | |
Earnings per share: | ||||
Basic and diluted for result for the period/year | 6 | 6.8p | 4.2p | 3.6p |
Condensed group statement of other comprehensive income
for the six months ended 30 September 2013
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | |
Unaudited | Unaudited | Audited | |
£000 | £000 | £000 | |
Profit for the period/year | 3,371 | 2,030 | 1,768 |
Net gain/(loss) on cash flow hedges | - | 32 | (281) |
Transfer of cash flow hedge interest to income statement | 328 | 218 | 774 |
Taxation through statement of changes in equity | - | (67) | 3 |
Taxation through income statement | - | - | (92) |
Other comprehensive income for the period/year, net of tax | 328 | 183 | 404 |
Total comprehensive income for the period/year, net of tax | 3,699 | 2,213 | 2,172 |
Attributable to: | |||
Equity holders of the parent | 3,699 | 2,213 | 2,172 |
Condensed group statement of financial position as at 30 September 2013
30 September 2013 | 30 September 2012 | 31 March 2013 | ||
Unaudited | Unaudited | Audited | ||
Note | £000 | £000 | £000 | |
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 8 | 139,014 | 121,375 | 125,792 |
Investment property | 9 | 5,998 | 6,129 | 6,062 |
Intangible assets | 10 | 5,604 | 5,604 | 5,604 |
Long-term assets | 1,146 | 307 | 369 | |
151,762 | 133,415 | 137,827 | ||
Current assets | ||||
Inventories | 445 | 434 | 459 | |
Trade receivables | 7,025 | 6,664 | 6,830 | |
Prepayments and other receivables | 4,593 | 3,148 | 1,954 | |
Cash | 11 | 2,635 | 5,769 | - |
14,698 | 16,015 | 9,243 | ||
Total assets | 166,460 | 149,430 | 147,070 | |
Equity and liabilities | ||||
Equity attributable to equity holders of parent | ||||
Share capital | 7 | 4,941 | 4,941 | 4,941 |
Share premium | 7 | 48,718 | 48,718 | 48,718 |
Capital redemption reserve | 7 | 135 | 135 | 135 |
Merger reserve | 7 | 348 | 348 | 348 |
Fair value of cash flow hedge | - | (549) | (328) | |
Retained earnings | 28,885 | 26,764 | 26,255 | |
Total equity | 83,027 | 80,357 | 80,069 | |
Non-current liabilities | ||||
Interest-bearing loans and borrowings | 57,726 | 47,670 | 44,213 | |
Derivative financial instruments | 284 | - | - | |
Deferred tax liabilities | 117 | 1,101 | 727 | |
58,127 | 48,771 | 44,940 | ||
Current liabilities | ||||
Trade and other payables | 23,726 | 19,602 | 19,619 | |
Dividends payable | 6 | 741 | - | - |
Interest-bearing loans and borrowings | - | - | 460 | |
Derivative financial instruments | 41 | - | - | |
Provisions | 13 | 798 | - | 1,538 |
Tax payable | - | 700 | 444 | |
25,306 | 20,302 | 22,061 | ||
Total liabilities | 83,433 | 69,073 | 67,001 | |
Total equity and liabilities | 166,460 | 149,430 | 147,070 |
The financial statements of Pinewood Shepperton plc, Company number: 03889552, were approved by the Board of Directors and authorised for issue by the Board of Directors on 25 November 2013 and are signed on its behalf by:
Chris Naisby
Finance Director
Condensed group statement of cash flows for the six months ended
30 September 2013
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | ||
Unaudited | Unaudited | Audited | ||
Note | £000 | £000 | £000 | |
Cash flow from operating activities: | ||||
Profit before tax | 1,601 | 2,969 | 1,319 | |
Adjustments to reconcile profit before tax to net cash flows: | ||||
Exceptional charges | - | - | 2,091 | |
Depreciation and amortization | 2,408 | 1,991 | 4,208 | |
Loss disposal of property, plant and equipment | 121 | - | 600 | |
Finance costs | 1,605 605 | 2,281 | 4,048 | |
Cash flow from operating activities before changes in working capital | 5,735 | 7,241 | 12,266 | |
Increase in trade and other receivables | (1,000) | (3,639) | (2,611) | |
Decrease in inventories | 14 | 52 | 27 | |
Increase in trade and other payables | 5,026 | 6,337 | 3,784 | |
Decrease in provisions | (740) | - | - | |
Cash generated from operations | 9,035 | 9,991 | 13,466 | |
Finance costs paid | (937) | (1,895) | (3,455) | |
Corporation tax paid | (1,258) | (143) | (296) | |
Corporation tax received in respect of FPC activity | 635 | 262 | 1,198 | |
Net cash flow from operating activities | 7,475 | 8,215 | 10,913 | |
Cash flow used in investing activities: | ||||
Purchase of property, plant and equipment | (17,704) | (4,432) | (9,552) | |
Additions to long term assets | (677) | - | (63) | |
Net cash flow used in investing activities | (18,381) | (4,432) | (9,615) | |
