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ODEON & UCI CINEmas HOlDINgs lImItEDDirectors’ report and financial statementsRegistered number 0617061131 December 2013

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ODEON & UCI Cinemas Holdings Limited

strategic Report 3

Directors’ Report 7

statement of directors’ responsibilities in respect of the strategic Report and the Directors’ Report and the financial statements 9

Independent auditor’s report to the members of Odeon and UCI Cinemas Holdings limited 10

Consolidated profit and loss account 11

Consolidated statement of total recognised gains and losses 12

Consolidated balance sheet 13

Company balance sheet 14

Consolidated cash flow statement 15

Notes 16

Contents

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Business Review Market positionthe 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 2,191 screens in 239 cinema sites, in a combination of freehold, long leasehold and short leasehold properties. the business operates under the name of Odeon in the UK and Ireland; UCI in germany, Italy, austria and Portugal; and Cinesa in spain.

Portfolio development – additional cinemasDuring 2013, five cinemas were added to the group’s portfolio as follows:may gualtieri, Italy (3 screens)June Chatham, UK (9 screens, previously managed)July West Bromwich, UK (5 screens)October trowbridge, UK (7 screens)December Villesse, Italy (7 screens)

Other developments were the refurbishment of the maquinista site in spain with one Dolby big screen replacing two screens and the closure of the 9 screen augusta site in spain.

Portfolio development – refurbishments and retail initiativesDuring 2013, in the UK new Costa Coffee operations opened at Hatfield in april and at the trowbridge new site in October, bringing the UK total to 41. a Coffee Republic at Braehead opened in December.

External digital screens were installed on Odeon leicester square, replacing 3 boards that previously held traditional posters and reinforcing the site’s reputation as the UK’s most prestigious cinema. the screens can show moving trailers and other advertising, giving rise to a new source of revenue in addition to increasing the cinema profile to customers.

In Continental Europe, a full lobby refurbishment in austria at the Vienna sCs site was completed during October.

Control over costsOur activities this year have included a strong focus on controlling costs and restructuring activities to improve the cost base for the future. staff cost and rent reductions have been particularly successful.

Main Market Attendance 2013 v 2012On a weighted average basis, the market volumes in the group’s major territories were down 5% overall.

Attendance (millions) (1) 2011 2012 2013 2013 vs 2012 growth

UKspaingermanyItaly

strategic Report

(1) Market data is provisional and for some territories is a full market estimate based on information available for part of the market.

Italy was ahead, with strong results in particular for the local title Sole a Catinelle, Italy’s biggest ever film. However, markets were down in all the other major territories, reflecting the exceptionally hot summer and thinner slate of blockbusters. spain was particularly disappointing, although the economy is showing signs of stabilising. the exceptional performance of Skyfall and The Intouchables in 2012 provided tough comparatives.

172.198.4

129.6112.1

172.594.1

135.1100.1

165.579.7

129.7106.0

(4.0%)(15.3%)(4.0%)+5.9%

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KPIs the primary KPIs followed by the group are attendance and EBItDa(2). Paid attendance was 3% lower in 2013 than in 2012, with 80.0m vs 82.3m customers, reflecting lower markets, mitigated by growth from estate development and increased market share in spain and Italy.

group EBItDa(2) was down 21% to £80m (2012: £101m) as a result of lower markets in aggregate across the territories and the inclusion in 2012 of a one-off credit of £9m relating to an asset accounting review, as described in the 2012 accounts.

the group also follows supplementary KPIs including revenue per customer, film hire costs, retail margins, staff and other costs. In 2013, approximately 15% of our cinema attendance arose from 3D films; UK and germany saw a higher 3D proportion than 2012, spain and Italy lower.

the lower markets overall than in 2012 were mitigated by:• increased market share in Spain and Italy;• continued retail revenue per head growth overall, largely due to the UK and Germany;• lower direct costs; and• successful indirect cost reductions.

the EBItDa(2) growth trend over recent years is illustrated by the following table.

£m 2008 2009 2010 2011 2012 2013

EBItDa(2) 72 80 92 103 101 80OpCo EBItDa(3) 63 71 82 93 91 69

Financial Resultsturnover for the year was down 2% at £707m (2012: £724m). as stated above, EBItDa(2) was £80m in 2013, a decrease of 21% on 2012. the EBItDa(2) of £80m is prior to charging non-cash depreciation and amortisation of £60m and other items as footnoted. an operating profit was reported of £4m (2012: £13m).

Interest costs in the profit and loss account, excluding non-cash items, were £52m in 2013 (2012: £52m).

the loss for the year of £100m (2012: £84m loss) was after total non-cash charges of £112m (2012: £122m), including £60m (2012: £74m) depreciation and amortisation, £46m (2012: £41m) financing cost accrual on loan notes and £3m (2012: £3m) amortisation of loan issue costs.

Investment and Net Debtthe group continued to invest to grow future earnings and enhance the high quality of the existing estate.In terms of asset additions, £8m was incurred on capital maintenance of the estate; £10m on additional sites for 2013 and future periods; and £6m on other revenue-generating projects. a further investment of £1m was made in digital assets. Digital assets are primarily externally funded but nevertheless shown on the group balance sheet, as described in note 1 to the accounts. total asset additions for 2013, as shown in note 13 to the accounts, were £25m. Net cash spend on capital expenditure was £30m (2012: £42m).

Net debt excluding loan notes and finance leases was £427m (2012: £411m) at year-end.

strategic Report continued

(2) “EBITDA” means earnings before interest, tax, depreciation, amortisation, one-off costs (2013: £2m and 2012: £3m), exceptional items and rent payable to the Odeon Property Group LLP (“PropCo”). The rent payable to PropCo was £11m (2012: £10m). EBITDA in 2012 included a £9m credit to rent with regard to prior years, as described in the 2012 accounts.

(3) “OpCo EBITDA” means EBITDA less rent payable to PropCo.

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Loans to Odeon Property Group LLPDuring 2007, 31 UK properties were sold to and leased back from subsidiaries of Odeon Property group llP (the “PropCos”), which are related parties. the consideration was partly settled in cash during 2007 and the remaining balance was left outstanding on account, accruing interest, see note 30.

at the 2009 year-end, in view of valuations in the property market at that time, the directors considered the recoverability of the amounts receivable from the PropCos and concluded that it was prudent to reduce their carrying values whilst market property valuations remained below historic levels. the carrying value of the loans was considered again for the 2010, 2011 and 2012 accounts and the directors concluded that the existing level of provision remained appropriate.

During 2013, some of the OpCo/PropCo leases were changed and Odeon Property group llP sold 22 of its properties, making £27m cash available to part repay the loans from OpCo(4). the directors have considered the remaining carrying value of the loans on the 2013 balance sheet and have concluded that the existing level of provision remains appropriate.

