Final Results

25th Mar 2009 07:00



Pinewood Shepperton plc

Preliminary Results for the Twelve Months Ended 31 December 2008

Pinewood Shepperton announces 2008 full year results in line with expectations, showing growth in Film and Television revenues and a consistent performance in Media Park. 

Highlights 

Revenue £42.9m (2007: £37.4m)

Operating profit before exceptional items £8.4m (2007: £8.1m)

Diluted earnings per share of 12.0p (2007: 10.3p)

Diluted earnings per share adjusted for the effect of indexation on deferred tax provision and exceptional items 11.5p (2007: 9.9p)

Recommended final dividend of 2.30p (2007: 2.30p) resulting in a total dividend for 2008 of 3.35p (2007: 3.30p)

Two new major developments for Media Park

Awarded a BAFTA award for Outstanding British Contribution to Cinema

Commenting on today's results, Ivan Dunleavy, Chief Executive of Pinewood Shepperton plc, said:

"In the context of the economic uncertainty of 2008, which continues, we have produced resilient results. We have delivered growth in Film, Television and Media Park revenues and are well placed to capitalise on the continuing strong demand for creative content."

"Our diversification strategy is working well, delivering consistent revenue streams from an ever wider range of customers. Our anticipated revenues for 2009 are in line with market expectations. We view the Group's prospects with continued confidence."

Enquiries

Pinewood Shepperton plc
Ivan Dunleavy - Chief Executive	01753 656 183
Brunswick Group LLP
Tom Buchanan / James Olley	020 7404 5959

A presentation of the results of the Company will be available on Pinewood Shepperton's website: www.pinewoodgroup.com from 12pm today. 

Operating review 

The Group reviews the business performance across three areas: Film, Television and Media Park.

Film

Pinewood Shepperton's Film revenues were strong during 2008, rising to £24.2m (2007: £19.5m) with high utilisation of the Group's facilities, in particular in the first half of the year. This demonstrates film's ability to deliver attractive revenues in times of wider economic uncertainty. The cinema industry enjoyed a successful year in 2008 with box office revenues up 5% on last year (Nielsen EDI) and an ongoing trend of increasing cinema admissions.  The appeal of film in uncertain economic times has not diminished.

The Studios benefited from the resolution of the Writers Guild of America strike, which had delayed a number of film productions that were due to start in the latter half of 2007. Demand was also driven by the continued strong reputation of UK studios as an appealing environment and a financially favourable place to make films, in part due to the tax credits available. 

The Group is encouraged that of the UK inward investment productions made in 2008, Pinewood Shepperton played host to the majority of the major films, such as Prince of Persia: The Sands of Time, Mamma Mia! and Quantum of Solace. 

Other productions using Pinewood Shepperton's facilities during the year included: Me and Orson Wells (CinemaNX), The Wolfman (Universal), Harry Potter and the Half-blood Prince (Warner Bros), Nine (Weinstein) and The Boat that Rocked (Working Title/Universal). 

In recognition of the key role that Shepperton Studios and Pinewood Studios have played in British film over the decades, we were delighted that The British Academy of Film and Television Arts awarded Shepperton Studios and Pinewood Studios their Award for Outstanding British Contribution to Cinema. In the words of BAFTA "Pinewood and Shepperton stand for excellence".

Televison 

Television revenues grew modestly to £12.7m (2007: £12.1m), despite the pressure by broadcasters on production budgets. 

This steady performance during the period was in the context of a declining advertising market for commercial broadcasters and budget constraints for public service broadcasters. As a leading provider of television facilities the Group has benefited from the diversity of its customers and the relationships it has with broadcasters. 

Pinewood Shepperton's aim is to diversify into television seeking longer term trading arrangements with producers and broadcasters and thus broadening the customer base using facilities across the Group. 

The Group provides the following television facilities and services: dedicated studios, channel hosting, post-production, filmed television drama and television commercials, demonstrating the versatility and breadth of its facilities.

The Group seeks to develop preferred supplier status with independent production companies and key broadcasters. Although there has been pressure on production costs, there continues to be strong demand for quality creative content and the Group is well positioned to service this demand. Commissioning broadcasters are increasingly looking for a fuller service offering. The Group has seen an encouraging trend of productions and on site tenants utilising the full offering of its facilities, from the actual filming to editing and picture and audio post production. The production of Little Dorrit, for the BBC, demonstrates this fuller service that the Studios have arranged. Little Dorrit was filmed at Pinewood Studios and utilised a number of film stages, the exterior water tank, the sound post production facilities and the facilities and services of a number of the Media Park tenants as a package from Pinewood Studios.

Television productions across the three Studios in 2008 included other new and returning productions such as Last of the Summer Wine, Thomas the Tank Engine, Wogans Total Recall, After You've Gone, and CBeebies and repeat customers including Dragons Den, IT Crowd, Green Green Grass, Gladiators, The Lily Allen Show, Weakest Link and Harry Hill's TV Burp. Facilities were also used for an increasing number of commercials, a further example of the diversification of the Group's television business. These included commercials for Nokia, Bird's Eye, Nationwide and Philips. 

