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PINEWOOD GROUP PRESENTATION OF FY19/20 RESULTS 1 Important notice - - PowerPoint PPT Presentation
PINEWOOD GROUP PRESENTATION OF FY19/20 RESULTS 1 Important notice - - PowerPoint PPT Presentation
PINEWOOD GROUP PRESENTATION OF FY19/20 RESULTS 1 Important notice This presentation has been prepared by Pinewood Finco plc (the Issuer) and Pinewood Group Limited (the Company and, collectively with the Issuer and its other
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Important notice
This presentation has been prepared by Pinewood Finco plc (the “Issuer) and Pinewood Group Limited (the “Company” and, collectively with the Issuer and its other subsidiaries, the “Group”) solely for information purposes. For purposes of this notice, the presentation that follows shall mean and include the slides that follow, the oral presentation of the slides by the Group or any person on behalf of the Group, any question-and-answer sessions that follows the oral presentation, hard and electronic copies of this document and any materials distributed at, or in connection with the presentation (collectively, the “Presentation”). This Presentation contains, and any related presentation may contain, financial information regarding the businesses and assets of the Group. Such financial information may not have been audited, reviewed or verified by any independent accounting firm. The inclusion of such financial information in this document or any related presentation should not be regarded as a representation or warranty by the Group or any other person as to the accuracy or completeness of such information’s portrayal of the financial condition or results of
- perations by the Group and should not be relied upon when making an investment decision. Certain financial data included in this presentation consists of “non‐IFRS financial
measures” and “non-UK GAAP financial measures”. These non‐IFRS financial measures and non-UK GAAP financial measures, as defined by the Company, may not be comparable to similarly‐titled measures as presented by other companies, nor should they be considered as an alternative to the historical financial results or other indicators of the performance based on IFRS or UK GAAP. The unaudited prospective financial information and the non-IFRS financial measures and non-UK GAAP financial measures contained in this presentation are based on a number of assumptions that are subject to inherent uncertainties subject to change. Neither the Group nor any of its directors, officers, employees, agents and consultants make any representation, warranty or undertaking, express or implied, as to the fairness, accuracy, interpretation, application, use or completeness of the information contained in this Presentation, and take no responsibility under any circumstances for any loss or damage suffered as a result of any omission, inadequacy, or inaccuracy in this Presentation. The Presentation may contain forward-looking statements. All statements other than statements of historical fact included in the Presentation are forward-looking statements. Forward-looking statements express the Group’s current expectations and projections relating to their financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “aim,” “anticipate,” “believe,” “can have,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “project,” “should,” “target,” “will,” “would” and other words and terms of similar meaning or the negative thereof. Such forward- looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group’s control that could cause the Group’s actual results, performance
- r achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in which it will operate in the future. You acknowledge that circumstances may change and the contents of this Presentation may become outdated as a result. The information contained in this Presentation should be considered in the context of the circumstances prevailing at the time and will not be updated to reflect material developments that may occur after the date of the Presentation. The information and opinions in this Presentation are provided as at the date of this Presentation and are subject to change without notice. None of the Group, nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or their contents or otherwise arising in connection with the Presentation, or any action taken by you or any of your officers, employees, agents or associates on the basis of the information in this Presentation. Any proposed terms in this Presentation are indicative only. You acknowledge that neither the Group, nor any of its affiliates, advisors or representatives intends to act or be responsible as a fiduciary to you, your management, stockholders, creditors or any other person. By accepting and reviewing this Presentation, you expressly disclaims any fiduciary relationship and agree that you are responsible for making your
- wn independent judgment with respect to any transaction and any other matters regarding this Presentation.
The Presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue, or the solicitation of an offer to purchase, subscribe to or acquire, securities of the Group, or an inducement to enter into investment activity in the United States, Canada, Australia or Japan or in any other jurisdiction in which such offer, solicitation, inducement or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of such jurisdiction. No part of this Presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever, nor does it constitute a recommendation regarding the securities of the Company, the Issuer or any of their respective subsidiaries or affiliates. Neither the Group, nor any of its affiliates, advisors or representatives provide legal, accounting or tax advice and you are strongly advised to consult your own independent advisers on any legal, tax or accounting issues relating to these materials. The Presentation is not for publication, release or distribution in any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction nor should it be taken or transmitted into such jurisdiction.
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Agenda
Barbara Inskip Chief Financial Officer Paul Golding Chairman and Acting CEO
- 1. Overview of FY 2019/20
- 2. COVID-19
- 3. Outlook
- 4. Q&A
- 3. Sustainability
- 3. Financial highlights
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- 1. OVERVIEW OF FY 2019/20
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Operational highlights
A very strong year
£96m
revenue +12%
60%
adjusted EBITDA margin +8 ppt
£58m
adjusted EBITDA +30%
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Pinewood East Phase II Long-term contracts
Strategy highlights
A transformational year for the business
International & Post-Production restructuring Real Estate Optimisation Shepperton
1 2 3 4 5
Achieved Current Priority
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Strategic highlights
Long-term contracts with Disney and Netflix
(1) Includes 5 new sound stages (c.100k sq ft) at Pinewood West expected to be delivered Q1 2022 (CY).