Reclassification of LeasesFive of the leases from the PropCos were classified as finance leases in the balance sheets for 2007-2012. During 2013, following the lease change process described above, the classification of the new leases was considered. the directors concluded that all the new leases should be classified as operating leases.this resulted in:• £11m derecognition of tangible fixed assets;• £29m removal of finance lease creditor; and• £18m recognition of deferred income creditor.the deferred income creditor will be amortised to the profit and loss account over the lease terms at a rate of £0.8m per annum.

Principal Risks and Risk Managementthe 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, changes to customer film viewing habits 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.

Economic conditions continue to be challenging, particularly in spain, although there are signs of the beginning of a potential recovery. the group has maintained good cost control in a year where a number of exceptional factors as described in the market commentary above have resulted in unusually low volumes.

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 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 9.00% 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% until may 2014. a further interest rate swap is in place for the period may 2014 to November 2015 to fix the effective total interest rate for that period on the Euro notes to 5.31%.

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.


(4) “OpCo” means the group headed by Odeon and UCI Cinemas Holdings Limited.

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Going Concern and Liquidity ManagementFollowing a refinancing in may 2011, senior secured notes totalling £300m and €200m are in issue. 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, which put the group in a strong liquidity position. 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 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.

Future Prospectsthe group will continue to invest in its existing portfolio of sites and seek new site opportunities and acquisition targets.

the business is clearly continuing to trade in 2014 and management fully expect it to continue through 2015 and thereafter.

the 2015 film slate is already looking to be one of the most promising in recent years.

By order of the board

J P MasonDirector 54 Whitcomb street london17 march 2014 WC2H 7DN


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Principal Activitythe principal activity of the group is the operation of multiplex cinemas. the principal activity of the Company is that of a holding company.

Ownershipterra 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.

Board of Directors and Management of the GroupDuring the year, at 31 December 2013 and in the period up to signature of this report and financial statements, the board of directors of Odeon and UCI Cinemas Holdings limited consisted of terra Firma representatives, members of the group’s executive management team and independent non-executive directors, as follows:

Executive management: terra Firma representatives:P m Donovan Chief Executive Officer (appointed to board 27 Jan 2014) R N Barr Chairmana R gavin Chief Executive Officer (resigned from board 14 Feb 2014) D Brown (resigned from board 2 may 2013)J P mason Chief Financial Officer E Del Prete (appointed to board 22 may 2013) m J Kinski (resigned from board 25 apr 2013) J K WilliamsonIndependent non-executives: F s Duncan g m Edge (resigned from board 25 sep 2013)

P m Donovan was appointed Chief Executive Officer on 14 February 2014, replacing a R gavin.J P mason will leave the business on 31 march 2014; he will therefore resign from the board of the Company on or before that date.

Post Balance Sheet Eventsthere were no disclosable post balance sheet events prior to the date of signature of this report and financial statements

Dividendsthe directors do not recommend the payment of a dividend (2012: £nil) with respect to preference or ordinary shares.

Employee involvementEmployment in the group decreased 4% to 9,068 in 2013 compared to 9,407 in 2012 (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 peopleFull 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.

Directors’ Report the Directors present their report and the audited financial statements of the group and Company for the year ended 31 December 2013.

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Communitythe 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 and employees actively participate in charitable fundraising activities.

Health and Safetythe 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.

Environmentthe 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.

Disclosure of information to auditor the directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditor is unaware; and each director has taken all the steps that he or she ought to have taken as a director to make himself or herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

Auditorthe auditor, KPmg llP, has indicated its willingness to continue in office. Elective resolutions are currently in force to dispense with holding annual general meetings, the laying of accounts before the Company in general meetings and the appointment of the auditor annually. Pursuant to section 487 of the Companies act 2006, the auditor will be deemed to be reappointed and KPmg llP will therefore continue in office.

By order of the board

J P MasonDirector 54 Whitcomb street london17 march 2014 WC2H 7DN

Directors’ Report continued

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the directors are responsible for preparing the strategic Report and 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 judgements 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; and • 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.

statement of directors’ responsibilities in respect of the strategic Report and the Directors’ Report and the financial statements

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We have audited the financial statements of Odeon and UCI Cinemas Holdings limited for the year ended 31 December 2013 set out on pages 11 to 46. the financial reporting framework that has been applied in their preparation is applicable law and UK accounting standards (UK generally accepted accounting Practice).

this report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. to the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor as explained more fully in the Directors’ Responsibilities statement set out on page 9, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International standards on auditing (UK and Ireland). those standards require us to comply with the auditing Practices Board’s Ethical standards for auditors.

Scope of the audit of the financial statements a description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the Group’s and the parent company’s affairs as at 31 December 2013 and of the Group’s

loss for the year then ended; • have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the strategic Report and Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches

not visited by us; or • the financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit.

Jonathan Hurst (Senior Statutory Auditor)For and on behalf of KPMG LLP, Statutory AuditorChartered Accountants st James’ squaremanchesterm2 6Ds18 March 2014

Independent auditor’s report to the members of Odeon and UCI Cinemas Holdings limited

KPMG LLPst James’ squaremanchesterm2 6DsUnited Kingdom

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Consolidated profit and loss account for the year ended 31 December 2013

Note 2013 2012 £m £m Turnover: Group and share of joint ventures 731.4 750.6less: share of joint ventures turnover (24.7) (26.7)

Group turnover 2,3 706.7 723.9Cost of sales 3 (249.7) (260.7) Gross profit 3 457.0 463.2Net operating expenses (452.9) (449.9)

Operating profit, analysed as: Before exceptional items 7.3 14.3 Net operating expenses - exceptional costs 3,6 (3.8) (2.3)Net operating expenses - exceptional income 3,6 0.6 1.3 3 4.1 13.3 Operating profit 3 4.1 13.3share of operating profit of joint ventures 0.3 - Operating profit including joint ventures 4.4 13.3loss on disposal of properties 6 - (1.8) Profit on ordinary activities before interest and taxation 4.4 11.5Interest receivable from related parties 30 1.6 1.7Interest payable and similar charges 8 (103.6) (99.3)Other finance cost 9 (0.1) (0.3) Loss on ordinary activities before taxation 3-9 (97.7) (86.4)taxation 10 (2.0) 2.4 Loss on ordinary activities after taxation and for the financial year 24 (99.7) (84.0)

analysis of continuing operations, including acquisitions, and discontinued operations is set out in note 3.

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2013 2012 £m £m loss for the financial year (99.7) (84.0)

actuarial pension scheme gain / (loss) recognised (note 27) 0.2 (2.1)

Effect of asset limit on above (1.4) (0.2)

Deferred tax on actuarial pension (gain) / loss - 0.5

Deferred tax on effect of asset limit 0.3 -

Foreign exchange differences (3.0) 2.9

total recognised losses (103.6) (82.9)

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.

