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ANNUAL REPORT & CONSOLIDATED

FINANCIAL STATEMENTS

Registered number 0617061131 December 2015

ODEON AND UCI CINEMAS HOLDINGS LIMITED

Odeon and UCI Cinemas Holdings Limited

Annual report and consolidated financial statements

31 December 2015

Company number - 06170611

Strategic Report 3

Directors’ Report 7

Statement of directors’ responsibilities in respect of the

annual report and the consolidated 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 Other Comprehensive Income 12

Consolidated Balance Sheet 13

Company Balance Sheet 14

Consolidated Statement of Changes in Equity 15

Company Statement of Changes in Equity 16

Consolidated Cash Flow Statement 17

Notes 18

CONTENTS

2



31 December 2015


BUSINESS REVIEW

Market position

The Group is the largest and best-positioned pan-European cinema operator - with market leading positions in the UK/Ireland, Spain and Italy - a strong presence in Germany and operations in two smaller European markets. At the year-end date, the Group operated a total of 2,238 screens in 243 cinema sites, primarily in short leasehold properties but also in a small number of freehold and long leasehold properties. The business operates under a number of high profile iconic brands: ODEON in the UK and Ireland; UCI in Germany, Italy, Austria and Portugal; and Cinesa in Spain.

Organisational changes

In the past two years the Group has undertaken a fundamental transformation across all territories to enable it to better drive performance and growth. This began with a change in senior management during 2014: Paul Donovan was appointed Chief Executive Officer in February 2014, and Mark Way (Chief Financial Officer) and Ian Shepherd (Chief Commercial Officer) joined the business in the middle of the same year. Together they brought a wide range of skills and experience from industries and businesses including mobile phone operators, the hotel and leisure sectors, retail and FMCG brands that complemented the Group’s longstanding experience of the cinema industry - the combination of which was fundamental to the creation of a new strategy that was implemented that year. The Group operates in a matrix structure with the Executive Committee setting the priorities and strategy for the overall Group while central functions provide specialist input and support to the Territory teams as they implement this strategy locally, determining how best to apply it to their local market dynamics and customer preferences.

Clear strategy for growth

Since 2014 the Group has been following a clear guest-focused strategy to drive growth and profitability from all of its operations. There are four main focus areas:

1. Commercial excellence – enhancing our CRM, market insight and digital capabilities

2. Transforming operations – to deliver a better guest experience and more efficient processes

3. Maximising retail – developing our range and quality to drive participation and sales

4. High performance culture – giving us the most motivated and guest centric colleagues in the sector

Each of the strategic focus areas is being progressed through a number of current activities; and more are planned for the future.

The business has a robust medium-term plan which is consistent with the strategy for growth and there is clear evidence that the differentiated strategy has already led to operating and financial outperformance in 2015, including the delivery of four quarters of market share growth in key territories in 2015.

Portfolio development – additional cinemas

During 2015, six cinemas were added to the Group’s portfolio, expanding our customer proposition and brand profile in key local markets:

March Milton Keynes, UK (11 screens) Edinburgh, UK (7 screens)

September Marcianese, Italy (11 screens)

October Charlestown, Ireland (9 screens)

December Llobregat, Spain (4 screens) Bolzano, Italy (6 screens)

Portfolio development – disposals

The Group took advantage of a number of opportunities during the year to dispose of a small number of non-core trading cinemas and properties on commercially attractive terms.

Portfolio development – other

A number of cinema refurbishments were completed in the year, primarily in the UK business, and capital investment in retail facilities continued as an integral part of the strategy to maximise future retail profitability.

Further estate development activity is planned for 2016 and beyond.

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31 December 2015

Company number - 06170611STRATEGIC REPORT (CONTINUED)

The cinema sector saw a return to strong volumes in 2015 following unusually low markets in 2013 and 2014.

On a weighted average basis, the market volumes in the Group’s territories were up 9% overall compared to 2014. The table below shows the performance of the major markets individually.

Attendance (millions) (1) 2013 2014 2015 2015 vs

2014 growth

UK 165.5 157.5 171.9 +9%

Spain 78.7 88.0 94.9 +8%

Germany 129.7 121.7 138.6 +14%

Italy 105.7 98.3 106.7 +9%

The year saw the release of a number of films from established international franchises that performed particularly strongly including Spectre, Star Wars: The Force Awakens, Jurassic World, Fast & Furious 7, Avengers: Age of Ultron, Hunger Games: Mockingjay Part 2 and Minions.

In addition, there were successful new international titles, including Fifty Shades of Grey and Inside Out.

Strong local film product also helped to boost volumes in our markets further, with Ocho Appelidos Catalanes and Fack Ju Gohte 2 taking the top positions in Spain and Germany respectively, and Honig im Kopf was also very successful in Germany.

MARKET SHARE

The organisational changes and improved strategy for the Group have successfully driven increased market share. On a weighted average basis, the Group’s Attendance market share increased 0.6% points to 19.4% overall in 2015, providing clear evidence that the new strategy for the Group is beginning to deliver.

The business is now operating to a pan-European strategy which is optimised for local market conditions. It is a strategy grounded in connecting better with our customers and also working more closely with our industry and other partners in order to grow the overall market and our share of it.

KPIs

The primary KPIs measured by the Group are Attendance and EBITDA(2).

With improved market volumes and the increased market share achieved by the Group, our paid Attendance increased 14% in 2015 to 89.5m customers, significantly ahead of average market attendance growth of 9%.

Revenue per customer increased well above inflation year-on-year, helped by intelligent pricing, improved retail offerings and improved operational delivery of them to the customer.

Group EBITDA(2) was up 77% to £95m (2014 Restated(3): £54m).

The EBITDA(2) history over recent years is illustrated by the following table.

£m 2010 2011 2012 2013 2014 2015

EBITDA(2) 82 93 91 69 54 95

(1) Market information is provisional and for some territories is a full market estimate based on information available for part of the market.(2) EBITDA is defined and reconciled to loss after tax in note 4.(3) UK GAAP accounting rules have changed. The new UK GAAP (covered by accounting standard FRS 102) is applied in the 2015 financial statements for

the first time. Certain 2014 comparative numbers have been restated in order to show comparisons on a consistent basis. EBITDA reported under old UK GAAP for 2014 was £53m.

MAIN MARKET ATTENDANCE 2015 V 2014

4



31 December 2015

Company number - 06170611STRATEGIC REPORT (CONTINUED)

FINANCIAL RESULTS

Turnover for the year was up 14% to £747m (2014 Restated: £658m), due to the improved attendance and revenue per customer described earlier. The increase was despite the reporting impact of the weakness of the Euro, which on average was 11% weaker vs Sterling in 2015 compared to 2014. The year-on-year adverse impact of different Euro exchange rates on turnover was £34m.

EBITDA(2) of £95m is stated prior to charging non-cash depreciation and amortisation of £56m and other items as shown in note 5. Operating profit was £58m (2014 Restated: £20m loss).

Interest costs in the profit and loss account, excluding non-cash items, were £37m in 2015 (2014: £43m).

The loss for the year of £5m (2014 Restated: £86m loss) was after total non-cash charges of £124m (2014 Restated: £125m), including £56m (2014: £60m) depreciation and amortisation, £52m (2014: £50m) financing cost accrual on loan notes and £3m (2014: £3m) amortisation of loan issue costs.

Net debt (gross of unamortised issue costs and excluding shareholder loan notes) was £394m (2014: £441m) at the year end.

INVESTMENT

The Group continued to invest to grow future earnings.

In terms of asset additions, £12m was invested in capital maintenance of the estate; £15m on additional sites for 2015 and future periods; and £10m on other revenue-generating projects. Total asset additions for 2015, as shown in note 12 to the accounts, were £37m. Net cash spend on capital expenditure was £34m (2014: £26m).

LOANS TO ODEON PROPERTY GROUP LLP

During 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 31).

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 make provision to reduce their carrying values whilst market property valuations remained below historic levels.

During 2013 and 2014, Odeon Property Group LLP sold its properties, making cash available to part repay the loans from OpCo(4). Further loan repayments were received by OpCo in 2015.

The disposal process generated higher proceeds than had been anticipated in the historic provisioning against the loans receivable. This gave rise to exceptional income in the profit and loss account in both 2014 and 2015.

PRINCIPAL RISKS AND RISK MANAGEMENT

The principal risk to the business is lower attendance. Though medium term attendance figures are broadly stable, 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 our strategy to drive attendance at each site, plus cost savings in film hire and staff, which reduce at lower attendances, and by controlling discretionary costs and capital expenditure.

Some commentators are concerned about the impact of the increasing penetration of home cinema equipment and online film viewing on cinema attendance. Similar concerns were expressed in previous decades with the introduction of TV, Video Cassettes and DVDs. The directors believe that cinema provides a different and better film experience than home entertainment; that these different distribution channels are generally complementary rather than competitive; 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 the Euro element (€200m) is at floating rates.