The channel hosting services at Teddington continue to make a solid contribution to Television revenues as these facilities expand to meet growing demand. 

Media Park

Media Park revenue was £6.0m for 2008 (2007: £5.8m), an increase of 4%.

Media Park, a key component of the Group's strategy, now comprises over 310 businesses offering a variety of services to the film and television industry. In the past 12 months the Group has attracted a number of new industry tenants including Red Europe and Riedel Communications. 

Rental rates remained stable across the Group despite difficult overall market conditions. Our Media Park facilities enjoyed high occupancy levels during the year. 

The Group has expanded capacity in line with its pre-let strategy. In December 2008, the 42,000 sq ft building pre-let to Technicolor achieved practical completion and the tenant has taken occupation. The building comprises three floors with a mix of commercial and office space to facilitate the digital and film processing undertaken by Technicolor in the UK. 

The Shepperton Studios Property Partnership established in September 2006 with Aviva continues to progress satisfactorily. The 60,000 sq ft Gainsborough Building was completed in May 2008. 40,000 sq ft of its workshop and production facilities were occupied by film productions. 

Project Pinewood 

Following a period of public consultation, Pinewood Shepperton will be submitting a planning application during the first half of 2009 for Project Pinewood, a long term scheme of national significance to create a living and working community for the creative industries. Project Pinewood is aimed at building upon the creative hub developing at Pinewood Studios.

Project Pinewood will combine the vocational requirements of the national and international film and television industries with the UK Government's demand for sustainable communities. The project will be a significant extension to Pinewood Studios, located adjacent to the existing Pinewood Studios site. 

Planning application costs incurred to 31 December 2008 were £3.4m. These costs are included in 'Freehold land' within 'Property, plant and equipment' on the balance sheet. The Board will consider all appropriate options to progress the development of this unique scheme including the introduction of suitable partners.

Change in Director Role and Responsibilities 

With immediate effect, Nicholas Smith will undertake a newly created position of Commercial Director. This is an enlarged role that replaces the Board level position of Sales and Marketing Director and reflects the greater input Nicholas has into the broader commercial activities of the Group. Nicholas will work alongside the Chief Executive to develop Group strategy and seek opportunities for new business generation. He will retain Board responsibility for the sales function of the Group. 

 

 

Dividend

Our businesses remain cash generative, giving us flexibility for the future. The Board is recommending a maintained final dividend of 2.30p taking the total dividend for the year to 3.35p, reflecting our confidence in Pinewood Shepperton's business model.

Current Trading and Outlook

Anticipated revenues for 2009 are in line with market expectations. Full year film revenues look to be strongly weighted to the second half. Resolution of the Screen Actors Guild (of America) dispute is still awaited but, so far, producers appear not to be allowing this to curtail their production plans. The decline in sterling is an extra incentive. In television the current economic downturn has led to cuts in broadcasters' programme investment. This is likely to result in flatter television revenues this year compared to the strong growth pattern delivered over the past few years. Media Park revenues should remain robust following investments made in 2007 and 2008. We are mindful of the challenging economic conditions and will continue to run the Group conservatively. The Board considers the Group to be well placed and views the Group's prospects with continued confidence.

Ivan Dunleavy

Chief Executive

 

Financial review

Revenue

Total revenues for the year increased to £42.9m (2007: £37.4m).

Film revenues of £24.2m (2007: £19.5m) were driven by strong utilisation of the studios facilities in the first half of 2008 benefiting from the resolution of the Writers Guild of America strike late in 2007. 

Television revenues of £12.7m (2007: £12.1m) showed modest growth from a combination of new customers together with a satisfactory level of repeat business.

Media Park revenue increased to £6.0m (2007: £5.8m), after eliminating the joint venture partner's 50% interest of £1.0m (2007: £0.8m) in Shepperton Studios Property Partnership.

Profit performance and earnings per share

Gross profit was £16.7m (2007: £14.8m) with gross margins being maintained at 39%.

Operating profit, before exceptional items, increased to £8.4m (2007: £8.1m) with margins of 19% (2007: 22%). The reduction in the operating margin was predominantly attributable to fluctuating energy costs, increased non cash share based payment charges relating to the Group's long term incentive plans and increased selling and distribution expenses reflecting higher revenues.

Profit before tax increased 12% to £5.9m (2007: £5.3m). 

Earnings before interest, tax, depreciation and amortisation increased to £12.0m (2007: £11.1m). 

Basic earnings per share were 12.3p (2007: 10.4p). Basic earnings per share, after adjusting the effects of indexation on the deferred tax provision and exceptional items, were 11.8p (2007: 10.1p).