Consolidated statement of total recognised gains and losses for the year ended 31 December 2013

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Consolidated balance sheet at 31 December 2013

Notes 2013 2012 £m £m £m £m

Fixed assets Intangible assets 12 157.4 167.6tangible assets 13 488.0 524.1Investments in joint ventures: share of gross assets 14 11.1 12.8 share of gross liabilities 14 (10.7) (12.5) Other costs 14 0.7 0.7 1.1 1.0 646.5 692.7Current assets stocks 15 6.0 6.7 Debtors due within one year 16 65.8 68.8 Debtors due after more than one year 17 40.8 58.3 Cash at bank and in hand 39.9 52.1 152.5 185.9 Creditors: amounts falling due within one year 18 (177.0) (183.3) Net current (liabilities) / assets (24.5) 2.6 Total assets less current liabilities 622.0 695.3 Creditors: amounts falling due aftermore than one year 19 (1,044.1) (1,007.5) Provisions for liabilities and charges 21 (61.6) (66.9) Net liabilities excluding pension liabilities (483.7) (379.1) Pension liability 27 (0.2) (1.2) Net liabilities including pension liabilities (483.9) (380.3) Capital and reserves Called up share capital 23 120.6 120.6Profit and loss account 24 (594.2) (490.6)Other reserves 32 (10.3) (10.3) Total shareholders’ deficit 32 (483.9) (380.3)

these financial statements were approved by the board of directors on 17 march 2014 and were signed on its behalf by:

J P MasonDirector

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Notes 2013 2012 £m £m £m £m

Fixed assets Investments 14 99.9 97.5 Current assets Debtors due within one year 16 2.9 2.9 Debtors due after more than one year 17 391.0 351.9 Cash at bank and in hand - - 393.9 354.8 Net current assets 393.9 354.8 Total assets less current liabilities 493.8 452.3 Creditors: amounts falling due aftermore than one year 19 (376.3) (336.1) Net assets 117.5 116.2 Capital and reserves Called up share capital 23 120.6 120.6Profit and loss account 24 (3.1) (4.4) Total shareholders’ funds 32 117.5 116.2

these financial statements were approved by the board of directors on 17 march 2014 and were signed on its behalf by:

J P MasonDirector

Company registered number: 06170611

Company balance sheet at 31 December 2013

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Consolidated cash flow statement for the year ended 31 December 2013

Note 2013 2012 £m £m

Net cash inflow from operating activities 25(a) 73.1 86.7 Returns on investments and servicing of finance Interest paid (53.6) (56.6) Net cash outflow from returns on investments and servicing of finance (53.6) (56.6) Taxation paid (1.1) (2.6) Capital expenditure and financial investment Purchase of tangible fixed assets (30.2) (41.9)sale of tangible fixed assets - - Net cash outflow from capital expenditure and financial investment (30.2) (41.9) Acquisitions and disposals Purchase of subsidiaries and joint ventures 14,31 (1.1) (3.6)Net cash acquired with subsidiaries 31 - - Net cash outflow from acquisitions and disposals (1.1) (3.6)

Equity dividends paid to shareholders - - Net cash outflow before financing (12.9) (18.0) Financing arrangement fees paid - (1.3)Other finance leases (0.5) (4.0)

Net cash outflow from financing (0.5) (5.3) Decrease in cash in the year 25(b) (13.4) (23.3)

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1 Accounting policiesthe following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.

Basis of preparationthe 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 managementthe financial statements are prepared on a going concern basis.the directors have formally considered and concluded that this remains appropriate. the directors’ assessment includes a review of detailed periodic funding requirements and sensitivity analysis. the conclusion has been reached, despite the fact that the consolidated balance sheet shows a shareholders’ deficit, because the group has long term funding in place. Further detail is set out below.

the business activities of the group, and its future prospects, are described within the strategic Report.

Following a refinancing in may 2011, senior secured notes totalling £300 million and €200 million are in issue. 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, which put the group in a strong liquidity position. 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 also has loan note funding in place from its shareholder. as shown in note 19, the maturity dates of the shareholder loan notes fall in 2015 and 2016. the directors are satisfied that the shareholder will not require any repayment of the loan notes that would impact upon the ability of the group to continue as a going concern.

Basis of consolidationOdeon and UCI Cinemas Holdings limited was incorporated on 19 march 2007. On 4 april 2007 a group structure amendment took place with the result that Odeon and UCI Cinemas Holdings limited was introduced as a new holding company for the group. merger accounting was 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 2007.

the consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up to 31 December 2013. the acquisition method of accounting has been adopted for acquisitions completed subsequent to the april 2007 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.

Turnoverturnover 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.

Goodwillgoodwill, 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.

Notes (forming part of the financial statements)

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1 Accounting policies (continued)

Tangible fixed assetsDepreciation 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 depreciatedFreehold buildings - 2% per annumlong leasehold property - over the period of the lease to a maximum of 50 yearsshort leasehold property - over the period of the leasePlant, fixtures and fittings - 4 – 33% 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 projectionCertain 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 currenciestransactions 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.

InvestmentsInvestments held as fixed assets are stated at cost less provisions for any impairment.

Asset Impairmentthe 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. Indications include 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 impairmentan 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.

Stocksstocks are stated at the lower of cost and net realisable value.

Notes (continued)

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LeasesRental costs under operating leases are charged to the profit and loss account over the period of the lease on a straight line basis. 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 costsOperating costs incurred before a new cinema is opened are written off to the profit and loss account as incurred.

Taxationthe 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 resourcesCash, 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 notessenior secured notes are stated net of unamortised issue costs. Interest accrued on the senior secured notes is shown within accruals and deferred income.

Notes (continued)

19



Pensionsthe 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.

Derivativesthe group’s financial instruments, other than derivatives, comprise borrowings, cash and liquid resources and various other 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.

Notes (continued)

20


2 Turnoverall turnover derives wholly from the ownership and operation of cinemas.

an analysis of turnover by geographical market is set out below:

2013 2012 Continuing Discontinued Total Continuing Discontinued total £m £m £m £m £m £m

UK 321.7 - 321.7 333.5 - 333.5Continental Europe & Ireland 385.0 - 385.0 390.4 - 390.4 Group turnover 706.7 - 706.7 723.9 - 723.9

3 Analysis of continuing and discontinued operations

2013 2012 Continuing Discontinued Total Continuing Discontinued total £m £m £m £m £m £m

Group turnover 706.7 - 706.7 723.9 - 723.9Cost of sales (249.7) - (249.7) (260.7) - (260.7) Gross profit 457.0 - 457.0 463.2 - 463.2Net operating expenses (452.9) - (452.9) (449.9) - (449.9) Group operating profit 4.1 - 4.1 13.3 13.3share of joint ventures’ operating profit 0.3 - 0.3 - - - 4.4 - 4.4 13.3 - 13.3

Net operating expenses in 2013 include exceptional costs of £3.8m (2012: £2.3m) and exceptional income of £0.6m (2012: £1.3m) which are explained in note 6.

