PWS.L Regulatory News (PWS)

Pinewood Shepperton plc

Successful completion of £50 million refinancing

and the publication of the audited results for the fifteen month period ended 31 March 2012

Pinewood Shepperton plc ("the Company"), a leading provider of services to the global film and television industry, today announces it has renewed its banking facilities and published its audited results for the fifteen month period ended 31 March 2012 ("the fifteen month period").

Highlights

·; Total committed facilities of £50 million and renewal of the £5 million overdraft facility.

·; Facilities extended to November 2016.

Summary

The Company is pleased to announce that it has completed a refinancing of its main banking facilities. It now benefits from £50 million term and revolving facilities, which mature in November 2016. These new arrangements replace the previous £47 million revolving and development facilities, which were due to expire in August 2013.

Banking Facilities

The principal terms of the revised bank facilities include:

·; Sterling-denominated term facility of £15 million.

·; Multi-currency revolving credit facility of £35 million.

·; The bank facilities attract a margin over LIBOR ratchet operated by reference to the Group's performance against its leverage covenant. The margin ratchets between 2.85% and 4.35%.

Existing lenders Lloyds TSB Bank plc and The Royal Bank of Scotland plc acted as arrangers on the new facilities, with both continuing as lenders.

Commenting on the successful refinancing, Ivan Dunleavy, Chief Executive, said:

"Against the backdrop of a strong operating performance demonstrated by our results in the fifteen months to 31 March the Company has renewed its banking facilities on favourable terms given current market conditions. The Company is well positioned to pursue its objectives and looks to the future with confidence."

Enquiries

Notes to editors

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

·; The 30,000 sq ft Richard Attenborough Stage was officially opened on 23 April 2012

·; 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 Studios has Europe's largest green screen

·; Pinewood and Shepperton Studios have been home to over 1,500 films in the last 75 years

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

·; The Studios offer digital network speeds of 10 Gb/s.

Forward looking statements

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

For more information

www.pinewoodgroup.com

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

Chairman's Statement

Pinewood Shepperton plc has once again delivered another strong performance with revenues of £63.0m for the fifteen month period ended 31 March 2012 (year to 31 December 2010: £43.4m). The Company has made a positive start to the new financial year. The Company has continued to invest in its facilities to ensure it remains the preferred destination for the screen based industries. A range of infrastructure projects have been completed or are under way to meet the ever increasing demands of its global customer base. These investments have included a £3.3m capital project for an electricity supply upgrade, a £0.5m new workshop facility and the new £5.6m 30,000 sq ft Richard Attenborough Stage officially named by Lord Puttnam on 23 April 2012. In addition, the Company announced on 29 February 2012 a transformational investment programme to expand its digital offering and HD television facilities.

The Company's international strategy has delivered positive growth. Our new markets in Canada, the Dominican Republic, Germany and Malaysia give the Company access to regions of the world where content production is expected to grow. The innovative water tank facility at Pinewood Indomina Studios in the Dominican Republic is expected to become operational during September 2012 and phase one of the Pinewood Iskandar Malaysia Studios is expected to open during May 2013.

In light of the level of exceptional costs incurred in the period, the Board has decided not to recommend a dividend in respect of the fifteen month period to 31 March 2012, resulting in nil interim dividends paid for the fifteen month period. The Board is committed to pay dividends in line with its dividend policy of not less than three times cover.

On 8 July 2011 the Recommended Cash Offer ("the Offer") by Peel Acquisitions (Pegasus) Limited ("Peel Acquisitions") for the Company closed. Peel Acquisitions is now the largest shareholder with 71.06% of the Company. Warren James Holdings Ltd is the second largest shareholder with 27.91% of the Company. Both major shareholders have independently stated their long-term support of the Company. Combined, these shareholdings represent nearly 99% of the share capital of the Company. Consequently, the Company wrote to the Financial Services Authority on 15 July 2011 to inform them that the Company no longer complies with the requirements of the UKLA's Listing Rules regarding the number of shares to be held in public hands. The Company announced on 27 April 2012 that it had received a Supervisory Notice from the FSA proposing to discontinue the listing of the Company's ordinary shares with effect from 31 May 2012, following a meeting by the Regulatory Decisions Committee (RDC) held on 26 April 2012. Subsequent to a submission made by the Company, the RDC has extended the proposed delisting date to 6 June 2012 to allow the Company to actively explore its options including a possible admission of its ordinary shares to trading on AIM. A further update will be made in due course.

During the period three Non-Executive Directors resigned from the Board: Adrian Burn, James Donald and Nigel Hall. Patrick Garner, Finance Director retired from the Company on 30 April 2012. I would like to record our thanks for their wise counsel over the years. We were delighted to welcome to the Board as Non-Executive Directors Peter Hosker, Neil Lees, Mark Senior and John Whittaker. Pinewood Shepperton's results for the period were achieved following major contributions by my fellow Directors and especially the staff. I thank them for their continued support.

Lord Grade of Yarmouth, CBE

Chairman

28 May 2012

Operating Review

Company Overview

Pinewood Shepperton plc has three complementary revenue streams - film, television and media park.

Film

Film revenues for the fifteen month period ended 31 March 2012 "the fifteen month period" were £44.9m (year to 31 December 2010: £29.1m).

The largest film production based at Pinewood Studios during the period was Dark Shadows (Warner Bros) and the largest production based at Shepperton Studios was Wrath of the Titans (Warner Bros). Productions which used the Company's facilities and services during the period included Prometheus (Fox), Anna Karenina (Working Title/Universal), Snow White and the Huntsman (Universal), The Hobbit: An Unexpected Journey (New Line Cinema and MGM) and Les Misérables (Working Title/Universal). The 23rd James Bond film Skyfall (Eon Productions/ MGM/Sony Pictures) commenced filming at Pinewood during the fifteen month period and is still in production.

The Company welcomed the announcement on 10 November 2011 that the Government has extended film tax relief until the end of 2015. This decision will deliver certainty for the UK's talented film makers and will provide a stable platform for growth, investment and jobs in a growing sector of the economy.

The European Commission published its Communication from the Commission on State Aid for Films and other Audiovisual Works on 14 March 2012. This second round of consultation invites comments on the new draft Communication. The deadline for comments is 14 June 2012. After reviewing the comments received, the Commission expects to adopt a revised Communication in the second half of 2012. The Company is coordinating its response to the Communication with the British Film Commission and the British Film Institute.

Digital Content Services (DCS) revenues for the fifteen month period were £8.0m (year to 31 December 2010: £5.8m).

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. Notable sound post production work included completion of DNA's remake of Judge Dredd and for the first Pinewood-backed film, A Fantastic Fear of Everything, starring Simon Pegg. In addition, a complete service package - incorporating stages, sound and picture post production - was delivered to the BBC's light entertainment series The Magicians.International re-versioning of sound-tracks and the long-term agreement with Disney Character Voices International continues to perform well, as do growing relationships with many international major studios.The preservation and restoration of a number of significant archive features was completed during the period; such as Passport to Pimlico, The Titfield Thunderbolt, The Land That Time Forgot and 'The Who's' Tommy. 

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. This has been achieved by taking advantage of the investment in core networking infrastructure undertaken at the Studios over the last three years, which now allows network speeds of 10Gb/s. This, in conjunction with the Data Centre, Screening Services, Media Transfer Centre and additional high speed network services has led to increased demand from customers.

The Company welcomed the announcement on 21 March 2012 by the Chancellor of the Exchequer that the Government intends to introduce fiscal incentives for animation and video games. The Company is well placed to meet the additional demand and build on its growing presence in these two sectors of the creative industries.

Film Funding

Last year, the Company announced that it would, through Pinewood Films Limited ("Pinewood Films"), provide low risk, partial film funding to selected independent British films. The Company committed to jointly fund its first such project A Fantastic Fear of Everything (Keel Films/Pinewood Films) in July 2011 which will premier on 8 June 2012 and announced in September 2011 its second investment, Last Passenger (Pinewood Films/BFI/Pathe Pictures/Future Films).

Building on the success of Pinewood Films, the Company is currently in advanced discussions with an existing third party film fund. Should these discussions prove successful, this would result in the Company advising a multimillion pound film fund. A further update will be made in due course.

International

International revenues included in film, principally representing fees, for the fifteen month period were £1.2m (year to 31 December 2010: £0.6m).

Pinewood is an expanding global brand, delivering premium services around the world. Its international initiatives, currently in four regions, are progressing well. The Company continues to actively explore strategic opportunities in other regions of the world.

The Company has a sales and marketing agreement with "Pinewood Toronto Studios". During the fifteen month period, the Studios attracted a number of high profile film and television productions which included Mama (De Milo productions/Universal International), Pacific Rim (Legendary Pictures/Warner Bros) and Total Recall (Sony Pictures). The joint venture "Pinewood Studio Berlin Film Services" attracted its first film production Planet B Boy (Sony Screen Gems). Construction of "Pinewood Iskandar Malaysia Studios" has commenced and is expected to open in May 2013. Phase one will comprise five film and two television stages totalling 125,000 sq ft. It will be the largest purpose built facility in the territory. Construction of the water tank at "Pinewood Indomina Studios" in the Dominican Republic is expected to open in September 2012.

Television

Television revenues for the fifteen month period were £10.1m (year to 31 December 2010: £8.2m).

The Company has developed a leading television business which provides unique production facilities, often utilising its film stages and Digital Content Services to host and service large 'event' television productions.

Following a sustained period where the UK television market contracted, the market is now seeing growth in some genres. The Company is consolidating its television offering at Pinewood Studios and is investing significantly in its television business to increase its ability to provide a comprehensive range of production facilities to the TV community including HD studios, film stages and post production services to support every genre of television production. The Company believes this comprehensive range of facilities gives its business a competitive edge.

This investment complements the recently opened 30,000 sq ft Richard Attenborough television/film stage at Pinewood Studios.Pinewood and Teddington television studios played host to new and repeat business from Would I Lie To You (Zepperton), Keith Lemon's Lemonaid (talkbackTHAMES) and The Rob Brydon Show (talkbackTHAMES). During the fifteen month period, television productions such as Got To Dance (Princess Productions) and The Magicians (Shine) utilised large film stages at Shepperton Studios.

The Company welcomed the announcement on 21 March 2012 by the Chancellor of the Exchequer that the Government intends to introduce fiscal incentives for high-end filmed television drama. We await further details from HM Treasury.

Media Park

Media Park (including the Company's 50% interest in the Shepperton Studios Property Partnership) revenues for the fifteen month period were £8.0m (year to 31 December 2010: £6.2m).

The total number of Media Park companies accommodated during the fifteen month period remained stable at 276 while occupancy for the fifteen month period increased to 92% (year to 31 December 2010: 90%). The Company continued to rationalise and refurbish its stock of buildings available for both Media Park occupiers and productions.

Outlook

During the fifteen month period the Company saw rising demand for its facilities, especially in film. This level of demand has continued into the start of the current financial year and bodes well for the future.