Diluted earnings per share were 12.0p (2007: 10.3p). Diluted earnings per share, after adjusting the effects of indexation on the deferred tax provision and exceptional items, were 11.5p (2007: 9.9p).

 

The diluted and weighted average number of shares in issue was 47.1m (2007: 46.4m), including the awards granted under the Group's long term incentive plan during the year.

Dividend

The Board is recommending a maintained final dividend of 2.30p per share (2007: 2.30p). Taken together with the interim dividend of 1.05p (2007: 1.00p) the total dividend is 3.35p (2007: 3.30p). The dividend for 2008 is covered 3.4 times (2007: 3.0 times) by earnings adjusted for the effects of indexation on deferred tax (and exceptional items in 2007). Subject to approval by shareholders at the Annual General Meeting to be held on 22 June 2009, the final dividend will be paid on 6 July 2009 to shareholders on the register on 5 June 2009 (ex-dividend date of 3 June 2009). It remains the Board's objective to continue its progressive dividend policy.

Cash flow and net debt

The Group delivered a 10% increase in operating cash flow of £12.5m (2007: £11.4m), before changes in working capital. After adjusting for movements in working capital, cash generated from operations was £9.6m (2007: £7.8m) from which the Group paid finance costs of £1.8m (2007: £1.8m) and corporation tax of £0.8m (2007: £1.4m). 

During the year, the Group incurred capital expenditure of £18.6m (2007: £16.6m) of which £16.6m was paid in cash (2007: £17.6m).

In August 2008, the Group arranged new banking facilities of up to £70.0m which comprise a £35.0m revolving credit facility, a £30.0m pre-let development facility and a £5.0m overdraft facility. These facilities are secured by a floating charge over the Group's assets. The revolving and pre-let development facilities contain no scheduled repayments and mature in August 2013. The £5.0m overdraft facility is renewable annually. At the year end £24.0m of the revolving credit facility, £6.0m of the pre-let development facility and £1.2m of the overdraft facility were drawn.

The Group's net debt at the end of the year was £42.6m (2007: £30.1m), which included £11.4m (2007: £10.0m) relating to the Group's 50% interest in the non-recourse Aviva loans to the Shepperton Studios Property Partnership ("SSPP"). The increase in net debt relates to investment expenditure, including the Group's pre-let developments, its share of the SSPP joint venture developments and Project Pinewood planning application costs.

The new revolving credit facility and pre-let development facility have a range of covenants together with variable margins between 175 and 275 basis points over LIBOR. The SSPP non-recourse Aviva loans and facilities are excluded from banking covenants. The Group was covenant compliant at 31 December 2008.

The Group's new banking facilities are in addition to the non recourse loans and facilities provided to SSPP by our joint venture partner Aviva which total £40.0m. To the extent these loans were drawn, £22.8m at the year end, they are 50% consolidated (£11.4m) in the Group's balance sheet at 31 December 2008. These facilities are for a twenty year term with no scheduled repayments.

Financial gearing 

As a result of investment expenditure during the year, net debt including the Group's share of the Aviva non-recourse facilities in the joint venture partnership was £42.6m (2007: £30.1m), increasing financial gearing to 61.1% (2007: 45.5%). 

The Group measures Return on Capital Employed (ROCE) by reference to operating profit as a percentage of average capital employed, being total equity plus interest-bearing loans and borrowings, which for 2008 was 8.0% (2007: 9.1%). The reduction in the ROCE is driven by the increase in capital investment expenditure including pre-let developments and Project Pinewood which at 31 December 2008 were not yet revenue generating. 

Finance costs

Net finance costs were £2.4m (2007: £1.8m), reflecting principally the increase in debt and the amortisation of arrangement costs for the banking facilities. Net finance costs were covered an overall 3.4 times (2007: 4.4 times) by operating profit. Interest of £0.5m (2007: £0.2m) was capitalised during the year.

Hedging

During 2008 the Group continued to use an interest rate derivative to manage its interest rate exposure. At the year end £22.5m (2007: £7.5m) of the Group's new revolving and pre-let facilities were hedged, which represents 75% of the total facilities drawn (excluding the Group's share of the SSPP debt).

Taxation

The current corporation tax expense for year ended 31 December 2008, based on profit before tax and exceptional items, of £5.9m, was £1.3m, a current tax rate of 22% (2007: 33%). After adjusting for exceptional items, and the effect indexation has on deferred tax the effective rate was 5% (2007: 9%).