Notes (continued)

21


4 Remuneration of directors

2013 2012 £m £m Directors’ emoluments 1.6 1.5Company contributions to money purchase pension schemes - - 1.6 1.5

the aggregate of emoluments of the highest paid director was £0.9m (2012: £0.8m). No contributions to a group pension scheme were made in relation to the highest paid director (2012: £nil).

Number of directors 2013 2012 Retirement benefits are accruing to the following number of directors under: money purchase schemes 2 2 5 Loss on ordinary activities before taxation

2013 2012 £m £m

Loss on ordinary activities before taxation is stated after charging/(crediting) Depreciation - Finance lease assets 2.2 2.4 - Other assets 52.6 66.0 - Digital projection deferred income release (7.6) (6.0)amortisation of goodwill 12.6 11.4amounts receivable by the auditors: - audit of group financial statements pursuant to legislation - - - audit of the parent company financial statements pursuant to legislation - - - audit of financial statements of subsidiaries pursuant to legislation 0.6 0.6 - Other services relating to taxation 0.2 0.3 - Other services relating to corporate finance transactions 0.1 - - all other services - -Property rental income (2.1) (2.2)Rentals under operating leases – property 132.3 117.3 adjustments were made during 2012 to the accounting for certain contributions from landlords, in order to treat them as lease incentives rather than as reductions in capital expenditure, as described in the 2012 Directors’ Report and Financial statements. In relation to this change, the table above includes adjustments in 2012 relating to prior years which have increased depreciation by £9.1m and decreased rentals under operating leases by the same amount. the impact upon the loss before taxation in total is nil.

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.

Notes (continued)

22


6 Exceptional items and loss on disposal

Exceptional coststhe exceptional costs in the current year related to staff restructuring, principally resulting from the digital roll-out, and property-related matters.

the exceptional costs in the prior year related to staff restructuring resulting from the digital roll-out and integration costs resulting from acquisitions.

the tax effect of the exceptional costs in the current year was a credit of £0.3m (2012: £nil).

Exceptional incomethe exceptional income in the current and prior years reflected property-related matters.

the tax effect of the exceptional income in the current year was £nil (2012: £nil).

Profit and loss on disposal the loss on disposal of tangible fixed assets represents the difference between the proceeds due (net of disposal costs) and the net book value of the assets sold or scrapped.

In the prior year, the loss was primarily due to the write-off of 35mm projectors no longer required following the digital roll-out.

7 Staff numbers and coststhe average number of persons employed by the group (including directors) during the period was as follows:

Number of employees 2013 2012 administration 365 373Cinema and other 8,703 9,034 9,068 9,407 the aggregate payroll costs of these persons were as follows: 2013 2012 £m £m Wages and salaries 105.9 106.3social security costs 15.7 16.5Pension costs 0.9 0.6 122.5 123.4

Notes (continued)

23


8 Interest payable and similar charges

2013 2012 £m £m

Interest payable on bank loans and overdrafts 1.1 0.4Interest payable on senior secured notes 42.5 42.4loan notes 46.0 40.7amortisation of issue costs 3.2 3.2Unwinding of discount on provisions 2.7 3.6Other financing costs 7.9 8.8share of joint ventures 0.2 0.2 103.6 99.3

Other financing costs includes, inter alia, guarantee facility fees, commitment fees, bank charges and finance charges payable in respect of finance leases.

9 Other finance cost

2013 2012 £m £m Expected return on pension scheme assets (note 27) (2.7) (2.3)Interest on pension scheme liabilities (note 27) 2.4 2.3Other finance charges 0.4 0.3 0.1 0.3

Notes (continued)

24


10 Taxation

analysis of charge in year 2013 2012 £m £m £m £m

UK corporation tax Current tax on income for the year - 0.1 Prior year adjustment - (0.1)

Overseas tax Current tax on income for the year 1.2 1.1 Prior year adjustment 0.2 (1.2) Current tax on income for the year 1.4 (0.1)share of joint ventures’ current tax - - total current tax 1.4 (0.1) Deferred tax Origination/reversal of timing differences 0.6 (2.3) Deferred tax for the year 0.6 (2.3)share of joint ventures’ deferred tax - - total deferred tax 0.6 (2.3) tax on loss on ordinary activities 2.0 (2.4)

Notes (continued)

25


10 Taxation (continued)Factors affecting the tax charge / (credit) for the current year

the current tax charge for the year is higher (2012: tax credit lower) than the standard rate of corporation tax in the UK at 23.25% (2012: 24.5%). the differences are explained below.

2013 2012 £m £m

Current tax reconciliation loss on ordinary activities before tax (97.7) (86.4) Current tax at 23.25% (2012: 24.5%) (22.7) (21.2) Effects of: Expenses not deductible for tax purposes 17.5 17.3Capital allowances for period in excess of depreciation (1.2) (1.8)Other timing differences (1.5) (1.1)losses not utilised (8.3) 7.4Provision for local taxes 1.0 0.8Overseas rate differences (2.0) (0.2)Capital gains in excess of book value 1.8 – adjustments in respect of prior years 0.2 (1.3) total current tax charge / (credit) (see above) 1.4 (0.1) Reductions in the UK corporation tax rate from 26% to 24% (effective from 1 april 2012) and to 23% (effective from 1 april 2013) were substantively enacted on 26 march 2012 and 3 July 2012 respectively. Further reductions to 21% (effective from 1 april 2014) and 20% (effective from 1 april 2015) were substantively enacted on 2 July 2013.

this will reduce the group’s future current tax charge accordingly and reduce the deferred tax asset at 31 December 2013 which has been calculated based on the rate of 20% substantively enacted at the balance sheet date.

11 Dividendsthe aggregate amount of dividends comprises:

2013 2012 £m £m Dividends in respect of the year – – the aggregate amount of dividends proposed and recognised as liabilities as at the year-end is £nil (2012: £nil). No dividends have been declared post year-end (2012: £nil).

Notes (continued)

26


12 Intangible assets

Goodwill £m Cost at beginning of year 243.9adjustments to acquisitions in the prior year (note 31) 0.5Exchange differences 2.2 at end of year 246.6 Amortisation at beginning of year 76.3Charge for the year 12.6Exchange differences 0.3 at end of year 89.2 Net book value at 31 December 2013 157.4 at 31 December 2012 167.6 goodwill is held at amortised cost.

Impairment reviews have been performed in accordance with FRs 10 and FRs 11, including assessments of recoverable amounts where appropriate. the directors have concluded that no goodwill impairment provision is required.

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.

