Odeon & UCI Bond Midco Limited
Directors’ report and financial
statements
Registered number 07623410
31 December 2011
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
Contents
Directors’ Report 1
Statement of directors’ responsibilities in respect of the Directors’ Report and the financial statements 6
Independent auditor’s report to the members of Odeon & UCI Bond Midco Limited 7
Consolidated profit and loss account 9
Consolidated statement of total recognised gains and losses 10
Consolidated balance sheet 11
Company balance sheet 12
Consolidated cash flow statement 13
Notes 14
1
Directors’ Report
The Directors present their report and the audited financial statements of the Group and Company for the year ended
31 December 2011.
The Company was incorporated on 5 May 2011. Later that month, a group structure amendment took place which
resulted in the Company’s introduction as a new holding company in an existing group, to set up an appropriate
structure for a refinancing. Merger accounting has been adopted as the basis of consolidation in relation to this
group structure amendment, meaning that the consolidated financial information included in these accounts has been
shown as though the structure change had occurred prior to 1 January 2011.
Principal Activity
The principal activity of the Group is the operation of multiplex cinemas. The principal activity of the Company is
that of a holding company.
Business Review
Market position
The Group is the market leader in Europe. It is a market leader in the UK/Ireland, Spain and Italy, with a presence
in three other European markets. At the year-end date, the Group operated a total of 2,153 screens in 231 cinema
sites, in a combination of freehold, long leasehold and short leasehold properties. The business operates under the
name of Odeon in the UK; UCI and Storm in Ireland; UCI in Germany, Italy, Austria and Portugal; and Cinesa in
Spain.
Group refinancing
In May 2011, a refinancing was successfully completed, which put the Group in a stronger position going forwards.
Senior secured notes totalling £475m equivalent were issued, the proceeds of which were partly used to repay in full
the existing bank debt. The refinancing also provided the Group with cash resources for investment in acquisitions
and other projects to grow the future earnings of the business. The term of the notes is 7 years. Furthermore,
agreements were entered during May 2011 that provide the Group with a £90m committed Revolving Credit Facility
(“RCF”) for working capital management and other purposes. The term of the RCF is 6 years. Under these new
financing arrangements, there are no regular maintenance covenant ratio tests: ratios are tested only upon certain
events which are within the control of the Group, such as raising additional external debt.
Portfolio development – acquisitions and new cinemas
During 2011, the following acquisitions were completed:
5 cinemas acquired from UGC in Spain (May)
4 cinemas acquired from UGC in Italy (May)
2 cinemas acquired from the Coliseo circuit in the area of Bilbao, Spain (May)
9 cinemas plus 2 pipeline sites acquired from Entertainment Enterprises in Ireland (May)
7 cinemas acquired from Giometti in Italy (June)
4 cinemas plus 3 pipeline sites acquired from Reel Cinemas in the UK (November).
The existing portfolio of subsidiaries was also developed during the year through the opening of new cinemas at La
Coruna (Spain) and Cagliari (Italy).
Portfolio development – major refurbishments
In the UK, the Swiss Cottage cinema in London was redeveloped, bringing this 1937 art deco 5-screen location
completely up-to-date with the installation of the latest digital technology, modern facilities and full disabled access,
whilst staying true to the building’s original iconic style. The development includes an IMAX auditorium capable
of showing both IMAX and IMAX 3D films.
Also in London, the Whiteleys cinema was redeveloped during 2011 and reopened in 2012 with “The Lounge”, our
unique luxury offering that includes reclining leather seating and at-seat service of fine food and drink.
Odeon &UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
2
Directors’ Report (continued)
Digital projection
External independent funding for the roll-out of digital projectors in the UK was secured during 2010, and in 2011
external funding was secured for most of our territories in Continental Europe.
By the 2011 year-end, the UK was fully digital and 89% of all of the Group’s screens were digital.
Digital projectors, along with additional technology, are used for the projection of 3D films. There is an ongoing
appetite from our customers for 3D film product, which commands a ticket price premium. In 2011, approximately
21% of our cinema attendance and 27% of our box office revenue arose from 3D films. 3D film product availability
continues to grow, as does our ability to screen the product.
The use of digital technology also offers long-term print cost savings to the distributors, the opportunity to reduce
some costs in the cinemas, an improved advertising platform, alternative content capability (such as live opera,
theatre and sports) and greater flexibility in programming.
Main Market Attendance Growth 2011 v 2010
Market volumes in the Group’s territories were similar in aggregate to the prior year, although the phasing of the
two years was different. A weaker 2011 first quarter (because of the hugely successful Avatar in 2010) and some
unusually warm weather early in 2011 led to lower volumes in the first part of the year, but a stronger 2011 second
quarter (due to the 2010 World Cup) and a strong December 2011 brought the volumes in our markets in aggregate
close to the 2010 levels at 1% lower on a weighted average basis.
Attendance (millions) (1)
2011 2010 2009 2011 vs 2010
growth
UK 172.1 168.8 172.9 +2%
Spain 100.0 101.6 110.0 (2%)
Germany 129.4 126.6 146.3 +2%
Italy 111.5 121.3 109.0 (8%)
KPIs
The primary KPIs followed by the Group are Attendance and EBITDA(2)
. Group Attendance was 8% higher in 2011
than in 2010, with 79.2m vs 73.1m customers, reflecting growth from acquisitions and other estate development net
of slightly lower markets.
EBITDA(2)
was up 12% to £103m (2010: £92m). The Group also follows supplementary KPIs including revenue
per customer, film hire costs, retail margins, staff and other costs. Slightly lower markets than 2010 overall were
mitigated by improved revenue KPIs, both ticket revenue and retail revenue per customer, and good control over
direct and indirect costs.
The EBITDA(2)
growth trend over recent years is illustrated by the following table.
£m 2011 2010 2009 2008 2007 (52wks)
2006
EBITDA(2)
103 92 80 72 68 65
Financial Results
Group turnover for the year was up 12% at £725m (2010: £650m). At constant foreign exchange rates, Group
turnover was up 11%. As stated above, EBITDA(2)
was £103m in 2011, an increase of 12% on the equivalent figure
of £92m in 2010. The EBITDA(2)
of £103m is prior to charging non-cash depreciation and amortisation of £65m
and other items as footnoted. An operating profit was reported of £26m (2010: £26m).
Interest costs in the profit and loss account, excluding non-cash items, were £41m in 2011 (2010: £26m).
The loss for the year of £65m (2010: £85m loss) was after total non-cash charges of £116m (2010: £141m),
including £65m (2010: £54m) depreciation and amortisation, £35m (2010: £79m) financing cost accrual on loan
notes and £11m (2010: £2m) amortisation of loan issue costs.
(1) Market data is provisional and for some territories is a full market estimate based on information available for part of the market.
(2) Earnings before interest, tax, depreciation, amortisation, one-off costs (2011: £3m and 2010: £1m), exceptional items and rent payable to the
Odeon Property Group LLP (“PropCo”). The rent payable to PropCo was £10m (2010: £9m).
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Directors’ report and financial statements
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3
Directors’ Report (continued)
Investment and Net Debt
The Group continued to invest to grow future earnings and enhance the high quality of the existing estate.
In terms of asset additions, £14m was incurred on capital maintenance of the estate; £4m on new sites for 2011 and
future periods; and £23m on other revenue-generating projects. A further net investment of £14m was made by the
Group in digital assets, but we expect to receive external refunds on installed assets of £13m in 2012. Digital assets
that are externally funded are nevertheless shown on the group balance sheet, as described in note 1 to the accounts.
Total asset additions for 2011, as shown in note 13 to the accounts, were £94m.
Taking all the above into account, along with the movement in capital creditors, net cash spend on capital
expenditure was £51m (2010: £33m).
In addition, £116m was spent on the acquisitions described earlier in this report.
Net debt excluding loan notes and finance leases was £395m (2010: £245m) at year-end, the increase caused
primarily by the expenditure on acquisitions and the one-off cash costs of refinancing.
Principal Risks and Risk Management
The principal risk to the business is lower attendance. There is some volatility year on year, depending on the film
slate, which in turn depends on production from Hollywood and local content in each country. An increase in the
availability of pirated films or the level of competition from other exhibitors may also have an impact on attendance.
The risk to earnings performance is mitigated by cost savings in film hire and staff, which reduce at lower
attendances, and by controlling discretionary costs and capital expenditure.
The challenging economic conditions caused a reduction in screen advertising in the last three years and slower
growth in retail revenue, but cinema attendance has been resilient. The Group has continued to achieve growth in
the main revenue KPIs and Group earnings on the like-for-like estate have increased through the challenging period.
Acquisitions and new cinema openings have further increased the growth.
Some commentators are concerned about the impact of the increasing penetration of home cinema equipment and
online film downloads on cinema attendance. Similar concerns were expressed with the introduction of TV, Video
Cassettes and DVDs. The directors believe that cinema continues to offer excellent value in the "going out" market
and that there will be ongoing demand for the cinema experience for the foreseeable future. The value to the
customer of the cinema experience has been further demonstrated and reinforced by the growth of high quality 3D
product.
The principal financial risk to the Group is the movement of interest rates. Following the 2011 refinancing, the
Sterling element of the senior secured notes (£300m) is at a fixed interest rate of 9.0% and, to hedge the Euro
element (€200m) which is at floating rates, a three year interest rate swap is in place to fix the effective total rate to
9.07%.