Patrick Garner FCA

Finance Director

Group income statement 

for the year ended 31 December 2008

			Year ended 31 December 2008	Year ended 31 December 2007
		Notes	£000	£000
Revenue
Rendering of services		2	42,867	37,397
Cost of sales			(26,167)	(22,637)
Gross profit			16,700	14,760
Selling and distribution expenses			(2,044)	(1,735)
Administrative expenses			(6,299)	(4,942)
Operating profit before exceptional items			8,357	8,083
Exceptional costs		4	-	(985)
Operating profit			8,357	7,098
Finance costs		5	(2,424)	(1,821)
Profit before tax			5,933	5,277
Current tax expense			(1,287)	(2,165)
Deferred tax credit			782	819
Effect of indexation on deferred tax provision			224	853
Total corporation tax expense		6	(281)	(493)
Profit for the year			5,652	4,784
Attributable to:
Equity holders of the parent			5,652	4,784
Earnings per share
-	basic for result for the year	7	12.3p	10.4p
-	diluted for result for the year	7	12.0p	10.3p

Group balance sheet 

at 31 December 2008

			As at 31 December 2008	As at 31 December 2007
		Notes	£000	£000
Assets
Non-current assets
Property, plant and equipment		8	117,239	102,257
Intangible assets		9	5,604	5,604
			122,843	107,861
Current assets
Inventories			413	411
Trade and other receivables			3,383	4,148
Prepayments			2,064	2,121
Cash			-	834
			5,860	7,514
Total assets			128,703	115,375
Equity and liabilities
Equity attributable to equity holders of parent
Share capital		10	4,594	4,591
Share premium		10	43,692	43,615
Capital redemption reserve		10	135	135
Merger reserve		10	348	348
Fair value of cash flow hedge			(1,372)	-
Retained earnings			22,220	17,616
Total equity			69,617	66,305
Non-current liabilities
Interest-bearing loans and borrowings		11	41,427	30,894
Deferred tax liabilities			2,941	3,921
			44,368	34,815
Current liabilities
Trade and other payables			12,012	12,913
Interest-bearing loans and borrowings		11	1,198	-
Tax payable			1,508	971
Provisions			-	371
			14,718	14,255
Total Liabilities			59,086	49,070
Total equity and liabilities			128,703	115,375

The financial statements were approved by the Board of Directors on 24 March 2009 and are signed on its behalf by:

Patrick Garner FCA 

Finance Director

 

Group cash flow statement 

for the year ended 31 December 2008

		Year	Year
		ended	ended
		31 December	31 December
		2008	2007
		£000	£000
Cash flow from operating activities
Profit before tax		5,933	5,277
Adjustments to reconcile profit before tax to net cash flows
Exceptional costs		-	985
Depreciation		3,594	3,033
Share-based payment charges		516	250
Finance costs		2,424	1,821
Cash flow from operating activities before changes in working capital		12,467	11,366
Decrease/(increase) in trade and other receivables		822	(823)
Increase in inventories		(2)	(92)
Decrease in trade and other payables		(3,683)	(2,684)
Cash generated from operations		9,604	7,767
Finance costs paid		(1,801)	(1,809)
Corporation tax paid		(750)	(1,354)
Net cash flow from operating activities		7,053	4,604
Cash flow (used in)/from investing activities
Costs of the Shepperton Studios Joint Venture transaction		-	(357)
Proceeds from insurance for 007 Stage		-	2,457
Purchase of property, plant and equipment		(16,613)	(17,641)
Net cash flow used in investing activities		(16,613)	(15,541)
Cash flow (used in)/from financing activities
Proceeds from the issue of shares		80	146
Payment of finance lease liabilities		-	(18)
Payment of loan issue fees		(1,385)	-
Dividends paid		(1,538)	(1,421)
Proceeds from borrowings of Joint Venture		1,371	-
Repayment of bank borrowings		(26,000)	-
Proceeds from bank borrowings		35,000	12,000
Net cash flow from financing activities		7,528	10,707
Net decrease in cash		(2,032)	(230)
Cash at the start of the year		834	1,064
(Overdraft)/cash at the end of the year		(1,198)	834

Group reconciliation of movement in net debt 

for the year ended 31 December 2008

		Year	Year
		ended	ended
		31 December	31 December
		2008	2007
		£000	£000
Reconciliation of net cash flow to movement in net debt
Decrease in cash		(2,032)	(230)
Repayments of finance lease obligations		-	18
Loan issue costs		1,385	-
Amortisation of loan issue costs		(175)	(92)
Proceeds from borrowings of Joint Venture		(1,371)	-
Repayment of bank borrowings		26,000	-
Proceeds from bank borrowings		(35,000)	(12,000)
Movement in fair value of cash flow hedge		(1,372)	4
Movement in net debt		(12,565)	(12,300)
Net debt at 1 January		(30,060)	(17,760)
Net debt at 31 December		(42,625)	(30,060)
Attributable to:
Cash		-	834
Current liabilities
Interest-bearing loans and borrowings		(1,198)	-
Non-current liabilities
Revolving credit facility loan		(24,000)	(21,000)
Pre-let development facility loan		(6,000)	-
Drawn facility loan		(30,000)	(21,000)
Fair value of cash flow hedge		(1,372)	-
Unamortised loan issue costs		1,316	106
Share of joint venture loan		(11,371)	(10,000)
Interest-bearing loans and borrowings		(42,625)	(30,894)
Net debt at 31 December		(42,625)	(30,060)