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sound stages1
Pinewood Studios Shepperton Studios
c.1.2m sq ft
total area under contract1
Inflation linked (RPI)
upwards only; no caps
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sound stages
c.0.4m sq ft
total area under contract
Inflation linked (RPI)
upwards only; no caps
100%
- f UK production accommodation space
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Achieved Current Priority
The Walt Disney Company Netflix
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Strategic highlights
Pinewood East Phase II – development completed
On-time
and on-budget
c.205k sq ft
lettable space
2 Occupied
by Disney under long-term contract
Achieved Current Priority
Pinewood East Phase II
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Strategic highlights
International & Post-Production restructuring
➢ Rationalised international presence:
− July 2019 – terminated sales and marketing agreement with Iskandar Malaysia studios − August 2019 – disposed of Pinewood’s stake in the Atlanta JV to our existing Partner − March 2020 – terminated sales and marketing and studio management agreement with studio in Cardiff
International
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Post-Production
➢ Streamlined our Post-Production business during the year by
exiting Picture Services (Q3 FY20) and Creative Audio (Q4 FY20)
➢ The space previously occupied by the businesses will be rented to
- ther occupiers
Achieved Current Priority
Existing studios
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Strategic highlights
Real Estate Optimisation – planning achieved; project underway
4 c.100k sq ft
stage space
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new stages to be
- ccupied by Disney
Underway
delivery expected Q1 2022 (CY)
Achieved Current Priority Note: the CGI image is intended for illustrative purposes only and does not necessarily indicate final design.
CGI of one of the new stages at Pinewood West
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Design
finalising detailed design and feasibility exercise
Strategic highlights
Shepperton – continuing to progress design and feasibility
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new sound stages
- vs. 14 existing
1.2m sq ft
- utline planning
consent (GEA)
Achieved Current Priority
CGI of Shepperton South expansion
Note: the CGI image is intended for illustrative purposes only and does not necessarily indicate final design.
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- 2. COVID-19 IMPACT
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COVID-19
Limited overall impact on our business
Our Business Industry Operations ➢ Both UK studios have followed government guidance throughout the pandemic ➢ Detailed operating procedures are in place to ensure the health and wellbeing of all our staff, customers and other visitors ➢ Importantly, the studios have remained fully operational throughout Financial ➢ Long-term contracts are not impacted by the virus ➢ Media Hub and ancillary business lines (Post-Production and TV) have been affected ▪ Media Hub: allowed smallest tenants to defer 3 months’ rent and repay it over the following 12 months; vacancies remain in line with historical norm ▪ Post-Production and TV: activity stopped temporarily; starting to pick-up and expected to return to normal levels in July ➢ Overall impact of COVID-19 to date has not been significant ➢ Productions went on hiatus in mid to late March ➢ Now returning; Universal’s Jurassic World: Dominion has announced its intention to restart filming
- n 6 July 2020
➢ For our customers, there has been a mixed impact ▪ Streaming platforms have witnessed a surge in demand during the lockdown ▪ Cinema closures have resulted in theatrical releases being postponed
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- 3. FINANCIAL HIGHLIGHTS
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Group results summary
A solid performance
Revenue is up 12% y-o-y, driven by the core UK studios business Gross profit margin improvement is explained by the discontinuation of lower margin Post-Production businesses and the addition
- f space (Pinewood East Phase 2)
Operating margin improvement reflects the operational gearing in the business, where central costs do not increase proportionally as additional space is added Income from JVs reflects a small profit from the Atlanta studio prior to the sale of our stake in August 2019 Net Finance costs includes (i) interest payable on our existing debt facilities, and (ii) interest receivable from the on-loan to
- parent. Both of which increased following the refinancing in September 2019
Financial Year £m 2019/20 2018/19 % growth Revenue 96.4 85.9 12.2% Gross Profit 56.0 45.0 24.6% Gross profit margin % 58.1% 52.3% 5.8 ppt Operating profit excl. adjusted items 47.7 35.9 33.0% Operating profit margin % 49.5% 41.7% 7.8 ppt Income from JVs 0.1 (1.4) Net Finance costs (7.8) (6.2) Profit before tax and adjusted items 40.0 28.3 41.5%
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Adjusted EBITDA progression
Core UK studios business driving growth
Note: Adjusted EBITDA is calculated as profit on ordinary activities before interest receivable and similar income, interest payable and similar charges, tax (credit)/charge on profit on ordinary activities, depreciation of property, plant and equipment, impairment of long-term assets, amortisation of goodwill, gain/loss on disposal of property, plant and equipment, and adjusted items. (1) UK Studios includes a FRS102 accounting requirement to recognise the revenue from certain long-term contracts on a straight straight-line basis incorporating the fixed uplifts over the initial term, rather than increasing each year reflecting the contractual amounts due. For FY20, this figure amounts to £1.4m (vs. FY19 = £0.0m).