The Group’s foreign exchange position is naturally hedged by holding a proportion of debt in Euro similar to the proportion of earnings.

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

MAIN MARKET ATTENDANCE 2015 V 2014

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31 December 2015


GOING CONCERN AND LIQUIDITY MANAGEMENT

Following 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, expiring in May 2017. Under these 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 current borrowings and RCF facilities could be refinanced under similar or more favourable terms.

Furthermore the Group has shareholder funding in place with a maturity dates of 30 November 2019.

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 PROSPECTS

Each of the strategic focus areas described earlier is being progressed through a number of current activities; and more are planned for the future.

The business has a robust medium-term plan which is consistent with the strategy for growth.

The Group will continue to invest in its existing portfolio of sites and seek new opportunities.

There is significant latent demand in the European cinema market and the Group is well placed to benefit from unlocking it.

By order of the board

Paul Donovan Chief Executive Officer St Albans House 57-59 Haymarket London SW1Y 4QX

18 March 2016

STRATEGIC REPORT (CONTINUED)

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31 December 2015


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T The Directors present their report and the audited financial statements of the Group and Company for the year ended 31 December 2015.

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.

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.

BOARD OF DIRECTORS AND MANAGEMENT OF THE GROUP

During the year, at 31 December 2015 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:

P M Donovan Chief Executive Officer

M J Way Chief Financial Officer

I A Shepherd Chief Commercial Officer (appointed 27 Jan 2015)

Terra Firma Representatives:

R N Barr Chairman

J K Williamson

E Del Prete (resigned 28 Aug 2015)

Independent Non-Executives:

F S Duncan

S M Julius

7



31 December 2015

Company number - 06170611DIRECTORS’ REPORT (CONTINUED)

POST BALANCE SHEET EVENTS

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

DIVIDENDS

The directors do not recommend the payment of a dividend (2014: £nil) with respect to preference or ordinary shares.

FUTURE PROSPECTS

Details of the future prospects of the Group are outlined in the strategic report.

EMPLOYEE INVOLVEMENT

Employment in the Group increased 8% to 9,288 in 2015 compared to 8,627 in 2014 (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 are opportunities at meetings and via email for employees to ask questions and to make suggestions to senior management.

EMPLOYMENT OF DISABLED PEOPLE

Full and fair consideration is given to applications for employment made by disabled people 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 and employees actively participate in charitable fundraising activities.

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. The group gained the Carbon Trust Standard for reducing energy by 5.6% over two years through better carbon management and accounting.

CHANGE IN ACCOUNTING STANDARDS

UK GAAP accounting rules have changed. The new UK GAAP (covered by accounting standard FRS 102) is applied in the 2015 financial statements for the first time. As required by FRS 102, the 2014 comparative numbers have been restated in order to show comparisons on a consistent basis.

The financial statements contain notes explaining the impact of the changes in accounting rules.

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.

AUDITOR

The 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

Mark Way Chief Financial Officer St Albans House 57-59 Haymarket London SW1Y 4QX

18 March 2016

8



31 December 2015


Statement of directors’ responsibilities in respect of the annual report and the consolidated financial statements

The directors are responsible for preparing the Strategic Report, the Directors’ Report and the consolidated 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), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.

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;

• 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.

9



31 December 2015


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

We have audited the financial statements of Odeon and UCI Cinemas Holdings Limited for the year ended 31 December 2015 set out on pages 11 to 55. The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.

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 of the parent company’s affairs as at 31 December 2015 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 the 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company 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.

Mick Davies (Senior Statutory Auditor)For and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants 1 St Peter’s SquareManchesterM2 3AE

22 March 2016

The notes on pages 18-55 form an integral part of these financial statements.10



31 December 2015


Restated

Note 2015 2014

£m £m

Turnover 747.2 658.2Cost of sales 3 (274.3) (232.0)

Gross profit 472.9 426.2Distribution costs, administration expenses and other operating income 5 (415.2) (446.3)

Group operating profit/(loss) 57.7 (20.1)

Operating profit/(loss) analysed as:Group operating profit/(loss) before exceptional items 36.1 (6.8)Exceptional Costs 5 (12.5) (15.0)Exceptional Income 5 34.1 1.7

Group’s share of profit in joint ventures 13 0.2 0.2Profit/(loss) on disposal of properties 5 10.5 (0.5)

Profit/(loss) on ordinary activities before interest and taxation 68.4 (20.4)Other interest receivable and similar income 8 23.0 26.4Interest payable and similar charges 9 (95.4) (99.0)

Loss on ordinary activities before taxation (4.0) (93.0)Tax on profit/(loss) on ordinary activities 10 (0.9) 7.1

Loss for the financial year (4.9) (85.9)

*Non GAAP measure is defined and reconciled to loss after tax in note 4.In both 2015 and 2014 all operations were continuing.

CONSOLIDATED PROFIT AND LOSS ACCOUNT for year ended 31 December 2015

Restated

Note 2015 2014

£m £m

EBITDA* 94.8 53.5

Operating profit/(loss) before exceptional items 36.1 (6.8)

Loss on ordinary activities after taxation (4.9) (85.9)




31 December 2015


CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME for year ended 31 December 2015

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.

Restated

Note 2015 2014

£m £m

Loss for the year (4.9) (85.9)

Other comprehensive income/(expense)

Foreign exchange differences on translation of foreign operations (8.2) (8.7)

Remeasurement of the net defined benefit pension asset 25 3.4 0.9

Effect of asset limit on remeasurement of net defined pension asset 25 (5.3) (3.9)

Deferred tax on pension items above 23 - 0.5

Other comprehensive loss for the year, net of income tax (10.1) (11.2)

Total comprehensive loss for the year (15.0) (97.1)

The notes on pages 18-55 form an integral part of these financial statements.

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31 December 2015


Restated

Note 2015 2014

£m £m £m £m

Fixed assetsIntangible assets 11 124.6 140.4 Tangible assets 12 418.6 450.2Investments in joint ventures 13 1.0 1.0

544.2 591.6Current assetsStocks 14 7.3 6.0Debtors due within one year 15 56.9 54.9Debtors due after more than one year 16 16.5 14.5Cash at bank and in hand 17 58.8 24.2

139.5 99.6Creditors: amounts falling due within one year 18 (190.6) (266.3)

Net current liabilities (51.1) (166.7)

Total assets less current liabilities 493.1 424.9

Creditors: amounts falling due aftermore than one year 19 (1,066.1) (955.5)

Provisions for liabilitiesDeferred tax liability 23 (6.2) (2.1)Provisions 24 (35.1) (66.3)Pensions and similar obligations 25 (0.6) (0.9)

(1,108.0) (1,024.8)

Net liabilities (614.9) (599.9)

Capital and reservesCalled up share capital 26 120.6 120.6Other reserves (10.3) (10.3)Profit and loss account (725.2) (710.2)

Shareholders’ deficit (614.9) (599.9)

CONSOLIDATED BALANCE SHEETAt 31 December 2015

These financial statements were approved by the board of directors on 18 March 2016 and were signed on its behalf by:Mark Way Chief Financial Officer - Company registered number: 06170611




31 December 2015


COMPANY BALANCE SHEETAt 31 December 2015

These financial statements were approved by the board of directors on 18 March 2016 and were signed on its behalf by:Mark Way Chief Financial Officer - Company registered number: 06170611

Restated

Note 2015 2014

£m £m £m £m

Fixed assetsInvestments 13 505.0 505.0

Current assets

Debtors due within one year 15 - -

Debtors due after more than one year 16 - -

- -

Creditors: amounts falling due within one year 18 (8.1) -

Net current liabilities (8.1) -

Total assets less current liabilities 496.9 505.0

Creditors: amounts falling due after more than one year 19 (436.0) (404.0)

(436.0) (404.0)

Net assets 60.9 101.0

Capital and reserves

Called up share capital 26 120.6 120.6

Profit and loss account (59.7) (19.6)

Shareholders’ equity 60.9 101.0




31 December 2015


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Called up share capital

Merger reserve

Profit and loss account

Total shareholders’

deficit

£m £m £m £m

Balance at 1 January 2014 120.6 (10.3) (594.2) (483.9)

Effect of change in accounting policy (note 33) - - (18.9) (18.9)

Balance at 1 January 2014 restated 120.6 (10.3) (613.1) (502.8)

Total comprehensive loss for the period

Profit or loss - - (85.9) (85.9)

Other comprehensive loss - - (11.2) (11.2)

Total comprehensive loss for the period - - (97.1) (97.1)

Total contributions by and distributions to owners - - - -

Balance at 31 December 2014 120.6 (10.3) (710.2) (599.9)


Merger reserve


Total shareholders’

deficit

£m £m £m £m

Balance at 1 January 2015 120.6 (10.3) (710.2) (599.9)


Profit or loss - - (4.9) (4.9)