Group statement of changes in equity

From 1 January 2008 to 31 December 2008

	Share capital	Share premium	Capital redemption reserve	Merger reserve	Fair value of cash flow hedge reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000	£000
At 1 January 2008	4,591	43,615	135	348	-	17,616	66,305
Profit for the year	-	-	-	-	-	5,652	5,652
Tax on items taken directly to or transferred from equity	-	-	-	-	-	(26)	(26)
Total recognised income and expense for the year	-	-	-	-	-	5,626	5,626
Equity dividends	-	-	-	-	-	(1,538)	(1,538)
New shares issued	3	77	-	-	-	-	80
Fair value of cash flow hedges	-	-	-	-	(1,372)	-	(1,372)
Share-based payment	-	-	-	-	-	516	516
At 31 December 2008	4,594	43,692	135	348	(1,372)	22,220	69,617

From 1 January 2007 to 31 December 2007

	Share capital	Share premium	Capital redemption reserve	Merger reserve	Fair value of cash flow hedge reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000	£000
At 1 January 2007	4,582	43,478	135	348	(3)	14,020	62,560
Profit for the year	-	-	-	-	-	4,784	4,784
Transfers to the income statement
On cash flow hedges	-	-	-	-	3	-	3
Tax on items taken directly to or transferred from equity	-	-	-	-	-	(17)	(17)
Total recognised income and expense for the year	-	-	-	-	3	4,767	4,770
Equity dividends	-	-	-	-	-	(1,421)	(1,421)
New shares issued	9	137	-	-	-	-	146
Share-based payment	-	-	-	-	-	250	250
At 31 December 2007	4,591	43,615	135	348	-	17,616	66,305

Publication of non-statutory accounts

The financial information contained herein does not constitute the Company's statutory accounts for the year ended 31 December 2008, as defined in section 240 of the Companies Act 1985, but have been extracted from the statutory accounts, upon which the auditors issued an unqualified opinion. Statutory 

accounts for 2007 have been delivered to the Registrar of Companies. Statutory accounts for the year ended 31 December 2008 will be delivered following the Company's Annual General Meeting. 

Extracts of notes to the financial statements

1. Basis of preparation

The consolidated financial statements of Pinewood Shepperton plc and all its subsidiaries and joint ventures have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2008 and applied in accordance with the Companies Act 1985. 

The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 December 2008. 

The Group financial statements are presented in UK sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

2. Revenue analysis

The Group operates in one principal continuing area of activity, that of media services, arising in the United Kingdom. It provides studio and related services to the film and television industries.

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

	2008 £000	2007 £000
Film	24,159	19,548
Television	12,742	12,085
Media Park	5,966	5,764
	42,867	37,397

 

3. Interest in a joint venture

The Group has a 50% interest in Shepperton Studios Property Partnership, an entity controlled jointly with a third party - Aviva Group, which holds a 997 year lease on the Shepperton Studios property. The Group's share of the joint venture's assets, liabilities and results are as follows:

			2008	2007
			£000	£000
Share of joint ventures balance sheet
Property, plant and equipment			20,995	19,662
Current assets			157	518
			21,152	20,180
Interest bearing loans and borrowings			(11,371)	(10,000)
Current liabilities			(548)	(782)
			(11,919)	(10,782)
Share of joint ventures income and expenses
Revenue			968	842
Cost of sales			(575)	(428)
Administrative expenses			6	4
Finance costs			(751)	(751)
Net loss			(352)	(333)

The Group's share of the capital commitments in respect of property, plant and equipment was nil (2007: £2,229,000).

4. Exceptional items

	2008 £000	2007 £000
Administrative expenses	-	985

BBC Resources aborted transaction costs

During the year ended 31 December 2007 the Group entered into a process relating to the potential acquisition of the BBC television studios business. Transaction expenses of £985,000 were incurred during the year. On 7 March 2008 the BBC announced that it intended to retain its television studios business.

5. Finance costs

	2008 £000	2007 £000
Bank loans and overdrafts	1,611	1,020
Interest rate hedging	6	(22)
Share of joint venture loan	751	751
Bank charges	33	15
Finance charges payable under finance leases	-	2
Other loans	23	55
	2,424	1,821

Finance costs of £479,000 (2007: £180,000) directly attributable to the construction of certain capital items have been capitalised based on LIBOR plus a variable margin consistent with the Group's secured bank loan. The capitalisation rate was 7.05% (2007: 6.88%).