Cash flow from/(used in) financing activities: | ||||
Proceeds from the issue of shares | - | 5,087 | 5,087 | |
Dividends paid | - | - | (247) | |
Repayment of asset financing obligations | (503) | (224) | (570) | |
Proceeds from asset financing | - | - | 1,849 | |
Payment of loan issue fees | - | (1,285) | (1,285) | |
Repayment of bank borrowings | - | (37,000) | (37,000) | |
Proceeds from bank borrowings | 14,504 | 35,000 | 30,000 | |
Net cash flow from/(used in) financing activities | 14,001 | 1,578 | (2,166) | |
Net increase/(decrease) in cash | 3,095 | 5,361 | (868) | |
(Overdraft)/cash at the start of the period/year | (460) | 408 | 408 | |
Cash/(overdraft) at the end of the period/year |
11 | 2,635 | 5,769 | (460) |
Included in the cash balance is £777,000 which is unavailable for general use (six months ended 30 September 2012: £4,568,000). Please see Note 11.
Condensed group reconciliation of movement in net debt
for the six months ended 30 September 2013
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | |
Unaudited | Unaudited | Audited | |
£000 | £000 | £000 | |
Reconciliation of net cash flow to movement in net debt: | |||
Increase/(decrease) in cash and cash equivalents | 3,095 | 5,361 | (868) |
Repayments of asset financing obligations | 503 | 224 | 570 |
Proceeds from asset financing | - | - | (1,849) |
Loan issue costs | - | 1,285 | 1,249 |
Amortisation of loan issue costs | (143) | (568) | (675) |
Repayment of bank borrowings | - | 37,000 | 37,000 |
Proceeds from bank borrowings | (14,504) | (35,000) | (30,000) |
Movement in fair value of cash flow hedge | 631 | 239 | 342 |
Movement in net debt | (10,418) | 8,541 | 5,769 |
Net debt at start of period/year | (44,673) | (50,442) | (50,442) |
Net debt at end of period/year | (55,091) | (41,901) | (44,673) |
Attributable to: | |||
Cash | 2,635 | 5,769 | (460) |
Non-current liabilities | |||
Revolving credit facility loan | (42,000) | (35,000) | (30,000) |
Drawn facility loans | (42,000) | (35,000) | (30,000) |
Fair value of cash flow hedge | - | (734) | (631) |
Unamortised loan issue costs | 869 | 1,155 | 1,012 |
Asset financing | (2,089) | (1,089) | (2,592) |
Share of joint venture loans | (14,506) | (12,002) | (12,002) |
Interest-bearing loans and borrowings | (57,726) | (47,670) | (44,213) |
Net debt at end of period/year | (55,091) | (41,901) | (44,673) |
Condensed group statement of changes in equity
From 1 April 2012 to 30 September 2013
Share capital | Share premium | Capital redemption reserve | Merger reserve | Fair value of cash flow hedge reserve | Retained earnings | Total equity | |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | |
At 1 April 2012 | 4,725 | 43,847 | 135 | 348 | (732) | 24,734 | 73,057 |
Profit for the period | - | - | - | - | - | 2,030 | 2,030 |
Other comprehensive income, net of tax | - | - | - | - | 183 | - | 183 |
Total net comprehensive income | - | - | - | - | 183 | 2,030 | 2,213 |
New shares issued | 216 | 4,871 | - | - | - | - | 5,087 |
At 30 September 2012 (Unaudited) | 4,941 | 48,718 | 135 | 348 | (549) | 26,764 | 80,357 |
Loss for the period | - | - | - | - | - | (262) | (262) |
Other comprehensive income, net tax | - | - | - | - | 221 | - | 221 |
Total net comprehensive income | - | - | - | - | 221 | (262) | (41) |
Equity dividends | - | - | - | - | - | (247) | (247) |
At 31 March 2013 (Audited) | 4,941 | 48,718 | 135 | 348 | (328) | 26,255 | 80,069 |
Profit for the period | - | - | - | - | - | 3,371 | 3,371 |
Other comprehensive income, net of tax | - | - | - | - | 328 | - | 328 |
Total net comprehensive income | - | - | - | - | 328 | 3,371 | 3,699 |
Equity dividends | - | - | - | - | - | (741) | (741) |
At 30 September 2013 | 4,941 | 48,718 | 135 | 348 | - | 28,885 | 83,027 |
Notes to the condensed group consolidated financial statements at 30 September 2013
1. Authorisation of financial statements and statement of compliance with IFRS
The unaudited interim condensed Group financial statements of Pinewood Shepperton plc for the six months ended 30 September 2013 were authorised for issue by the Board of Directors on 25 November 2013 and the statement of financial position was signed on the Board's behalf by the Finance Director. Pinewood Shepperton plc ("the Company") is public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange.