The Group’s foreign exchange position is naturally hedged by holding a proportion of debt in Euros similar to the
proportion of earnings. Most of the group’s excess cash is held in Sterling.
Future Prospects
The Group will continue to develop its portfolio of sites and seek strategic acquisition targets.
The Group is also close to completing the roll-out of digital projectors, which will continue to bring the commercial
benefits described earlier in this report.
Going Concern and Liquidity Management
The directors believe that the Group has adequate resources to continue operating for the foreseeable future. With
this in mind, the directors have formally considered and concluded that the preparation of financial statements on a
going concern basis is appropriate. Further details are shown in the “Basis of preparation” section of note 1 to the
financial statements.
Board of Directors and Management of the Group
During the year, and at 31 December 2011, the board of directors of Odeon and UCI Bond Midco Limited consisted
of members of the Group’s executive management team, as follows:
A R Gavin (appointed 5 May 2011)
J P Mason (appointed 5 May 2011)
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Directors’ report and financial statements
31 December 2011
4
Directors’ Report (continued)
Post Balance Sheet Events
There were no disclosable post balance sheet events prior to the date of signature of this report and financial
statements.
Dividends
The directors do not recommend the payment of a dividend with respect to preference or ordinary shares.
Ownership
Terra Firma Investments (GP) 2 Limited, acting as general partner of the six limited partnerships which constitute
the Terra Firma Capital Partners II Fund, Terra Firma Capital Partners II LP-H, TFCP II Co-Investment 2 LP and
TFCP II Co-Investment 2A LP (“Terra Firma”), has the ability to exercise a controlling influence over the Company
and the Group through the holding of shares in a parent of the Company.
Terra Firma, through new holding companies, acquired the Odeon and UCI businesses from their respective vendors
in late 2004.
Creditor Payment Policy
The Group does not follow any specific external code or standard on payments practice. Payments to suppliers are
made in accordance with agreed terms. The Company itself had no trade creditors at 31 December 2011.
Employee involvement
Employment in the Group increased 9% to 9,591 in 2011 compared to 8,781 in 2010 (average number of employees,
including part time employees). Meetings are held on a regular basis with employees to review attendance, film
slate, financial and operating performance. Information is cascaded from senior management teams to cinema
teams. There is an annual cinema management conference in all territories and more frequent regional meetings.
There is opportunity at these meetings for senior managers to be questioned about matters which concern the
employees.
Employment of disabled people
Full and fair consideration is given to applications for employment made by disabled persons having regard to their
particular aptitudes and abilities. Wherever possible the employment of members of staff who become disabled will
be continued under normal terms and conditions and appropriate training and career development will be offered.
Community
The cinema is an important part of social life in local communities. Cinema management maintain close contact
with local community representatives, politicians and businesses. Cinemas are used as meeting places for purposes
other than only films. Sub-brands have been developed which cater for special interest groups. Employees actively
participate in charitable fundraising activities and in the UK generated in excess of £80k for The Variety Club and
NSPCC.
Health and Safety
The policy of the Group is to endeavour at all times to achieve the highest standards of health, safety and welfare for
its employees, customers and other visitors. To this end, clearly-defined policies, procedures, roles and
responsibilities are in place, and supervision, instruction, information and appropriate training are provided. A full
management system including monitoring of safety standards, independent audits and review of all key findings by
senior management is in place. The system has been independently reviewed to ensure compliance with the relevant
standards.
Environment
The Group has taken steps to reduce its impact on the environment and is committed to continuing to do so.
Efficiency savings have been made in gas and electricity consumption, and water consumption has been reduced
through the introduction of flow reduction systems. Waste reduction is also a priority, in particular through the
sourcing of more recyclable and environmentally-friendly products.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
6
Statement of directors’ responsibilities in respect of the Directors’ Report and the
financial statements
The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they
have elected to prepare the Group and parent company financial statements in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that period.
In preparing each of the Group and parent company financial statements, the directors are required to:
■ select suitable accounting policies and then apply them consistently;
■ make judgments and estimates that are reasonable and prudent;
■ state whether applicable UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
■ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and the parent company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent
company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and
to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
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Directors’ report and financial statements
31 December 2011
9
Consolidated profit and loss account for the year ended 31 December 2011
Note 2011 2010
£000 £000
Turnover: Group and share of joint ventures 751,011 671,643
Less: share of joint ventures turnover (25,879) (21,998)
Group turnover 2,3 725,132 649,645
Cost of sales 3 (254,894) (235,641)
Gross profit 3 470,238 414,004
Net operating expenses (444,635) (387,999)
Operating profit, analysed as:
Before exceptional items 25,093 27,461
Net operating expenses - exceptional costs 3,6 (4,096) (1,456)
Net operating expenses - exceptional income 3,6 4,606 -
3 25,603 26,005
Operating profit 3 25,603 26,005
Share of operating profit / (loss) of joint ventures 287 (3)
Operating profit including joint ventures 25,890 26,002
Loss on disposal of properties 6 (4) (525)
Profit on ordinary activities before interest and taxation 25,886 25,477
Interest receivable from related parties 2,973 7,635
Interest payable and similar charges 8 (91,859) (112,894)
Other finance income / (costs) 9 7 (234)
Loss on ordinary activities before taxation 3-9 (62,993) (80,016)
Taxation 10 (2,387) (4,495)
Loss on ordinary activities after taxation and for the financial year 24 (65,380) (84,511)
Analysis of continuing operations, including acquisitions, and discontinued operations is set out in note 3.
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Directors’ report and financial statements
31 December 2011
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Consolidated statement of total recognised gains and losses for the year ended 31 December 2011
2011 2010
£000 £000
Loss for the financial year (65,380) (84,511)
Actuarial pension scheme (loss) / gain recognised (note 27) (1,675) 3,085
Effect of asset limit on above (1,659) (2,616)
Deferred tax on actuarial pension (loss) / gain 452 (863)
Deferred tax on effect of asset limit 448 732
Deferred tax change in rate (28) (5)
Foreign exchange differences (10,624) 20,293
Total recognised losses (78,466) (63,885)
There is no difference between the loss on ordinary activities before taxation and the loss for the year stated above
and their historical cost equivalents.
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Directors’ report and financial statements
31 December 2011
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Consolidated cash flow statement for the year ended 31 December 2011
Note 2011 2010
£000 £000
Net cash inflow from operating activities 25(a) 67,061 65,572
Returns on investments and servicing of finance
Interest paid (25,461) (22,647)
Net cash outflow from returns on investments and servicing
of finance
(25,461)
(22,647)
Taxation paid (3,811) (576)
Capital expenditure and financial investment
Purchase of tangible fixed assets (51,476) (32,771)
Sale of tangible fixed assets 246 -
Net cash outflow from capital expenditure and financial
investment
(51,230)
(32,771)
Acquisitions and disposals
Purchase of subsidiaries and joint ventures 14,31 (119,290) (16,280)
Net cash acquired with subsidiaries 31 3,101 -
Net cash outflow from acquisitions and disposals (116,189) (16,280)
Equity dividends paid to shareholders - -
Net cash outflow before financing (129,630) (6,702)
Financing
Shares issued 50 -
Senior secured notes issued 475,000 -
Bank loans and overdrafts repaid (313,516) (10,999)
New bank loans drawn-down 30,004 -
Arrangement fees paid (21,912) (2,944)
Other finance leases (2,121) (416)
Net cash inflow / (outflow) from financing 167,505 (14,359)
Increase / (decrease) in cash in the year 25(b) 37,875 (21,061)
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Directors’ report and financial statements
31 December 2011
14
Notes (forming part of the financial statements)
1 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered
material in relation to the financial statements.
Basis of preparation
The financial statements have been prepared in accordance with applicable accounting standards, and under the
historical cost accounting rules. Upon acquisition, assets are included at fair value.
Going concern and liquidity management
The financial statements are prepared on a going concern basis. The directors have formally considered and
concluded that this remains appropriate. The facts set out below were relevant in arriving at this conclusion.
The business activities of the Group, and its future prospects, are described within the Directors’ Report.
In May 2011, a refinancing was successfully completed, which put the group in a stronger position going forwards.
Senior secured notes totalling £475 million equivalent were issued, the proceeds of which were partly used to repay
in full the existing bank debt. The refinancing also provided the group with cash resources for investment in
acquisitions and other projects to grow the future earnings of the business. The term of the notes is 7 years.
Furthermore, agreements were entered during May 2011 that provide the group with a £90 million committed
Revolving Credit Facility (“RCF”) for working capital management and other purposes. The term of the RCF is 6
years. Under these new financing arrangements, there are no regular maintenance covenant ratio tests: ratios are
tested only upon certain events which are within the control of the group, such as raising additional external debt.
The Group has a substantial cash balance available to meet working capital requirements, despite both investment in
the estate and acquisitions having taken place. Furthermore, the RCF was not used at all to draw loans up to the
year-end date.
Basis of consolidation
Odeon & UCI Bond Midco Limited was incorporated on 5 May 2011. In May 2011 a group structure amendment
took place with the result that Odeon & UCI Bond Midco Limited was introduced as a new holding company to
facilitate the refinancing that took place in May 2011. Merger accounting has been adopted as the basis of
consolidation following this group structure amendment. By adopting this accounting treatment the consolidated
financial information included in these accounts has been shown as though the structure change had occurred prior
to 1 January 2011.