6. Taxation

	Year ended 31 December 2008	Year ended 31 December 2007
	£000	£000
Consolidated income statement
Current corporation tax
UK corporation tax	1,565	1,765
Amounts (over)/under provided in previous years	(278)	400
Total current corporation tax	1,287	2,165
Deferred tax
Relating to origination and reversal of temporary timing differences	(1,006)	(1,672)
Tax charge in the income statement	281	493
The tax charge in the income statement comprises:
Tax on profit before exceptional items	281	789
Tax provision adjustments relating to exceptional items	-	(296)
Tax charge in the income statement	281	493

 

7. Earnings per ordinary share and dividend

Earnings per ordinary share

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

Diluted earnings per ordinary share are calculated by dividing net profit for the year attributable to the holders of ordinary equity of the parent by the weighted average number of ordinary shares outstanding during the year adjusted for the effects of dilutive potential ordinary shares resulting from employee share schemes.

The Group presents as exceptional items on the face of the income statement those items where the cost or income is of such size or incidence that the additional disclosure is required for the reader to understand the financial statements. Basic and diluted earnings per share are also presented on this basis.

Basic and diluted earnings per share are also presented adjusting for the combined effect of the exceptional items and the effects of indexation on the deferred tax provision.

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

	2008 £000	2007 £000
Profit attributable to equity holders of the parent for basic earnings per share	5,652	4,784
Adjustments to profit for calculation of adjusted earnings per share
Exceptional items	-	985
Taxation adjustments on exceptional items	-	(296)
Adjusted profit for adjusted earnings per share	5,652	5,473
Effects of indexation on deferred tax provision	(224)	(853)
	5,428	4,620

	Thousands	Thousands
Basic weighted average number of ordinary shares	45,929	45,861
Dilutive potential ordinary shares resulting from employee share schemes	1,186	587
Diluted weighted average number of ordinary shares	47,115	46,448

Earnings per share	2008	2007
- basic for result for the year	12.3p	10.4p
- diluted for result for the year	12.0p	10.3p
- basic for result for the year adjusted for exceptional items	12.3p	11.9p
- diluted for result for the year adjusted for exceptional items	12.0p	11.8p
- basic for result for the year adjusted for exceptional items and effect of indexation on deferred tax provision	11.8p	10.1p
- diluted for result for the year adjusted for exceptional items and effect of indexation on deferred tax provision	11.5p	9.9p

Dividend paid

	2008 £000	2007 £000
Final dividend for 2006 paid at 2.1p per ordinary share	-	962
Interim dividend for 2007 paid at 1.0p per ordinary share	-	459
Final dividend for 2007 paid at 2.30p per ordinary share	1,056	-
Interim dividend for 2008 paid at 1.05p per ordinary share	482	-
	1,538	1,421

8. Property, plant and equipment

	Freehold land	Freehold buildings and improvements	Leasehold improvements	Fixtures, fittings and equipment	Assets under construction	Total
	£000	£000	£000	£000	£000	£000
Cost:
At 1 January 2007	43,289	38,295	505	18,585	6,991	107,665
Additions	3,621	6,836	132	3,098	2,918	16,605
Disposals	-	-	-	-	(411)	(411)
Transfers	-	4,315	-	989	(5,304)	-
At 31 December 2007	46,910	49,446	637	22,672	4,194	123,859
Additions	276	2,565	473	2,011	13,251	18,576
Transfers	3,782	10,565	-	500	(14,847)	-
At 31 December 2008	50,968	62,576	1,110	25,183	2,598	142,435
Depreciation:						-
At 1 January 2007	-	6,128	81	12,360	-	18,569
Provided during the year	-	1,222	69	1,742	-	3,033
At 31 December 2007	-	7,350	150	14,102	-	21,602
Provided during the year	-	1,439	229	1,926	-	3,594
At 31 December 2008	-	8,789	379	16,028	-	25,196
Net book value:
At 31 December 2008	50,968	53,787	731	9,155	2,598	117,239
At 31 December 2007	46,910	42,096	487	8,570	4,194	102,257

Assets under construction at 31 December 2008 relates to building refurbishment and infrastructure costs and are not depreciated. 

The costs incurred to 31 December 2008 on Project Pinewood have been capitalised and classified within freehold land. Capitalisation of costs is based on management judgement that the economic benefits expected from the assets will exceed the carrying value. Costs are monitored regularly by the Board, which involves the evaluation of all factors likely to affect the outcome of the outline planning application to be submitted during the first half of 2009. Up to the 31 December 2008 the Group capitalised expenditure of £3,432,000 progressing the planning application.

  The Board has reviewed the carrying value of the Pinewood land with its associated planning costs incurred up to 31 December 2008 and considers the carrying value as being appropriate.

Of the £3,432,000 capitalised Project Pinewood costs, £369,000 was incurred in 2007 and included in prepayments, £2,000,000 was paid in cash in the year and £1,063,000 was included in trade and other payables at 31 December 2008.

The Group's long-term loan is secured by a floating charge over the Group's assets.

9. Intangible assets and impairment testing

	Goodwill £000
At 31 December 2008 and 2007	5,604

The goodwill of £5,604,000 (2007: £5,604,000) has been acquired through business combinations and has been allocated to the Group's cash-generating unit. It is tested at least annually for impairment.