On 16 May 2012, the Company announced that it is embarking on a consultation

on the future development of Pinewood Studios with local and national stakeholders and the producers and developers of creative content. Certainty as to its future development is critical to enable Pinewood Studios to plan for growth. Without major investment Pinewood Studios cannot remain globally competitive and respond to the changing needs and ever increasing demands of the screen and digital industries both at home and abroad.

The Company is responding well to the increasing demand for content both at its UK studios and abroad.

The Board looks forward to the future with confidence.

Ivan DunleavyChief Executive

28 May 2012

Financial Review

As a result of the change to its accounting reference date from 31 December to 31 March, the Company is delivering audited results for the fifteen months ended 31 March 2012 ("the fifteen month period").

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. The Company's financial KPIs relate to revenue, profitability, return on capital employed, cash flow and net debt, all of which are discussed as part of the Financial Review.

Revenue

Total revenues for the fifteen month period were £63.0m (year to 31 December 2010: £43.4m).

Film revenues for the period were £44.9m (year to 31 December 2010: £29.1m), reflecting the Company's ongoing success in winning business in a buoyant but highly competitive international market. Included in film are international revenues for the fifteen month period of £1.2m (year to 31 December 2010: £0.6m). These revenues were earned from providing international sales, marketing and studio development services in Canada, the Dominican Republic and Malaysia.

Television revenues for the fifteen month period were £10.1m (year to 31 December 2010: £8.2m) reflecting the current television commissioning environment and competitive market conditions.

Included within film and television revenues are Digital Content Services which cover sound and picture post production, foreign language versioning, digitisation and archival services. Digital Content Services revenues for the fifteen month periodwere £8.0m (year to 31 December 2010: £5.8m).

Media Park revenues, inclusive of service, utility and facility charges for the fifteen month periodwere £8.0m (year to 31 December 2010: £6.2m). The fifteen month period included the Group's 50% interest in revenues from the Shepperton Studios Property Partnership of £0.8m (year to 31 December 2010: £0.9m).

Profit performance and earnings per share

Gross profit for the fifteen month period was £24.9m (year to 31 December 2010: £17.4m). Gross margin for the fifteen month period was 40% (year to 31 December 2010: 40%).

Operating profit before exceptional items for the fifteen month period was £13.2m (year to 31 December 2010: £9.1m). Operating profit before exceptional items for the fifteen month period was 21% (year to 31 December 2010: 21%) reflecting the production mix and increased operating costs.

EBITDA (earnings before exceptional items, interest, tax, depreciation and amortisation) for the fifteen month period was £17.9m (year to 31 December 2010: £12.8m).

Loss before tax, after exceptional items, for the fifteen month period was £1.9m (year to 31 December 2010: profit £5.8m).

Basic loss per share for the fifteen month period was 6.3p (year to 31 December 2010 earnings: 9.3p). Basic earnings per share after adjusting for exceptional items and the effects of the release of the provision for potential capital gains tax on properties for the fifteen month period was 14.6p (year to 31 December 2010: 8.0p).

Diluted loss per share for the fifteen month period was 6.3p (year to 31 December 2010 earnings: 8.9p). Diluted earnings per share after adjusting for exceptional items and the release of the provision for the potential capital gains tax on properties were 14.6p for the fifteen month period (year to 31 December 2010: 7.7p).

The weighted average number of shares in issue at 31 March 2012 was 46.9m (31 December 2010: 46.2m). At 31 March 2012 there are no shares potentially issuable as a result of employee share schemes and therefore the weighted average diluted number of shares was 46.9m (31 December 2010: 48.2m).

Return on capital employed

The Group measures return on capital employed by reference to operating profit before exceptional items, as a percentage of average capital employed, being total equity plus interest bearing loans and borrowings, which for the fifteen month period was 8.7% (year to 31 December 2010: 7.7%).

Adjusted consolidated income statement

The following table summarises the Group's consolidated income statement for the period identifying Underlying Operations and exceptional items being the write off of Project Pinewood costs, expenses incurred in relation to the Peel Offer, Group reorganisation costs and prior period VAT refunds. Profit before tax from Underlying Operations for the fifteen month period was £9.5m (year to 31 December 2010: £5.8m). 

The Board considers that the presentation of an adjusted consolidated income statement provides a useful analysis of Underlying Operations for the fifteen month period. The adjustments for exceptional items are as follows:

Project Pinewood

The Company has provided as an exceptional charge £7.1m of Project Pinewood costs incurred over the five years to 31 December 2011 following the Secretary of State for Communities and Local Government's decision on 19 January 2012 to refuse planning permission for Project Pinewood.

Acquisition by Peel

The Company incurred exceptional costs of £2,400,000 in the period in relation to the acquisition of a majority shareholding in the Company by Peel Acquisitions and also incurred £1,268,000 of accelerated share based non-cash charges as a result of the Offer by Peel Acquisitions becoming unconditional on 21 June 2011.

Group reorganisation

The Company incurred exceptional reorganisation costs of £287,000 in relation to the restructuring of certain business areas during the fifteen month period.

VAT claim

The Group successfully agreed a VAT refund of £541,000 relating to prior periods. This benefit has been treated in the income statement as exceptional income.

Dividend

In light of the level of exceptional costs incurred in the period, the Board has decided not to recommend a dividend in respect of the fifteen month period to 31 March 2012, resulting in nil interim dividends paid for the fifteen month period. The Board is committed to pay dividends in line with its dividend policy of not less than three times cover.

Cash flow and net debt

The Company generated operating cash flow for the fifteen month period of £16.2m (year to 31 December 2010: £13.0m). After adjusting for movements in working capital, cash generated from operations for the fifteen month period was £16.1m (year to 31 December 2010: £17.6m), from which finance costs of £4.1m (year to 31 December 2010: £3.0m) and corporation tax of £3.0m (year to 31 December 2010: £1.9m) were paid.

Cash outflow on capital expenditure during the fifteen month period was £16.2m (year to 31 December 2010: £6.7m). The main items of expenditure during the period were: life cycle expenditure £3.7m, power upgrade costs of £1.8m, Project Pinewood costs of £2.2m, new stage construction costs of £5.6m and infrastructure works of £2.9m.

Following the cash outflow on capital expenditure during the fifteen month period net debt at 31 March 2012 increased to £50.4m (31 December 2010: £42.7m) which included £12.0m (31 December 2010: £12.0m) relating to the Company's 50% interest in the non-recourse Aviva loan to the Shepperton Studios Property Partnership ("SSPP").

One of the pre-conditions of the Offer by Peel Acquisitions for Pinewood Shepperton plc was that the current banking facilities remained in place to August 2013. The Board was required to agree a waiver of a change of control clause within the banking documentation. The variations to the banking documentation required the Company to pay a fee to the banks of £235,000 which has been included in exceptional costs. In addition, there has been an increase in the margin by 25 basis points which took effect from 12 July 2011. The Board also cancelled £18.0m of the undrawn pre-let development facility.

The Company's amended banking facilities of £52m, following the successful offer for the Company by Peel Acquisitions, comprised of a £40.5m revolving credit facility, a £6.5m pre-let development facility and a £5m overdraft facility, all of which were secured by a floating charge over the Group's assets.

The revolving and pre-let development facilities contained no scheduled payments and were due to mature in August 2013. The £5m overdraft facility was also available until August 2013 and subject to annual reviews. As at 31 March 2012, £30.5m (31 December 2010: £22.5m) of the revolving credit facility and £6.5m (31 December 2010: £6.0m) of the pre-let development facility were drawn. The overdraft facility was undrawn at 31 March 2012 and undrawn at 31 December 2010. There are a range of covenants relating to the revolving credit facility, pre-let facility and overdraft facility. The Company was covenant compliant with adequate headroom on all covenants at 31 March 2012.

On 28 May 2012, the Company arranged new banking facilities of up to £55m which comprise a £35m revolving credit facility, a £15m term facility and a £5m overdraft facility subject to annual review. These facilities are secured on certain of the Group's assets. The term facility contains scheduled repayments of £1.5m on 30 June 2015 and 30 June 2016 and matures in November 2016. The revolving credit facility has no scheduled repayments and matures in November 2016. The £5m 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 £55m banking facilities, there are non-recourse facilities provided to SSPP by the Company's joint venture partner Aviva which total £40m, of which £24m was drawn at 31 March 2012. This loan, which is 50% consolidated at £12m (31 December 2010: £12m) is included in the Group's statement of financial position. These facilities, which are available until 2026, are covenant free with no scheduled repayments.

Investment property

Investment property is recognised in accordance with IAS 40 as a category within assets in the Company's statement of financial position. At 31 March 2012, investment property was recorded at the carrying cost of £6.2m (31 December 2010: £6.4m). This compares to the Director's assessment of the fair value of £7.3m (31 December 2010: £7.1m). Further information can be found in note 15 to the financial statements.

Capital commitments

The Company had capital commitments of £2.5m at 31 March 2012 (31 December 2010: £2.3m).

Financial gearing

At 31 March 2012, net debt including the Group's share of the SSPP non-recourse drawn loan was £50.4m (31 December 2010: £42.7m). Financial gearing at 31 March 2012 excluding fair value and loan issue costs was 68.3% (31 December 2010: 55.8%).

Finance costs and hedging

Net finance costs for the fifteen month period were £4.6m (year to 31 December 2010: £3.3m). 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 2.9 times by operating profit before exceptional items for the fifteen month period (year to 31 December 2010: 2.8 times). The Company continued to use interest rate derivatives to manage interest rate exposure.

At 31 March 2012 the Company had a £7.5m hedge with an effective rate of 2.89% plus a variable margin that was entered into in April 2009 and expires in July 2013. The Company also had a £15m hedge with an effective rate of 5.195% plus a variable margin that was entered into in October 2009 and expires in July 2013.

At 31 March 2012, £22.5m (31 December 2010: £22.5m) of the Company's facilities were under interest rate swaps and £1.3m (31 December 2010: £1.8m) under a fixed interest rate asset financing facility.

At 31 March 2012, 48% (31 December 2010: 57%) of the Company's borrowings were at a fixed rate of interest. Following the renewal of its banking facilities the Company is reviewing appropriate hedging in line with it's hedging policy. The Board regularly reviews the hedging arrangements to manage interest rate exposure. Further details on interest rate risk management can be found in note 27 to the financial statements.

Taxation

The current corporation tax expense for the fifteen month period, based on adjusted profit before tax of £9.5m, was £2.1m, a current adjusted tax rate of 22% (year to 31 December 2010: 35%).

The current corporation tax expense for the fifteen month period, based on loss before tax of £1.9m, was £1.4m, a current tax rate of (73%) (year to 31 December 2010: 35%).

Going concern

In assessing the going concern basis, the Directors considered the Company's business activities, the financial position of the Company and the Company's financial risk management objectives and policies as described above. The Directors considered that the Company has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing these financial statements.

Ivan Dunleavy

Chief Executive

28 May 2012

Board of Directors

Non-Executive Chairman

Lord Grade of Yarmouth, CBE ‡ (69) began his career as a sports journalist; previous positions include Chief Executive of Channel 4 (1988-1997), Chairman and Chief Executive of First Leisure plc and Chairman of the Governors of the BBC and Chairman and Chief Executive of ITV plc. He is Non-Executive Chairman of Ocado and the entertainment talent services company, James Grant Group and a Non-Executive Director of WRG. Lord Grade has been Chairman of Pinewood Shepperton since February 2000. He was created a Peer in 2010.