The consolidated financial statements include the financial statements of the Company and its subsidiary
undertakings made up to 31 December 2011. The acquisition method of accounting has been adopted for
acquisitions completed subsequent to the May 2011 group structure amendment. Under this method, the results of
subsidiary undertakings acquired or disposed of in the year are included in the consolidated profit and loss account
from the date of acquisition or up to the date of disposal. A joint venture is an undertaking in which the Group has a
long-term interest and over which it exercises joint control. The Group’s share of the profits less losses of joint
ventures is included in the consolidated profit and loss account and its interest in their net assets is included in
investments in the consolidated balance sheet.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own
profit and loss account. The amount of the profit/(loss) dealt with in the Company financial statements is disclosed
in note 24 to these financial statements.
Turnover
Turnover represents amounts charged to customers for goods, services and property rental income, stated net of
value added tax, which is recognised based on the date the goods and services are received and the period over
which the rental income is earned.
Goodwill
Goodwill, being the difference between the costs of businesses acquired and the fair value of their separable net
assets is included in the balance sheet as an intangible asset in accordance with FRS 10 “Goodwill and Intangible
Assets” and is amortised over its useful economic life which the directors estimate to be 20 years.
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Directors’ report and financial statements
31 December 2011
15
Notes (continued)
1 Accounting policies (continued)
Tangible fixed assets
Depreciation is provided on the cost or revaluation of tangible fixed assets on a straight-line basis over their
estimated useful lives as follows:
Land is not depreciated
Freehold buildings - 2% per annum
Long leasehold property - over the period of the lease to a maximum of 50 years
Short leasehold property - over the period of the lease
Plant, fixtures and fittings - 10 – 25% per annum
Assets under construction (the construction and redevelopment of cinemas) are not depreciated as these assets are
not available for use in the business.
Digital projection
Certain digital projectors and related assets located and operated in Group premises, which are funded and legally
owned by independent third parties, are recognised in the Group’s consolidated balance sheet and a corresponding
deferred income creditor of the same carrying value is recognised. The fixed assets are depreciated over their
estimated useful lives and the corresponding deferred income balance is released against this depreciation over the
same period.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction.
Assets and liabilities denominated in foreign currencies are translated using the contracted rate or the rate of
exchange ruling at the balance sheet date. The foreign currency assets and liabilities of subsidiary undertakings are
translated at the closing exchange rates. Profit and loss accounts of such undertakings are consolidated at the
monthly average rates of exchange during the year. Gains and losses arising on these translations are generally taken
to reserves: they are taken through the profit and loss account for the year only to the extent that translation gains or
losses in relation to foreign currency assets are exceeded by those on foreign currency borrowings, excluding
borrowings in place as long term strategic funding which are not expected to be settled without replacement.
Classification of financial instruments issued by the Group and Company
Following the adoption of FRS 25, preference shares issued by the Company are treated as equity (i.e. forming part
of shareholders’ funds) only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Company to deliver cash or other financial assets or to
exchange financial assets or financial liabilities with another party under conditions that are potentially
unfavourable to the Company; and
(b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-
derivative that includes no obligation to deliver a variable number of the Company’s own equity
instruments or is a derivative that will be settled by the Company’s exchanging a fixed amount of cash or
other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability.
Investments
Investments held as fixed assets are stated at cost less provisions for any impairment.
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Directors’ report and financial statements
31 December 2011
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Notes (continued)
1 Accounting policies (continued)
Asset Impairment
The carrying amounts of the Group’s assets are reviewed for impairment when events or changes in circumstances
indicate that the carrying amount of the fixed assets of income-generating units may not be recoverable. An
indication is the recognition of an onerous lease provision in relation to specific income-generating units. If this or
any other such indication exists, the recoverable amount is estimated and an appropriate impairment loss is
recognised.
Reversals of impairment
An impairment loss is reversed where the recoverable amount increases as a result of a change in economic
conditions or in the expected use of the asset.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
Stocks
Stocks are stated at the lower of cost and net realisable value.
Leases
Rental costs under operating leases are charged to the profit and loss account over the period of the lease. Certain
leases with related parties contain inflation-driven rental uplifts with pre-determined minimums: the amount
payable in respect of these uplifts is charged to the profit and loss account as it arises. Assets acquired under
finance leases are capitalised and the outstanding future lease obligations are shown in creditors. Provision is made
for lease commitments on certain leasehold properties based on the expected exposure. The amount provided is
based either on the future rental obligations (discounted by 7.5%, based on property yields), net of anticipated
operating profit from trading (discounted by 10.0%, based on cost of capital), or management’s best estimate of the
expected exposure. Provision is made for the remaining period of the leases identified, subject to a maximum of 25
years, after which the directors consider the impact of discounting upon the rental and trading projections renders
them immaterial.
Pre-opening costs
Operating costs incurred before a new cinema is opened are written off to the profit and loss account as incurred.
Taxation
The charge for taxation is based on the loss for the year and takes into account taxation deferred because of timing
differences between the treatment of certain items for taxation and accounting purposes.
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain
items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as
otherwise required by FRS 19.
Cash and liquid resources
Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less
overdrafts payable on demand. Liquid resources are current asset investments which are disposable without
curtailing or disrupting the business and are either readily convertible into known amounts of cash at or close to
their carrying values or traded in an active market.
Loan notes
Loan notes are held in the balance sheet at their issued amount less directly attributable issue costs plus the accrued
finance charge which has arisen on them. The finance charge accrues at a constant rate over the term of the notes.
Senior secured notes
Senior secured notes are stated net of unamortised issue costs. Interest accrued on the senior secured notes is shown
within accruals and deferred income.
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Directors’ report and financial statements
31 December 2011
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Notes (continued)
1 Accounting policies (continued)
Pensions
The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those
of the Group in an independently administered fund. The amount charged to the profit and loss account represents
the contributions payable to the scheme in respect of the accounting period.
The Group also operates two pension schemes providing benefits based on final pensionable pay. The assets of the
schemes are held separately from those of the Group.
Pension scheme assets are measured using market values. For quoted securities the current bid price is taken as
market value. Pension scheme liabilities are measured using a projected unit method and discounted at the current
rate of return on a high quality corporate bond of equivalent term and currency to the liability.
The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full. The movement in
the scheme surplus/deficit is split between operating charges, finance items and, in the statement of total recognised
gains and losses, actuarial gains and losses.
Derivatives
The Group’s financial instruments, other than derivatives, comprise borrowings, cash and liquid resources and other
various items such as trade debtors, trade creditors etc. The main purpose of these financial instruments is to raise
finance for the Group’s operation.
The Group also enters into interest rate swaps to manage the interest rate risk arising from the Group’s sources of
finance. Amounts payable or receivable in respect of interest rate swap transactions are recognised on an accruals
basis until settlement date and are treated as an adjustment to the interest expense over the period of the contract.
All derivatives are held for hedging purposes.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
18
Notes (continued)
2 Turnover
All turnover derives wholly from the ownership and operation of cinemas.
An analysis of turnover by geographical market is set out below:
2011 2010
Continuing
£000
Discontinued
£000
Total
£000
Continuing
£000
Discontinued
£000
Total
£000
UK 315,485 - 315,485 313,890 - 313,890
Continental Europe & Ireland 409,647 - 409,647 335,755 - 335,755
Group turnover 725,132 - 725,132 649,645 - 649,645
3 Analysis of continuing and discontinued operations
2011 2010
Continuing
£000
Discontinued
£000
Total
£000
Continuing
£000
Discontinued
£000
Total
£000
Group turnover 725,132 - 725,132 649,645 - 649,645
Cost of sales (254,894) - (254,894) (235,641) - (235,641)
Gross profit 470,238 - 470,238 414,004 - 414,004
Net operating expenses (444,635) - (444,635) (387,999) - (387,999)
Group operating profit 25,603 - 25,603 26,005 26,005
Share of joint ventures’
operating profit / (loss)
287
-
287
(3)
-
(3)
25,890 - 25,890 26,002 - 26,002
The total figures for continuing operations in 2011 include the following amounts relating to acquisitions: turnover
£57,449,000 (2010: £1,727,000), cost of sales £20,615,000 (2010: £691,000) and net operating expenses
£37,235,000 (2010: £825,000).
The directors have concluded that the acquisitions do not individually meet the criteria of “substantial acquisitions”
as defined in FRS 6. Therefore, the disclosure of separate full profit and loss accounts for the acquisitions has not
been made.
Net operating expenses in 2011 include exceptional costs of £4,096,000 (2010: £1,456,000) and exceptional income
of £4,606,000 (2010: £nil) which are explained in note 6.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
19
Notes (continued)
4 Remuneration of directors
2011 2010
£000 £000
Directors’ emoluments 1,480 1,428
Company contributions to money purchase pension schemes 39 37
1,519 1,465
The aggregate of emoluments of the highest paid director was £897,000 (2010: £891,000). No contributions to a
Group pension scheme were made in relation to the highest paid director (2010: £nil).