The unaudited interim condensed consolidated financial statements for the six months ended 30 September 2013 have been prepared in accordance with International Accounting Standard 34 Interim financial reporting, as adopted by the European Union.
2. Basis of preparation and accounting policies
Basis of preparation
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements as defined in Section 435 of the Companies Act 2006, and should be read in conjunction with the Group's Annual report and Accounts for the year ended 31 March 2013, from which comparative information included in the interim condensed consolidated financial statements has been extracted. The consolidated financial statements for the year ended 31 March 2013, which were prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.
Going concern
Information on the Group's risks, management and exposure are set out in the "Key business risks" section of the Group's Annual Report and Note 29 "Financial risk management, objectives and policies" of the Group's Annual Accounts for the year ended 31 March 2013. Although the Group is in a net current liability position, the Group has £13.0m of undrawn committed loan facilities in place, excluding facilities under the SSPP and Atlanta joint ventures, which the Directors are confident provides sufficient headroom to support continued trading. The Directors, having made appropriate enquiries, therefore consider that the Group has adequate resources to continue in the operational business for the foreseeable future and continue to adopt the going concern basis in preparing these consolidated financial statements.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's Annual Accounts for the year ended 31 March 2013, with the exception of newly applicable standards effective for annual periods beginning on or after 1 January 2013, none of which have a material impact on these accounts, and 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. Newly applicable accounting standards effective since 31 March 2013 were IAS 1 Financial Statement Presentation - Presentation of Other Comprehensive Income (revised) and IFRS 13 Fair Value Measurement.
The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.
Significant accounting judgements and estimates
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed in Note 16 "Principal Risks and Uncertainties".
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".
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 period ended 30 September 2013 and 30 September 2012 (restated) is presented below:
Revenue: | Six months ended 30 September 2013
| Six months ended 30 September 2012 (restated) | Year ended 31 March 2013
|
Unaudited | Unaudited | Audited | |
£000 | £000 | £000 | |
Media Services: | |||
External Film | 19,025 | 18,777 | 35,203 |
Intersegment Film | 539 | 118 | 466 |
External Television | 3,165 | 2,457 | 5,239 |
External Media Hub | 3,142 | 3,122 | 6,272 |
25,871 | 24,474 | 47,180 | |
Media Investment: | |||
Film Production Companies | 11,056 | 2,748 | 8,736 |
External investment management | 183 | - | 192 |
11,239 | 2,748 | 8,928 | |
Total segmental revenue | 37,110 | 27,222 | 56,108 |
Elimination of intersegment revenue | (539) | (118) | (466) |
Group revenue | 36,571 | 27,104 | 55,642 |
Income statement: | Six months ended30 September 2013
| Six months ended30 September 2012 (restated) | Year ended 31 March 2013
| |||||||||
Unaudited
| Unaudited
| Audited
| ||||||||||
Media Services
| Media Invest-ment | Total
| Media Services
| Media Invest-ment | Total
| Media Services
| Media Invest-ment | Total
| ||||