Executive Directors

Ivan Dunleavy, Chief Executive

Ivan Dunleavy (52) has spent his career in media businesses initially in finance roles. Prior to his current role he was Chief Executive of VCI plc, until it was acquired by Kingfisher plc in November 1998. He is a Director of UK Screen Association Limited, the industry trade body, and has been Chief Executive of Pinewood Shepperton since February 2000. 

Andrew M Smith, Director of Strategy and Communications (from 1 May 2012) and Company Secretary

Andrew M. Smith (49) joined the Company in June 2008 as Group Director Corporate Affairs. He was appointed Company Secretary on 20 December 2010 and was appointed to the Board in May 2012. Prior to this he was Managing Partner of The Policy Partnership. He is a member of the Film Skills Council, the Skillset Craft and Technical Skills Academy Industry Board, the British Film Commission Advisory Board and the Buckinghamshire Thames Valley Local Enterprise Partnership. He is a Non-Executive Director of Bucks Business First Ltd.

Nicholas Smith, Commercial Director

Nicholas Smith (50) joined Pinewood Shepperton in May 2002 and was appointed to the Board in July 2005. In February 2012, Nicholas was appointed to the Board of Iskandar Malaysia Studios SDN BHD. Previous positions include Head of European Sales for Nokia (Home Communications), European Sales Director for beenz.com, Broadcast Director for TSMS Ltd and Marketing Manager at London Weekend Television.

Non-Executive Directors

Peter Hosker, LLB * (55) trained as a solicitor and joined the Peel Group in 1989 after being a partner in a Manchester firm of solicitors. He joined the Board of the Peel Group in 2002 as Director of Legal and Corporate Affairs. He represents the Peel Group on the boards of a number of joint venture and investee companies. He was appointed to the Board of Pinewood Shepperton in 2011.

Neil Lees (48) was appointed Deputy Chairman of the Peel Group in March this year having been an Executive Director since 2007. He began his career as a Company Secretary at Ferranti International and subsequently joined the Peel Group in 1994. He chairs a number of Peel Group businesses and operating companies and is also Chairman of the Trustees of Peel Ports Final Salary Pension Scheme. He was appointed to the Board of Pinewood Shepperton in 2011.

Mark Senior (49) trained as a Chartered Accountant. He joined the Peel Group as Corporate Development Director for Media in early 2011 and has been actively involved in managing Peel's interests at MediaCityUK. He has spent most of his career in Corporate Finance, latterly as a Mergers & Acquisitions partner at Ernst & Young. He was appointed to the Board of Pinewood Shepperton in 2011.

Steven Underwood, ACA * ‡ (38) trained as a chartered accountant with Coopers & Lybrand. He joined the Board of the Peel Group as Corporate Development Director in March 2007 and was promoted to Chief Executive in April 2012. He previously spent eight years in Investment Banking with Rothschild. He represents the Peel Group on the Boards of a number of its investee companies. He was appointed to the Board of Pinewood Shepperton in 2010.

John Whittaker (70) is Chairman of the Peel Group which he founded in 1971 and developed into a leading UK infrastructure, transport and real estate enterprise. He is a highly regarded investor, and has overseen the growth of the Peel Group across many sectors such as land, real estate, ports, airports, renewable energy and media. John is Deputy Chairman of Capital Shopping Centres Group PLC. He was appointed to the Board of Pinewood Shepperton in 2011.

* Member of the Audit Committee

‡ Member of the Remuneration Committee

Directors' Report

The Directors present their Report together with the financial statements for the fifteen month period ended 31 March 2012.

Principal activities, business review and future developments

The principal activity of the Group is the provision of studio and related services to the global film and television industry. The Board considers the Group to be well placed and views its future prospects with confidence.

The information that fulfils the requirements of the business review can be found in the following sections, which are incorporated into this report by reference: Operating review, Financial review, Key business risks, Corporate governance, Employees and Corporate Responsibility (pages 4 to 32).

Future developments are discussed within the Chairman's statement and Operating review (pages 3 to 6).

Results and dividend

Loss for the fifteen month period ended 31 March 2012 after exceptional items of £10.5m was £2.9m (year to 31 December 2010: profit £4.3m). The Board has decided not to recommend a final dividend in respect of the fifteen month period ended 31 March 2012 (31 December 2010: 2.50p).

Directors and their interests

The Directors at 31 March 2012 who service throughout the year and until the date of signing and their interests in the share capital of the Company were as follows:

* Total beneficial interest includes shares held by Goodweather Investment Limited, a subsidiary of the Peel Group of which Mr Whittaker is the Chairman and which is controlled by the Billown Trust, the beneficiaries of which are John Whittaker and other members of the Whittaker family.

Since 31 March 2012, there has been no change in the Directors' interests in shares.

The Company has complied with the Financial Services Authority announcement on 9 January 2009 with respect to Disclosure and Transparency Rule 3.1.2, and discloses relevant information to the market via Regulatory News Service bulletins as soon as it receives notification of transactions.

At the forthcoming Annual General Meeting to be held on 28 August 2012 Nicholas Smith will retire by rotation and, being eligible, will offer himself for re-election. In accordance with the Company's Articles of Association Andrew Smith, John Whittaker, Mark Senior, Peter Hosker and Neil Lees will offer themselves for election as they have been appointed to the Board since the Company's last Annual General Meeting.

Details of Directors' service contracts are provided in the Directors' remuneration report. Directors' interests in contracts in the Group's business are disclosed as related party transactions in Note 26 to the accounts.

The Company appoints and replaces Directors in accordance with the Company's Articles of Association and has a process of selection and recruitment of replacements as noted in the Nomination Committee section of the Corporate Governance Report.

Corporate governance

Details of the Company's corporate governance policies are incorporated into the report by reference and can be found on pages 21 to 29.

Annual General Meeting

The notice convening the Annual General Meeting of the Company, to be held at Travers Smith LLP, 10 Snow Hill, London EC1A 2AL, at 10.30 am on 28 August 2012, together with an explanation of the resolutions to be proposed at the meeting, will be contained in a circular to shareholders enclosed with the Annual Report.

Share capital

The Company's share capital comprises one class of ordinary shares which carry no restrictions on the transfer of shares or on voting rights (other than set out in the Company's Articles of Association).

There are no agreements known to the Company between holders of shares in the Company which may result in restrictions on the transfer of shares or on voting rights in relation to the Company.

Details of issued share capital are contained in Note 21 to the accounts.

At 22 May 2012, the beneficial interests amounting to 3% or more of the issued share capital of the Company, as notified to the Company, comprised:

No holder of shares in the Company has any special rights with regard to control of the Company.

Creditor payment policy

Group trade creditors at 31 March 2012 were equivalent to 31 days (31 December 2010: 26 days) of purchases during the period in line with Group policy; specific terms are agreed between operating companies and their respective suppliers, and that payments are made to suppliers in accordance with those terms.

Charitable donations

The Group continues to demonstrate its commitment to the support of various media related charities as well as local charity initiatives and causes. During the fifteen month period the Company donated £24,000 (year to 31 December 2010: £9,000) to charitable causes. Further details are contained in the Corporate responsibility report on page 30. No political donations were made during the year.

Financial instruments

The financial risk management objectives and policies of the Group are included in Note 27 to the accounts.

Principal risks and analysis of Key Performance Indicators

The principal risks to which the Group and Company are exposed are disclosed in the 'Key business risks' section of the Annual Report and in Note 27 to the accounts.

In monitoring and assessing business performance the Board uses a number of key performance indicators which are covered on pages 7 to 11 in the 'Financial review' section of the Annual Report.

Directors' liabilities

The Company has granted an indemnity to all its Directors against liability brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third party indemnity provision remains in force as at the date of approving the Directors' report.

Going concern

The Group's business activities, together with the key business risks that may impact its future development, performance and position are within the following sections: Operating review, Financial review, Key business risks, Corporate governance and Corporate responsibility which form part of the Business review within the Directors' report. The review covers the financial position of the Group and its cash flows, liquidity position and borrowing facilities on pages 7 to 11. In addition, Notes 22 and 27 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 has primary banking facilities and an overdraft facility in place until November 2016, the overdraft is subject to an annual review. In addition, the Shepperton Studios Property Partnership joint venture partnership with Aviva has a non-recourse facility in place until 2026. The Group also has a strong brand and reputation in the marketplace with a wide number of customers and suppliers in the film and television industry. As a consequence, the Directors believe that the Group is well placed to manage its business risks and operations successfully despite the current economic environment.

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, as there are no material uncertainties related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. The going concern assessment has been prepared in accordance with 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009', published by the Financial Reporting Council in 2009.

Directors' statement as to disclosure of information to auditors

The Directors who were members of the Board at the time of approving the Directors' report are listed on page 12 and13.

Having made enquiries of fellow directors and of the Group's auditors, each of these Directors confirms that:

(1) so far as he is aware, there is no relevant information of which the Group's auditors are unaware; and

(2) he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Group's auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

Registered auditors

Following the completion of the Offer by Peel Acquisitions, the Company asked Ernst & Young LLP to resign as auditor in order that Deloitte LLP could be appointed. Deloitte LLP is the auditor of the Peel Group. Ernst & Young LLP consequently resigned on 14 April 2012 as auditor of the Company and its subsidiaries. In accordance with Section 489 and Section 492 of the Companies Act 2006, resolutions proposing the reappointment of Deloitte as auditors to the Company at a level of remuneration to be agreed by the Directors will be proposed at the Annual General Meeting.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable United Kingdom law and International Financial Reporting Standards as adopted by the European Union.

The Directors are required to prepare Group financial statements for each financial year which present fairly the financial position of the Group and the financial performance and cash flows of the Group for that period. In preparing those Group financial statements, the Directors are required to:

·; select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

·; make judgements and estimates that are reasonable and prudent;

·; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·; provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance; and

·; state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and parent company and enable them to ensure that the Group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the Directors, whose names and functions are listed on page 14, confirms that, to the best of their knowledge:

·; the Group financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

·; the Chairman's statement, Operating review, Financial review and the Directors' report, when taken together, include a true and fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that it faces.

By order of the Board

Andrew M. SmithCompany Secretary

28 May 2012

Key business risks

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

The Business review contains forward-looking statements that are made by the Directors in good faith. This information is based on the view of the Board of Directors at the date of approval of this Annual Report and based on knowledge and information at that time together with what are considered to be reasonable judgements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors outside of the Group's control which could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including factors outside of the Group's control. Any forward-looking statements speak only as of the date that they are made, and the Group gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based.

Corporate Governance

During the period under review, the Company received an offer from Peel Acquisitions (Pegasus) Limited ("Peel Acquisitions") to acquire all of the issued and to be issued ordinary shares in the capital of the Company (the "Offer"). On 21 June 2011, the Board of Peel Acquisitions declared the Offer unconditional. As a result of the Offer, Peel Acquisitions holding in the Company increased to 71.1%.