Number of directors
2011 2010
Retirement benefits are accruing to the following number of directors under:
Money purchase schemes 2 2
5 Loss on ordinary activities before taxation
2011 2010
£000 £000
Loss on ordinary activities before taxation is stated
after charging/(crediting)
Depreciation
- Finance lease assets 2,075 1,995
- Other assets 55,544 43,095
- Digital projection deferred income release (2,043) (1,127)
Amortisation of goodwill 9,689 9,679
Amounts receivable by the auditors:
- Audit of Group financial statements pursuant to legislation 20 20
- Audit of the parent company financial statements pursuant to legislation 6 -
- Audit of financial statements of subsidiaries pursuant to legislation 481 344
- Other services relating to taxation 811 242
- Other services relating to corporate finance transactions 480 -
- All other services 50 40
Property rental income (2,426) (2,569)
Lease exit premiums - -
Rentals under operating leases – property 124,660 105,633
Amounts paid to the Company’s auditor and their associates in respect of services to the Company, other than the
audit of the Company’s financial statements, have not been disclosed as the information is required instead to be
disclosed on a consolidated basis.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
20
Notes (continued)
6 Exceptional items and loss on disposal
Exceptional costs
The exceptional costs in the current year relate to staff restructuring resulting from the digital roll-out and
integration costs resulting from the acquisitions during the year.
The tax effect of the exceptional costs in the current year was a credit of £111,000.
The exceptional costs in the prior year related to restructuring of the UK business and property-related matters.
The tax effect of the exceptional costs in the prior year was £nil.
Exceptional income
The exceptional income in the current year reflects property-related matters.
The tax effect of the exceptional costs in the current year was £nil.
Profit and loss on disposal
The profit on disposal of properties represents the difference between the proceeds due (net of disposal costs) and
the net book value of the assets sold.
In the current year, a number of freehold and leasehold property interests were disposed of. The loss associated
with these disposals was £4,000.
In the prior year, a number of freehold and leasehold property interests were disposed of. The loss associated with
these disposals was £525,000.
7 Staff numbers and costs
The average number of persons employed by the Group (including directors) during the period was as follows:
Number of employees 2011 2010
Administration 346 327
Cinema and other 9,245 8,454
9,591 8,781
The aggregate payroll costs of these persons were as follows: 2011 2010
£000 £000
Wages and salaries 110,446 95,888
Social security costs 15,612 13,685
Pension costs – regular costs 391 483
126,449 110,056
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
21
Notes (continued)
8 Interest payable and similar charges
2011 2010
£000 £000
Interest payable on bank loan 7,482 17,864
Interest payable on senior secured notes 26,302 -
Loan notes 34,987 78,550
Loan from related party 1,042 2,492
Amortisation of issue costs 11,162 1,971
Unwinding of discount on provisions 3,845 4,000
Other financing costs 6,845 7,839
Share of joint ventures 194 178
91,859 112,894
Other financing costs includes, inter alia, guarantee facility fees, commitment fees, bank charges, and loan note
redemption fees, together with finance charges payable in respect of finance leases.
9 Other finance (income) / cost
2011 2010
£000 £000
Expected return on pension scheme assets (note 27) (2,706) (2,760)
Interest on pension scheme liabilities (note 27) 2,399 2,474
Other finance charges 300 520
(7) 234
10 Taxation
Analysis of charge in year 2011 2010
£000 £000 £000 £000
UK corporation tax
Current tax on income for the year 57 (3,510)
Prior year adjustment (113) -
Overseas tax
Current tax on income for the year 2,343 3,933
Prior year adjustment (622) -
Current tax on income for the year 1,665 423
Share of joint ventures’ current tax 79 (40)
Total current tax 1,744 383
Deferred tax
Origination/reversal of timing differences 643 4,112
Deferred tax for the year 643 4,112
Share of joint ventures’ deferred tax - -
Total deferred tax 643 4,112
Tax on loss on ordinary activities 2,387 4,495
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
22
Notes (continued)
10 Taxation (continued)
Factors affecting the tax charge / (credit) for the current year
The current tax charge for the year is higher (2010: higher) than the standard rate of corporation tax in the UK,
26.5% (2010: 28.0%). The differences are explained below. 2011 2010
£000 £000
Current tax reconciliation
Loss on ordinary activities before tax (62,993) (80,016)
Current tax at 26.5% (2010: 28.0%) (16,693) (22,404)
Effects of:
Expenses not deductible for tax purposes 16,679 15,546
Capital allowances for period less than depreciation 2,947 1,752
Other timing differences 114 15
Losses not utilised / (brought forward losses utilised) 2,435 (604)
Provision for local taxes 1,429 1,465
Overseas rate differences (2,070) (594)
Group relief surrender for no consideration (2,362) 8,285
Adjustments in respect of prior years (735) (3,078)
Total current tax charge (see above) 1,744 383
The Emergency Budget on 22 June 2010 announced that the UK corporation tax rate would reduce from 28% to
24% and the Budget on 23 March 2011 announced that the UK rate would be further reduced to 23%. The current
corporation tax rate of 26% is to be reduced to 25% from 1 April 2012 as enacted in the Finance Act 2011 with the
rate reduced down to 23% over the subsequent two years.
The UK’s net deferred tax asset of £188,000 reflected in the Group’s balance sheet has been calculated at the rate of
25%, that being the rate substantively enacted at the balance sheet date. It has not been possible to quantify the full
anticipated effect of the further 2% rate reduction, it will reduce any future UK corporation tax charge and will
reduce the Group’s current UK deferred tax asset.
11 Dividends
The aggregate amount of dividends comprises: 2011 2010
£000 £000
Dividends in respect of the year - -
- -
The aggregate amount of dividends proposed and recognised as liabilities as at the year-end is £nil (2010: £nil). No
dividends have been declared post year-end (2010: none).
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
23
Notes (continued)
12 Intangible assets
Goodwill
£000
Cost
At beginning of year 198,871
Acquisitions in the current year (see note 31a) 91,011
Acquisitions in the prior year (see note 31b) (2,990)
Exchange differences (5,607)
At end of year 281,285
Amortisation
At beginning of year 55,948
Charge for the year 9,689
Exchange differences (402)
At end of year 65,235
Net book value
At 31 December 2011 216,050
At 31 December 2010 142,923
Goodwill is held at amortised cost.
Impairment reviews have been performed in respect of the acquisitions made in the current and prior years. The
recoverable amount has been assessed in accordance with FRS 10.
In accordance with FRS 11, a review was performed to establish whether or not there were any indications of
impairment to the carrying amount of goodwill. The review concluded that there were no such indications.
The directors consider each acquisition separately for the purpose of determining the amortisation period of any
goodwill that arises. Goodwill is amortised over 20 years on all acquisitions in these financial statements,
representing the directors’ best estimate of the useful economic life of the goodwill.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
24
Notes (continued)
13 Tangible fixed assets
Group
Land and
buildings
Plant, fixtures
and fittings
Assets
under
construction
Total
£000 £000 £000 £000
Cost
At beginning of year 312,247 261,494 2,122 575,863
Acquisitions in the current year (see note 31a) 21,466 20,992 119 42,577
Acquisitions in the prior year (see note 31b) 3,166 - - 3,166
Additions 3,966 86,061 4,163 94,190
Reclassifications 638 1,395 (2,033) -
Disposals (5,932) (3,457) - (9,389)
Exchange differences (2,712) (5,759) (75) (8,546)
At end of year 332,839 360,726 4,296 697,861
Depreciation
At beginning of year 78,547 142,708 - 221,255
Charge for the year 14,987 42,632 - 57,619
On disposals (5,900) (3,280) - (9,180)
Exchange differences (642) (2,566) - (3,208)
At end of year 86,992 179,494 - 266,486
Net book value
At 31 December 2011 245,847 181,232 4,296 431,375
At 31 December 2010 233,700 118,786 2,122 354,608
The net book value of land and buildings costs comprises: 2011 2010
£000 £000
Freehold 27,879 18,974
Long leasehold 20,149 22,589
Short leasehold 197,819 192,137
245,847 233,700
Included in the total net book value of land and buildings is £20,413,000 (2010: £16,469,000) in respect of assets
held under finance leases. Depreciation for the year on these assets was £2,075,000 (2010: £1,995,000).
Included in the total net book value of plant, fixtures and fittings is £43,300,000 (2010: £13,155,000) in respect of
digital and related assets held under third party arrangements/agreements with an offsetting amount shown within
deferred revenue. Depreciation for the year on these assets was £2,043,000 (2010: £1,127,000).
In accordance with FRS 11, a review was performed to establish whether or not there were any indications of
impairment to the carrying amount of tangible fixed assets. The review concluded that there were no such
indications other than for those sites with onerous lease provisions, whose tangible fixed asset values have been
written down. The approach to asset impairment reviews is described in more detail in note 1.
Company
The Company did not hold any tangible fixed assets.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
25
Notes (continued)
14 Fixed asset investments
Group
Joint ventures Goodwill Interests in
joint ventures
Loans Total
£000 £000 £000 £000
Cost
At beginning of year 700 735 500 1,935
Repayments - - - -
At end of year 700 735 500 1,935
Share of post acquisition reserves
At beginning of year - (700) - (700)
Retained profit - 14 - 14
At end of year - (686) - (686)
Net book value
At 31 December 2011 700 49 500 1,249
At 31 December 2010 700 35 500 1,235
The total of the Group’s profit before taxation from interests in joint ventures was £93,000 (2010: £181,000 loss).