Other comprehensive loss - - (10.1) (10.1)

Total comprehensive loss for the period - - (15.0) (15.0)

Total contributions by and distributions to owners - - - -

Balance at 31 December 2015 120.6 (10.3) (725.2) (614.9)




31 December 2015


COMPANY STATEMENT OF CHANGES IN EQUITY



Total shareholders’ equity

£m £m £m

Balance at 1 January 2014 120.6 (3.1) 117.5


Profit or loss - (16.5) (16.5)

Other comprehensive loss - - -

Total comprehensive loss for the period - (16.5) (16.5)

Total contributions by and distributions to owners - - -

Balance at 31 December 2014 120.6 (19.6) 101.0




Total shareholders’ equity

£m £m £m

Balance at 1 January 2015 120.6 (19.6) 101.0


Profit or loss - (40.1) (40.1)

Other comprehensive loss - - -

Total comprehensive loss for the period - (40.1) (40.1)

Total contributions by and distributions to owners - - -

Balance at 31 December 2015 120.6 (59.7) 60.9

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31 December 2015


CONSOLIDATED CASH FLOW STATEMENTfor year ended 31 December 2015


Note 2015 Restated 2014

£m £m

Cash flows from operating activitiesLoss for the year (4.9) (85.9) Adjustments for: Depreciation 5 51.5 54.9 Amortisation 5 11.6 12.1 Interest receivable and similar income 8 (23.0) (26.4) Interest payable and similar charges 9 95.4 99.0 (Gain)/loss on disposal of properties 5 (10.5) 0.5 Share of operating profit of joint ventures (0.2) (0.2) Taxation 10 0.9 (7.1)

120.8 46.9 Decrease in trade and other debtors 15,16 0.3 33.1 Increase in stocks 14 (1.4) - Increase/(decrease) in trade and other creditors 18,19 11.6 (22.7) Decrease in provisions and employee benefits 24,25 (33.1) -

Tax received 98.2 57.30.5 0.2

Net cash from operating activities 98.7 57.5

Cash flows from investing activities Proceeds from sale of tangible fixed assets 5 12.2 0.2 Acquisition of a subsidiary 2 (0.5) (0.5) Acquisition of tangible fixed assets 12 (33.6) (25.9)

Net cash from investing activities (21.9) (26.2)

Cash flows from financing activities Proceeds from new loan 20 - 1.3 Paid to related parties - (0.2) Interest paid (38.8) (45.4) Repayment of borrowings 20 (0.9) (0.2) Payment of finance lease liabilities (1.4) (1.5)

Net cash from financing activities (41.1) (46.0)

Net increase/(decrease) in cash and cash equivalents 35.7 (14.7) Cash and cash equivalents at 1 January 17 24.2 39.9 Effect of exchange rate fluctuations on cash held (1.1) (1.0)

Cash and cash equivalents at 31 December 17 58.8 24.2

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31 December 2015


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) 1. ACCOUNTING POLICIESOdeon and UCI Cinemas Holdings Limited (the “Company”) is a company limited by shares and incorporated and domiciled in the UK.

UK GAAP has changed. The new accounting framework is set out in Financial Reporting Standard 102, which is implemented for the first time in these financial statements.

These Group and parent company financial statements were prepared in accordance with Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”) as issued in September 2015, and under the historical cost accounting rules. Upon acquisition, assets are included at fair value. The presentation currency of these financial statements is sterling.

An explanation of how the transition to FRS 102 has affected both the financial position and financial performance of the Group is provided in note 33.

FRS 102 grants certain first-time adoption exemptions from the full requirements of FRS 102. The following exemptions have been applied in these financial statements:

• Business combinations – business combinations that took place prior to transition date have not been restated.

• Designation of previously recognised financial instruments – certain financial assets and liabilities were at the transition date designated at fair value through profit or loss.

• Lease incentives – for leases commenced before transition date the Group continued to account for lease incentives under previous UK GAAP.

The parent company is included in the consolidated financial statements, and is considered to be a qualifying entity under FRS 102 paragraphs 1.8 to 1.12. The following exemptions available under FRS 102 in respect of certain disclosures for the parent company financial statements have been applied:

• The reconciliation of the number of shares outstanding from the beginning to the end of the period has not been included a second time;

• No separate parent company Cash Flow Statement with related notes is included; and

• Key Management Personnel compensation has not been included a second time.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

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31 December 2015


1.1 CHANGE IN ACCOUNTING POLICY/PRIOR PERIOD ADJUSTMENT

In these financial statements the Group and Company have implemented FRS 102, the new UK GAAP accounting framework, which has necessitated changes to its accounting policies in the following areas:

• Loyalty Awards; Under FRS 102.23.9 an entity is required to account for award credits as a separately identifiable component of the sale. Previously the group accounted for the cost of providing the rewards rather than the revenue.

• Interest Rate Swap; Under FRS 102.12.6 to 12.8 derivatives are recognised on the balance sheet at fair value through profit and loss. Previously interest rate swaps were held off balance sheet until the related transaction occurred.

• Lease incentives; Lease incentives were previously accounted for over the shorter of the lease term and the period to the rent review. Under FRS 102.20.15 lease incentives are now recognised over the lease term, except where covered by the first time adoption exemption taken, as described above.

1.2 GOING CONCERN

The 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 and Company have 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 directors believe that the current borrowings and RCF facilities could be refinanced under similar or more favourable terms.

The directors have reviewed forecast monthly cash requirements, including reasonable sensitivities, and are satisfied that there is sufficient headroom under the Group’s existing facilities.

1.3 BASIS OF CONSOLIDATION

Odeon 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 2015. 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, holding 50% of the shares. These are listed in note 13. 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 the Company Statement of Changes in Equity.

1.4 FOREIGN CURRENCY

Transactions in foreign currencies are translated to the Group companies’ functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. Foreign exchange differences arising on translation are recognised in the profit and

NOTES (CONTINUED)

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31 December 2015


loss account. 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.

1.5 FINANCIAL INSTRUMENTS

Trade and other debtors / creditors

Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.

Interest-bearing borrowings classified as basic financial instruments

Interest-bearing borrowings (excluding loan notes) are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

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.

Investments

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

Cash and cash equivalents

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.

Derivatives

The Group enters into interest rate swaps to manage the interest rate risk arising from the Group’s sources of finance. Changes in the fair value of the interest rate swap are charged to the profit and loss account.

1.6 TANGIBLE FIXED ASSETS

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not

depreciated. The estimated useful lives or depreciation rate are as follows:

• 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 - 4-33% per annum

Depreciation methods, useful lives and residual values are reviewed if there is an indication of a significant change since the last annual reporting date in the pattern by which the company expects to consume an asset’s future economic benefits.

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.

1.7 GOODWILL

Goodwill is stated at cost less any accumulated amortisation and accumulated impairment losses. Goodwill is allocated to cash-generating units or group of cash-generating units that are expected to benefit from the synergies of the business combination from which it arose.

Goodwill is amortised on a straight

NOTES (CONTINUED)

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31 December 2015

Company number - 06170611NOTES (CONTINUED)

line basis over its useful life. Goodwill has no residual value. The finite useful life of goodwill is estimated to be 20 years.

The company reviews the amortisation period and method when events and circumstances indicate that the useful life may have changed since the last reporting date. Goodwill is tested for impairment in accordance with Section 27 - Impairment of assets when there is an indication that it may be impaired.

1.8 STOCKS

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

1.9 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. 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 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.

1.10 EMPLOYEE BENEFITS

Defined contribution plans and other long term employee benefits

A defined contribution plan is a post-employment benefit plan under which the company pays

fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. 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.

Defined benefit plans

The Group operates three pension schemes providing benefits based on final pensionable pay. The assets of the schemes are held separately from those of the Group. The schemes have been closed to future benefit accrual for a number of years.

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The entity’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The entity determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by applying the discount rate as determined at the beginning of the annual period to the net defined benefit liability/(asset) taking account of changes arising as a result of contributions and benefit payments.

The discount rate is the yield at the balance sheet date on AA credit rated bonds denominated in the currency of, and having maturity dates approximating to the terms of the entity’s obligations. A valuation is performed annually by a qualified actuary using the projected unit credit method. The entity recognises net defined benefit plan assets to the extent that it is able to

recover the surplus either through reduced contributions in the future or through refunds from the plan.

Changes in the net defined benefit liability arising from employee service rendered during the period, net interest on net defined benefit liability, and the cost of plan introductions, benefit changes, curtailments and settlements during the period are recognised in profit or loss.

Remeasurement of the net defined benefit liability/asset is recognised in the statement of other comprehensive income.

Long term incentive plans

Share-based payment transactions in which the Company receives goods or services by incurring a liability to transfer cash or other assets that is based on the price of the entity’s equity instruments are accounted for as cash-settled share-based payments. The fair value of the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each balance sheet date and at settlement date. Any changes in the fair value of the liability are recognised in profit or loss.