Notes (continued)

27


13 Tangible fixed assets

Group Land and Plant, Assets buildings fixtures and under fittings construction Total £m £m £m £m

Cost at beginning of year 381.0 446.5 2.3 829.8additions 6.7 15.7 2.1 24.5Reclassifications (13.8) 1.8 (2.2) (14.2)Disposals (2.1) (1.5) - (3.6)Exchange differences 2.9 4.9 0.1 7.9 at end of year 374.7 467.4 2.3 844.4 Depreciation at beginning of year 101.9 203.8 - 305.7Charge for the year 19.4 35.4 - 54.8Reclassifications (3.1) - - (3.1)On disposals (1.9) (1.5) - (3.4)Exchange differences 0.6 1.8 - 2.4

at end of year 116.9 239.5 - 356.4 Net book value at 31 December 2013 257.8 227.9 2.3 488.0 at 31 December 2012 279.1 242.7 2.3 524.1 the net book value of land and buildings costs comprises: 2013 2012 £m £m Freehold 24.0 26.6long leasehold 19.4 19.8short leasehold 214.4 232.7 257.8 279.1

Notes (continued)

28


13 Tangible fixed assets (continued)Included in the total net book value of land and buildings is £6.6m (2012: £18.0m) in respect of assets held under finance leases. the decrease was primarily due to the replacement during the year of five property leases; the new leases were classified as operating leases. Depreciation for the year on assets held under finance leases was £2.2m (2012: £2.4m).

Included in the total net book value of plant, fixtures and fittings is £62.2m (2012: £67.7m) 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 £7.6m (2012: £6.0m).

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.

Companythe Company did not hold any tangible fixed assets in the current or prior year.

Notes (continued)

29


14 Fixed asset investments

Group

Joint ventures Goodwill Cost and share Loans Total £m £m £m £m

Cost at beginning of year 0.7 0.7 0.5 1.9Repayments - - - - at end of year 0.7 0.7 0.5 1.9

Share of post acquisition reserves at beginning of year - (0.9) - (0.9)Retained profit - 0.1 - 0.1 at end of year - (0.8) - (0.8) Net book value At 31 December 2013 0.7 (0.1) 0.5 1.1 at 31 December 2012 0.7 (0.2) 0.5 1.0

the total of the group’s profit before taxation from interests in joint ventures was £0.1m (2012: £0.2m loss).

Company Investments in group undertakings £m

at beginning of year 97.5additions in the year 2.4 At end of year 99.9

the only direct subsidiaries of the Company are Odeon and UCI Cinemas group limited and Odeon & UCI Cinemas Digital limited.

During 2013, the Company increased its investment in Odeon and UCI Cinemas group limited by subscribing to 2 Ordinary shares of £1 each with a share premium of £2.4m.

Notes (continued)

30


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 and UCI Cinemas group limited great Britain 100% owned Holding companyOdeon & UCI Bond Holdco limited great Britain 100% owned Holding companyOdeon & UCI Bond midco limited great Britain 100% owned Holding companyOdeon & UCI Finco plc great Britain 100% owned senior secured notes issuerCicero Holdings limited great Britain 100% owned Holding companyCicero Investments limited great Britain 100% owned Holding companyCicero acquisitions limited great Britain 100% owned Holding companyOdeon Cinemas limited great Britain 100% owned Operation of cinemasaBC Cinemas limited great Britain 100% owned Operation of cinemasOdeon Cinemas (Rl) limited great Britain 100% owned Operation of cinemasBookit limited great Britain 100% owned Credit and debit card transaction processing lucius Holdings limited great Britain 100% owned Holding companylucius Investments limited great Britain 100% owned Holding companyUnited Cinemas International acquisitions limited great Britain 100% owned Holding companyUnited Cinemas International multiplex BV Netherlands 100% owned Holding companyUnited Cinemas International (UK) limited great Britain 100% owned Operation of cinemasOdeon and sky Filmworks ltd great Britain 50% owned Film distributionDigital Cinema media limited great Britain 50% owned screen advertisingCompania de Iniciativas y Espectaculos sa (Cinesa) spain 100% owned Operation of cinemasCineparque y Espectaculos sa spain 100% owned Operation of cinemasmulticines y Espectaculos sa spain 100% owned Operation of cinemasCines y Espectaculos Norte sa spain 100% owned Operation of cinemasmulticines Oeste sa spain 100% owned Operation of cinemasmulticines y Espectaculos Centro sl spain 100% owned Operation of cinemasCinema International Corporation lda Portugal 100% owned Operation of cinemasUnited Cinemas International multiplex gmbH germany 100% owned Operation of cinemasKino Friedrichshain Betriebsgesellschaft mbH germany 100% owned Operation of cinemasKino gera Betriebsgesellschaft mbH germany 100% owned Operation of cinemasKino lausitzpark Betriebsgesellschaft mbH germany 100% owned Operation of cinemasUCI Kinoplex gmbH germany 100% owned Operation of cinemasUnited Cinemas International multiplex gesellschaft mbH austria 100% owned Operation of cinemasUCI Italia spa Italy 100% owned Operation of cinemasUCI Nord Ovest srl Italy 100% owned Operation of cinemasUCI sud srl Italy 100% owned Operation of cinemasUCI Nord srl Italy 100% owned Operation of cinemasUCI Centro srl Italy 100% owned Operation of cinemasUCI Nord Est srl Italy 100% owned Operation of cinemasUCI torino srl Italy 100% owned Operation of cinemasUCI Campi Bisenzio spa Italy 100% owned Operation of cinemasUCI Roma Est srl Italy 100% owned Operation of cinemasUCI adriatica srl Italy 100% owned Operation of cinemasUCI appennino srl Italy 100% owned Operation of cinemasUCI Recupero e sviluppo spa Italy 100% owned Operation of cinemasUnited Cinemas International (Ireland) limited Ireland 100% owned Operation of cinemasWaterwhite Projections limited Ireland 100% owned Operation of cinemasBolgal limited Ireland 100% owned Holding company

Notes (continued)

31


15 Stocks Group group Company Company 2013 2012 2013 2012 £m £m £m £m goods for resale 6.0 6.7 - -

16 Debtors amounts falling due within one year

Group group Company Company 2013 2012 2013 2012 £m £m £m £m trade debtors 29.7 31.7 - -Other debtors 13.9 16.4 - -Prepayments and accrued income 22.2 20.7 - -amounts owed by group undertakings - - 2.9 2.9 65.8 68.8 2.9 2.9 17 Debtors amounts falling due after one year

Group group Company Company 2013 2012 2013 2012 £m £m £m £m trade debtors 1.4 1.4 - -Other debtors 11.9 7.3 - -Prepayments and accrued income 3.2 - - -loan notes - - 380.0 338.9Deferred tax (note 22) 2.9 2.9 - -amounts owed by related parties 21.4 46.7 11.0 13.0 40.8 58.3 391.0 351.9

the following loan notes, including accrued interest, receivable from a group undertaking were due at 31 December 2013:

Par value £98.2m Issued for £98.2m Interest rate 11.0%Book value at 31 December 2013 was £191.7m

Par value €115.5m Issued for €115.5m Interest rate 11.0%Book value at 31 December 2013 was €225.6m (£188.3m)

Notes (continued)