Company Investments in
group
undertakings
£000
At beginning of year -
Additions in the year 108,855
Exchange differences (3,166)
At end of year 105,689
The only direct subsidiaries of the Company are: Name Country of
incorporation
% interest Nature of business
Odeon & UCI Finco plc Great Britain 100% owned Senior secured notes issuer
Cicero Holdings Limited Great Britain 100% owned Holding company
Lucius Holdings Limited Great Britain 100% owned Holding company
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
26
Notes (continued)
14 Fixed asset investments (continued)
The principal undertakings in which the Company had a direct or indirect interest at the year-end are shown below.
The investments include both ordinary and preference shares.
Name Country of
incorporation
% interest Nature of business
Odeon & UCI Finco plc Great Britain 100% owned Senior secured notes issuer
Cicero Holdings Limited Great Britain 100% owned Holding company
Cicero Investments Limited Great Britain 100% owned Holding company
Cicero Acquisitions Limited Great Britain 100% owned Holding company
Odeon Cinemas Limited Great Britain 100% owned Operation of cinemas
ABC Cinemas Limited Great Britain 100% owned Operation of cinemas
Odeon Cinemas (RL) Limited Great Britain 100% owned Operation of cinemas
Bookit Limited Great Britain 100% owned Credit and debit card
transaction processing
Lucius Holdings Limited Great Britain 100% owned Holding company
Lucius Investments Limited Great Britain 100% owned Holding company
United Cinemas International Acquisitions Limited Great Britain 100% owned Holding company
United Cinemas International Multiplex BV Netherlands 100% owned Holding company
United Cinemas International (UK) Limited Great Britain 100% owned Operation of cinemas
Odeon and Sky Filmworks Ltd Great Britain 50% owned Film distribution
Digital Cinema Media Limited Great Britain 50% owned Screen advertising
Compania de Iniciativas y Espectaculos SA (Cinesa) Spain 100% owned Operation of cinemas
Cineparque y Espectaculos SA Spain 100% owned Operation of cinemas
Multicines y Espectaculos SA Spain 100% owned Operation of cinemas
Cines y Espectaculos Norte SA Spain 100% owned Operation of cinemas
Multicines Oeste SA Spain 100% owned Operation of cinemas
Multicines y Espectaculos Centro SL Spain 100% owned Operation of cinemas
Cinema International Corporation Lda Portugal 100% owned Operation of cinemas
United Cinemas International Multiplex GmbH Germany 100% owned Operation of cinemas
Kino Friedrichshain Betriebsgesellschaft mbH Germany 100% owned Operation of cinemas
Kino Gera Betriebsgesellschaft mbH Germany 100% owned Operation of cinemas
Kino Lausitzpark Betriebsgesellschaft mbH Germany 100% owned Operation of cinemas
UCI Kinoplex GmbH Germany 100% owned Operation of cinemas
United Cinemas International Multiplex Gesellschaft mbH Austria 100% owned Operation of cinemas
UCI Italia SpA Italy 100% owned Operation of cinemas
UCI Nord Ovest Srl Italy 100% owned Operation of cinemas
UCI Sud Srl Italy 100% owned Operation of cinemas
UCI Nord Srl Italy 100% owned Operation of cinemas
UCI Centro Srl Italy 100% owned Operation of cinemas
UCI Nord Est Srl Italy 100% owned Operation of cinemas
UCI Torino Srl Italy 100% owned Operation of cinemas
UCI Campi Bisenzio SpA Italy 100% owned Operation of cinemas
UCI Roma Est Srl Italy 100% owned Operation of cinemas
UCI Adriatica Srl Italy 100% owned Operation of cinemas
UCI Appennino Srl Italy 100% owned Operation of cinemas
UCI Recupero e Sviluppo SpA Italy 100% owned Operation of cinemas
United Cinemas International (Ireland) Limited Ireland 100% owned Operation of cinemas
Waterwhite Projections Limited Ireland 100% owned Operation of cinemas
Bolgal Limited Ireland 100% owned Holding company
15 Stocks
Group Group Company
2011 2010 2011
£000 £000 £000
Goods for resale 7,469 6,121 -
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
27
Notes (continued)
16 Debtors amounts falling due within one year
Group Group Company
2011 2010 2011
£000 £000 £000
Trade debtors 26,584 17,842 -
Other debtors 15,317 10,195 -
Prepayments and accrued income 18,858 11,346 -
60,759 39,383 -
17 Debtors amounts falling due after one year
Group Group Company
2011 2010 2011
£000 £000 £000
Trade debtors 3,816 - -
Other debtors 6,243 5,162 -
Prepayments and accrued income 1,077 - -
Loan notes - - 652,057
Deferred tax (note 22) - - -
Amounts owed by group undertakings - - 530,413
Amounts owed by related parties - 210,492 -
11,136 215,654 1,182,470
The following unsecured discounted loan notes, receivable from a group undertaking were due at 31 December
2011:
Par value €636.6m
Book value at 31 December 2011 was €359.2m (£300.9m)
Discount rate 16.1%
Final redemption date 28 October 2015
Par value £557.9m
Book value at 31 December 2011 was £323.1m
Discount rate 16.1%
Final redemption date 26 August 2015
The following loan notes, including accrued interest, receivable from a group undertaking were due at 31 December
2011:
Par value €12.5m
Issued for €12.5m
Interest rate 16.2%
Book value at 31 December 2011 was €33.6m (£28.1m)
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
28
Notes (continued)
18 Creditors: amounts falling due within one year
Group Group Company
2011 2010 2011
£000 £000 £000
Bank loans and overdrafts - 6,200 -
Trade creditors 56,998 37,865 -
Finance leases 3,161 2,738 -
Other creditors including taxation and social
security
21,488
27,085
-
Corporation tax 5,454 5,413 -
Accruals and deferred income 82,391 58,902 102
169,492 138,203 102
Prior to the refinancing, interest was payable on the bank loan at LIBOR or EURIBOR plus a margin of between
2.75% and 4.13% (2010: between 1.50% and 4.13%) plus costs of between nil and 0.01%. Bank loans and
overdrafts due within one year are stated net of £nil (2010: £nil) of unamortised issue costs.
19 Creditors: amounts falling due after more than one year
Group Group Company
2011 2010 2011
£000 £000 £000
Senior secured notes 467,504 - -
Bank loans and overdrafts - 275,169 -
467,504 275,169 -
Unamortised issue costs (19,175) (7,783) (3,016)
448,329 267,386 (3,016)
Finance leases 36,841 31,346 -
Loan notes - 566,330 -
Other creditors, accruals and deferred income 44,089 11,208 -
Amounts owed to group undertakings - - 705,335
Amounts owed to related parties - 45,692 -
529,259 921,962 702,319
In May 2011, a refinancing was successfully completed and senior secured notes totalling £475m equivalent were
issued, the proceeds of which were partly used to repay in full the existing bank debt. The Sterling element of the
senior secured notes (£300m) is at a fixed interest rate of 9.00% and, to hedge the Euro element (€200m) which is at
floating rates, a three year interest rate swap is in place to fix the effective total rate to 9.07%. All the senior secured
notes are scheduled to mature on August 1, 2018. They are listed on the Luxembourg Stock Exchange and traded
on the Euro MTF Market. The senior secured notes are secured by liens over the assets of certain group companies.
The asset classes secured, which vary by jurisdiction, include share capital, material bank accounts and other
material assets. As part of the refinancing, a £90m revolving credit facility (“RCF”) was also put in place. It is
available until May 2017 and secured in a similar way to, whilst receiving priority over, the senior secured notes.
The draw down on the RCF was £nil at the current year-end.
Prior to the refinancing, interest was payable on the bank loans at LIBOR or EURIBOR plus a margin of between
2.75% and 4.13% (2010: between 1.50% and 4.13%) plus costs of between nil and 0.01%.
The aggregate amount of loan notes issued to a related party included in creditors falling due after more than one
year is £nil (2010: £566,330,000). This is the net book value based on the aggregate issued amounts of £nil (2010:
£223,078,000) plus interest accrued of £nil (2010: £343,252,000).
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
29
Notes (continued)
19 Creditors: amounts falling due after more than one year (continued)
The maturity profile of the Group’s senior secured notes, bank and other borrowings (excluding preference shares)
at 31 December was as follows:
2011 2010
Group £000 £000
Within 1 year, or on demand 3,161 8,938
Within one to two years 6,067 10,529
Within two to five years 9,073 175,440
Over five years 489,205 465,098
507,506 660,005
Un-amortised issue costs (19,175) (7,783)
488,331 652,222
Finance leases
Future minimum payments under finance leases are as follows:
2011 2010
Group £000 £000
Within 1 year 3,161 2,738
Within one to five years 15,140 10,644
Over five years 21,700 20,702
Total gross payments 40,001 34,084
20 Derivatives and other financial instruments
Short-term debtors and creditors are excluded from the disclosures relating to derivatives and other financial
instruments. There is no material difference between the fair value of financial assets and liabilities and the carrying
value in the balance sheet.
Financial assets
Financial assets comprise cash at bank and in hand and are held in Sterling and Euro. Interest is earned on cash at
bank at floating interest rates linked to short-term bank deposit rates.