Other long term incentive plans are recognised at the best estimate of fair value as at the balance sheet date.

1.11 PROVISIONS

A provision is recognised in the balance sheet when the entity has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the amount required to settle the obligation at the reporting date.

Where the parent company enters into financial guarantee contracts

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to guarantee the indebtedness of other companies within its group, the company treats the guarantee contract as a contingent liability in its individual financial statements until such time as it becomes probable that the company will be required to make a payment under the guarantee.

1.12 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, and net of loyalty points earned and redeemed.

The cost of loyalty points is treated as a deduction from sales and part of the fair value of the consideration received is deferred and subsequently recognised over the period that the rewards are redeemed or expire. The fair value of the points awarded is determined with reference to the fair value to the customer.

1.13 EXPENSES

Operating leases

Rental 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 contain inflation-driven rental uplifts with pre-determined minimums and the amount payable in respect of these uplifts is charged to the profit and loss account as it arises. Lease incentives received are recognised in profit and loss over the term of the lease as an integral part of the total lease expense.

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 net of risk adjusted anticipated operating profit from trading, discounted using a risk free discount rate, 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.

Finance leases

Leases in which the entity assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Assets acquired under finance leases are capitalised and the outstanding future lease obligations are shown in creditors.

Exceptional items

In order for items to be classified as exceptional in the financial statements, they must: be significant in value; relate to events outside the ordinary course of business; and be one-off or non-recurring.

Pre-opening costs

Operating costs incurred before a new cinema is opened are written off to the profit and loss account as incurred.

Interest receivable and interest payable

Interest payable and similar charges include interest payable, finance charges on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the profit and loss account (see foreign currency accounting policy). Other interest receivable and similar income include interest receivable on funds invested and net foreign exchange gains.

Interest income and interest payable are recognised in profit or loss as they accrue, using the effective interest method. Dividend income is recognised in the profit and loss account on the date the entity’s right to receive payments is established. Foreign currency gains and losses are reported on a net

basis.

1.14 TAXATION

The charge for taxation is based on the profit or 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 102.

2. ACQUISITIONS AND DISPOSAL OF BUSINESSES

During 2015, the Group paid deferred consideration of £0.5m (2014: £0.5m) in relation to a 2011 acquisition.

NOTES (CONTINUED)

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NOTES (CONTINUED)

3. SEGMENTAL ANALYSIS The Group has two operating segments split by geographical location: UK & Ireland and Continental Europe.

UK & Ireland Continental Europe

Total

2015 £m £m £m

Revenue 402.7 344.5 747.2

Operating profit 28.3 29.4 57.7

Share of operating profit of JV 0.2

Profit on disposal of properties 10.5

Net finance costs (72.4)

Tax (0.9)

Loss after tax (4.9)

UK & Ireland Continental Europe

Total

2014 Restated £m £m £m

Revenue 330.8 327.4 658.2

Operating loss (7.9) (12.2) (20.1)

Share of operating profit of JV 0.2

Loss on disposal of properties (0.5)

Net finance costs (72.6)

Tax 7.1

Loss after tax (85.9)

2015 2014 Restated

Revenue by category £m £mAdmission ticket sales 500.8 442.1

Retail 180.3 158.9

Other 66.1 57.2

Total revenue 747.2 658.2

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31 December 2015


4. EBITDAEBITDA is defined as operating profit before exceptional items, strategic costs, depreciation, digital projection deferred income release and amortisation. Other items include certain one off costs that management exclude from EBITDA on a non-statutory basis on the grounds that they are not related to the ongoing activities of the business. A reconciliation between EBITDA and loss after taxation is shown below:

2015 2014 Restated

£m £m

EBITDA 94.8 53.5

Depreciation (44.7) (47.6)

Amortisation (11.6) (12.1)

Other items (2.4) (0.6)

Exceptional items 21.6 (13.3)

Share of operating profit of joint venture 0.2 0.2

Gain/(loss) on disposal of properties 10.5 (0.5)

Profit/(loss) on ordinary activities before interest and taxation 68.4 (20.4)

Net finance costs (72.4) (72.6)

Taxation (0.9) 7.1

Loss after taxation (4.9) (85.9)

2015 2014 Restated

£m £mDepreciation

- Finance Lease Assets 1.2 1.5

- Other Assets 50.3 53.4

- Digital production deferred income release (6.8) (7.3)

Amortisation of Goodwill 11.6 12.1

Property rental income (1.6) (1.9)

Rentals under operating leases - property 120.6 129.2Exceptional Costs 12.5 15.0

Exceptional Income (34.1) (1.7)

(Profit)/loss on disposal of properties (10.5) 0.5

5. EXPENSES AND AUDITOR’S REMUNERATIONIncluded in profit/loss are the following:

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31 December 2015


EXCEPTIONAL COSTS

The exceptional costs in 2015 related to restructuring and preparation for potential future transactions. The exceptional costs in 2014 related to restructuring and property matters.

The tax effect of the exceptional costs in 2015 was £0.7m (2014: nil).

EXCEPTIONAL INCOME

The exceptional income in 2015 related to:

(i) a premium from a cinema landlord in exchange for granting an option to potentially terminate the lease;

(ii) partial release of onerous lease provisions;

(iii) partial release of provisions made against amounts receivable from subsidiaries of Odeon Property Group LLP, which were related parties; and

(iv) other property matters.

The exceptional income in 2014 reflected a partial reversal of provisions made against amounts receivable from subsidiaries of Odeon Property Group LLP, which were related parties.

The tax effect of the exceptional income in 2015 was £4.7m (2014: nil).

PROFIT/LOSS ON DISPOSAL OF PROPERTIES

The profit or 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.

Auditor’s remuneration: 2015 2014

£m £m

Audit of these financial statements - -

Amounts receivable by the company’s auditor and its associates in respect of: Audit of financial statements of subsidiaries of the company 0.6 0.5

Taxation compliance services 0.1 0.1

Other tax advisory services 0.4 0.2

Other assurance services 0.1 -

All other services 1.4 -

2.6 0.8

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31 December 2015


6. STAFF NUMBERS AND COSTSThe average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:

2015 2014

£m £m

The aggregate payroll costs of these persons were as follows:

Wages and salaries 109.4 101.0

Social security costs 15.6 15.0

Employer contributions to defined contribution plans 1.2 1.3

126.2 117.3

Number of employees

Number of employees

2015 2014

Administration 380 334

Cinema and Other 8,908 8,293

9,288 8,627

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31 December 2015


7. DIRECTORS’ REMUNERATION

Directors’ remuneration includes amounts payable upon leaving office. Elements of the cost of directors’ remuneration are disclosed within exceptional items where appropriate.

The remuneration of the highest paid director was £1.2m (2014: £0.8m). No contributions to a Group pension scheme were made in relation to the highest paid director (2014: £nil).

Number of directors

Number of directors

2015 2014

Retirement benefits are accruing to the following number of directors under:

Defined contribution pension schemes - 1

2015 2014

£m £m

Directors’ remuneration 2.5 1.8

Company contributions to defined contribution pension schemes - -

2.5 1.8

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31 December 2015


8. OTHER INTEREST RECEIVABLE AND SIMILAR INCOME

9. INTEREST PAYABLE AND SIMILAR CHARGES

Restated

2015 2014

£m £m

Gain on fair value adjustment to carrying amount of interest rate swap 0.3 1.8

Net foreign exchange gain 22.8 24.1

Net interest income on net defined benefit plan assets 0.4 0.6

Other finance charges (0.5) (0.4)

Interest receivable from related parties - 0.3

Total other interest receivable and similar income 23.0 26.4

2015 2014

£m £m

Interest payable on bank loans and overdrafts 0.2 0.6

Interest payable on senior secured notes 34.6 37.7

Interest payable on shareholder loan notes 52.2 49.6

Amortisation of issue costs 3.2 3.3

Unwind of discount on provisions 2.6 2.8

Other financing costs 2.4 4.8

Share of joint ventures 0.2 0.2

Total other interest payable and similar charges 95.4 99.0

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31 December 2015


10. TAXATION

Total tax expense recognised in the profit and loss account, other comprehensive income and equity

2015 2014

£m £m £m £m

Current tax

Current tax on income for the period 1.4 0.4

Adjustments in respect of prior periods (1.3) (0.5)

Current tax on income for the year 0.1 (0.1)

Share of joint ventures’ current tax - 0.1

Total current tax 0.1 -

Deferred tax (note 23)

Origination and reversal of timing differences 0.8 (7.1)

Deferred tax for the year 0.8 (7.1)

Share of Joint ventures’ deferred tax - -

Total deferred tax 0.8 (7.1)

Tax expense relating to changes in accounting policies and material error

-

-

Total tax 0.9 (7.1)