On 12 July 2011, John Whittaker, Mark Senior, Peter Hosker and Neil Lees were appointed to the Board of the Company as Non-Executive Directors and Adrian Burn, James Donald and Nigel Hall resigned as Non-Executive Directors of the Company.

The principal corporate governance rules which applied to the Company during the fifteen month period under review were those set out in the UK Corporate Governance Code published by the Financial Reporting Council in June 2010 (the "Combined Code"), the UK Financial Services Authority ("FSA") Listing Rules and the FSA's Disclosure and Transparency Rules.

The Company's approach to its application of the principles set out in the Combined Code is detailed below. During the period from 1 January to 11 July 2011, the Company complied with all applicable requirements of the Combined Code. As a consequence of the Offer and since the changes to the Board on 12 July 2011, the Company has not complied with the requirements of the Combined Code as explained below.

Membership of the Board

The Board comprises the Non-Executive Chairman, Lord Grade of Yarmouth; three Executive Directors: Ivan Dunleavy, Nicholas Smith and Andrew Smith; and five Non-Executive Directors: John Whittaker, Mark Senior, Peter Hosker, Neil Lees and Steven Underwood. Further details of the Board members can be found on page 12 to 13 of the Annual Report.

Independence of Directors

John Whittaker is Chairman of the Peel Group and each of Mark Senior, Peter Hosker, Neil Lees and Steven Underwood are executives of the Peel Group. As a consequence of the Peel Group's holding in the Company, the Board does not consider that any of the Non-Executive Directors are independent for the purposes of the Combined Code and therefore since 12 July 2011, the Company has not complied with the requirement set out in B.1.2 of the Combined Code that a smaller company should have at least two independent Non-Executive Directors. Since the resignation of Adrian Burn on 12 July 2011, the Board has not appointed a Senior Independent Director.

Notwithstanding that the Non-Executive Directors are not independent for the purposes of the Combined Code, the Board is of the view that the Non-Executive Directors contribute significantly to the Group's strategic direction and that their level of experience makes a significant and valuable contribution to the Board.

Conflicts of interest

In accordance with Section 175 of the Companies Act 2006, procedures have been put into place for the disclosure by Directors of potential and/or actual conflicts of interest, and these have been operated effectively. Each potential and/or actual conflict is disclosed as it arises and is considered by an appropriate quorum of Directors. Directors leave a Board meeting when matters relating to them or which may constitute a conflict of interest are being discussed.

The Group complies with the Model Code on share dealings and this extends beyond Directors to Persons Discharging Managerial Responsibilities ("PDMRs"). In accordance with the FSA requirements over PDMRs, a policy has been introduced to ensure that PDMRs disclose appropriate and relevant information directly to the Company Secretary.

Role and responsibility of the Board

The Board is responsible for determining corporate strategy, treasury policy, approval of capital expenditure projects in excess of £50,000, dividend policy, interim and annualfinancial statements, all regulatory communications required by the Group and appointments to the Board. In the continuing challenging economic climate the Board continues to maintain and, where it considers necessary, enhance the financial disciplines across the Group.

In advance of the monthly Board meeting the Board members are provided with comprehensive historic and forward-looking financial and operational information to support their under-standing of the business and related strategic and operational issues, and to enable them to fulfil their responsibilities accordingly. Where there are specific items that require Board approval, additional reports and supporting information is circulated. Directors are provided with regular access to the Company Secretary and to the executive management team to facilitate their understanding of significant operational issues and assessment of the Group's prospects, including the ongoing consideration of succession planning. This also ensures that the Directors can make further enquiries on financial, operational and strategic matters as and when required. There are also procedures in place to enable Board members to take independent professional advice as necessary.

Board evaluation

The Board regularly conducts evaluations of its performance. The Chairman reviews individual Board members contributions to the Board and its committees. The Chairman's performance is likewise reviewed by other members of the Board. These evaluations are carried out on a rolling basis.

Directors' training

Prior to their appointment to the Board, all Directors are provided with a detailed understanding of the Group, by meeting with existing Directors, and being provided with comprehensive financial and operational information. Additionally, Directors are fully briefed and kept up to date on issues impacting their role and responsibilities as Directors.

Directors continue to be updated on significant financial and operational issues via Board meetings and regular communications from the Group, as well as being provided with direct access to the Group'sexecutive management team.

Meetings of Directors

During the period under review the Board held 14 scheduled Board meetings and 15 further full meetings to discuss various corporate matters. The following table sets out attendance of the Directors at the Board and Committee meetings during the fifteen month period ended 31 March 2012:

Executive Directors maintain regular and structured dialogue with major shareholders via direct scheduled meetings and communication in response to ad hoc queries and requests from shareholders. In addition, the Chairman is available to meet significant shareholders, as required.

Share capital

The information about share capital required to be included in this statement can be found on page 15 in the Directors' report.

Board Committees

The Board has established three committees - Audit, Nomination and Remuneration. The Chairman and members of these committees are appointed by the Board, following consultation with the appropriate committee's chairman.

The terms of reference of the Audit, Nomination and Remuneration committees are contained in the 'Corporate governance' section of the Company's Investor Relations website at www.pinewoodshepperton.com.

Audit Committee

Adrian Burn - Chairman - resigned 12 July 2011Nigel Hall - resigned 12 July 2011James Donald - resigned 12 July 2011

Steven Underwood - Chairman - with effect from 17 August 2011

Peter Hosker - with effect from 17 August 2011

Since 12 July 2011 the Audit Committee has not complied with the requirement set out in C.3.1 of the Combined Code that an Audit Committee of a smaller company should have at least two independent Non-Executive Directors. Notwithstanding that they are not independent, the Board is satisfied that Steven Underwood and Peter Hosker have recent and relevant financial experience.

The Committee has written terms of reference reflecting the requirements of the Combined Code, which have been approved by the Board. The Committee provides the Board with assurance in respect of the integrity of the Group's financial reporting procedures, policies and controls.

The Group's external auditors meet directly with the Audit Committee in advance of full year and interim results, and on other occasions as required.

The Audit Committee reports to the full Board of the Company. The Committee also reviews the effectiveness of the external audit process including the issue of auditor independence. In line with best practice, the Audit Committee introduced a policy that defines non-audit services that the Group's auditors may or may not provide. The key point of the policy is that the Audit Committee will not support the use of the appointed audit firm for book-keeping services and any other services deemed incompatible with auditor independence by professional or government regulations. For certain other types of work including, but not limited to, taxation, governance, accounting advice and consultancy services the policy allows for a review of a range of suppliers and costs above a predetermined level are required to be approved by the Audit Committee.

Further unscheduled communication between the members of the Committee is conducted as required. The Audit Committee continues to consider that, given the size of the Company, an internal audit function is not currently required.

During the year matters considered by the Committee included:

·; The Annual Report and Accounts;

·; Preliminary results;

·; First interim report and results for the six month period ended 30 June 2011 and the second interim report for the 12 month period ended 31 December 2011;

·; The Group accounting policies;

·; The use of the going concern basis in the preparation of the accounts;

·; Review report from Ernst & Young on the first and second interim results and from Deloitte LLP on the fifteen month period results;

·; A management letter report from Ernst & Young on recommendations of improvements to internal control;

·; Compliance with the Combined Code; and

·; Approval of the appointment of Deloitte LLP as independent external auditor together with audit scope and fees.

The Committee met on three occasions during the fifteen month period ended 31 March 2012.

Nomination Committee

Nigel Hall - Chairman - resigned 12 July 2011Adrian Burn - resigned 12 July 2011

There were no Nomination Committee meetings between 1 January 2011 and 12 July 2011.

Since 12 July 2011 there has not been a Nomination Committee and the Board as a whole has considered the matters to be reviewed by the Nomination Committee. The Company has therefore not been in compliance with the requirement set out in B.2.1 of the Combined Code that there should be a nomination committee which should lead the process for board appointments and make recommendations to the Board.

The Board intends to re-instate the Nomination Committee and to appoint Lord Grade as the Chairman and appoint Steven Underwood as a member of the Committee. Once re-instated, the Committee will use the existing terms of reference in place which reflect the requirements of the Code and have been approved by the Board. The Committee's purpose will be to make recommendations to the Board and on all proposed appointments of Directors, to review succession plans for the Group and to review Board effectiveness.

When the need arises to recruit a director, a role profile will be prepared that identifies the requirements of the role and the experience and background of a candidate. This will then be used to assess the applicants. External search consultants will be engaged as necessary to undertake the identification of appropriate candidates. Should the need arise to appointa successor to the Chairman of the Committee, then the Chairman of the Committee would not be permitted to chair relevant meetings.

During the fifteen month period under review, the Board appointed four Non-Executive Directors: John Whittaker, Mark Senior, Peter Hosker and Neil Lees and one Executive Director: Andrew Smith. In the case of the Non-Executive Directors, these appointments were made on the recommendation of Peel Acquisitions following the Offer and, as a consequence, neither an external search consultancy nor open advertising was used. In the case of Andrew Smith this was a result of an internal appointment.

The executive management team are a key component of effective succession planning within the Group. The team has been selected based on experience, background and ability to support the Board in delivering the Group strategy and maximising stakeholder value. Their training and development needs are regularly reviewed as this is a critical part of the succession plan for the wider business to ensure that a pipeline of talent and knowledge is developed and retained. An overview of the executive management team can be found under the 'Employees' section of the Annual Report.

Remuneration Committee

Nigel Hall - Chairman - resigned 12 July 2011Adrian Burn - resigned 12 July 2011Steven Underwood - with effect from 31 October 2011

Lord Grade of Yarmouth -with effect from 31 October 2011

Since 12 July 2011, the Remuneration Committee has not complied with the requirement set out in D.2.1 of the Combined Code that a Remuneration Committee of a smaller company should have at least two independent Non-Executive Directors.

A detailed report on the Remuneration Committee's activities is contained within the Directors' remuneration report. The Committee met on four occasions during the fifteen month period ended 31 March 2012.

Internal control

The Board acknowledges that it is responsible for the Group's system of internal control and has reviewed its effectiveness in accordance with the provisions of the Combined Code. The Audit Committee, in accordance with the terms of reference, has reviewed the effectiveness of the internal control systems and has found the systems to be effective. The internal control system implemented at the Company for the fifteen month period under review, and continuing, is structured in order that the Group's risks are effectively identified, evaluated and managed to provide reasonable butnot absolute reassurance that there is no material mis-statement or loss. This process is consistent with the requirements of the Turnbull Guidance.

The main elements of the Group's internal control system, including risk identification, are as follows:

Board

The Board of Directors is ultimately responsible for internal control procedures, with an organisational structure that supports clearly defined authority levels. The primary responsibility for the operation of the internal control systems lies with the Executive Directors and the Executive Management team. Board meetings include consideration of strategic, financial, operational and compliance issues, which are endorsed through assessment by the Audit Committee of the effectiveness of the internal, financial and operating control environment.