32


18 Creditors: amounts falling due within one year

Group group Company Company 2013 2012 2013 2012 £m £m £m £m trade creditors 60.7 63.3 - -Finance leases 1.8 3.8 - -Other creditors including taxation and social security 22.6 28.0 - -Corporation tax 2.0 1.8 - -accruals and deferred income 89.9 86.4 - - 177.0 183.3 - -

19 Creditors: amounts falling due after more than one year

Group group Company Company 2013 2012 2013 2012 £m £m £m £m senior secured notes 466.9 463.5 - -Unamortised issue costs (13.4) (16.6) - - 453.5 446.9 - -Finance leases 7.2 35.0 - -loan notes 464.8 414.8 375.6 335.4Other creditors, accruals and deferred income 117.9 110.1 - -amounts owed to related parties 0.7 0.7 0.7 0.7 1,044.1 1,007.5 376.3 336.1

Notes (continued)

33


19 Creditors: amounts falling due after more than one year (continued)Following a refinancing in may 2011, senior secured notes totalling £300m and €200m are in issue. 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 RCF loans was £nil (2012: £nil) at the year-end.

the aggregate amount of loan notes issued to a related party included in creditors falling due after more than one year is £464.8m (2012: £414.8m). this is the net book value based on the aggregate issued amounts of £243.2m (2012: £240.8m) plus interest accrued of £221.6m (2012: £174.0m). Further details are set out below:

the following loan notes, including accrued interest, issued by Odeon and UCI Cinemas group limited to a parent company, monterey Capital III sarl during 2005, remained outstanding at 31 December 2013:

Par value £11.2m Par value €26.2m Issued for £11.2m Issued for €26.2m Interest rate 16.4%; amended to 11.0% in august 2007 Interest rate 16.1%; amended to 11.0% in august 2007 maturity date 26 august 2015 maturity date 28 October 2015 Book value at 31 December 2013 was £30.3m Book value at 31 December 2013 was €70.6m (£59.0m)

the following loan notes, including accrued interest, issued by Odeon and UCI Cinemas Holdings limited to its immediate parent, monterey Capital III sarl during 2007, remained outstanding at 31 December 2013. these loan notes replaced loan notes of equivalent value previously held by a related party (note 30).

Par value £98.2m Par value €115.5m Issued for £98.2m Issued for €115.5m Interest rate 10.875% Interest rate 10.875% maturity date 8 august 2016 maturity date 8 august 2016 Book value at 31 December 2013 was £168.3m Book value at 31 December 2013 was €223.0m (£186.1m)

the following loan note, including accrued interest, issued by Odeon and UCI Cinemas Holdings limited to its immediate parent, monterey Capital III sarl during 2010, remained outstanding at 31 December 2013. this loan note was issued in lieu of the payment of interest due on the loan issued with a par value of £98.2m.

Par value £15.5m Issued for £15.5m Interest rate 10.875% maturity date 22 December 2016 Book value at 31 December 2013 was £21.2m

Notes (continued)

34


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:

2013 2012group £m £m

Within 1 year, or on demand 1.8 3.8Within one to two years 4.6 4.3Within two to five years 933.8 10.6Over five years 0.5 898.4 940.7 917.1Un-amortised issue costs (13.4) (16.6) 927.3 900.5

Finance leasesFuture minimum payments under finance leases are as follows:

2013 2012group £m £m

Within 1 year 1.8 3.8Within one to five years 6.7 14.9Over five years 0.5 20.1 total gross payments 9.0 38.8

20 Derivatives and other financial instrumentsshort-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 assetsFinancial 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 liabilitiesthe 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 notes the fixed rate was 9.00% and for Euro denominated notes the effective fixed rate was 9.07%.

the interest on loan notes is fixed at rates of 10.875% and 11.000%.

there are no unrecognised gains or losses relating to interest rate swaps.

Notes (continued)

35


21 Provisions for liabilities and charges

lease provisions & other £m

at the beginning of the year 66.9Utilised (8.6)Unwinding of discount on provision 2.7Credited to the profit and loss account (0.6)Exchange differences 1.2 at the end of year 61.6

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 taxthe deferred tax asset recognised (note 17) is:

Group group Company Company 2013 2012 2013 2012 £m £m £m £m Un-utilised losses 2.9 2.9 - - 2.9 2.9 - -

the potential amounts of deferred tax asset not recognised are:

Group group Company Company 2013 2012 2013 2012 £m £m £m £m accelerated capital allowances 14.2 11.3 - -Other timing differences 14.2 17.1 - -Un-utilised losses 109.8 97.2 - - 138.2 125.6 - -

Notes (continued)

36


23 Called up share capital

2013 2012authorised £m £m

200,000,000 (2012: 200,000,000) a Ordinary shares of £1 each 200.0 200.0

2013 2012

allotted, called up and fully paid £m £m

120,644,970 (2012: 120,644,970) a Ordinary shares of £1 each 120.6 120.6

Voting rights the a Ordinary shares shall confer on each holder thereof the right to receive notice and to attend, speak and vote at all general meetings of the Company.

24 Reserves

group Profit and loss account £m at beginning of the year (490.6) loss for the year (99.7)actuarial pension scheme gain recognised (note 27) 0.2Effect of pension asset limit on above (1.4)Deferred tax on pension gain –Deferred tax on effect of pension asset limit 0.3Exchange differences (3.0)Dividends – at the end of year (594.2)

Company Profit and loss account £m

at beginning of the year (4.4) Profit for the year 1.3Exchange differences –Dividends – at the end of year (3.1)

Notes (continued)

37


25 Notes to cash flow statement(a) Net cash flow from operating activities

2013 2012 £m £m Operating profit 4.1 13.3Depreciation 54.8 68.4amortisation of goodwill and intangibles 12.6 11.4Decrease in stock 0.7 0.7Decrease / (increase) in debtors 21.2 (6.2)Decrease in provisions (11.8) (13.4)(Decrease) / increase in creditors (8.5) 12.5 Net cash inflow from operating activities 73.1 86.7 (b) Net debt

Balance at Other Balance at 31 December non-cash 31 December 2012 Cashflow movements Exchange 2013 £m £m £m £m £m

Net cash: Cash at bank and in hand 52.1 (13.4) - 1.2 39.9 Debt: Debt falling due within one year - - - - -Debt falling due after more than one year (862.4) - (49.2) (7.4) (919.0)Finance leases (38.8) 0.5 29.4 (0.1) (9.0) Net debt (849.1) (12.9) (19.8) (6.3) (888.1) Non-cash movements are primarily finance charges accrued on the loan notes, the amortisation of issue costs and the reclassification of finance lesses.