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31 December 2015


2015 2014 Restated

Current tax

Deferred tax

Total tax Current tax

Deferred tax

Total tax

£m £m £m £m £m £m

Recognised in profit and loss account 0.1 0.8 0.9 - (7.1) (7.1)

Recognised in other comprehensive income - - - - (0.5) (0.5)

Recognised directly in equity - - - - - -

Total tax 0.1 0.8 0.9 - (7.6) (7.6)

Analysis of current tax recognised in profit and loss 2015 2014

£m £m

UK corporation tax - -

Share of tax of joint venture - 0.1

Foreign tax 0.1 (0.1)

Total current tax recognised in profit and loss 0.1 -

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31 December 2015


RECONCILIATION OF EFFECTIVE TAX RATE

2015 2014 Restated

£m £m

Loss for the year (4.9) (85.9)

Total tax expense/(income) 0.9 (7.1)

Loss excluding taxation (4.0) (93.0)

Tax using the UK corporation tax rate of 20.25% (2014:21.50%) (0.8) (20.0)

Effect of tax rates in foreign jurisdictions 0.8 (0.6)Non-deductible expenses 0.9 8.8

Capital allowances for period in excess of depreciation not provided for in deferred tax (1.4) (1.3)Other timing differences not provided for in deferred tax (3.2) (1.3)

Losses not utilised not provided for in deferred tax 0.8 8.6

Recognition of previously unrecognised deferred tax asset (3.5) -

Provision for local taxes 0.7 0.4

Under/(over) provided in prior years (1.1) (1.7)

Capital gains in excess of book value 0.2 -

Difference with deferred tax rate (0.6) -

Total tax expense/(income) included in profit or loss 0.9 (7.1)

Reductions in the UK corporation tax rate from 23% to 21% were effective from 1st April 2014, falling to 20% on 1 April 2015. On 26th October 2015, further reductions to 19% from 1 April 2017 and 18% from 1st April 2020 were substantively enacted. The deferred tax balance included on the balance sheet has been calculated based on these rates.

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31 December 2015


Goodwill is held at amortised cost, and amortisation is charged to operating profit.

Impairment reviews have been performed in accordance with FRS 102. 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.

COMPANY

The Company did not hold any intangible assets in the current or prior year

11. INTANGIBLE ASSETS AND GOODWILL

Group Goodwill

£m

Cost

Balance at 1 January 239.8

Acquisitions through business combinations -

Disposals -

Effect of movements in foreign exchange (5.9)

Balance at 31 December 233.9

Amortisation

Balance at 1 January 99.4

Amortisation for the year 11.6

Effect of movements in foreign exchange (1.7)

Balance at 31 December 109.3

Net book value

At 1 January 2015 140.4

At 31 December 2015 124.6

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31 December 2015


12. TANGIBLE FIXED ASSETS Group Land and

buildingsPlant,

fixtures & fittings

Cinemas under

construction

Total

£m £m £m £mCostBalance at 1 January 374.5 467.5 6.3 848.3Additions 1.2 10.7 24.8 36.7Reclassifications 10.7 12.3 (23.0) -Disposals (15.1) (13.4) (0.1) (28.6)Effect of movements in foreign exchange (7.9) (13.9) (0.1) (21.9)

Balance at 31 December 363.4 463.2 7.9 834.5

Depreciation and impairmentBalance at 1 January 129.6 268.5 - 398.1Depreciation charge for the year 20.7 30.8 - 51.5Reclassifications - - - -Disposals (11.7) (12.0) - (23.7)Effect of movements in foreign exchange (2.8) (7.2) - (10.0)

Balance at 31 December 135.8 280.1 - 415.9

Net book valueAt 1 January 2015 244.9 199.0 6.3 450.2

At 31 December 2015 227.6 183.1 7.9 418.6

2015 2014

£m £mFreehold 22.9 26.4Long leasehold 18.3 21.2Short leasehold 186.4 197.3

227.6 244.9

LAND AND BUILDINGS The net book value of land and buildings comprises:

LEASED PLANT AND MACHINERY

At the year end the net carrying amount of land and buildings leased under a finance lease was £3.8m (2014: £4.9m). Depreciation for the year on assets held under finance lease was £1.2m (2014: £1.5m).

Included in the net carrying amount of plant, fixtures and fittings is £43.6m (2014: £52.8m) in respect of digital and related assets held under third party arrangements/agreements with an offsetting amount shown in deferred revenue. Depreciation for the year on these assets was £6.8m (2014:£7.3m).

COMPANY

The Company did not hold and tangible fixed assets in the current or prior year.33



31 December 2015


13. FIXED ASSET INVESTMENTS

Group Interests in Joint Ventures

£m

Cost

At beginning of year 1.9

Additions -

Disposals -

At end of year 1.9

Share of post acquisition reserves

At beginning of year (0.9)

Retained profits less losses -

Disposals -

At end of year (0.9)

Provisions

At beginning of year -

Disposals -

Impairment losses -

Reversal of past impairments -

At end of year -

Net book value



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31 December 2015


Company Shares in group undertakings

£m

Cost

At beginning of year 505.0

Additions -

Disposals -

Transfers between items -

At end of year 505.0

Provisions

At beginning of year -

Provided in year -

Disposals -

Impairment losses -

Reversal of past impairments -

Transfers between items -

At end of year -

Net book value



The only direct subsidiary of the Company is Odeon and UCI Cinemas Group Limited.

During 2014, the Company contributed its investment in Odeon & UCI Cinemas Digital Limited to Odeon and UCI Cinemas Group Limited in exchange for 1 Ordinary share of £1 with no share premium; increased its investment in Odeon and UCI Cinemas Group Limited by subscribing for 1 Ordinary share of £1 with a share premium of £6.2m; contributed to Odeon and UCI Cinemas Group Limited both the amounts owed by related parties (at estimated market value) and amounts owed by group undertakings in exchange for 1 Ordinary share of £1 with a share premium of £7.6m; and waived loan notes of £391.4m due from Odeon and UCI Cinemas Group Limited, in substance a capital contribution and corresponding increase in the cost of investment.

35



31 December 2015


The undertakings of the Group and Company at the year-end are:

Name Country of incorporation

Nature of business % interest

Odeon and UCI Cinemas Group Limited Great Britain Holding Company 100% owned

Odeon & UCI Bond Holdco Limited Great Britain Holding Company 100% owned

Odeon & UCI Bond Midco Limited Great Britain Holding Company 100% owned

Odeon & UCI Finco plc Great Britain Senior secured notes issuer 100% owned

Cicero Holdings Limited Great Britain Holding Company 100% owned

Cicero Investments Limited Great Britain Holding Company 100% owned

Cicero Acquisitions Limited Great Britain Holding Company 100% owned

Odeon Equity Co Limited Great Britain Non trading company 100% owned

Odeon DDB Co Limited Great Britain Non trading company 100% owned

Odeon Bridge Co Limited Great Britain Non trading company 100% owned

Odeon Property Acquisition Co (Cayman) Limited Cayman Islands Holding Company 100% owned

Odeon Limited Great Britain Non trading company 100% owned

Odeon Cinemas Group Limited Great Britain Non trading company 100% owned

Odeon Cinemas Holdings Limited Great Britain Holding Company 100% owned

Associated British Cinemas Limited Great Britain Holding Company 100% owned

Odeon Cinemas Limited Great Britain Operation of cinemas 100% owned

United Cinemas International (UK) Limited Great Britain Operation of cinemas 100% owned

ABC Cinemas Limited Great Britain Operation of cinemas 100% owned

Odeon Cinemas (RL) Limited Great Britain Operation of cinemas 100% owned

Bookit Limited Great Britain Credit and debit card transaction processing

100% owned

Movitex Signs Limited Great Britain Non trading company 100% owned

Odeon Finance Limited Cayman Islands Non trading company 100% owned

Hopeart Limited Great Britain Non trading company 100% owned

Odeon and UCI Digital Operations Limited Great Britain Administration & technical support services

100% owned

UCI Exhibition (UK) Limited Great Britain Non trading company 100% owned

UCI Developments Limited Great Britain Non trading company 100% owned

United Cinemas International (China) Limited Great Britain Non trading company 100% owned

Hollywood Express Limited Great Britain Non trading company 100% owned

Digital Cinema Media Limited Great Britain Screen advertising 50% owned

Odeon and Sky Filmworks Ltd Great Britain Film distribution 50% owned

Curzon Cinema (Loughborough) Limited Great Britain Non trading company 100% owned

Cinema International Corporation (UK) Limited Great Britain Holding Company 100% owned

36



31 December 2015




CIC Theatre Group Great Britain Non trading company 100% owned

CIC Film Properties Great Britain Non trading company 100% owned

Empire-Ritz (Leicester Square) Great Britain Non trading company 100% owned

Plaza Theatre Company Great Britain Non trading companyr 100% owned

Lucius Holdings Limited Great Britain Holding Company 100% owned

Lucius Investments Limited Great Britain Holding Company 100% owned

United Cinemas International Acquisitions Limited Great Britain Holding Company 100% owned