1 2 3 4
Axis not to scale All figures in £m
◼ Growth in UK studios business driven by (i) an improvement in production accommodation occupancy following the completion of
the two long contracts, (ii) the addition of space with Pinewood East Phase 2 completed partway through the year
◼ Creative Services decreased y-o-y as the Group exited Picture Services and Creative Audio Post-Production businesses;
decrease partially offset by outperformance in the localisation Post-Production division
◼ International (including Share of Atlanta JV) reflects the reversal of the £1.4m loss from the Atlanta JV incurred in 2018/19 ◼ Central costs lower due to (i) lower staff costs, and (ii) costs related to ceased Media Investment business not incurred 2019/20
3 2 1 4
(1)
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Cash flow
Cash generative business
(1) Adjustments to EBITDA include (i) termination fee for Malaysia, (ii) restructuring costs, and (iii) a one-off stamp duty payment in relation to the restructuring of the Shepperton Studios partnership. (2) EBITDA excluding adjusted items is calculated before the results of joint ventures - 2019/20 = £57k; 2018/19 = £(1,414)k.
Cash flow 2019/20 vs. 2018/19
3 2 1 2
2019/20 2019/20 2019/20 2018/19 £m As reported Adjusted items
- Excl. adjusted items
- Excl. adjusted items
EBITDA 55.6 (2.4) 58.0 46.1 Working capital 18.6 0.0 18.6 7.5 Cash from operations 74.2 (2.4) 76.6 53.6 Net interest (23.4) (5.9) (17.5) (9.4) Tax paid (6.5) 0.0 (6.5) (3.7) Net cash flow – operating activities 44.3 (8.3) 52.6 40.4 Disposal of JVs & investments 15.4 15.4 (0.0)
- Capex and other investing activities
(49.7) 0.0 (49.7) (42.1) On-loan to parent (175.0) (175.0) 0.0
- Net cash flow – investing activities
(209.3) (159.6) (49.7) (42.1) Net cash flow – financing activities 218.3 218.5 (0.2) (0.6) Net cash flow 53.3 50.6 2.7 (2.2)
3 Improvement in working capital is a result of the two long term contracts where rent is paid in advance Net interest payments increased by £8.1m following the refinancing, explained by (i) increase in interest with a higher principal amount of Senior Secured Notes, and (ii) 15 months of payments in 2019/20 due to the change in the interest payment dates Increase in tax paid due to transition to a new payment schedule, resulting in 6 payments (vs. usual 4) in the year ended Mar-20 Capital expenditure principally relates to the second phase of expansion of the Pinewood East Site 4 1 4
(2) (2) (1)
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Capital structure update
Strong liquidity position
Capital structure evolution
◼ The business is in a strong liquidity position currently
Financial Year LTV (%) £m 2019/20 2018/19 2019/20(1) 2018/19(2) Senior Secured Notes 550.0 250.0 49.5% 41.3% Revolving Credit Facility (£50m)
- Finance lease obligations
- 0.2
- 0.0%
Cash (92.7) (39.9) (8.3)% (6.6)% Adjusted net debt 457.3 210.3 41.2% 34.8%
(1) Valuation of £1,110 million, dated September 2019 and undertaken by JLL. (2) Valuation of £605 million, dated November 2017 and undertaken by JLL.
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- 4. SUSTAINABILITY
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Sustainability
Investing in a sustainable future
100%
electricity purchased from renewable sources from Apr-20
32%
reduction in carbon emissions since FY14/15
100,000
passenger journeys replaced by free shuttle bus service
28,500
trees & shrubs planted on recently developed sites
Highlights
ZERO
waste sent to landfill; all waste segregated
Winner
“Best Practice Large Scale Mitigation” 2019 CIEEM Awards
Solar panels at our studios Award winning green roofs (CIEEM Awards,2019) at Pinewood East Phase I
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- 5. OUTLOOK
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Looking ahead
Prepared & well positioned to continue to serve the needs of our customers
➢ Remaining fully operational with a continuing focus on safety
▪
We remain fully operational and prepared for the return of productions
▪
Pinewood will continue to follow government guidance to help make the studios safe for its staff and customers ➢ Prior to the pandemic, production demand was as strong as ever
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Combined total spend on film and HETV production in the UK for the 12 month period to March 2020 was £3.6bn, up 6% y-o-y and the highest on record
▪
Inward investment accounted for £3.1bn (86%) of the total spend, and was also the highest on record
▪
We expect activity levels at both Pinewood and Shepperton to return to previous levels within the short-term ➢ Pinewood remains cautious and extremely well placed
▪
The long-term contracts will continue to provide a secure revenue stream
▪
Our customer relationships provide exceptional insight into the requirements of the film and HETV producers
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We continue to progress our expansion plans to enable us to meet any stable, excess demand
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Pinewood − Finalising the design of Pinewood East Phase 3, which will potentially provide a further c.100k sq ft of production space and complete the Pinewood East expansion
▪
Shepperton − Finalising the design of Shepperton South, an expansion opportunity for which we have planning consent for c.1.2m sq ft
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International − Monitoring the key international markets where our customers want to work The next investor update is scheduled for 5 August 2020.
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- 6. Q&A