Financial liabilities
The Group borrows in the desired currencies at both fixed and floating rates of interest. Interest rate hedging
contracts (swaps) are used to generate the desired interest profile to manage the Group’s exposure to interest rate
fluctuations. The Group’s policy is to maintain fixed interest rates, by means of hedging contracts, covering
between 50% and 100% of the senior secured notes. At the year-end approximately 100% of the Group’s senior
secured notes were at fixed rates after taking into account interest rate swaps. For Sterling denominated loans the
fixed rate was 9.00% and for Euro denominated loans a fixed rate of 9.07%.
There are no unrecognised gains or losses relating to interest rate swaps.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
30
Notes (continued)
21 Provisions for liabilities and charges
Lease
provisions
& other
At the beginning of the year 65,527
Arising on acquisitions in the current year (see note 31a) 7,134
Utilised (8,233)
Unwinding of discount on provision 3,845
Charged to the profit and loss account 46
Exchange differences (980)
At the end of year 67,339
Provision has been made for lease commitments on certain leasehold properties based on the expected exposure.
The amount provided is based either on the future rental obligations (discounted by 7.5%, based on property yields),
net of anticipated operating profit from trading (discounted by 10.0%, based on cost of capital), or management’s
best estimate of the expected exposure. Provision has been made for the remaining period of the leases identified,
subject to a maximum of 25 years, after which the directors consider the impact of discounting upon the rental and
trading projections renders them immaterial.
22 Deferred tax
The deferred tax asset recognised (note 17) is:
Group Group Company
2011 2010 2011
£000 £000 £000
Accelerated capital allowances - - -
Other timing differences - - -
Un-utilised losses - - -
- - -
The potential amounts of deferred tax asset not recognised are:
Group Group Company
2011 2010 2011
£000 £000 £000
Accelerated capital allowances 9,776 9,799 -
Other timing differences 16,181 12,713 -
Un-utilised losses 93,964 73,838 -
119,921 96,350 -
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
31
Notes (continued)
23 Called up share capital
2011 2010
£000 £000
Allotted, called up and fully paid
62,100 (2010: 10,100) Ordinary shares of £1 each 62 10
14,737,024 (2010: 14,737,024) Ordinary shares of €1 each 12,343 12,564
34,661,352 (2010: 34,661,352) Preference shares of £1 each 34,661 34,661
69,998,017 (2010: 69,998,017) Preference shares of €1 each 58,625 59,674
105,691 106,909
On 5 May 2011, Odeon & UCI Bond Midco Limited was incorporated with an initial share capital of £50,000. As
the Company was formed after 1 October 2009, under regulations introduced by the Companies Act 2006, no
authorised share capital is required. On 24 May 2011, the Company acquired Cicero Holdings Limited (“CHL”)
and Lucius Holdings Limited (“LHL”) with the consideration settled by the issuing of 10,100 Ordinary shares of £1
each, 14,737,024 Ordinary shares of €1 each, 34,661,352 Preference shares of £1 each and 69,998,017 Preference
shares of €1 each. At the same time, the Company acquired amounts due from CHL and LHL with the
consideration settled by the issuing of 2,000 Ordinary shares of £1 each giving rise to share premium of
£443,404,000.
The 2010 comparatives relate to Cicero Holdings Limited and Lucius Holdings Limited.
The principal terms of the shares are described below.
Income
Any profits which the Company may determine to distribute in respect of any financial year shall belong to and be
distributed amongst the holders of the Preference Shares and the holders of the Ordinary Shares as follows:
(a) firstly, to the extent that the holders of Preference Shares have not then received the preferred participation of
such shares, in paying to the holders of the Preference Shares the amount by which the aggregate amount previously
paid by the Company to the holders of the Preference Shares (in that capacity) is less than the preferred participation
of such shares. To the extent that the profits that the Company determines to distribute are less than the aggregate
preferred participation of all of the Preference Shares, such profits shall be applied among the holders of the
Preference Shares pro rata to the respective preferred participation of the Preference Shares held by them.
(b) after payment of the preferred participation to the holders of the Preference Shares, the aggregate amount of
profits resolved to be distributed (or balance of them) shall be paid to the holders of Ordinary Shares as nearly as is
practicable pro rata to the amounts paid up on their Ordinary Shares.
No dividend or other distribution shall be declared or paid by the Ordinary Shares unless or until the Company shall
have paid to the holders of the Preference Shares, the aggregate preferred participation of all of the Preference
Shares. No dividend or distribution shall be declared or paid on any Preference Shares in excess of the preferred
participation of that share. The preferred participation in relation to the Preference Shares is 11% per annum.
Voting rights
Ordinary Shares shall confer on each holder thereof (in that capacity) the right to receive notice of and to attend,
speak and vote at all general meetings of the Company;
On a show of hands every holder of an Ordinary Share who is present in person or by proxy (or being a corporation
is present by a representative) shall have one vote, and on a poll every holder of an Ordinary Share who is present in
person or by a proxy (or being a corporate is present by a representative) shall have one vote for every Ordinary
Share; and
Preference Shares shall confer on each holder thereof (in that capacity) the right to receive notice of and to attend
and speak at all general meetings of the Company but shall not confer any right (in that capacity) to vote thereat.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
32
Notes (continued)
23 Called up share capital (continued)
Redemption
The Preference Shares are not redeemable.
Capital
On a return of capital on liquidation, dissolution or winding up of the Company either voluntary or involuntary or
other return of capital, the surplus assets of the Company remaining after the payment of its liabilities (the
“Surplus”) shall be applied as follows:
(a) first, to the extent that the holders of the Preference Shares have not received the preferred participation of each
Preference Share held by them, in paying to the holders of the Preference Shares the amount by which the aggregate
amount previously paid by the Company to the holders of the Preference Shares (in that capacity) is less than the
preferred participation of each Preference Share held by them and if the surplus is less than the aggregate preferred
participation of all of the Preference Shares, the surplus shall be applied among the holders of the Preference Shares
pro rata to the respective preferred participations of the Preference Shares held by them; and
(b) the balance (if any) of the surplus remaining after the payments above shall belong to the holders of the Ordinary
Shares according to the amounts paid on the nominal amount thereof.
24 Reserves
Group
Profit
and loss
account
£000
At beginning of the year (436,731)
Loss for the year (65,380)
Actuarial pension scheme loss recognised (note 27) (1,675)
Effect of pension asset limit on above (1,659)
Deferred tax on pension loss 452
Deferred tax on effect of pension asset limit 448
Deferred tax change in rate (28)
Exchange differences (10,624)
Dividends -
At the end of year (515,197)
Company
Profit
and loss
account
£000
At beginning of the year -
Profit for the year 53,177
Exchange differences (16,534)
Dividends -
At the end of year 36,643
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
33
Notes (continued)
25 Notes to cash flow statement
(a) Net cash flow from operating activities 2011 2010
£000 £000
Operating profit 25,603 26,005
Depreciation 57,619 45,090
Amortisation of goodwill and intangibles 9,689 9,679
Increase in stock (970) (1,496)
(Increase) / decrease in debtors (14,818) 1,921
Decrease in provisions (10,609) (9,887)
Increase / (decrease) in creditors 547 (5,740)
Net cash inflow from operating activities 67,061 65,572
(b) Net debt Balance at
31 December
2010
Cashflow
Other
non-cash
movements
Exchange
Balance at
31 December
2011
£000 £000 £000 £000 £000
Net cash:
Cash at bank and in hand 36,277 37,875 - (1,149) 73,003
Debt:
Debt falling due within one year (6,200) 6,200 - - -
Debt falling due after more than one year (833,716) (175,776) 563,428 (2,265) (448,329)
Finance leases (34,084) 2,121 (8,349) 310 (40,002)
Net debt (837,723) (129,580) 555,079 (3,104) (415,328)
Non-cash movements are primarily finance charges accrued on the loan notes and the impact of the refinancing, the
amortisation of issue costs and finance leases arising on acquisition.
(c) Reconciliation of net cash flow to movement in net debt 2011 2010
£000 £000
Increase / (decrease) in net cash in the period 37,875 (21,061)
Cash (inflow) / outflow from (increase) / decrease in debt (167,455) 14,359
Non cash movement 555,079 (78,550)
Translation difference (3,104) 14,701
Movement in net debt in the year 422,395 (70,551)
Net debt at end of previous period (837,723) (767,172)
Net debt at end of year (415,328) (837,723)
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
34
Notes (continued)
26 Financial commitments
Group 2011 2010
£000 £000
Capital commitments
Contracted for but not provided 3,099 5,969
Operating commitments
At 31 December 2011 the Group was committed to making the following payments during the next year in respect
of operating leases: Land and
buildings
Land and
buildings
Group 2011 2010
£000 £000
Operating lease which expire:
Within one year 4,072 1,886
In two to five years 11,234 9,030
Over five years 122,779 118,519
138,085 129,435
The Company had no capital or operating lease commitments at 31 December 2011 or at the preceding year-end.
27 Pension schemes
The Group operates or participates in two defined benefit schemes (the ABC Cinemas Limited Pension Scheme (the
"ABC plan") and the Optima 2 Pension Scheme (the "Optima 2 plan")) and one defined contribution scheme (the
Odeon DC Stakeholder Pension Scheme). Assets of the schemes are held separately from those of the Group in
independently administered funds.