Multiscreen Holdings UK Limited Great Britain Non trading company 100% owned

United Cinemas International Multiplex BV Netherlands Holding Company 100% owned

Cinesa/UCI BV Netherlands Holding Company 100% owned

UCI Multiplex Holding BV Netherlands Non trading company 100% owned

UCI Company BV Netherlands Non trading company 100% owned

Essential Cinemas BV Netherlands Non trading company 100% owned

Compania de Iniciatives y Espectaculos SA (Cinesa) Spain Operation of cinemas 100% owned

Cinema International Corporation Lda Portugal Operation of cinemas 100% owned

United Cinemas International Multiplex GmbH Germany Operation of cinemas 100% owned

Kino Friedrichshain Betriebsgesellschaft mbH Germany Operation of cinemas 100% owned

Kino Gera Betriebsgesellschaft mbH Germany Operation of cinemas 100% owned

Kino Lausitzpark Betriebsgesellschaft mbH Germany Operation of cinemas 100% owned

UCI Kinoplex GmbH Germany Operation of cinemas 100% owned

UCI Digital GmbH Germany Administration & technical support services

100% owned

United Cinemas International Multiplex Gesellschaft mbH Austria Operation of cinemas 100% ownedUCI Digiplex GmbH Austria Administration & technical

support services100% owned

UCI Italia SpA Italy Operation of cinemas 100% owned

UCI Nord Ovest Srl Italy Operation of cinemas 100% owned

UCI Sud Srl Italy Operation of cinemas 100% owned

UCI Nord Srl Italy Operation of cinemas 100% owned

UCI Centro Srl Italy Operation of cinemas 100% owned

UCI Nord Est Srl Italy Operation of cinemas 100% owned

UCI Torino Srl Italy Operation of cinemas 100% owned

UCI Campi Bisenzio SpA Italy Operation of cinemas 100% owned

37



31 December 2015




UCI Roma Est Srl Italy Operation of cinemas 100% owned

UCI Adriatica Srl Italy Operation of cinemas 100% owned

UCI Appennino Srl Italy Operation of cinemas 100% owned

UCI Recupero e Sviluppo SpA Italy Operation of cinemas 100% owned

UCI Digital Operations Srl Italy Administration & technical support services

100% owned

International Cinemamedia UCI Srl Italy Screen advertising 100% owned

Multiscreen Holdings (Ireland) Limited Ireland Non trading company 100% owned

UCI Holdings Ireland Limited Ireland Holding company 100% owned

Ashbourne Cinemas Limited Ireland Operation of cinemas 100% owned

Bolgal Limited Ireland Holding Company 100% owned

Castletroy Cinemas Limited Ireland Operation of cinemas 100% owned

Charlestown Cinema Property Limited Ireland Operation of cinemas 100% owned

Charlestown Films Limited Ireland Non trading company 100% owned

First Class Cinemas Limited Ireland Operation of cinemas 100% owned

First Class Productions Limited Ireland Operation of cinemas 100% owned

Kilcin Limited Ireland Operation of cinemas 100% owned

Point Pictures Limited Ireland Operation of cinemas 100% owned

Premier Productions Limited Ireland Holding and property company

100% owned

Storm Cinemas (Waterford) Limited Ireland Operation of cinemas 100% owned

United Cinemas International (Ireland) Limited Ireland Operation of cinemas 100% owned

Waterwhite Projections Limited Ireland Operation of cinemas 100% owned

Odeon & UCI Cinemas Digital Limited Great Britain Non trading company 100% owned

Odeon Bournemouth (ABC) Limited Great Britain Property company 100% owned

Odeon Bournemouth (Odeon) Limited Great Britain Property company 100% owned

Odeon Weston-Super-Mare Limited Great Britain Property company 100% owned

38



31 December 2015


14. STOCKS

15. DEBTORS AMOUNTS FALLING DUE WITHIN ONE YEAR

16. DEBTORS AMOUNTS FALLING DUE AFTER ONE YEAR

Group Company

2015 2014 2015 2014

£m £m £m £m

Goods for resale 7.3 6.0 - -

Group Company

2015 2014 2015 2014

£m £m £m £m

Trade debtors 23.2 24.7 - -

Prepayments and accrued income 20.5 14.6 - -

Amounts owed by related parties - 1.6 - -

Other debtors 13.2 14.0 - -

56.9 54.9 - -

Group Company

2015 2014 2015 2014

£m £m £m £m

Trade debtors 1.2 1.3 - -

Prepayments and accrued income 3.7 3.2 - -

Other debtors 5.6 6.0 - -

Deferred tax assets (see note 23) 6.0 4.0 - -

16.5 14.5 - -

39



31 December 2015


The net cash inflow for 2015 includes a net £6.4m inflow relating to exceptional items credited in 2015 (2014: £1.2m outflow).

Non-cash movements are primarily finance charges accrued on the loan notes, the amortisation of issue costs, the ageing of loan notes and the amendment to a finance lease in Spain.

17. CASH AND NET DEBT

18. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Balance at 31 December

2014

Cashflow Othernon-cash

movements

Exchange Balance at31 December

2015

£m £m £m £m £mNet cash:Cash at bank and in hand 24.2 35.7 - (1.1) 58.8

Debt:Debt falling due within one year (96.0) 0.9 94.8 0.1 (0.2)Debt falling due after more than one year

(850.3) - (150.2) 23.5 (977.0)

Finance leases (7.3) 1.4 0.3 0.4 (5.2)

Net debt (929.4) 38.0 (55.1) 22.9 (923.6)

Group 2015

Restated 2014

Company 2015

2014

£m £m £m £m

Bank loans and overdrafts (see note 20) 0.2 1.0 - -

Trade creditors 47.7 45.3 - -

Obligations under finance leases (see note 21) 1.6 1.7 - -

Shareholder loan notes - 95.0 - -

Financial liabilities – interest rate swap designated at fair value through profit and loss

-

0.3

- -

Other creditors including taxation and social security

24.5

25.7

-

-

Corporation tax 0.6 1.8 - -

Accruals and deferred income 116.0 95.5 8.1 -

190.6 266.3 8.1 -

40



31 December 2015


Group2015

2014

Company2015

2014

£m £m £m £mSenior secured notes 447.4 456.5 - -Unamortised issue costs (7.2) (10.4) - -

440.2 446.1 - -Bank loans and overdrafts - 0.2 - -Obligations under finance leases 3.6 5.6 - -Shareholder loan notes 536.3 403.5 434.9 403.5Other creditors, accruals and deferred income

85.5

99.6

-

-

Amounts owed to group undertakings - - 0.6 -Shareholder loans 0.5 0.5 0.5 0.5

1,066.1 955.5 436.0 404.0

19. CREDITORS: AMOUNTS FALLING AFTER MORE THAN ONE YEAR

20. INTEREST-BEARING LOANS AND BORROWINGSThis note provides information about the contractual terms of the Group’s and parent Company’s interest-bearing loans and borrowings, which are measured at amortised cost.

Group2015

2014

Company2015

2014

£m £m £m £mCreditors falling due within one year Bank loans 0.2 1.0 - -Shareholder loan notes - 95.0 - -Finance lease liabilities 1.6 1.7 - -

1.8 97.7 - -

Creditors falling due in more than one yearBank loans - 0.2 - -Senior secured loans (excluding issue costs) 447.4 456.5 - -Shareholder loan notes 536.3 403.5 434.9 403.5Shareholder loans 0.5 0.5 0.5 0.5Finance lease liabilities 3.6 5.6 -

987.8 866.3 435.4 404.0

Total 989.6 964.0 435.4 404.0

41



31 December 2015


TERMS AND DEBT REPAYMENT SCHEDULE

Group CurrencyNominal interest

rate

Date of maturity 2015 2014

£m £m

Bank Loan EUR 4.795% Mar 2016 0.2 1.2

Senior Secured Note GBP £300m GBP 9.0% Aug 2018 300.0 300.0

Senior secured Note EUR €200m EUR 4.93% Aug 2018 147.4 156.5

Monterey Capital III loan note - Par value £11.2m(1)

GBP

11.0%

Nov 2019

35.1

33.7


GBP

11.0%

Nov 2019

2.2

-

Monterey Capital III loan note - Par value €26.2m(1)

EUR

11.0%

Nov 2019

64.1

61.3


GBP

10.875%

Nov 2019

26.1

23.5

Monterey Capital III loan note - Par value €115.5m(2)

EUR

10.875%

Nov 2019

202.0

193.5


GBP

10.875%

Nov 2019

189.7

186.5


GBP

10.875%

Nov 2019

17.1

-

Monterey Capital III loan(2) GBP 3.22% Nov 2019 0.5 0.5

Finance Leases GBP&EUR - - 5.2 7.3

989.6 964.0

Following a refinancing in May 2011, senior secured notes totalling £300m and €200m are in issue. The Sterling element of the senior secured notes is at a fixed interest rate of 9.00% and the Euro element (€200m) is at floating rates, being 5% plus the 3 month LIBOR. At 31 December 2015 the total rate payable was 4.93%. 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 (2014: £nil) at the year-end.