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | ||||
Segment revenue- total | 25,871 | 11,239 | 37,110 | 24,474 | 2,748 | 27,222 | 47,180 | 8,928 | 56,108 | |||
Cost of sales | (14,671) | (13,324) | (27,995) | (13,464) | (3,145) | (16,609) | (27,563) | (10,260) | (37,823) | |||
Elimination of intersegment profit | (539) | - | (539) | (118) | - | (118) | (466) | - | (466) | |||
Gross profit/(loss) | 10,661 | (2,085) | 8,576 | 10,892 | (397) | 10,495 | 19,151 | (1,332) | 17,819 | |||
Selling and distribution expenses | (924) | - | (924) | (867) | - | (867) | (1,699) | - | (1,699) | |||
Administrative expenses: | ||||||||||||
Recurring in the ordinary course of business | (3,603) | (664) | (4,267) | (3,472) | (86) | (3,558) | (6,342) | (814) | (7,156) | |||
Exceptional expenses | (58) | - | (58) | (820) | - | (820) | (2,997) | - | (2,997) | |||
Total administrative expenses | (3,661) | (664) | (4,325) | (4,292) | (86) | (4,378) | (9,339) | (814) | (10,153) | |||
Loss on disposal of property, plant and equipment | (121) | - | (121) | - | - | - | (600) | - | (600) | |||
Operating profit/(loss) | 5,955 | (2,749) | 3,206 | 5,733 | (483) | 5,250 | 7,513 | (2,146) | 5,367 | |||
Operating profit/(loss) before exceptional items | 6,013 | (2,749) | 3,264 | 6,553 | (483) | 6,070 | 10,510 | (2,146) | 8,364 | |||
Finance costs | (1,495) | (110) | (1,605) | (2,281) | - | (2,281) | (3,911) | (137) | (4,048) | |||
Profit/(loss) before tax | 4,460 | (2,859) | 1,601 | 3,452 | (483) | 2,969 | 3,602 | (2,283) | 1,319 | |||
Corporation tax (expense)/credit | (1,371) | 153 | (1,218) | (1,568) | 21 | (1,547) | (1,740) | 195 | (1,545) | |||
UK film tax relief | - | 2,378 | 2,378 | - | 440 | 440 | - | 1,522 | 1,522 | |||
Deferred tax credit | 139 | 471 | 610 | 168 | - - | 168 | 144 | 328 | 472 | |||
Total corporation tax (expense)/credit | (1,232) | 3,002 | 1,770 | (1,400) | 461 | (939) | (1,596) | 2,045 | 449 | |||
Profit/(loss) after tax | 3,228 | 143 | 3,371 | 2,052 | (22) | 2,030 | 2,006 | (238) | 1,768 | |||
During the period, the Group provided film finance totalling £1,135,000 to its wholly owned subsidiary film production companies for the production of Our Robot Overlords, Posh and Pressure (six months ended 30 September 2012: £520,000 Belle).
4. Exceptional charges
Exceptional administrative expenses for the period total £58,000 (six months ended 30 September 2012: £820,000) and consist of:
Group reorganisation
The Group incurred exceptional reorganisation costs of £58,000 in the period (six months ended 30 September 2012: £124,000) in relation to the restructuring of certain business areas.
AIM listing
As a result of the Company's ordinary shares admission to AIM in July 2012, the Group incurred £336,000 of professional advisor fees during the period. No such costs have been incurred in the current period.
Isle of Man Media Development Fund
The Group incurred costs of £360,000 in the prior period 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 current period.
5. Taxation
The current corporation tax credit for the period, arising on profit before tax of £1.6m, was £1.8m (six months ended 30 September 2012: £0.9m expense). The corporation tax credit for the year includes £2.4m of UK film tax relief (six months ended 30 September 2012: £0.4m) which reflects the accounting treatment of the Group's FPCs and offsets the operating loss from Media Investment in respect of these FPC's.
The underlying rate of tax on profit before accounting for UK film tax relief from film production companies, prior year adjustments and exceptional items is 23% (six months ended 30 September 2012: 24%).