Defined benefit schemes
Both the ABC plan and the Optima 2 plan are closed to new members. The ABC plan is closed to future accrual
from 1 November 2009. The Optima 2 plan is closed to future accrual from 1 January 2009. The latest full
actuarial valuation for the ABC plan was carried out as at 30 April 2009 and was updated for FRS 17 purposes to 31
December 2011 by a qualified independent actuary. The latest full actuarial valuation for the Optima 2 plan was
carried out as at 31 December 2009 and was updated for FRS 17 purposes to 31 December 2011 by a qualified
independent actuary.
The major financial assumptions used by the actuaries were:
2011 2010 2009
ABC Plan
%
Optima 2
Plan %
ABC Plan
%
Optima 2
Plan %
ABC Plan
%
Optima 2
Plan %
Rate of increase in salaries 3.5 3.5 4.0 4.0 4.0 4.0
Rate of increase in pensions in
payment and deferred pensioners
-pre 6.4.1997 accrual 2.3 2.0 2.4 2.1 2.4 2.1
-post 6.4.1997 accrual 2.9 2.9 3.1 3.1 3.1 3.1
Discount rate applied to scheme
liabilities
4.9
4.9
5.6
5.6
5.7
5.7
Inflation assumption 3.0 3.0 3.2 3.2 3.2 3.2
The mortality assumptions are based on standard mortality tables which allow for future mortality improvements.
The assumptions are that a member currently aged 65 will live on average for a further 20.9 years (ABC Plan) and
for a further 21.7 years (Optima 2 Plan).
For a member aged 40 in 2011, retiring in 25 years time, the assumptions are that they will live on average for a
further 22.4 years after retirement (ABC Plan) and for a further 22.9 years after retirement (Optima 2 Plan).
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
35
Notes (continued)
27 Pension schemes (continued)
The pension cost relating to the defined benefit schemes is assessed in accordance with the advice of independent
qualified actuaries using the projected unit method. As both the Optima 2 plan and ABC plan are closed to new
members and future accrual, the current service cost is nil. The Group made special deficit reduction contributions
of £919,000 (Optima 2 plan) and £1,157,000 (ABC plan). These rates are subject to review at future actuarial
valuations.
Scheme assets/ liabilities
The assets in the schemes and the expected rates of return were:
2011 2010 2009
Long-
term
rate of
return
expected
per
annum
Fair
Value–
ABC
Plan
Fair
Value–
Optima
2 Plan Total
Long-
term rate of return
expected
per annum
Fair
Value–
ABC Plan
Fair
Value–
Optima 2 Plan Total
Long-
term rate of return
expected
per annum
Fair
Value
– ABC Plan
Fair Value
–
Optima 2 Plan Total
% £000 £000 £000 % £000 £000 £000 % £000 £000 £000
Equities 6.6 6,434 11,895 18,329 7.5 7,127 13,171 20,298 8.25 6,300 15,964 22,264 Bonds 4.1 4,344 - 4,344 5.0 3,865 - 3,865 5.5 3,572 - 3,572
Gilts 3.1 15,661 11,381 27,042 4.0 11,669 8,637 20,306 4.5 10,654 5,136 15,790
Property 6.6 - 2,218 2,218 7.5 - 2,078 2,078 - - - - Other 0.5 146 115 261 0.5 103 52 155 0.5 215 92 307
Total 26,585 25,609 52,194 22,764 23,938 46,702 20,741 21,192 41,933
The Group employs a building block approach in determining the long-term rate of return on pension plan assets.
Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent
with widely accepted capital market principles. The assumed long-term rate of return on each asset class is set out
within this note. The overall expected rate of return on assets is then derived by aggregating the expected return for
each asset class over the actual asset allocation.
The fair value of the schemes’ assets, which are not intended to be realised in the short term and may be subject to
significant change before they are realised, and the present value of the schemes’ liabilities, which are derived from
cash flow projections over long periods and thus inherently uncertain, were:
2011 2010 2009
ABC
Plan
Optima
2 Plan Total
ABC
Plan
Optima 2
Plan Total
ABC
Plan
Optima 2
Plan Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Total fair value of assets 26,585 25,609 52,194 22,764 23,938 46,702 20,741 21,192 41,933
Present value of scheme liabilities (22,310) (27,013) (49,323) (20,148) (24,391) (44,539) (20,350) (24,459) (44,809)
Effect of asset limit (4,275) - (4,275) (2,616) - (2,616) - - -
Surplus/(deficit) in the scheme-
pension liability - (1,404) (1,404) - (453) (453) 391 (3,267) (2,876) Related deferred tax assets - 351 351 - 122 122 (110) 915 805
Net pension surplus/(liability) - (1,053) (1,053) - (331) (331) 281 (2,352) (2,071)
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
36
Notes (continued)
27 Pension schemes (continued)
Changes to the present value of the defined benefit obligation during the year
2011 2010
ABC
Plan
Optima 2
Plan
Total
ABC
Plan
Optima 2
Plan
Total
£000 £000 £000 £000 £000 £000
Opening defined benefit obligation 20,148 24,391 44,539 20,350 24,459 44,809
Current service cost - - - - - -
Interest cost 1,074 1,325 2,399 1,114 1,360 2,474
Contributions by scheme participants - - - - - -
Actuarial loss / (gain) on scheme liabilities 2,060 2,028 4,088 (503) (826) (1,329)
Net benefits paid out (972) (731) (1,703) (813) (602) (1,415)
Closing defined benefit obligation 22,310 27,013 49,323 20,148 24,391 44,539
Changes to the fair value of scheme assets during the year
2011 2010
ABC
Plan
Optima 2
Plan
Total
ABC
Plan
Optima 2
Plan
Total
£000 £000 £000 £000 £000 £000
Opening fair value of scheme assets 22,764 23,938 46,702 20,741 21,192 41,933
Expected return on scheme assets 1,205 1,501 2,706 1,203 1,557 2,760
Actuarial gain / (loss) on scheme assets 2,431 (18) 2,413 705 1,051 1,756
Contributions by the employer 1,157 919 2,076 928 740 1,668
Contributions by scheme participants - - - - - -
Net benefits paid out (972) (731) (1,703) (813) (602) (1,415)
Closing fair value of scheme assets 26,585 25,609 52,194 22,764 23,938 46,702
Upon recommendation from the actuaries, the Group has agreed to make additional annual contributions to the ABC
plan of £1,157,000 per annum until 30 April 2016, and additional annual contributions of £1,000,000 per annum
until 31 March 2016 to the Optima 2 plan.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
37
Notes (continued)
27 Pension schemes (continued)
The movement in the deficit on the schemes is shown below:
Movement in deficit during the year 2011 2010
ABC
Plan
Optima 2
Plan
Total
ABC
Plan
Optima 2
Plan
Total
£000 £000 £000 £000 £000 £000
Surplus / (deficit) in scheme at the beginning
of the year - (331) (331) 281 (2,352) (2,071)
Current service cost - - - - - -
Contributions paid 1,157 919 2,076 928 740 1,668
Other finance income 131 176 307 89 197 286
Actuarial gain / (loss) 371 (2,046) (1,675) 1,208 1,877 3,085
Effect of asset limit (1,659) - (1,659) (2,616) - (2,616)
Deferred tax - 229 229 110 (793) (683)
Surplus/(deficit) in the scheme at end of year - (1,053) (1,053) - (331) (331)
Analysis of amount charged to operating profit
2011 2010
ABC
Plan
Optima 2
Plan
Total
ABC
Plan
Optima 2
Plan
Total
£000 £000 £000 £000 £000 £000
Current service cost and total operating
charge - - - - - -
Analysis of amounts included in other finance income
2011 2010
ABC
Plan
Optima 2
Plan
Total
ABC
Plan
Optima 2
Plan
Total
£000 £000 £000 £000 £000 £000
Expected return on pension scheme assets 1,205 1,501 2,706 1,203 1,557 2,760
Interest on pension scheme liabilities (1,074) (1,325) (2,399) (1,114) (1,360) (2,474)
131 176 307 89 197 286
Analysis of amount recognised in statement of total recognised gains and losses
2011 2010
ABC
Plan
Optima 2
Plan
Total
ABC
Plan
Optima 2
Plan
Total
£000 £000 £000 £000 £000 £000
Actual return less expected return on
pension scheme assets 2,431 (18) 2,413 705 1,051 1,756
Experience losses arising on the scheme
liabilities - - - - (1,133) (1,133)
Change in actuarial assumptions (2,060) (2,028) (4,088) 503 1,959 2,462
Actuarial gain / (loss) recognised in
statement of total recognised gains and
losses
371 (2,046) (1,675) 1,208 1,877 3,085
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
38
Notes (continued)
27 Pension schemes (continued)
History of experience gains and losses
ABC Plan
2011
£000
2010
£000
2009
£000
2008
£000
2007
£000
Difference between the expected and actual return on scheme
assets:
Amount (£000s) (2,431) (705) (1,118) (3,247) 56
Percentage of year end scheme assets (9.1%) (3.1%) (5.4%) (17.5%) 0.3%
Experience gains and losses on scheme liabilities:
Amount (£000s) - - 365 (9) 25
Percentage of year end present value of scheme liabilities 0.0% 0.0% 1.8% (0.1%) 0.1%
Total amount recognised in statement of total recognised gains
and losses:
Amount (£000s) 371 1,208 306 (2,028) 1,662
Percentage of year end present value of scheme liabilities 1.7% 6.0% 1.5% (10.6%) 8.3%
Optima 2 Plan
2011
£000
2010
£000
2009
£000
2008
£000
2007
£000
Difference between the expected and actual return on scheme
assets:
Amount (£000s) 18 (1,051) (2,938) (6,352) (1,373)
Percentage of year end scheme assets 0.1% (4.4%) (13.9%) (37.2%) (6.4%)
Experience gains and losses on scheme liabilities:
Amount (£000s) - (1,133) 34 7 (711)
Percentage of year end present value of scheme liabilities 0.0% (4.6%) 0.1% 0.0% (3.2%)
Total amount recognised in statement of total recognised gains
and losses:
Amount (£000s) (2,046) 1,877 1,104 (4,773) 1,319
Percentage of year end present value of scheme liabilities (7.6%) 7.7% 4.5% (21.6%) 5.9%
Defined contribution schemes
The pension charge in respect of the Odeon DC Stakeholder Pension Scheme is equal to the contributions payable
during the year ended 31 December 2011 of £1,076,000 (2010: £1,098,000). As at 31 December 2011 there were
£nil (2010: £84,000) outstanding contributions to be made to the Odeon DC Stakeholder Pension Scheme.