The aggregate amount of loan notes issued to a related party shown above, falling due within one year is nil (2014: £95m, being £37.1m issued amount and £63.3m accrued interest).

For those loan notes issued to a related party falling due after one year the amount is £536.3m (2014: £403.5). This is the net book value based on the aggregate issued amounts of £248.6m (2014: £204.1) plus interest accrued of £287.7m (2013: £199.4m). During 2015, loan notes of £2.2m and £17.1m were issued in respect of interest accrued on the loan notes of £11.2m and £98.2m respectively.(1) These 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 2015.

42



31 December 2015


21. OTHER INTEREST-BEARING LOANS AND BORROWINGS

(2) These loan notes and loan, 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 2015. These loan notes replaced loan notes of equivalent value previously held by a related party (note 30).

The maturity profile for the Group’s senior secured notes, bank and other borrowings at 31 December was as follows:

NOTES (CONTINUED)

COMPANY

The loan notes and loan issued by the Company, and described in note (2) on the preceding page, are due for repayment within two to five years (2014: one to two years).

COMPANY

The Company did not have any finance leases in the current or prior year.

FINANCE LEASE LIABILITIES Finance lease liabilities are payable as follows:

Group 2015 2014

£m £m

Within 1 year, or on demand 1.8 97.7

Within one to two years 1.1 407.9

Within two to five years 985.5 458.2

Over five years 1.2 0.2

Un-amortised issue costs 989.6 964.0

(7.2) (10.4)

982.4 953.6

Group Minimum lease payments 2015

Minimum lease payments 2014

£m £m

Less than one year 1.6 1.7

Between one and five years 2.4 5.4

More than five years 1.2 0.2

5.2 7.3

43



31 December 2015


23. DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets and liabilities are attributable to the following:

NOTES (CONTINUED)

22. DERIVATIVES

Group Group 2015 Group 2014 Restated

£m £m

Amounts falling due within one year

Financial liabilities designated as fair value through profit or loss - 0.3

The Group borrows in the desired currencies at both fixed and floating rates of interest. Interest rate hedging contracts (swaps) have previously been 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 if appropriate, covering between 50% and 100% of the senior secured notes. At the year-end approximately 67% of the Group’s senior secured notes were at fixed rates. For Sterling denominated notes the fixed rate was 9.00%.

COMPANY

The Company did not have any derivatives or other financial assets or liabilities at either the current or prior year end.

Group Assets 2015

2014 Restated

Liabilities 2015

2014 Net 2015 2014 Restated

£m £m £m £m £m £m

Accelerated capital allowances (4.3) (10.1) (8.8) (4.1) (13.1) (14.2)

Unused tax losses 10.3 14.0 0.4 0.2 10.7 14.2

Other - 0.1 2.2 1.8 2.2 1.9

Tax assets/(liabilities) 6.0 4.0 (6.2) (2.1) (0.2) 1.9

The potential amounts of deferred tax not recognised are:

Group Assets 2015

2014 Restated

Liabilities 2015

2014 Net 2015 2014 Restated

£m £m £m £m £m £m

Accelerated capital allowances 1.7 3.5 - - 1.7 3.5

Unused tax losses 76.5 88.0 - - 76.5 88.0

Other 7.7 14.4 - - 7.7 14.4

Tax assets 85.9 105.9 - - 85.9 105.9

It is currently estimated there will be a net reversal of deferred tax liabilities of £3.3m in 2016 arising on fixed assets and other timing differences.

44



31 December 2015


24. PROVISIONS

Group Lease and other provisions

£m

Balance at 1 January 2015 66.3

Credited to profit and loss account (18.0)

Provisions used during the year (13.2)

Amounts arising from acquisition/disposal -

Unwinding of discounted amount 2.6

Exchange differences (2.6)

Balance at 31 December 2015 35.1

Provision has been made for lease commitments and claims relating to certain properties. The amount provided is based either on the future rental obligations, net of anticipated operating profit from trading (risk adjusted as appropriate), 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.

COMPANY

The Company held no provisions in either the current or prior year.

45



31 December 2015


25. EMPLOYEE BENEFITSThe Group participates in two main defined benefit schemes in the UK, the ABC Cinemas Limited Pension Scheme (the “ABC plan”) and the Optima 2 Pension Scheme (the “Optima 2 plan”). The Group also participates in a small defined benefit scheme in Ireland, the UCI Ireland Limited Staff Pension and Life Assurance Scheme (the “Ireland plan”) and one defined contribution scheme in the UK, the Odeon DC Stakeholder Pension Scheme. Assets of the schemes are held separately from those of the Group in independently administered funds.

The information disclosed below is in respect of the whole of the plans of the Group. The Company has no pension obligations or charges.

NET PENSION (LIABILITY)/ASSET

The principal assets, liabilities and movements included in these financial statements for the three defined benefit schemes are summarised as follows:

2015 2014ABC Plan Optima 2

PlanIreland

PlanTotal ABC

PlanOptima 2

PlanIreland

PlanTotal

£m £m £m £m £m £m £m £m

Total fair value of assets

35.5

36.9

1.1

73.5

36.3

36.2

1.1

73.6

Present value of scheme liabilities

(24.2)

(33.1)

(1.7)

(59.0)

(26.6)

(36.1)

(2.0)

(64.7)

Surplus/(deficit) 11.3 3.8 (0.6) 14.5 9.7 0.1 (0.9) 8.9Effect of asset limit

(11.3)

(3.8)

-

(15.1)

(9.7)

(0.1)

-

(9.8)

Deficit recognised - - (0.6) (0.6) - - (0.9) (0.9)

Actuarial gain/(loss) in other comprehensive income

0.4

2.7

0.3

3.4

2.3

(1.0)

(0.4)

(0.9)

46



31 December 2015


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, are shown in the table above.

The Directors consider the Ireland plan to be immaterial to these financial statements and have therefore chosen not to provide detailed disclosures in relation to it.

The detailed disclosures for the ABC plan and the Optima 2 plan are shown in the remainder of this note.

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 2012 and was updated for FRS 102 purposes to 31 December 2015 by a qualified independent actuary. The latest full actuarial valuation for the Optima 2 plan was carried out as at 31 December 2012 and was updated for FRS 102 purposes to 31 December 2015 by a qualified independent actuary.

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.

MOVEMENTS IN PRESENT VALUE OF DEFINED BENEFIT OBLIGATION

ABC Plan Optima 2 Plan Total

£m £m £mAt 1 January 2015 26.6 36.1 62.7Current service cost - - -Interest expense 0.9 1.3 2.2Actuarial loss on scheme liabilities (1.9) (3.4) (5.3)Net benefits paid (1.4) (0.9) (2.3)

At 31 December 2015 24.2 33.1 57.3

ABC Plan Optima 2 Plan Total

£m £m £mAt 1 January 2015 36.3 36.2 72.5Interest income 1.3 1.3 2.6Actuarial gain on scheme assets (1.5) (0.7) (2.2)Contributions by employer 0.8 1.0 1.8Contributions by members - - -Benefits paid (1.4) (0.9) (2.3)

At 31 December 2015 35.5 36.9 72.4

MOVEMENTS IN FAIR VALUE OF PLAN ASSETS

47



31 December 2015


EXPENSE RECOGNISED IN THE PROFIT AND LOSS ACCOUNT

EXPENSE RECOGNISED IN OTHER COMPREHENSIVE INCOME


PlanTotal ABC Plan Optima 2

PlanTotal

£m £m £m £m £m £m

Current service cost - - - - - -

Net interest on net defined benefit liability

0.4

-

0.4

0.2

0.4

0.6

Total expense recognised in profit or loss

0.4

-

0.4

0.2

0.4

0.6



PlanTotal

£m £m £m £m £m £m

Actuarial return less expected return on pension scheme assets

(1.5)

(0.7)

(2.2)

5.1

3.0

8.1

Change in actuarial assumptions 1.9 3.4 5.3 (2.8) (4.0) (6.8)

Actuarial gain/(loss) recognised in other comprehensive income

0.4

2.7

3.1

2.3

(1.0)

1.3

48



31 December 2015


The fair value of the plan assets and the return on those assets were as follows:

Principal actuarial assumptions (expressed as weighted averages) at the year-end were as follows:

NOTES (CONTINUED)

2015 Fair value 2014 Fair valueABC Plan Optima 2


PlanTotal

£m £m £m £m £m £m

Equity Instruments 6.7 16.2 22.9 6.7 15.8 22.5

Debt Instruments 28.8 16.4 45.2 29.5 16.5 46.0

Cash and cash equivalents - 0.2 0.2 0.1 0.2 0.3

Real Estate - 4.1 4.1 - 3.7 3.7

Actual return on plan assets 35.5 36.9 72.4 36.3 36.2 72.5


PlanABC Plan Optima 2

Plan

% % % %

Discount rate 3.8 3.9 3.6 3.7

Rate of increase in salaries 2.0 2.0 3.4 3.5

Rate of increase in pensions-in-payment 2.0 2.9 1.9 2.9

Rate of increase in pensions in deferred pensions 3.0 2.0 2.9 2.0Inflation Assumption 3.0 3.0 2.9 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 21.6 years (ABC Plan) and for a further 21.8 years (Optima 2 Plan).