The recoverable amount has been determined based on a value in use calculation using cash flow projections based on the Group's forecasts and long range plan. The pre-tax cash flows in this period of time support the carrying value of the goodwill.

Key assumptions used for value in use calculations for the years to 31 December 2008 and 31 December 2007: The following describes the key assumptions used as a basis for cash flow projections which support the Group's impairment testing of the goodwill.

Cash flow from operations -Cash flow projections have been estimated using a combination of assumptions including, but not limited to, facility utilisation, income growth and Media Park void ratios and rent increases. Considering previously achieved trading levels and the anticipated future operating environment for the business and taking into account any cost efficiencies which may be achieved, management have retained the assumptions used in the Group's forecast and its long range plan. Beyond the period covered by management information, a UK long term growth rate of 2.5% has been applied to cash flow projections. A pre-tax discount rate of 12.9% (2007: 12.3%) has been used to discount the Group's cash flow and to estimate the value in use.

With regard to the assessment of the value in use, management believes that no reasonably possible change in any of the key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.

10. Share capital and reserves

Authorised

	2008 £000	2007 £000
Ordinary shares of 10p each	7,000	7,000

Issued, called up and fully paid

		2008		2007
	No.	£000	No.	£000
Ordinary shares of 10p each	45,908,596	4,591	45,818,687	4,582
Shares issued under the Pinewood Shepperton plc  Sharesave scheme:
10p ordinary shares issued on 23 April 2007	-	-	597	-
10p ordinary shares issued on 2 July 2007	-	-	30,444	3
10p ordinary shares issued on 6 July 2007	-	-	45,151	5
10p ordinary shares issued on 13 July 2007	-	-	2,083	-
10p ordinary shares issued on 20 July 2007	-	-	2,315	-
10p ordinary shares issued on 8 August 2007	-	-	1,157	-
10p ordinary shares issued on 24 September 2007	-	-	1,216	-
10p ordinary shares issued on 15 October 2007	-	-	6,946	1
10p ordinary shares issued on 25 January 2008	4,630	-	-	-
10p ordinary shares issued on 24 June 2008	31,565	3	-	-
	45,944,791	4,594	45,908,596	4,591

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the general meetings of the Company. 

Share option schemes

The Group has two share-based payment plans under which options to subscribe for the Group's shares have been granted. At 31 December 2008, 240,510 shares were outstanding (2007: 320,461). 

Long-term incentive plan

The Group has a long-term incentive plan under which awards for the Group's shares have been granted to certain executives and senior employees. At 31 December 2008, 1,902,651 share awards were outstanding (2007: 1,309,308). 

Nature and purpose of reserve

Share premium reserve

The share premium reserve increased by £77,000 in the year as a result of the share issues noted in the table above.

Capital redemption reserve

The capital redemption reserve arose as a result of the repurchase of shares in 2001.

Merger reserve

On acquiring Shepperton Studios Limited the Group issued ordinary shares as part of the consideration. Merger relief was taken in accordance with s131 of the Companies Act 1985, and hence £348,000 was credited to the merger reserve.

Fair value of cash flow hedge reserve

The cash flow hedge reserve is used to record the fair value gains or losses, and related deferred tax, on the hedging instrument used by the Group to manage interest rate risk. The cash flow hedge is determined to be an effective hedge.

11. Interest-bearing loans and borrowings

	Effective interest rate		2008	2007
Current borrowings	%	Maturity	£000	£000
Bank overdraft	Base rate + 1.75%	Annual renewal	1,198	-
			1,198	-
Non-current borrowings
Revolving credit facility	LIBOR + variable margin	15 August 2013	24,000	21,000
Pre-let development facility	LIBOR + variable margin	15 August 2013	6,000	-
Secured drawn facility loan			30,000	21,000
Share of joint venture loan	Base rate + 2%	30 September 2026	11,371	10,000
Non-current drawn loan facilities			41,371	31,000
Cash flow hedge	5.525%	31 March 2009	46	-
Cash flow hedge	5.195%	1 July 2013	1,326	-
Secured bank loan arrangement costs			(1,316)	(106)
			41,427	30,894
Total current and non-current interest-bearing loans and borrowings			42,625	30,894

Banking facilities

In August 2008, the Group entered into agreements with a syndicate of banks, which provides facilities as follows:

Overdraft

A £5,000,000 (2007: £3,000,000) to support the future operating activities of the business, secured by floating charge over the Group's assets. This is renewable annually with interest charged at 175 basis points over bank base rate. 

Revolving credit facility

A revolving credit facility of up to £35,000,000 to support the operating activities of the business, secured by floating charge over the Group's assets. Interest is charged at LIBOR plus a variable margin of between 175 and 275 basis points based on specific covenant levels. 

Pre-let development facility

A pre-let development facility of up to £30,000,000 to support the pre-let media park development strategy, secured by floating charge over the Group's assets. Interest is charged at LIBOR plus a variable margin of between 175 and 225 basis points based on the status of the pre-let development. 