(c) Reconciliation of net cash flow to movement in net debt

2013 2012 £m £m (Decrease) / increase in net cash in the period (13.4) (23.3)Cash outflow from decrease in debt 0.5 5.3Non cash movement (19.8) (47.6)translation difference (6.3) 8.1 movement in net debt in the year (39.0) (57.5)Net debt at end of previous period (849.1) (791.6) Net debt at end of year (888.1) (849.1)

Notes (continued)

38


26 Financial commitments

Group 2013 2012 £m £m

Capital commitments Contracted for but not provided 10.7 6.0 Operating commitmentsat 31 December 2013 the group was committed to making the following payments during the next year in respect of operating leases:

Group Land and land and Buildings Buildings 2013 2012 £m £m

Operating lease which expire: Within one year 3.9 5.9In two to five years 19.3 8.4Over five years 122.9 127.4 146.1 141.7

the Company had no capital or operating lease commitments at 31 December 2013 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 schemesBoth 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 2012 and was updated for FRs 17 purposes to 31 December 2013 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 2013 by a qualified independent actuary.

Notes (continued)

39


27 Pension schemes (continued)

the major financial assumptions used by the actuaries were:

2013 2012 2011 ABC Plan Optima 2 aBC Plan Optima 2 aBC Plan Optima 2 % Plan % % Plan % % Plan%

Rate of increase in salaries 3.8 3.8 3.4 3.4 3.5 3.5Rate of increase in pensions in payment and deferred pensioners - pre 6.4.1997 accrual 2.3 1.9 2.3 1.9 2.3 2.0- post 6.4.1997 accrual 2.8 2.8 2.8 2.8 2.9 2.9Discount rate applied to scheme liabilities 4.6 4.6 4.6 4.6 4.9 4.9Inflation assumption 3.3 3.3 2.9 2.9 3.0 3.0

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 21.8 years (aBC Plan) and for a further 22.2 years (Optima 2 Plan).

For a member aged 40 in 2013, retiring in 25 years time, the assumptions are that they will live on average for a further 23.2 years after retirement (aBC Plan) and for a further 25.2 years after retirement (Optima 2 Plan).

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 £1.0m (Optima 2 plan) and £1.2m (aBC plan). these rates are subject to review at future actuarial valuations.

Scheme assets/ liabilitiesthe assets in the schemes and the expected rates of return were:

2013 2012 2011 Long term long- long rate of term rate term rate Fair return Fair Fair of return Fair Fair of return Fair Value expected Value- Value- expected Value- Value- expected Value – per ABC Optima per aBC Optima per – aBC Optima annum Plan 2 Plan Total annum Plan 2 Plan total annum Plan 2 Plan total % £m £m £m % £m £m £m % £m £m £m

Equities 7.1 6.3 14.4 20.7 6.8 7.4 13.1 20.5 6.6 6.4 11.9 18.3Bonds 4.6 5.5 4.1 9.6 4.3 5.0 - 5.0 4.1 4.3 - 4.3gilts 3.6 17.7 9.4 27.1 3.3 15.7 11.9 27.6 3.1 15.7 11.4 27.1Property 7.1 - 3.2 3.2 6.8 - 2.3 2.3 6.6 - 2.2 2.2Other 0.5 0.3 - 0.3 0.5 0.1 0.1 0.2 0.5 0.2 0.1 0.3 total 29.8 31.1 60.9 28.2 27.4 55.6 26.6 25.6 52.2

Notes (continued)

40



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:

2013 2012 2011 ABC Optima aBC Optima aBC Optima Plan 2 Plan Total Plan 2 Plan total Plan 2 Plan total £m £m £m £m £m £m £m £m £m

total fair value of assets 29.8 31.1 60.9 28.2 27.4 55.6 26.6 25.6 52.2

Present value of scheme liabilities (23.8) (31.4) (55.2) (23.7) (28.9) (52.6) (22.3) (27.0) (49.3)

Effect of asset limit (6.0) - (6.0) (4.5) - (4.5) (4.3) - (4.3)

surplus/(deficit) in the scheme- pension liability - (0.3) (0.3) - (1.5) (1.5) - (1.4) (1.4)

Related deferred tax assets - 0.1 0.1 - 0.3 0.3 - 0.4 0.4

Net pension surplus/(liability) - (0.2) (0.2) - (1.2) (1.2) - (1.0) (1.0)

Changes to the present value of the defined benefit obligation during the year

2013 2012 ABC Optima 2 aBC Optima 2 Plan Plan Total Plan Plan total £m £m £m £m £m £m

Opening defined benefit obligation 23.7 28.9 52.6 22.3 27.0 49.3Current service cost - - - - - -Interest cost 1.0 1.4 2.4 1.0 1.3 2.3Contributions by scheme participants - - - - - -actuarial loss on scheme liabilities 0.1 1.9 2.0 1.3 1.6 2.9Net benefits paid out (1.0) (0.8) (1.8) (0.9) (1.0) (1.9)

Closing defined benefit obligation 23.8 31.4 55.2 23.7 28.9 52.6

Notes (continued)

41



Changes to the fair value of scheme assets during the year

2013 2012 ABC Optima 2 aBC Optima 2 Plan Plan Total Plan Plan total £m £m £m £m £m £m Opening fair value of scheme assets 28.2 27.4 55.6 26.6 25.6 52.2Expected return on scheme assets 1.2 1.5 2.7 1.0 1.3 2.3actuarial gain on scheme assets 0.2 2.0 2.2 0.3 0.5 0.8Contributions by the employer 1.2 1.0 2.2 1.2 1.0 2.2Contributions by scheme participants - - - - - -Net benefits paid out (1.0) (0.8) (1.8) (0.9) (1.0) (1.9) Closing fair value of scheme assets 29.8 31.1 60.9 28.2 27.4 55.6

the group has agreed to make additional annual contributions to the aBC plan of £1.2m per annum until 31 august 2015 and additional annual contributions of £1.0m per annum until 31 march 2016 to the Optima 2 plan.

the movement in the deficit on the schemes is shown below:

Movement in deficit during the year


surplus / (deficit) in scheme at the beginning of the year - (1.2) (1.2) - (1.0) (1.0)Current service cost - - - - - -Contributions paid 1.2 1.0 2.2 1.2 1.0 2.2Other finance income 0.2 0.1 0.3 - - -actuarial gain / (loss) - 0.2 0.2 (1.0) (1.1) (2.1)Effect of asset limit (1.4) - (1.4) (0.2) - (0.2)Deferred tax - (0.3) (0.3) - (0.1) (0.1) Deficit in the scheme at end of year - (0.2) (0.2) - (1.2) (1.2)

Notes (continued)

42



Analysis of amount charged to operating profit

2013 2012 ABC Optima 2 aBC Optima 2 Plan Plan Total Plan Plan total £m £m £m £m £m £m Current service cost and total operating charge - - - - - -

Analysis of amounts included in other finance income


Expected return on pension scheme assets 1.2 1.5 2.7 1.0 1.3 2.3Interest on pension scheme liabilities (1.0) (1.4) (2.4) (1.0) (1.3) (2.3) 0.2 0.1 0.3 - - -