28 Contingent liabilities
At 31 December 2011 certain group companies acted as guarantors under the terms of the £475m equivalent senior
secured notes and the £90m revolving credit facility. Certain group companies also acted as guarantors of rent and
other payments for other group companies.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
39
Notes (continued)
29 Ultimate parent undertaking and controlling party
The directors regard Terra Firma Holdings Limited, a company registered in Guernsey, as the ultimate parent entity.
The ultimate controlling party is Guy Hands.
30 Related parties
The Company has taken advantage of the exemption granted by FRS 8, Related Party Disclosures, not to disclose
transactions with group entities where 100% of the voting rights are controlled within the group.
Terra Firma Investments (GP) 2 Limited, acting as general partner of the six limited partnerships which constitute
the Terra Firma Capital Partners II Fund, Terra Firma Capital Partners II LP-H, TFCP II Co-Investment 2 LP and
TFCP II Co-Investment 2A LP (“Terra Firma”), has the ability to exercise a controlling influence over the Company
through the holding of shares in a parent of the Company. The directors therefore consider it to be a related party.
Odeon and UCI Cinemas Group Limited (“OUCGL”) was the immediate parent prior to the refinancing, and the
directors therefore consider it to be a related party. Unsecured loan notes, including interest accrued, of £nil (2010:
£566,330,000) were held by OUCGL at 31 December 2011. Interest of £34,987,000 (2010: £78,550,000) in relation
to these notes was charged during the year.
A loan, including interest accrued, of £nil (2010: £45,692,000) was payable to OUCGL at 31 December 2011.
Interest of £1,042,000 (2010: £2,492,000) in relation to this loan was charged during the year.
During April 2007, certain group companies entered into sale and leaseback arrangements in relation to freehold and
leasehold properties. Terra Firma has the ability to exercise a controlling influence over the companies with which
the sale and leaseback transactions took place through the holding of shares. The directors therefore consider them
to be related parties.
The companies to which the freehold and leasehold properties were sold (the “Propcos”) are listed below:
Odeon Banbury Ltd
Odeon Barnet Ltd
Odeon Beckenham Ltd
Odeon Birmingham Ltd
Odeon Bournemouth (ABC) Ltd
Odeon Bournemouth (Odeon) Ltd
Odeon Canterbury Ltd
Odeon Chelmsford Ltd
Odeon Derby Ltd
Odeon Dudley Ltd
Odeon Esher Ltd
Odeon Gerrards Cross Ltd
Odeon Harrogate Ltd
Odeon Hastings Ltd
Odeon Holloway Ltd
Odeon Huddersfield Ltd
Odeon Lee Valley Ltd
Odeon Leicester Square Ltd
Odeon Muswell Hill Ltd
Odeon Preston Ltd
Odeon Putney Ltd
Odeon Richmond Hill Street Ltd
Odeon Richmond Red Lion Street Ltd
Odeon Streatham Ltd
Odeon Swiss Cottage Ltd
Odeon Tamworth Ltd
Odeon Taunton Ltd
Odeon Telford Ltd
Odeon Warrington Ltd
Odeon Weston-super-Mare Ltd
Odeon Worcester Ltd
The total consideration for the properties sold, excluding VAT, was £178,750,000. The consideration was partly
settled during May 2007 and in the same year the balance due from the Propcos was assigned to OUCGL. The
aggregate remaining balance due to the Group from OUCGL at 31 December 2011 was £nil (2010: £210,492,000),
including interest. The balance attracted interest at LIBOR plus a margin of 2.375%. Interest accrued during the
year was £2,973,000 (2010: £7,635,000).
The relevant trading companies within the Group entered into lease contracts with the Propcos. The amount payable
from the Group to the Propcos during the year was £11,636,000 (2010: £11,189,000). The terms of the leases are
between 25 and 30 years.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
40
Notes (continued)
31 a) Acquisitions in the current year
Fair values on acquisitions
During 2011, the Group acquired cinema businesses in Spain, Italy, Ireland and the UK. The aggregate
consideration and provisional fair value to Odeon & UCI Bond Midco Limited is shown below:
Book value of
assets acquired
Fair value
adjustments
Accounting
policy
adjustments
Provisional fair
value
£000 £000 £000 £000
Tangible fixed assets 42,434 (1,909) 2,052 42,577
Stock 378 - - 378
Debtors 9,444 (1) 137 9,580
Cash 3,101 - - 3,101
Creditors (15,117) - (2,727) (17,844)
Provisions (346) (6,787) (1) (7,134)
Net assets acquired 39,894 (8,697) (539) 30,658
Goodwill at cost (note 12) 91,011
121,669
Satisfied by:
Cash 115,553
Deferred consideration 3,833
Acquisition costs 2,283
121,669
The fair values contain provisional amounts which will be finalised in the 2012 financial statements when the
detailed acquisition investigation has been completed.
Fair value adjustments reflect impairment of tangible fixed assets and onerous lease provisions relating to two sites
in Spain and one in Italy.
Accounting policy adjustments primarily reflect fixed assets identified as being held under finance lease
arrangements.
Deferred consideration of £1.0m is due in 2012. The remaining £2.8m is payable in equal instalments over the
subsequent five years.
The 2011 acquisitions can be summarised as follows:
Previous operator Country Month Acquisition basis
UGC Spain May-11 100% of share capital and asset purchase
UGC Italy May-11 100% of share capital
Coliseo Spain May-11 Asset purchase
Entertainment Enterprises Ireland May-11 100% of share capital
Giometti Italy Jun-11 Asset purchase
Reel Cinemas UK Nov-11 100% of share capital
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
41
Notes (continued)
31 b) Acquisitions in the prior year
Fair values on acquisitions
In December 2010, the Group acquired 100% of the share capital of companies containing three cinemas previously
operated by Pathe in Italy.
Provisional fair value
at 31 December 2010
Adjustments Revised fair value
£000 £000 £000
Tangible fixed assets 3,214 3,166 6,380
Stock 163 - 163
Debtors 2,005 - 2,005
Cash - - -
Creditors (2,966) - (2,966)
Net assets acquired 2,416 3,166 5,582
Goodwill at cost (note 12) 15,142 (2,990) 12,152
17,558 176 17,734
Satisfied by:
Cash 16,198 1,382 17,580
Deferred consideration 1,278 (1,278) -
Acquisition costs 82 72 154
17,558 176 17,734
The detailed acquisition investigation was completed during 2011, with the fair value of the tangible fixed assets
being assessed and adjusted for as shown above.
Additionally, during 2011, the group paid the deferred consideration, settled purchase price adjustments arising
from contractual obligations and incurred additional acquisition costs.
Odeon & UCI Bond Midco Limited
Directors’ report and financial statements
31 December 2011
42
Notes (continued)
32 Reconciliation of movement in shareholders’ deficit
Ordinary share
capital
Share
premium
Profit and
loss account
Total
Group £000 £000 £000 £000
Shares issued 52 443,404 - 443,456
Loss for the year - - (65,380) (65,380)
Actuarial pension scheme loss - - (1,675) (1,675)
Effect of pension asset limit on above - - (1,659) (1,659)
Deferred tax on pension loss - - 452 452
Deferred tax on effect of pension asset limit - - 448 448
Deferred tax change in rate - - (28) (28)
Dividends - - - -
Foreign exchange differences (1,270) - (10,624) (11,894)
Net increase in shareholders’ funds (1,218) 443,404 (78,466) 363,720
Shareholders’ deficit as at 31 December 2010 106,909 - (436,731) (329,822)
Shareholders’ funds as at 31 December 2011 105,691 443,404 (515,197) 33,898
Ordinary share
capital
Share
premium
Profit and
loss account
Total
Company £000 £000 £000 £000
Shares issued (note 23) 108,857 443,404 - 552,261
Profit for the year - - 53,177 53,177
Dividends - - -
Foreign exchange differences (3,166) - (16,534) (19,700)
Net increase in shareholders’ funds 105,691 443,404 36,643 585,738
Shareholders’ funds as at 31 December 2010 - - - -
Shareholders’ funds as at 31 December 2011 105,691 443,404 36,643 585,738
33 Post balance sheet events
There were no disclosable post balance sheet events prior to the date of approval of these financial statements.
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