Operating Company controls

The identification and mitigation of major business risks is the responsibility of the Executive Directors and Executive Management Team who have ongoing operational responsibility. A part of this remit includes the maintenance and regular review of procedures to identify and mitigate potential areas of risk, supported by the Group's in-house legal counsel, in addition to external advisor guidance. This process and review also ensures that procedures comply with Group policies and guidelines.

Authorisation procedures

The authorisation procedures in respect of matters such as purchase commitments, capital expenditure, investment limits and treasury transactions are clearly defined within the Group.

Insurance

The Company has granted an indemnity to all its Directors against liability brought by third parties, subject to the conditions set out in the Companies Act 2006. The continuing adequacy of insurance cover for the Group is evaluated on an annual basis and the Board concluded that the insurance cover for the Group is currently adequate.

Financial reporting

In advance of each financial year, the Board approves a comprehensive budget, incorporating a detailed appraisal of underlying assumptions and business risks. The Board is provided with financial information on a monthly basis detailing historical and forecast results against budget and prior year, incorporating monthly and year to date trading results, statement of financial position and summary notes, cash flow statements, capital expenditure, levels of indebtedness and covenant compliance. In addition, monthly Board meetings include an appraisal of current forecasts, treasury policy, financial resources, borrowing facilities and hedging strategy. The executive management team is also provided with key financial data on a monthly basis, to assess performance against budgets and provide explanations on the results to the Board.

Treasury management

The treasury function is managed in accordance with guidance approved by the Board and procedures are regularly reviewed to ensure that they remain suitable. Appropriate segregation of duties is in place and significant transactions are authorised by the Board. Financial reports and analysis are provided to the Board on a monthly basis as noted in financial reporting above.

Shareholder communication

Pinewood Shepperton plc maintains a strong communication strategy with its shareholders. The Company also communicates regularly with the employees of the Group. All Company announcements are posted on the investor relations section of the Company's website at www.pinewoodshepperton.com as they are released. The Company's dedicated investor relations website includes historic financial and share price information, as well as a link to 'About us' which provides information on the business and the services and facilities available.

Additionally, the Annual General Meeting, to be held this year on 28 August 2012, will provide shareholders with a further opportunity to meet and question the Company's Board, and to review the results and business during the fifteen month period ended 31 March 2012.

By order of the Board

Andrew M. SmithCompany Secretary

28 May 2012

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, employee relations and health and safety. 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 Non-Executive Director, Steven Underwood.

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 also receive regular and relevant communication via the Company's intranet site Spotlight and staff briefings, in terms of 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 three apprenticeships in Drapes, Post Production and Maintenance and Plumbing. The Company held its first Apprenticeship Award Ceremony on 28 March 2012.

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.

Nigel Bennett, Operations Manager - Digital Content Services Nigel Bennett joined the Company in 1998. In 2007 Nigel was appointed Pinewood Operations Manager Post Production and in 2010 was made responsible for the daily operations of its post production facilities. In April 2012 he was appointed Operations Manager - Digital Content Services.

Paul Darbyshire, Broadcast Director

Paul Darbyshire joined Teddington Studios in 1998 and is responsible for the Group's television and channel hosting facilities. In addition he oversees operational responsibilities for all television studios and related facilities across the Group. Before joining, Paul worked for BTTV as a Channel Development Manager and later Operations Director. In April 2012 he was appointed Broadcast Director.

Magdalena Duke, Legal Counsel

Solicitor responsible for the Company's legal matters, including negotiation of stage, studio and post production agreements, Pinewood Films transactions and litigation. Joined in October 2010 from media law firm Davenport Lyons following a career as a broadcast journalist with the BBC. 

Mark Hackett, Sales Director - Television

Mark Hackett joined as a TV Sales Executive in 2005 and was promoted to Head of TV Sales in 2010. Prior to 2005, Mark was employed as a Sales and Business development executive for a number of media related organisations including Universal Sound. In April 2012 he was appointed Sales Director - Television.

Giles Farley, Managing Director, Group Digital Content Services

Giles Farley joined in 2000 and, in 2010, was promoted to Managing Director, Group Digital Content Services. He was previously responsible for UK training, installations and technical sales at Avid and DigiDesign.

David Godfrey, MCMI, Director International Operations

David Godfrey MCMI joined in 1985 and has held positions as Assistant Studio Manager, Television and Commercials Manager, Studio Manager and Head of Group Studio Operations. He was appointed Director of International Operations for the Group in 2010 with responsibility to develop international studio offerings worldwide.

Peter Hicks, UK Operations Director

Peter Hicks joined in 1991 and has held positions at Shepperton such as Assistant Studio Manager and Studio Manager. He was appointed Group Studio Manager in June 2010 and is responsible for the operational running of both Pinewood and Shepperton studios. In April 2012 he was appointed UK Operations Director. He is also responsible for Group Health and Safety. 

Chris Naisby FCCA, Group Finance Director

Chris Naisby joined in 2001 as Finance Manager, having previously worked in financial roles at various media companies, including Reed Elsevier. Promoted to Financial Controller in April 2008 with key responsibilities of supporting the Finance Director and the Board with strategic financial information, preparation of statutory accounts and Board reports as well as managing the Finance team. In April 2012 he was appointed Group Finance Director of the Pinewood Studios Group.

Noel Tovey, Sales Director - FilmNoel Tovey joined in 1989 and in 1992 was appointed Site Manager at Shepperton Studios. Since 1999 he has held sales focused positions including Group Commercials Manager, Sales Executive for Pinewood Toronto Studios in 2009 and Head of Film Sales Europe from 2010. In April 2012 he was appointed Sales Director - Film.

Andy Weltman, Executive Vice President, Pinewood USA IncAndy Weltman joined Pinewood in 2012 as Executive Vice President, Pinewood USA Inc.

having had an extensive background in feature film production. Prior to his current role, he oversaw the British Film Commission in the US, was Director of Development for several independent feature film companies and Director of Studio Operations at WGBH.

David Wight MA (Cantab) PG Dip MRICS, Group Director Property

David Wight is responsible for the Company's real estate portfolio of land, buildings and Media Park occupiers, property development and planning. He joined in 2003 as Studio Manager of Pinewood Studios. Prior to this he was operations director in the independent sector of the cinema industry after a career as an officer in the Royal Navy.

Darren Woolfson, Group Director Technology

Darren Woolfson joined in October 2007 having held a number of technical roles in the film and television post-production industry. He is responsible for the co-ordination and delivery of the Group's strategy of enhancing its technology infrastructure. Previously he was the Technical Director at Molinare Limited.

Corporate Responsibility

The Company continues to support many local initiatives along with various national charitable organisations linked to film, television and the wider screen based industries.

Helping and advising young people from all backgrounds to get into the industries is a priority. This is demonstrated by the Company's support for its main charity, First Light, an organisation that supports young people from underprivileged areas around the country to help them get into the film and television industries. The Company also supports its follow up scheme, Second Light, which is aimed at 17 to 25 year olds, providing work placements, courses and mentoring.

Bucks Creative Enterprises 'On the Lot' day provides afternoon sessions at Pinewood Studios to give 30 young school leavers the chance to meet industry professionals and to gain an insight into what roles there are in the film and television industries. This affords young people the opportunity to understand what qualifications are needed and what path to take to realise their ambitions. Support is also given to all Production Guild initiatives, Skillset training days, the Pinewood Young Filmmakers Group, The Brabourne Awards and various short film projects.

Acknowledging the importance of industry organisations, a number of guilds such as the British Society of Cinematographers, British Kinematograph, Sound and Television Society, Guild of Production Designers, Designers Guild, the Association of Motion Picture Sound and the trade union, Bectu, are given rooms free of charge to hold meetings.

Pinewood Studios continues to support Riding for the Disabled with the provision of a lighting and sound system for its outdoor arena, along with a cash donation. The Company also supplied kits for the Thames Valley Youth Football Club. These kits are recycled each year and donated to a football team in a small village in Africa. During the period the Mashujaa children's football club in Tanzania was the recipient. Local community clubs that cater for the young and the elderly including the Iver Heath Bowls Club, Iver Drama Club, schools, colleges, universities and local councils close to the Studios also receive support. At Shepperton Studios a main focus is the Littleton Church of England Infant School which is adjacent to the studios. Advice and support has been given to further the school's marketing initiatives and school visits to the studios have been conducted to enhance the learning experiences of the children. A flag pole was also donated so the children could fly the national flag, those of the patron saints and the school flag.

Encouragement is also given to staff members who wish to participate in charitable fund raising activities, for which the Company offers donations. Each year a group activity is organised to raise money for a nominated charity and 22 members of staff took part in last year's '3-peaks challenge'.

During the year community visits to film sets have been organised for local residents. At Shepperton the invitation to the 47 Ronin set was received with great enthusiasm with over 400 people going onto the set of a Japanese fortress. Pinewood had an equally enthusiastic response to its invitation to view sets from Snow White and the Huntsman.

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 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 is being made on raising the profile of health and safety in the Company and information is available on the Company's intranet, Spotlight, which is available to all staff. The Smoke Free campaign at Pinewood Studios which was set up in 2009, in conjunction with the NHS to assist staff, customers and tenants to stop smoking continued through 2010 and into 2011 with a number of successful groups being held throughout this period.

The Health and Safety Executive made two visits to the Studios during 2011 and four visits to productions and contractors on site. No notices were issued to the Company. There was a downward trend in staff accidents for 2011/2012 with a total of 25 accidents of which three where reportable under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations ("RIDDOR") for the fifteen month period to 31 March 2012. Neil Lees, Non-Executive Director has Board accountability for health and safety issues, supported by the executive management team. The Board monitors relevant health and safety issues each month.

Environmental issues

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

A number of measures in support of this policy have been implemented.

Recycling

The recycling facility at Pinewood has significantly reduced the number of lorry movements to and from the site and continues to divert large amounts of waste away from landfill. The different waste streams that are being recycled at Pinewood are regularly monitored, with productions and tenants being actively encouraged to recycle as much waste as possible.

Materials recycled include electrical equipment, paper, cardboard, glass, tins and plastic bottles. Many of the items are compacted and baled before they are sent on for re-processing.

The success of the scheme at Pinewood has led to the introduction of a similar recycling facility at Shepperton with increasing amounts of waste material now being recycled there.

Travel Plan

Travel Plan measures continue to be promoted 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 the initiatives include the Cycle to Work scheme, bikers' breakfasts, cycle shelters, travel information points, travel surveys, video conferencing, electric car charging points and free shuttle buses.

Improvements to the shuttle bus timetables and the provision of additional services have again resulted in an increase in the total number of passenger journeys by 10% in the calendar year to 31 December 2011 compared to 2010 on the Pinewood shuttle and 32% in the calendar year to 31 December 2011 compared to 2010 on the Shepperton shuttle.

Each passenger journey represents a potential car journey saved which not only helps to ease congestion on the local highway network but helps to improve the local environment and air quality.

Energy

The Company is a full participant in the Government's Carbon Reduction Commitment Energy Efficiency Scheme (CRC), which aims to reduce CO2 emissions by reducing energy consumption.