Analysis of amount recognised in statement of total recognised gains and losses


actual return less expected return on pension scheme assets 0.2 2.0 2.2 0.3 0.5 0.8Experience losses arising on the scheme liabilities - - - - - -Change in actuarial assumptions (0.1) (1.9) (2.0) (1.3) (1.6) (2.9) actuarial gain / (loss) recognised in statement of total recognised gains and losses 0.1 0.1 0.2 (1.0) (1.1) (2.1)

Notes (continued)

43



History of experience gains and losses

ABC Plan 2013 2012 2011 2010 2009 £m £m £m £m £m

Difference between the expected and actual return on scheme assets: amount (0.2) (0.3) (2.4) (0.7) (1.1)Percentage of year end scheme assets (0.6%) (1.0%) (9.1%) (3.1%) (5.4%) Experience gains and losses on scheme liabilities: amount - 0.2 - - 0.4Percentage of year end present value of scheme liabilities 0.0% 1.0% 0.0% 0.0% 1.8% Total amount recognised in statement of total recognised gains and losses: amount 0.1 (1.0) 0.4 1.2 0.3Percentage of year end present value of scheme liabilities 0.4% (3.8%) 1.7% 6.0% 1.5%

Optima 2 Plan 2013 2012 2011 2010 2009 £m £m £m £m £m

Difference between the expected and actual return on scheme assets: amount (2.0) (0.5) - (1.1) (2.9)Percentage of year end scheme assets (6.5%) (1.9%) 0.1% (4.4%) (13.9%) Experience gains and losses on scheme liabilities: amount (0.4) - - (1.1) -Percentage of year end present value of scheme liabilities (1.4%) 0.0% 0.0% (4.6%) 0.1%

Total amount recognised in statement of total recognised gains and losses: amount 0.1 (1.1) (2.0) 1.9 1.1Percentage of year end present value of scheme liabilities 0.3% (3.9%) (7.6%) 7.7% 4.5%

Defined contribution schemesthe pension charge in respect of the Odeon DC stakeholder Pension scheme is equal to the contributions payable during the year ended 31 December 2013 of £1.8m (2012: £1.1m). as at 31 December 2013 there were £0.2m (2012: £nil) outstanding contributions to be made to the Odeon DC stakeholder Pension scheme.

Notes (continued)

44


28 Contingent liabilities

at 31 December 2013 certain group companies acted as guarantors under the terms of the £300m and €200m 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.

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.

monterey Capital III sarl (“monterey”), a company registered in luxembourg, was the immediate parent of the Company at 31 December 2013, and the directors therefore consider it to be a related party. Unsecured loan notes, including interest accrued, of £375.6m (2012: £335.4m) were held by monterey at 31 December 2013. Interest of £37.1m (2012: £32.8m) in relation to these notes was charged during the year.

a loan, including interest accrued, of £0.7m (2012: £0.7m) was payable to monterey at 31 December 2013. Interest of £0.0m (2012: £0.0m) in relation to this loan was charged during the year.

In addition, unsecured loan notes, including interest accrued, of £89.3m (2012: £79.4m) were held by monterey at 31 December 2013 in relation to Odeon and UCI Cinemas group limited, a subsidiary of the Company. Interest of £8.9m (2012: £7.9m) in relation to these notes 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 had the ability to exercise a controlling influence over the companies with which the sale and leaseback transactions took place (the “PropCos”) through the holding of shares. the directors therefore considered them to be related parties. the total consideration for the properties sold in 2007, excluding Vat, was £178.8m. the consideration was partly settled during may 2007. During april 2009, the Company advanced £20.0m to the PropCos. Further settlements in cash totalling £26.9m were received by the group during 2013. the aggregate balance due to the group from the PropCos at 31 December 2013 was £21.4m (2012: £46.7m) (note 17), including interest and the effect of a provision of £37.8m made against the balance. the balance attracts interest at lIBOR plus a margin of 2.375%. Interest accrued during the year was £1.6m (2012: £1.7m).

the relevant trading companies within the group entered into lease contracts with the PropCos. the rent payable from the group to the PropCos during the year was £11.4m (2012: £12.0m).

Notes (continued)

45


30 Related parties (continued)

During 2013, 10 of the PropCos together with their properties were sold to third parties. these companies, shown in the first column of the table below, are no longer considered by the directors to be related parties.

a further 12 property assets were sold during 2013 by other PropCos to third parties. the companies that sold the property assets are listed in the second column of the table below. the directors consider these companies remain related parties. the third column in the table lists the companies that continued to own property assets at 31 December 2013. the directors consider these companies remain related parties.

31 Acquisitions

During 2013, the group paid deferred consideration of £0.6m and incurred additional acquisition costs of £0.5m.

Notes (continued)

Company sold during 2013:(no longer related parties)Odeon Chelmsford ltdOdeon Derby ltdOdeon Dudley ltdOdeon Huddersfield ltdOdeon lee Valley ltdOdeon Preston ltdOdeon tamworth ltdOdeon taunton ltdOdeon telford ltdOdeon Warrington ltd

Property asset sold during 2013:(related parties)Odeon Banbury ltd Odeon Birmingham ltdOdeon Canterbury ltdOdeon gerrards Cross ltd Odeon Harrogate ltdOdeon leicester square ltdOdeon muswell Hill ltdOdeon Putney ltdOdeon Richmond Hill street ltdOdeon Richmond Red lion street ltdOdeon streatham ltdOdeon swiss Cottage ltd

Retained at 31 December 2013:(related parties)Odeon Barnet ltdOdeon Beckenham ltdOdeon Bournemouth (aBC) ltdOdeon Bournemouth (Odeon) ltdOdeon Esher ltdOdeon Hastings ltdOdeon Holloway ltdOdeon Weston-super-mare ltdOdeon Worcester ltd

46


32 Reconciliation of movement in shareholders’ deficit Ordinary Other Profit and Total share capital reserves loss account

Group £m £m £m £m loss for the year – – (99.7) (99.7)actuarial pension scheme gain – – 0.2 0.2Effect of pension asset limit on above – – (1.4) (1.4)Deferred tax on actuarial pension scheme gain – – – – Deferred tax on effect of asset limit – – 0.3 0.3Foreign exchange differences – – (3.0) (3.0) Net increase in shareholders’ deficit – – (103.6) (103.6)shareholders’ deficit as at 31 December 2012 120.6 (10.3) (490.6) (380.3) shareholders’ deficit as at 31 December 2013 120.6 (10.3) (594.2) (483.9)

Ordinary Profit and Total share capital loss account

Company £m £m £m Profit for the year – 1.3 1.3Foreign exchange differences – – – Net increase in shareholders’ funds – 1.3 1.3shareholders’ funds as at 31 December 2012 120.6 (4.4) 116.2 shareholders’ funds as at 31 December 2013 120.6 (3.1) 117.5

33 Post balance sheet events

there were no disclosable post balance sheet events prior to the date of approval of these financial statements.

Notes (continued)

odeon & uci cinemas holdings limited - amazon … · 3 odeon & uci cinemas holdings limited...

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