Reconciliation of the total tax charge
A reconciliation between the tax expense and the product of accounting profit multiplied by the standard rate of corporation tax in the UK for the six months ended 30 September 2013 is:
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | |
Unaudited | Unaudited | Audited | |
£000 | £000 | £000 | |
Accounting profit before corporation tax | 1,601 | 2,969 | 1,319 |
Profit on ordinary activities multiplied by UK rate of 23% (2011/2012: 24%) | 368 | 713 | 317 |
Adjustments in respect of: | |||
Corporation tax under provided in previous years | - | 534 | 457 |
Film tax credit | (2,378) | (440) | (1,522) |
Deferred tax over provided in previous years | - | (68) | (130) |
Non allowable depreciation on buildings | 109 | 72 | 179 |
Other non allowable expenses/(income) | (3) | 184 | 337 |
Overseas tax at higher rate | - | - | 23 |
Utilisation of previously unrecognised tax losses | - | - | (173) |
Effect of taxation rate change on provision for deferred taxation | (11) | (56) | (29) |
Cash flow hedges | 145 | - | 92 |
Tax (credit)/expense | (1,770) | 939 | (449) |
6. Earnings per ordinary share and dividend
Basic earnings per ordinary share is calculated by dividing net profit for the period attributable to the holders of ordinary equity by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per ordinary share are calculated by dividing net profit for the period attributable to the holders of ordinary equity by the weighted average number of ordinary shares outstanding during the period adjusted for the effects of dilutive potential ordinary shares resulting from employee share schemes.
The Group presents as exceptional items on the face of the income statement those items where the cost or income is one off in nature and 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 effect of the exceptional items.
The following reflects the profit and number of shares generating the basic and diluted earnings per ordinary share computations:
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | |
Unaudited | Unaudited | Audited | |
£000 | £000 | £000 | |
Profit attributable to equity holders of the parent | 3,371 | 2,030 | 1,768 |
Adjustments to loss for calculation of adjusted earnings per share: | |||
Exceptional administrative expenses | 58 | 820 | 2,997 |
Exceptional finance charges | - | 244 | 411 |
Swap termination costs | - | 402 | 402 |
Taxation adjustments on exceptional items | (13) | (295) | (653) |
Adjusted profit for adjusted earnings per share | 3,416 | 3,201 | 4,925 |
| |||
Thousands | Thousands | Thousands | |
Basic and diluted weighted average number of ordinary shares | 49,410 | 48,078 | 48,735 |
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | |
Earnings per share: | Unaudited | Unaudited | Audited |
Basic and diluted for result for the period | 6.8p | 4.2p | 3.6p |
Basic and diluted for result for the period adjusted for exceptional items | 6.9p | 6.7p | 10.1p |
Dividends paid
Six months ended 30 September 2013 | Six months ended 30 September 2012 | Year ended 31 March 2013 | |
Unaudited | Unaudited | Audited | |
£000 | £000 | £000 | |
Interim dividend for the year ended 31 March 2013 paid at 0.5p per share | - | - | 247 |
Final dividend for the year ended 31 March 2013 paid at 1.5p per share | 741 | - | - |
741 | - | 247 |
The final dividend for the year ended 31 March 2013 was paid on 7 October 2013.
The Board of Directors approved and declared an interim dividend of 0.6p per share for the year ended 31 March 2014 on 25 November 2013. The dividend is to be paid on 7 February 2014.
7. Share capital and reserves
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the general meetings of the Company.
Authorised
| No. | £000 |
At 30 September 2013 and 2012: Ordinary shares of 10p each | 70,000,000 | 7,000 |
Issued, called up and fully paid
No. | £000 | |
At 1 January 2011: Ordinary shares of 10p each | 46,232,006 | 4,623 |
Shares issued under Company Share option schemes: | ||
10p ordinary shares issued on 21 June 2011 | 800,000 | 80 |
At 30 June 2011 | 47,032,006 | 4,703 |
Shares issued under Company Share option schemes: | ||
10p ordinary shares issued on 8 July 2011 | 216,677 | 22 |
10p ordinary shares issued on 28 December 2011 | 1,243 | - |
At 31 March 2012 and 31 December 2011 | 47,249,926 | 4,725 |
New shares issued: 10p ordinary shares issued on 23 July 2012
| 2,160,000 | 216 |
At 30 September 2013, 31 March 2013 and 30 September 2012 | 49,409,926 | 4,941 |
Share premium reserve
The share premium increased by £4.9m in the period to 30 September 2012 as a result of the new shares issued less share issuance costs of £0.3m on 23 July 2012. No increases have arisen in the six month period to 30 September 2013.
Capital redemption reserve
The capital redemption reserve arose as a result of the repurchase of shares in 2001.
Merger reserve
On acquiring Shepperton Studios Limited the Company issued ordinary shares as part of the consideration. Merger relief was taken in accordance with Section 131 of the Companies Act 1985 (since succeeded by Section 612 of the Companies Act 2006), and hence £0.3m was credited to the merger reserve.