To assist with this aim, the Group set a target for reducing CO2 in 2011 by 10% (in relation to 2010's benchmark). The Group exceeded this target and managed to achieve a reduction in the relative CO2 emissions by 15%.

In addition to the reduction in relative emissions, the Group has also achieved a 2% reduction in absolute CO2 emissions, again achieved in a year of unprecedented occupancy levels at the Studios.

The successful reductions in CO2 emissions were due to a combination of factors including:

·; the appointment of an Environmental Manager with the specific role of recording and reporting CO2 emission levels to the Board;

·; the installation of a comprehensive system of Automatic Meter Readers that have been consistently used to identify areas of unnecessary energy consumption; and

·; the fitting of energy efficient devices and systems wherever possible - including stage lighting and boiler controls.

The Group will again be seeking to further reduce CO2 emissions in 2012/13 by another 10% in relation to 2011's benchmark.

The Group was pleased that Teddington achieved a Merit Award from Richmond Borough Council's Go Green Richmond Award Scheme.

Ethical business practices

The Board continues to consider the principles which support ethical business practices with a policy that guides employee conduct in consideration of such issues and is mindful of the Group's responsibility to consider human rights.

Following the enactment of the Bribery Act 2010 during 2011 the Group introduced an Anti-Bribery and Anti-Corruption Policy including an intranet Risk Register requiring disclosure of the giving and receiving of gifts and entertainment over a set threshold together with a self-approval test with the aim of facilitating transparency.

Directors' remuneration report

Remuneration Committee

The Board presents its remuneration report to shareholders of the Company. The Board has established a Remuneration Committee ("the Committee") to advise it on appropriate policies and procedures in determining suitable remuneration packages for Executive Directors and senior management, and continues to take advice from external advisers as considered necessary by the Committee. Since 12 July 2011, the Remuneration Committee has not complied with the requirement set out in D.2.1 of the Combined Code that a Remuneration Committee of a smaller company should have at least two independent Non-Executive Directors.

The Committee comprised of Nigel Hall (Chairman), Adrian Burn and James Donald until their resignations on 12 July 2011 and Lord Grade of Yarmouth and Steven Underwood (Chairman) since 31 October 2011. During the fifteen month period, the Committee met on four separate occasions. All members of the Committee were present on each occasion, save for one meeting for which Adrian Burn was unavailable.

The Committee's responsibilities include the monitoring, review and recommendation to the Board on the Group's broad policy for the remuneration of all Executive Directors, and to determine, and thereafter review at least annually, the remuneration packages of all Executive Directors, including basic salary, pension arrangements and annual and long-term incentives, and, as appropriate, make recommendations in respect of other senior management. In addition, the Committee reviews the corporate targets and objectives relating to the Executive Directors' compensation, including an evaluation of their performance. The Committee's terms of reference are contained in the 'Corporate Governance' section of the Company's Investor Relations website at www.pinewoodshepperton.com.

The Committee continues to take advice, where appropriate, in order to support its up to date understanding of current market trends, comparable remuneration packages in similar organisations, and general issues for consideration in determining appropriate rewards. During the fifteen month period the Committee sought advice from PricewaterhouseCoopers LLP, the Group's remuneration advisers on Executive Directors remuneration, Non-Executive Directors remuneration, long-term incentives and how the long-term incentive plan is monitored, in addition to updates on performance criteria and the accounting implications for existing grants.

In addition, appropriate legal advice relating to contractual issues is taken as necessary to ensure compliance with best practice.

Please note that the information contained in this report is unaudited except where otherwise stated.

General policy

The Group's remuneration policy is to provide remuneration packages to Executive Directors and seniormanagement which align their interests to those of shareholders, whilst retaining appropriate flexibility to cater for potential future changes in remuneration policy best practice and the environment in which the Group operates. Grouppolicy aims to provide competitive rewards based on the achievement of recognised short-term and long-term performance based targets, recognising that the value of awards to Executive Directors and employees should be commensurate with individual responsibilities within the Group.

In establishing remuneration packages, the Committee's remuneration policy seeks to benchmark the components of Executive Directors' remuneration against comparators drawn from UK listed companies in the media sector (FTSE All Share, Fledgling and AIM). The policy has been defined against these comparators as follows: basic salary - lower quartile to median; bonus potential - upper quartile; benefits - market rate; and incentives - median to upper quartile.

The Committee reviews on an annual basis whether its remuneration policy remains appropriate for the relevant financial year. Factors taken into account by the Committee include: market conditions affecting the Group; current financial macro economic conditions; the recruitment market in the Group's sector; changing market practice; and the changing views of institutional shareholders and their representative bodies.

The Committee has concluded that the remuneration policy remains valid for 2012.

Balance between fixed and variable elements of remuneration (audited)

The following table shows the balance between fixed and variable performance based compensation for the fifteen month period, where the fixed component is made up of salary, benefits and pension contributions and the variable component comprises:

·; the maximum potential bonus, and

·; the market value at the date of grant of the maximum number of shares which could vest by virtue of the LTIP awards if all relevant performance conditions are fully met.

Overview of equity participation

The Company encourages share ownership by its employees and has operated a Sharesave Scheme (the "SAYE Scheme"). Employees were invited to participate in the scheme in 2004, 2006, 2007, 2009 and 2010.

The Company also operated the Pinewood Shepperton plc 2006 Long-Term Incentive Plan (the "LTIP") for Executive Directors and key management.

Details of the options made to Executive Directors during the fifteen month period under the SAYE Scheme are set out under the table in this report entitled 'Directors' share options'.

Details of awards made to Executive Directors during the fifteen month period under the LTIP are contained within the section of this report entitled 'Long-Term Incentive Plan'.

The Committee is responsible for selecting performance measures relating to the Company LTIP and for determining whether or not targets have been met.

As a result of the Offer becoming unconditional on 21 June 2011, the SAYE Scheme and the Long-Term Incentive Plan were closed.

Components of the Executive Directors' remuneration

The key components of the Executive Directors' remuneration are:

Basic salary and benefits in kind (audited)

The basic salary for each Executive Director reflects the Committee's assessment of performance, responsibilities and market value for comparable positions, as guided by independent advice. The Committee has access to information on the pay and conditions of other employees in the Group when determining the remuneration packages for Executive Directors. The Committee actively considers the relationship between general changes to employee pay and conditions and any proposed changes in the remuneration packages for Executive Directors to ensure it can be sufficiently robust in its determinations in light of the position of the Company as a whole. The basic salary and benefits in kind of all Executive Directors were reviewed on 1 January 2012. In line with the change in accounting reference date this review will now take place on 1 April of each year. The following table shows the basic salary on 1 January 2010, 2011 and 2012:

Benefits in kind include provision of a car allowance, pension, medical and life insurance, and permanent health insurance.

Annual bonus

The Executive Directors participate in an annual bonus scheme, which is linked to the achievement of annual financial targets set by the Committee, based on the Group's budget approved prior to the commencement of the financial year.

For the calendar year ended 31 December 2011, bonus was payable on the achievement of100% of budgeted earnings before interest and tax ("EBIT") performance and at this level of earnings, bonus payable was 25% of salary. The maximum bonus entitlement for the Executive Directors was 100% of salary, payable on the achievement of 120% of budgeted EBIT performance, with a straight line mechanism operating between 100% and 120% of budgeted EBIT performance.

In approving the calendar year ended 31 December 2011 bonus levels the Committee measured the level of achievement against the performance targets set and also the contribution of the individual Executive Directors.

The targets for the annual bonus scheme and the maximum annual bonus potential are reviewed and agreed by the Committee at the beginning of each year to ensure that they are appropriate to the current market conditions and position of the Group in order to ensure that they continue to remain challenging.

Following the change in accounting reference date, to 31 March, the date of the next review will be 1 April 2013.

Long-Term Incentive Plan ("LTIP")

Following the Peel Acquisition, the Pinewood Shepperton plc 2006 Long-Term Incentive Plan matured. No further awards will be granted under the LTIP.

One of the key factors that contribute to the Company's strong performance is the contribution and commitment of its staff and the Board will, in the near term, be considering incentive mechanisms appropriate to the business for key staff who meaningfully contribute to strong growth and the long term success of the Company.

ShareSave Scheme ("SAYE Scheme")

The Company established a SAYE Scheme at the time of the Initial Public Offering in 2004. SAYE Scheme options have been issued at a 20% discount to the then prevailing market value. Employees were invited to participate in the scheme in 2004, 2006, 2007, 2009 and 2010.

Following the Peel Acquisition the SAYE Scheme matured and no further options will be granted under the SAYE Scheme.

Dilution

The Company operates all of its share arrangements (both discretionary and "all employee") within the ABI Guidelines on dilution. The Company can issue a maximum of 10% of its issued share capital in a rolling ten-year period to employees under all its share plans. In addition, of this 10% the Company can only issue 5% to satisfy awards under discretionary or executive plans.

Pension arrangements

For Executive Directors, only basic salary is pensionable. All Executive Directors are eligible to become members of the personal pension plan arranged by the Group, which is a defined contribution scheme. The Company's contribution for the Executive Directors is set at a maximum of 12.5% of basic salary. All other employer contributions for the executive management team and employees reflect longevity of service with the Group but are capped at a maximum of 10% of basic salary.

Executive Directors' service agreements

The Executive Directors have rolling Service Agreements which are subject to 12 months notice which the Committee regards as appropriate in the event of termination of an Executive Director's Service Agreement. The Service Agreements of the Executive Directors (other than for Nicholas Smith) specify the compensation which must be paid to the Executive Director where the Company terminates the agreement either without notice or without cause, which is limited to salary and benefits payable during the Executive Director's notice period (salary only in the case of Andrew Smith). The Service Agreement of Nicholas Smith provides that the Company may opt to terminate the agreement with notice or a payment in lieu of notice, and provides for inherent mitigation. The Committee will ensure that there have been no unjustified payments for failure upon an Executive Director's termination of employment. There are no special provisions in the Service Agreements extending notice periods on a change of control, liquidation of the Company or termination of employment.

The dates of Executive Directors' service agreements are:

Ivan Dunleavy 20 April 2004

Patrick Garner 20 April 2004 (resigned 30 April 2012)

Nicholas Smith 01 July 2005

Andrew Smith 01 June 2008 (appointed 01 May 2012)

Chairman and Non-Executive Directors' service agreements and remuneration

The Chairman and Non-Executive Directors' have specific letters of engagement, the dates of which are:

Michael Grade 19 April 2004

Adrian Burn 19 April 2004 (resigned 12 July 2011)

Nigel Hall 19 April 2004 (resigned 12 July 2011)

James Donald 27 March 2006 (resigned 12 July 2011)

Steven Underwood 25 June 2010

John Whittaker 12 July 2011

Mark Senior 12 July 2011

Peter Hosker 12 July 2011

Neil Lees 12 July 2011

The Chairman is appointed for an initial term of one year and thereafter on a rolling basis with notice to terminate of six months (or immediately by the Company in certain circumstances such as breach of terms). The Non-Executive Directors are appointed for a rolling term of 12 months subject to normal provisions of appointment at the Company's 2012 Annual General Meeting, re-appointment at subsequent Annual General Meetings, and retirement by rotation with immediate right of termination by the Company in specific circumstances including breach of terms. Retirements by rotation are noted in the Directors' report. The appointment and reappointment of the Chairman and Non-Executive Directors' are matters reserved for the full Board.