For a member aged 40 in 2015, retiring in 25 years time, the assumptions are that they will live on average for a further 24.0 years after retirement (ABC Plan) and for a further 24.7 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 £0.8m (ABC plan). These rates are subject to review at future actuarial valuations.

DEFINED CONTRIBUTION PLANS

The pension charge in respect of the defined contribution pension plans for the year ended 31 December 2015 was £1.2m (2014: £1.3m). As at 31 December 2015 there were £0.2m (2014: £0.2m) outstanding contributions to be made to the Odeon DC Stakeholder Pension Scheme.

49



31 December 2015


A share-based long term incentive plan (“LTIP”) is in place.

During 2014, certain members of the executive management team purchased in cash shares in Odeon & UCI Cinemas Group Limited (“OUCGL”), a subsidiary of the Company. These shares (B, C and D ordinary) potentially enable them to participate in future value growth of the business.

On a future sale of the business, executive management would have a right to sell their shares to the Company, and the Company would have a corresponding right to buy their shares, for a price determined in accordance with the share rights under the Articles of OUCGL and separate contractual arrangements.

The method of settlement would depend on the nature of any future sale of the business.

At December 2014, the directors concluded that the fair value of the LTIP was no more than the amounts paid by the individual members of executive management in respect of the shares, and there was no liability to the Group.

During 2015 the estimated fair value of the LTIP increased such that the Group now recognises a liability. There are uncertainties regarding the liability and the charge to the profit and loss account in the period because the fair value depends upon assumptions regarding, inter alia, the equity value of the business and the timing of any future sale. The liability takes into account the directors’ best estimates of these matters.

The movement in the year is shown in the following table:

OTHER LONG TERM BENEFITS

SHARE BASED PAYMENTS

NOTES (CONTINUED)

£m

Carrying amount of liability at 1 January 2015 -Share based payment expense in the period 5.8

Carrying amount of the liability at 31 December 2015 5.8

OTHER LONG TERM INCENTIVES

The Group has other long term incentive schemes in place which are structured to pay bonuses to executive management and other employees through the normal payroll systems upon a change of ownership. Accrual has been made for the directors’ best estimates of the fair values as at the balance sheet date.

50



31 December 2015


26. CAPITAL

27. OPERATING LEASESNon-cancellable operating lease rentals are payable as follows:

28. COMMITMENTSCAPITAL COMMITMENTS

Contractual commitments to purchase tangible fixed assets at the year-end were £2.9m (2014: £10.8m). The Company had no commitments in the current or prior year.

29. CONTINGENCIES

At 31 December 2015 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.

Share capital 2015 2014

£m £m

Allotted, called up and fully paid

120,644,970 (2014:120,644,970) A ordinary shares of £1 each 120.6 120.6

Group 2015 Group 2014

£m £m

Less than one year 143.0 146.3

Between one and five years 541.1 565.6

More than five years 951.1 1,038.2

1,635.2 1,750.1

The holders of A ordinary shares are entitled to receive dividends as declared from time to time and are entitled to attend, speak and vote at meetings of the Company (one vote per share).

DIVIDENDS

After the balance sheet date no dividends (2014:£nil) were proposed by the directors.

During the year £120.6m was recognised as an expense in the profit and loss account in respect of operating leases (2014: £129.2m).

The Company had no operating lease commitments at 31 December 2015 or 2014.

51



31 December 2015


30. RELATED PARTIESGROUP

Identity of related parties with which the Group has transacted

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 2015, and the directors therefore consider it to be a related party. 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. Further settlements in cash totalling £18.6m were received by the Group during 2014, with an additional £3.2m reduction in the amount due from the PropCos as a result of the sale of three companies to Odeon and UCI Cinemas Group Limited (Odeon Bournemouth (ABC) Ltd, Odeon Bournemouth (Odeon) Ltd and Odeon Weston-super-Mare Ltd).During 2015 a process to dissolve the PropCos was initiated. Prior to this, all balances with the Group were extinguished through settlements in cash totalling £2.8m and the release of a provision and none remained at 31 December 2015 (2014 £1.6m). Interest income from the PropCos in 2015 was nil (2014 £0.3m). Rental expense payable to the PropCos in 2015 was nil (2014 £1.2m).

Transactions with key management personnel

Total compensation of key management personnel (the directors) is disclosed in note 7 and note 25. There were no other transactions with key management personnel during the year.

Administrative expenses incurred from

Finance (income)/expense

2015 2014 2015 2014

£m £m £m £m

Entities with control, joint control or significant influence over the Group

-

-

52.2

49.6

Entities over which Group has control, joint control or significant influence (subject to wholly owned exemption)

-

-

-

-

Key management personnel of the company and its group

-

-

-

-

Other related parties (subject to wholly owned exemption)

-

1.2

-

(0.3)

- 1.2 52.2 49.3

Other related party transactions

52



31 December 2015


Receivables outstanding Creditors outstanding

2015 2014 2015 2014

£m £m £m £m

Entities with control, joint control or significant influence over the Group

-

-

536.8

499.0

Entities over which Group has control, joint control or significant influence (subject to wholly owned exemption)

-

-

-

-

Key management personnel of the company and its group

-

-

-

-

Other related parties (subject to wholly owned exemption)

-

1.6

-

-

- 1.6 536.8 499.0

Finance (income)/expense Creditors outstanding

2015 2014 2015 2014

£m £m £m £m

Entities with control, joint control or significant influence over the Company

42.3

40.1

435.4

404.0

The creditors balance represents loan notes and loans payable to related parties. Details of these can be found in note 20.

COMPANY

Identity of related parties with which the Company has transacted

The Company has loan notes outstanding with Monterey, and associated interest expense related to these (note 20), and an intercompany balance with Odeon and UCI Cinemas Group Limited as seen in the table below:

53



31 December 2015


31. ULTIMATE PARENT COMPANY AND PARENT COMPANY OF LARGER GROUPThe directors regard Terra Firma Holdings Limited, a company registered in Guernsey, as the ultimate parent entity. The ultimate controlling party is Guy Hands.

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

33. EXPLANATION OF TRANSITION TO FRS 102 FROM PREVIOUS UK GAAPAs stated in note 1, these are the first financial statements prepared by the Group and Company in accordance with FRS 102. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 2015 and the comparative information presented in these financial statements for the year ended 2014.

GROUP

In preparing its FRS 102 balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its previous UK GAAP basis of accounting. An explanation of how the transition from UK GAAP to FRS 102 has affected the Group’s financial position and financial performance is set out in the following table and the notes that accompany the table.

Reconciliation of loss and equity from previous GAAP to FRS 102

Group Note Loss for the year ended

31 December

Equity as at 31 December

Equity as at 1

January

2014 2014 2014

£m £m £m

Amount under previous GAAP (119.0) (590.4) (483.9)

Interest rate swap brought onto balance sheet at fair value, revalued through profit and loss account

A

1.8

(0.3)

(2.1)Change in accounting for loyalty rewards B 0.8 (7.1) (8.1)

Reclassification of foreign exchange movements from other comprehensive income to profit and loss account

C

24.1

-

-

Deferred tax adjustment D 6.4 (2.1) (8.7)

Amount under FRS 102 (85.9) (599.9) (502.8)

54



31 December 2015


Notes to the reconciliation

A) The interest rate swap is now held at fair value, having previously not being recognised on the balance sheet until the related transaction had occurred. This resulted in the recognition of a financial liability on the balance sheet. This is revalued at fair value at the reporting date, with the change being recorded in the profit and loss account.

B) As explained in note 1, loyalty rewards must now be accounted for at the fair value of their associated revenue and

not the cost to the Group. This has resulted in a deferred revenue balance being recognised and remeasured at the reporting date.

C) Certain foreign exchange gains and losses were previously recognised directly in the statement of Other Comprehensive Income. In accordance with FRS 102 these have been reclassified to the profit and loss account. As this is a reclassification there has been no change to opening or closing equity.

D) The change in deferred tax is a result of the change in deferred tax requirements on the fair value adjustments made to the fixed assets of acquired entities.

COMPANY

In preparing their FRS 102 balance sheet there have been no adjustments to the balance sheet.

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