8. Property, plant and equipment
Freehold land | Freehold buildings and improve-ments | Leasehold improve-ments | Fixtures, fittings and equipment | Assets under construc-tion | Total | |
£000 | £000 | £000 | £000 | £000 | £000 | |
Cost: | ||||||
At 31 March 2012 | 56,471 | 72,835 | 2,630 | 31,673 | 412 | 164,021 |
Additions | - | 1,219 | 50 | 1,300 | 1,148 | 3,717 |
At 30 September 2012 | 56,471 | 74,054 | 2,680 | 32,973 | 1,560 | 167,738 |
Additions | - | 5,297 | 280 | 1,495 | 636 | 7,708 |
Disposals | - | (832) | - | (145) | - | (977) |
Transfers | - | - | 412 | - | (412) | - |
At 31 March 2013 | 56,471 | 78,519 | 3,372 | 34,323 | 1,784 | 174,469 |
Additions | - | 8,704 | - | 1,499 | 5,505 | 15,708 |
Disposals | - | (165) | (6) | (1,214) | - | (1,385) |
At 30 September 2013 | 56,471 | 87,058 | 3,366 | 34,608 | 7,289 | 188,792 |
Depreciation: | ||||||
At 31 March 2012 | 7,690 | 14,469 | 1,040 | 21,251 | - | 44,450 |
Provided during the year | - | 1,016 | 88 | 809 | - | 1,913 |
At 30 September 2012 | 7,690 | 15,485 | 1,128 | 22,060 | - | 46,363 |
Provided during the year | - | 1,117 | 89 | 932 | - | 2,138 |
Impairment for the year | - | - | 528 | 25 | - | 553 |
Depreciation on disposals | - | (246) | - | (131) | - | (377) |
At 31 March 2013 | 7,690 | 16,356 | 1,745 | 22,886 | - | 48,677 |
Provided during the year | - | 1,221 | 75 | 1,010 | - | 2,306 |
Depreciation on disposals | - | (14) | - | (1,191) | - | (1,205) |
At 30 September 2013 | 7,690 | 17,563 | 1,820 | 22,705 | - | 49,778 |
Net book value: | ||||||
At 30 September 2013 | 48,781 | 69,495 | 1,546 | 11,903 | 7,289 | 139,014 |
At 31 March 2013 | 48,781 | 62,163 | 1,627 | 11,437 | 1,784 | 125,792 |
At 30 September 2012 | 48,781 | 58,569 | 1,552 | 10,913 | 1,560 | 121,375 |
Assets under construction at 30 September 2013 relate to costs capitalised under the Pinewood Studios Development Framework, £2,534,000 and the studio facility being constructed by the Pinewood Atlanta joint venture, £4,755,000. These are not depreciated.
During the period the Group has capitalised borrowing costs amounting to £115,000 (six months ended 30 September 2012: £nil) on qualifying assets. Borrowing costs were capitalised at a weighted average rate of general borrowing of 4.5%.
The Group's long term loan is secured by a floating charge over the Group's assets.
9. Investment property
Investment property is stated at depreciated cost excluding the day to day expense of servicing the property. At 30 September 2013, the Group's investment property had a carrying value of £6.0m (30 September 2012: £6.1m).
10. Intangible assets
Goodwill£000 | |
At 30 September 2013 and 2012 | 5,604 |
The goodwill of £5.6m (30 September 2012: £5.6m) has been acquired through business combinations and has been allocated to the Group's cash-generating unit. It is tested at least annually for impairment. The last impairment review was performed at 31 March 2013 and did not give rise to any indication of impairment.
The recoverable amount has been determined based on a value in use calculation using cash flow projections based on the Group's long range plan. The pre-tax cash flows over this period support the carrying value of the goodwill.
The key assumptions used to determine the recoverable amount for the cash generating unit were discussed in the Group's Annual Report and Accounts for the year ended 31 March 2013.
11. Cash
Included within the Cash balance per the statement of financial position at the period end are amounts which are unavailable for general use. These amounts relate to funds reserved solely for use in the production of specific Pinewood Film Production Company operations. The reconciliation below shows the breakdown of total cash per the statement of financial position at the period end:
30 September 2013 | 30 September 2012 | 31 March 2013 | |
Unaudited | Unaudited | Audited | |
£000 | £000 | £000 | |
Net cash/(overdraft) available for general use | 1,858 | 1,201 | (2,094) |
Restricted cash | 777 | 4,568 | 1,634 |
Total cash/(overdraft) | 2,635 | 5,769 | (460) |
12. Commitments and contingencies
Capital commitments
At 30 September 2013, the Group had capital commitments contracted but not provided for totalling £594,000 (30 September 2012: £nil) in relation to the new Q Stage, TV3 project and energy infrastructure upgrades.