With the exception of the Chairman, the Non-Executive Directors are not entitled to receive any fees pursuant to their Service Agreements. The fees of the Chairman are determined by the full Board, reflecting market practice, levels of service, together with his contribution of time and expertise in support of the Group, and are reviewed annually. The Chairman and Non-Executive Directors are not eligible for pension scheme membership and do not participate in any of the Group's bonus or share plans.

The Company intends to enter into an agreement with Peel Acquisitions pursuant to which Peel Acquisitions has agreed to supply the Company with five non-executive directors (currently: John Whittaker, Steven Underwood, Mark Senior, Peter Hosker and Neil Lees) or such lower number as is required by the Company. As consideration for the supply of the non-executive directors, the Company has agreed to pay a fee of £40,000 per annum for each non-executive director that is supplied (exclusive of VAT where applicable) which fees shall accrue from day to day with effect from 12 July 2011. Either party may terminate the agreement by giving three months prior written notice. 

The fees of the Chairman were last adjusted with effect 1 January 2011. The fee paid to the Chairman, Lord Grade of Yarmouth increased by 2.5% to £105,000.

Copies of the terms and conditions of appointment of the Chairman and each of the Non-Executive Directors are available for inspection at the Company's registered office during normal business hours and will be available for inspection at the place of the Annual General Meeting for at least 15 minutes prior to and during the Annual General Meeting.

Performance graph

The graph below details the percentage change in total shareholder return for the five-year period from 31 March 2007 to 31 March 2012 against both the FTSE Small Cap and the FTSE Media and Photography index, which the Board considers to be appropriate peer groups for the Company.

Total shareholder return: Pinewood Shepperton plc vs FTSE Small Cap and FTSE Media and Photography for the five-year period from 31 March 2007 to 31 March 2012 (rebased to 100).

The starting value for the Company is based on the market price of 221.0p on 31 March 2007.

Directors' remuneration for the 15 month period ended 31 March 2012 (audited)

Basic salary and fees for the fifteen month period ended 31 March 2012 for the Non-Executive Directors include fees payable for compensation for loss of office of £22,000 for each of Adrian Burn and Nigel Hall and £20,000 for James Donald.

None of the above Directors received reimbursement for expenses during the year requiring separate disclosure as required by The Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008.

Directors' share options (audited)

The gain arising on options exercised during the period for Ivan Dunleavy was £6,210 (31 December 2010: £nil) and for Nick Smith was £6,210 (31 December 2010: £nil).

Long-Term Incentive Plan (audited)

The Pinewood Shepperton plc 2006 LTIP provides for the grant of Level 1 and Level 2 awards to Executive Directors, to a maximum, in aggregate, of 250% of basic salary, on an annual basis.

In order for Level 1 awards to be granted, Executive Directors are required to have purchased shares in the Company (to a maximum value of 50% of Level 2 awards), which are matched on a two for one basis up to a maximum of 125% of salary. The number of executive shares purchased is detailed in the section entitled 'Directors and their interests' in the Directors' report. Level 2 awards are restricted to a maximum of 150% of basic salary.

Awards granted on 7 May 2008 and 24 June 2008 failed to meet the Total Shareholder Return and Return on Capital Employed targets over the three year measurement period and therefore lapsed.

In respect of the grants during 2011, the value of Level 2 Awards was set at 100% of basic salary. No Level 1 awards were made during this period.

Basis of performance condition selection and measurement

The shares subject to the LTIP awards will only be released to Executive Directors in three years from the date of grant, subject to the retention of the related executive shares purchased for three years, the continued employment of the Executive Directors, and the satisfaction of performance conditions based 50% on Total Shareholder Return and 50% on annual average Return on Capital Employed ("ROCE") performance, both measured over the three year period.

Total shareholder return ("TSR")

Comparative TSR was selected as a performance condition for part of the awards granted by the Committee as it ensures that the Executives Directors have outperformed their peers over the measurement period in delivering shareholder value before being entitled to receive any of their awards, irrespective of general market conditions.

Prior to the measurement of the TSR performance of the Company the Committee will determine whether the precondition has been satisfied. The precondition has to be satisfied prior to determining the actual level of release of the part of the award subject to the TSR performance condition. The test used by the Committee to determine whether this part of the award is capable of release will be the level of financial performance of the Company over the measurement period against budgeted levels for the following financial criteria:

(a) ROCE;

(b) EBITDA; and

(c) Normalised Earnings per Share.

If the Committee on measurement finds that the majority of these criteria have not been met and that suitable justification for this has not been provided by the Board, this part of the award will be incapable of release irrespective of the TSR performance of the Company.

TSR is measured against an appropriate comparator group of companies consisting of those forming the FTSE small cap index. This is set for each award year by reviewing and updating the comparator group data to ensure that the information reflects those companies who have moved in or out of the index. The 2008 comparator group was set at, 7 May 2008, the 2010 group was set at 1 April 2010 and the 2011 group was set at 9 March 2011.

Where the performance measure is TSR, PricewaterhouseCoopers LLP, the Committee's advisers, shall calculate the TSR in accordance with the rules of the LTIP and approve those figures prior to the release of any award.

The comparative performance targets set for the minimum and maximum award releases are as follows:

Return on capital employed ("ROCE")

It is the view of the Committee that ROCE is an appropriate performance condition for part of the awards granted under the LTIP because it is one of the key investment criteria used throughout the business and a consistent return enhances shareholder value over the medium to longer term; ROCE measures consistent value creation and is, therefore, a particularly valuable measure in a cyclical business and ROCE is a measure well understood by the executive team and something that they can directly influence.

The Committee determines whether the performance conditions for share awards or options are satisfied. Where the performance requirements are based on ROCE the Committee will use the principles behind the audited figures disclosed in the Group's financial statements, and may take advice from independent advisers as to whether any adjustments are required to ensure consistency in accordance with the terms of the performance conditions.

ROCE targets set for the minimum and maximum award releases are as follows:

The Committee took into account the following factors when setting the ROCE targets for the 2011 LTIP: the median and upper quartile historic levels of ROCE for the comparator group companies and the projected ROCE for the Group provided by external analysts, the increase in capital investment in the performance period focussed predominantly on capital projects relating to the Group's Media Park development strategy which will not flow through to increased earnings within the 2011 LTIP performance period; and the challenging economic climate for earnings over this performance period.

Impact on profit for the year (audited)

The impact, by Executive Director, of all share plans on the Group income statement of Pinewood Shepperton plc for the fifteen month period ended 31 March 2012 is summarised as follows:

The remuneration report will be subject to shareholder approval at the Annual General Meeting.

On behalf of the Board

Steven UnderwoodChairman of the Remuneration Committee

28 May 2012

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PINEWOOD SHEPPERTON PLC

We have audited the group financial statements of Pinewood Shepperton plc for the 15 month period ended 31 March 2012 which comprise the Group Income Statement, the Group Statement of other Comprehensive Income, the Group Statement of Financial Position, the Group Statement of Cash Flows, the Group reconciliation of movement in net debt, the Group Statement of Changes in Equity and the related notes 1 to 27. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's 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 and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.  In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

In our opinion the group financial statements:

·; give a true and fair view of the state of the Group's affairs as at 31 March 2012 and of its loss for the 15 month period then ended;

·; have been properly prepared in accordance with IFRSs as adopted by the European Union; and

·; have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.

As explained in note 1 to the Group financial statements, the group in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).

In our opinion the Group financial statements comply with IFRSs as issued by the IASB.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

·; certain disclosures of directors' remuneration specified by law are not made; or

·; we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

·; the directors' statement, contained within the Director's Report, in relation to going concern; and

·; the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review;

·; certain elements of the report to shareholders by the Board on directors' remuneration.

We have reported separately on the parent company financial statements of Pinewood Shepperton plc for the 15 month period ended 31 March 2012 and on the information in the Directors' Remuneration Report that is described as having been audited.

Alan Fendall (Senior statutory auditor)

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor

Manchester, UK

28 May 2012

Group income statement for the fifteen month period ended 31 March 2012 and year ended 31 December 2010

Group statement of other comprehensive income for the fifteen month period ended 31 March 2012 and year ended 31 December 2010

Group statement of financial position at 31 March 2012 and 31 December 2010

The financial statements of Pinewood Shepperton plc Company number: 3889552 were approved and authorised for issue by the Board of Directors on 28 May 2012. They were signed on its behalf by:

Ivan Dunleavy

Chief Executive

Group statement of cash flows for the fifteen month period ended 31 March 2012 and year ended 31 December 2010

Group reconciliation of movement in net debt for the fifteen month period ended 31 March 2012 and year ended 31 December 2010

Group statement of changes in equity

From 1 January 2011 to 31 March 2012

From 1 January 2010 to 31 December 2010

1. Authorisation of financial statements and statement of compliance with IFRS

The Group financial statements of Pinewood Shepperton plc for the fifteen month period ended 31 March 2012 were authorised for issue by the Board of the Directors on 28 May 2012 and the statements of financial position were signed on the Board's behalf by the Chief Executive. Pinewood Shepperton plc is a public limited company incorporated and domiciled in England and Wales. The registered office is located at Pinewood Studios, Pinewood Road, Iver Heath, Buckinghamshire, SL0 0NH, United Kingdom. The Company's ordinary shares are traded on the London Stock Exchange.

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union as they apply to the financial statements of the Group for the fifteen month period ended 31 March 2012. The Group's financial statements are also consistent with IFRSs as issued by the IASB. The principal accounting policies adopted by the Group are set out in Note 2.

2. Accounting policies

Basis of preparation and statement of compliance

The consolidated financial statements of Pinewood Shepperton plc and all of its subsidiaries and joint ventures have been prepared in accordance with IFRS as adopted by the European Union as they apply to the financial statements of the Group for the fifteen month period ended 31 March 2012 and applied in accordance with the Companies Act 2006.

The accounting policies which follow set out those policies which apply in preparing the financial statements for the fifteen month period ended 31 March 2012. The Group financial statements are presented in UK sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

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 Directors considered that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing these financial statements.

The Group's assessment of going concern is explained further in the Directors' report on page 16 of the Annual Report.

Basis of consolidation

The Group consolidated financial statements comprise the financial statements of Pinewood Shepperton plc and its subsidiaries and joint ventures as at 31 March 2012 and 31 December 2010. All intercompany balances and transactions have been eliminated in full.

Subsidiaries and joint ventures 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 or joint venture, the consolidated financial statements include the results for the part of the reporting year during which Pinewood Shepperton plc has control.

Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year except as follows:

IAS 24 Related Party Transactions (Amendment)

The IASB has issued an amendment to IAS 24 that clarifies the definitions of a related party. The new definitions emphasise a symmetrical view of related party transactions as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group.