Long-term loan facilities become repayable on demand following a change in control of the Group.

Covenants

The banking agreements contain a range of covenants appropriate for the revolving credit facility, the overdraft facility and the pre-let development facility. The Group was covenant compliant at 31 December 2008.

Share of joint venture loan

This relates to the Group's 50% interest, £11,371,000 (2007: £10,000,000) of the joint venture's £22,742,000 investor and development loans (2007: £20,000,000). These loans are secured by a fixed charge on the assets of Shepperton Studios Property Partnership, are non-recourse to the Group and are repayable in full on 30 September 2026. Interest on the loans is base rate plus a 2% margin with an interest rate floor of 6.5%. The interest rate floor is an embedded derivative in the loan agreement; however the derivative has not been separated from the loan agreement as it satisfies the criteria for non-separation in IAS 39.

12. Commitments and contingencies

Capital commitments

At 31 December 2008, the Group had capital commitments contracted for but not provided in the accounts totalling nil (2007: £8,004,000) in relation to the completion of certain capital expenditure projects.

Guarantees

At 31 December 2008, the Group had guarantees in place, in the form of documentary credits, that were not provided for in the accounts totalling £557,345 (2007: £557,345) in relation to certain s278 highways related infrastructure.

13. Related party disclosures

The consolidated financial statements include the financial statements of Pinewood Shepperton plc, its subsidiaries and its 50% share of Joint Ventures listed in the following table.

	Country of incorporation	% equity interest
		2008	2007
Pinewood Studios Limited	United Kingdom	100	100
Shepperton Studios Limited	United Kingdom	100	100
Pinewood-Shepperton Studios Limited	United Kingdom	100	100
Studiolink Limited	United Kingdom	100	100
Teddington Studios Limited	United Kingdom	100	100
The Studio Broadcasting Company Limited	United Kingdom	100	100
Baltray No.1 Limited	United Kingdom	100	100
Baltray No.2 Limited	United Kingdom	100	100
Shepperton Management Limited	United Kingdom	100	100
Sauls Farm and Stables Limited	United Kingdom	100	100
Sauls Farm Limited	United Kingdom	100	100

Pinewood Shepperton plc is the parent entity of the Group.

Joint Ventures		% Joint Venture interest
Shepperton Studios (General Partner) Limited	United Kingdom	50	50
Shepperton Studios Property Partnership	United Kingdom	50	50

During the year the Group entered into transactions with the following related parties, involving the utilisation of media facilities at normal market rates and settlement terms.

		Sales to related party £000	Amounts owed by related  party £000
Entity with which Michael Grade was associated during the year:
ITV	2008	175	2
ITV	2007	165	15

Michael Grade is Non-Executive Chairman of Pinewood Shepperton plc and Executive Chairman of ITV plc. 

 Joint ventures:

Shepperton Studios Limited has a commercial property lease on the Shepperton Studios property. The net cost to the Group of principal lease rentals during the year ended 31 December 2008 was £802,000 (2007: £679,000). In addition the Group pays a top up rent to the joint venture partnership based on certain of its trading activities at the Shepperton Studios site. During the year the net cost to the Group of the top up rent was £62,000 (2007: £42,000). The Group's share of amounts owed to the 50% Joint Venture partnership at 31 December 2008 was £548,000 (2007: £89,000).

Shepperton Management Limited manages the assets of the joint venture partnership and charges an asset manager fee based on independent valuations of the Shepperton Studios site. Asset manager fees charged during the year ended 31 December 2008 were £120,000 (2007: £130,000).

14. Date of approval of the preliminary announcement

The preliminary announcement was approved by the Board of Directors on 24 March 2009.

Company Secretary			Auditors
D M Richardson			Ernst & Young LLP
			1 More London Place
Head Office, Registered office  and Director's address			London SE1 2AF
Pinewood Shepperton plc
Pinewood Road			Registrars and Receiving Agents
Iver Heath			Equiniti Limited
Buckinghamshire SL0 0NH			Aspect House
			Spencer Road
Investor relations website			Lancing
available at www.pinewoodgroup.com			West Sussex BN99 6DA
Corporate Broker			Principal Bankers
JPMorgan Cazenove & Co. Ltd			The Royal Bank of Scotland plc
20 Moorgate			135 Bishopsgate
London EC2R 6DA			London EC2M 3UR
Financial Adviser			Lloyds TSB Bank plc
Lazard & Co. Limited			25 Gresham Street
50 Stratton Street			London EC2V 7HN
London W1J 8LL
			Allied Irish Banks, p.l.c.
Legal Advisers to the Company			St Helen's
Travers Smith LLP			1 Undershaft
10 Snow Hill			London EC3A 8AB
London EC1A 2AL

ENDFR CKQKBNBKBPNB

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Related Shares:

PWS.L