Guarantees
At 30 September 2013, the Group had guarantees in place, in the form of documentary credits, totalling £155,000 (30 September 2012: £155,000) in relation to certain Section 278 highways related infrastructure which have not been provided for.
13. Provisions
Teddington Studios Limited previously exercised an option to terminate its leasehold interest in Teddington Studios on 24 December 2014. The Group elected during 2013 to cease activity at the site in advance of the termination date and as a result has determined the lease on the Studio is an onerous contract. The provision for onerous lease contracts represents the present value of the future lease payments and unavoidable costs that the Group is presently obliged to make under the non-cancellable onerous operating lease contract from Teddington Studios, less net revenue expected to be earned on the lease from tenants and productions. The estimate may vary as a result of changes in the utilisation of the leased premises. The initial estimate of these costs was provided for in the income statement for the year ended 31 March 2013. The provision is expected to be fully utilised within two years.
The movement in the provision for the six months ended 30 September 2013 is as follows:
Onerous Lease Provision£000 | |
Balance at 31 March 2013 | 1,538 |
Utilisation of provision | (740) |
Balance at 30 September 2013 | 798 |
14. Financial risk management, objectives and policies
The financial risk management, objectives and policies of the Group are disclosed in Note 29 of the Group's Annual Report and Accounts for the year ended 31 March 2013.
Fair values of financial assets and liabilities
As at 30 September 2013, there were no significant differences between the book value and fair value (as determined by market value) of the Group's financial assets and liabilities. The fair value of floating and fixed rate borrowings approximate to the carrying value because interest rates are reset to market rates at intervals of less than one year.
The fair value of derivative financial instruments is estimated by discounting the future contracted cash flow using readily available market data and represents a level 2 measurement in the fair value hierarchy under IFRS 7 Financial Instruments: Disclosures.
As at 30 September, the total interest rate instruments outstanding were for principal amounts totalling £22.5m. The contracts mature in November 2016 and therefore the cash flows and resulting effect on profit and loss are expected to occur over that period. The fair values of the interest rate instruments are disclosed as a liability of £0.3m in the condensed balance sheet. Any movements in the fair values of the contracts are recognised in the income statement.
15. Related party disclosures
The unaudited interim consolidated financial statements include the financial statements of Pinewood Shepperton plc, its subsidiaries and its interests in the joint ventures listed in the following table.
Country of incorporation | % equity interest | ||
30 September 2013 | 30 September 2012 | ||
Pinewood Studios Limited | United Kingdom | 100 | 100 |
Shepperton Studios Limited | United Kingdom | 100 | 100 |
Pinewood-Shepperton Studios Limited | United Kingdom | 100 | 100 |
Teddington Studios Limited | United Kingdom | 100 | 100 |
Pinewood Shepperton Facilities Limited | United Kingdom | 100 | 100 100 |
Baltray No.1 Limited | United Kingdom | 100 | 100 |
Baltray No.2 Limited | United Kingdom | 100 | 100 |
Shepperton Management Limited | United Kingdom | 100 | 100 |
Pinewood PSB Limited (previously Project Pinewood Property Limited) | United Kingdom | 100 | 100 |
Saul's Farm Limited | United Kingdom | 100 | 100 |
Pinewood Malaysia Limited | United Kingdom | 100 | 100 |
Pinewood Germany Limited | United Kingdom | 100 | 100 |
Pinewood Dominican Republic Limited | United Kingdom | 100 | 100 |
Pinewood USA Inc | USA | 100 | 100 |
Pinewood Film Production Studios Canada Inc | Canada | 100 | 100 |
Pinewood China Limited | United Kingdom | 100 | - |
Pinewood Atlanta Limited | United Kingdom | 100 | - |
Pinewood Films Limited | United Kingdom | 100 | 100 100 |
Pinewood Last Passenger Limited (previously Pinewood Films No.2 Limited) | United Kingdom | 100 | 100
|
Pinewood Belle Limited (previously Pinewood Films No.3 Limited) | United Kingdom | 100 | 100 |
Pinewood Films No.4 Limited | United Kingdom | 100 | 100 |
Pinewood Films No.5 Limited | United Kingdom | 100 | - |
Pinewood Films No.6 Limited | United Kingdom | 100 | - |
Pinewood Films No.7 Limited | United Kingdom | 100 | - |
Pinewood Films No.8 Limited | United Kingdom | 100 100 | - |
Pinewood Films No.9 Limited | United Kingdom | 100 | - |
Pinewood Films Advisors Limited | United Kingdom | 100 | 100 |
PSL Consulting Limited | United Kingdom | 100 | - |
Pinewood Shepperton plc is the parent entity of the Group.
Joint ventures
|
| % Joint venture interest | |
Shepperton Studios (General Partner) Limited | United Kingdom | 50 | 50 |
Shepperton Studios Property Partnership | United Kingdom | 50 | 50 |
Pinewood Studio Berlin Film Services GmbH | Germany | 50 | 50 |
Pinewood Atlanta LLC | USA | 40 | - |
Shepperton Studios Limited has a commercial property lease on the Shepperton Studios property. The net cost to the Group of principal lease rentals during the six month period ended 30 September 2013 was £597,000 (six months ended 30 September 2012: £565,000).
In addition the Group pays a top up rent to the joint venture partnership based on certain of its trading activities at the Shepperton Studios site. The net cost to the Group of the top up rent for the period was £175,000 (six months ended 30 September 2012: £163,000).
Shepperton Management Limited manages the assets of the joint venture partnership and charges an asset management fee based on independent valuations of the Shepperton Studios site. Asset management fees charged during the period were £59,000 (six months ended 30 September 2012: £61,000). The Group's share of amounts owed by the 50% joint venture partnership at 30 September 2013 was £624,000 (30 September 2012: £802,000).
Pinewood Germany Limited has a 50:50 joint venture with Studio Hamburg GmbH, to market their existing studio facilities in Hamburg and Berlin.
Pinewood Atlanta Limited entered into a 40:60 joint venture with River's Rock LLC to develop 288 acres of land south of Atlanta, Georgia, USA into world class studio facilities. Pinewood will provide sales and marketing facilities. The Group's share of amounts owed by the 40% joint venture at 30 September was £3,772,000, which includes a bank loan of £2,504,000 which has been guaranteed by the joint venture partner and is ring-fenced from the Group's banking covenants.
On 17 April 2013, the Group announced that it had entered into a 50:50 joint venture agreement with Seven Stars Media Limited, one of China's leading private media groups which provides content creation and distribution, media services and events. The joint venture, to be called "Song Lin", initially will assess a number of business proposals in the growing entertainment market in China. Under the terms of the joint venture, Pinewood will provide its expertise with limited capital investment and therefore there will be limited financial impact to the Group from the venture. The joint venture has yet to be incorporated.
Board Changes
On 29 April 2013, Thomas Allison was appointed to the Board as a Non-Executive Director, replacing Mark Senior as a Peel Holdings nominated Non-Executive Director.
On 30 September 2013, Chris Naisby was appointed to the Board as Finance Director.
Peel Management fee
The Group has agreed an Advisory and Non-Executive Directors Services fee of £120,000 per annum with Peel Acquisitions (Pegasus) Limited. Fees charged in relation to these services during the period were £60,000 (six months ended 30 September 2012: £240,000).
Transaction with Director
The Group has a consultancy agreement for services related to the Isle of Man Investment Advisory Agreement with Gasworks Media Limited, a company incorporated in the Isle of Man, whose sole shareholder, Steve Christian, is also an Executive Director of the Group. The total value of the transactions during the year is £135,000, of which £45,000 remains outstanding for payment by the Group at 30 September 2013 (six month period ended 30 September 2012: no transactions). The balance owing is unsecured, interest free and payable in cash upon invoicing.
16. Principal risks and uncertainties
There are no changes to the assessment and considerations of the principal risks as disclosed in the Group's Annual Report for year ended 31 March 2013.
The principal risks to which the Group is exposed are disclosed in the "Key business risks" section of the Annual Report and Note 29 "Financial risk management, objectives and policies" of the Annual Accounts for the year ended 31 March 2013. An electronic version of the Annual Report and Accounts can be found in the investor relations section of the Group's website: www.pinewoodshepperton.com