The following are not effective at the date of these accounts though we do not expect them to have a material impact once they have been adopted:

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

The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or "recycled") to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and there will be no impact on the Group's financial position or performance. The amendment becomes effective for annual periods beginning on or after 1 July 2012.

IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The amendment becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9 as issued reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets, but will potentially have no impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance. This standard becomes effective for annual periods beginning on or after 1 January 2013.

Summary of significant accounting policies

Interest in a joint venture

The Group has an interest in one joint venture which is a jointly controlled entity. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest.

The Group recognises its joint ventures interests using the proportionate consolidation method. The Group combines its share of each of the assets, liabilities, income and expenses of the joint venture with the similar items, line by line, in its consolidated financial statements. The financial statements of the joint ventures are prepared for the same reporting year as the parent company. Accounting policies are consistent with the exception that the joint ventures carries its property, plant and equipment at valuation rather than cost. Adjustments are made to bring such dissimilar accounting policies into line with the Group accounting policies. If the Group purchases assets from the joint ventures, the Group does not recognise its share of the profits of the joint venture from the transaction until it resells the assets to an independent party.

Foreign currency translation

The functional and presentation currency of Pinewood Shepperton plc and its subsidiaries is UK sterling (UK £). Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of transactions. Exchange differences resulting from the settlement of such transactions and from the translation at exchange rates ruling at the statement of financial position date of monetary assets and liabilities denominated in currencies other than the functional currency are recognised in the consolidated income statement.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration receivable, excluding discounts, rebates, VAT and other sales taxes or duty. The Group has assessed its revenue arrangements and has concluded that it is acting as a principal in all of its revenue arrangements. Where a contract spans an accounting cut off date, the value of the revenue recognised is the time proportion of the total value of the contract completed by the cut off date. The following specific recognition criteria apply:

·; Film customers utilise services for a period of time. Film revenues are also derived from international agreements to provide sales and marketing services. Revenue is recognised as the Group earns the right to consideration for the service provided and this is time apportioned and earned as time elapses

·; Television revenue is derived from the provision of services and is recognised on a time apportioned basis in relation to the television production process

·; Media Park revenue, which includes revenue from Investment property, is derived from customers contracting to use the Group's facilities for a period of time. Revenue is recognised on a straight line basis over the term of the agreement

·; Royalty revenue is recognised on an accruals basis in accordance with the relevant contracted agreement. Revenue is recognised as the Group earns the right to consideration for the royalty and this is time apportioned and earned as time elapses.

Film Investments

Film investments are classified as Investments at fair value with any impairment in the investment expensed in the income statement. The Company reviews the fair value at least annually. Any net changes in fair value are recognised in the income statement.

Tax

Deferred tax

Deferred corporation tax is provided, using the liability method, on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred corporation tax liabilities are recognised for all taxable temporary differences:

·; except where the deferred corporation tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·; in respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred corporation tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised except:

·; where the deferred corporation tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·; in respect of deductible temporary differences associated with investments in subsidiaries deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred corporation tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred corporation tax asset to be utilised.

Deferred corporation tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

Corporation tax

Corporation tax relating to items recognised directly in equity is recognised in other comprehensive income and the statement of changes in equity and not in the income statement.

Value added tax

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Revenues, expenses and assets are recognised net of the amount of value added tax except:

·; where the value added tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

·; receivables and payables are stated with the amount of value added tax included.

Pensions and other post-employment benefits

The Group operates a defined contribution scheme. Contributions are charged to the income statement as they become payable in accordance with the rules of the schemes.

Share-based payment transactions

Employees (including Directors) of the Group may receive part of their remuneration in the form of share-based payment transactions, whereby employees render their services in exchange for shares or rights over shares ('equity-settled transactions').

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using the binomial method. In valuing equity-settled transactions, no account is taken of any performance conditions, other than the conditions linked to the price of the shares of Pinewood Shepperton plc ('market conditions').

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Group at that date based on the best available estimate of the number of equity instruments, will ultimately vest.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition and in circumstances where holders of awards with no performance conditions attached cancel their awards whilst remaining in the employment of the Group. These are treated as vesting irrespective of whether or notthe market condition is satisfied, provided that all other performance conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification.

Where an equity-settled award is cancelled by the award holder whilst remaining in the employment of the Group, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

Where an equity-settled award is cancelled due to the holder of the award no longer remaining in the employment of the Group, no expense is recognised.

The dilutive effect of outstanding issuable awards is reflected as additional share dilution in the computation of earnings per share. Awards that are contingently issuable are not considered dilutive unless the performance conditions for ultimate vesting are met.

Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand. For the purpose of the Group statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as described above, net of outstanding bank overdrafts.

Interest-bearing loans and borrowings

Obligations for loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at the fair values of consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method, allocating the interest income or interest expense over the relevant period. The loan issue costs are amortised in the income statement over the remaining maturity of the loans at a constant carrying amount and are reviewed for changes in circumstances that may indicate that the loans will not be held to maturity.

Derivative financial instruments

The Group has interest rate swaps to hedge against risks associated with interest rate fluctuations. These derivative financial instruments are stated at fair value.

The fair values of the interest rate swap contracts are determined by reference to market values for similar instruments. The interest rate swaps are cash flow hedges which hedge exposure to variability in cash flows that are attributable to the interest rate risk on the Group's external borrowings.

The portion of the gain or loss on the hedging instruments that is determined to be an effective hedge is recognised directly in other comprehensive income and the statement of changes in equity in a cash flow hedge reserve and the ineffective portion is recognised in the Group income statement in finance costs. Amounts taken to other comprehensive income and the statement of changes in equity are transferred to the income statement when the hedged transaction affects Group income.

Hedge accounting is discontinued when the hedging instruments expire, or are sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instruments recognised in other comprehensive income and the statement of changes in equity is kept in other comprehensive income and the statement of changes in equity until the forecasted transactions occur. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in other comprehensive income and the statement of changes in equity is transferred to the Group income statement for that year.

Property, plant and equipment

Property, plant and equipment are stated at cost to the Group less accumulated depreciation and any impairment loss. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended. Depreciation is calculated on all property, plant and equipment, other than land, from the time they are available for use on a straight line basis over the estimated useful life as follows:

Freehold buildings - 50 yearsFreehold improvements - 25 yearsFixtures, fittings and equipment - 3 to 10 yearsLeasehold improvements - shorter of 25 years or the term of the lease

Land and assets under construction are not depreciated.

The carrying value of freehold land and buildings within 'Property, plant and equipment' in the statement of financial position is based on external valuations undertaken by an independent firm of Chartered Surveyors in February 2000 (as amended in January 2001) and November 2000, on each occasion to establish the fair values of the Pinewood Studios and Shepperton Studios businesses acquired. Subsequent to these valuations, which established the cost to the Group of freehold land and buildings, additions, disposals and depreciation have been recorded in line with Group accounting policies.

The carrying value of property, plant and equipment is reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable, and is written down immediately to the recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising in de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item is derecognised.

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangements at the inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased item, or if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and the reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability, using the effective interest rate method. Finance charges are recognised in the income statement on a straight line basis.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases, where the lessor retains substantially all the risks and benefits of ownership of the asset, are classified as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term.

Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or development of certain investment capital expenditure projects that necessarily take a substantial period of time to get ready for their intended use, or sale, are capitalised as part of the cost of the respective assets. All other borrowing costs are recognised as an expense in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

The Group has capitalised borrowing costs for all eligible assets where development or construction was commenced on or after 1 January 2007. No charges have been made for borrowing costs incurred prior to this date that have been expensed.

Investment property

As defined by IAS 40, investment property is property held to earn rental income and/or for capital appreciation. Assets classified as investment property are carried at cost (including transaction costs) less accumulated depreciation and any recognised impairment in value, and exclude the costs of the day to day servicing of an investment property. The depreciation policies for investment property are in accordance with the Group depreciation policy, as defined within 'Property, plant and equipment' in Note 2 to the financial statements. In accordance with IAS 40, the Group has determined the fair value of assets classified as investment. The key assumptions used in arriving at the fair value and the fair value are contained in Note 15, 'Investment property', on page 70.

Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share price for the publicly traded Pinewood Shepperton plc or other fair value indicators.

Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates assets or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement. After such reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over the remaining useful life.

Goodwill

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any

accumulated impairment loss. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill is allocated to the related cash-generating unit monitored by management. Where the recoverable amount of the cash-generating unit is less than the carrying amount, including goodwill, an impairment loss is recognised in the income statement.

Intangible assets

Intangible assets, when identified, are capitalised at cost and subsequently amortised over their useful economic life.

Available-for-sale financial assets

Available for sale financial investments include equity securities. Equity investments classified as available-for-sale are those which are neither classified as held for trading nor designated at fair value though profit or loss.

The Group evaluates its available-for-sale financial assets and whether the ability to sell them is still appropriate.

The Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost, where 'significant' is estimated to be around 20% of the original cost of the investment and 'prolonged' is no less than 12 months. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement - is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income.

Long term assets

Costs incurred in the establishment of long-term agreements are capitalised on the Statement of Financial Position and categorised as Long-term assets.

These costs are reviewed at least annually for any impairment in their carrying value and once the long-term agreement becomes operational the costs are amortised over the term of the agreement.

Impairment costs and amortisation are expensed to the Group Income Statement.

Inventories

Inventories are valued at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition. Net realisable value is based on the estimated selling price less any estimated further costs expected to be incurred to completion and disposal.

Trade and other receivables

Trade receivables are recognised and carried at the lower of their original invoice value and recoverable amount.

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified and are determined using business knowledge and individual circumstances specific to each customer.

Exceptional items of income and expense

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 shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.

Dividends

The equity transaction is recognised when the shareholders' right to receive payment is established.

Share issue costs

Costs directly attributable to the raising of equity are charged to the share premium account.

Significant accounting judgements, estimates and assumptions

Estimates

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect reported amounts at the end of the period.

Judgements

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date are discussed below.

Impairment of goodwill

The carrying amount of goodwill at 31 March 2012 was £5,604,000 (2010: £5,604,000). The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating unit to which the goodwill is allocated. The Group considers Pinewood Shepperton plc and its subsidiaries to be one cash-generating unit.

Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The cash flows are derived from the Board approved budget for the next year and the Board approved long range plan and do not include non-cash generating assets, any activities that the Group is not yet committed to or significant future investments that will enhance the asset's performance of the cash generating unit. This calculation is sensitive to the discount rate used for the calculation of present values of cash flows.

The key assumptions used to determine the value in use are further explained in Note 16.

Going concern

Information on the Group's risks, management and exposure are set out in the "Key business risks" section and Note 27 "Financial risk management, objectives and policies" of the this Annual Report. The Directors, having made appropriate enquiries, consider that the Group has adequate resources to continue in the operational business for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the financial statements.

3. Segment information and revenue analysis

The chief operating decision maker is the Board of Directors. The Group operates in one principal continuing area of activity, that of media services, primarily arising in the United Kingdom. It provides studio and related services to the film and television and wider creative industries.

Revenues from these activities can be further analysed by type of customer as follows: