Community

Cineworld observes the British Board of Film Classification's guidelines for film classification unless the local authority specifies otherwise; within this, however, it seeks to show as wide a range of film product and other screen content as possible. This is frequently driven by the local community and its needs. Cineworld has been once again the number one exhibitor in the UK for Bollywood product with over 50% box office share over 47 titles. In addition, Cineworld has continued to show a wider range of film product than its main competitors in the multiplex industry including non-English language titles, smaller British releases and independent American productions. Cineworld has also continued to increase the amount of non-film alternative content which it exhibits. Live screenings from the Metropolitan Opera and the National Theatre have attracted different audiences to Cineworld cinemas across the country. There have also been live screenings of acts and shows as diverse as Bon Jovi, Metallica, Andre Rieu, Les Miserable and Simply Red. Cineworld has also shown live sport in 3D in the form of Six Nations Rugby and the FIFA World Cup. Screening such a wide range of content means that we attract a wider range of audiences into our cinemas and are able to distinguish ourselves in the marketplace from our principal competitors by offering more.

In 2010, Cineworld once again worked with various charities, local government and community groups. Cineworld took part in a screening programme in conjunction with BAFTA and local children's hospices. In addition, Cineworld hosted the second annual screening for the British Forces Foundation for families whose members are serving abroad. Cineworld also hosted the national Times Spelling Bee competition. Many cinemas also work on their own individual projects with local charities. All these events increase the profile of the Cineworld brand and help place Cineworld at the centre of local communities as well as supporting worthy causes.

Cineworld was, once again, the major venue partner for the Edinburgh International Film Festival, the Jameson Dublin International Film Festival and the Bradford International Film Festival as well as taking part in a number of smaller regional and local festivals. It also continued its sponsorship of two MA scholarships at the National Film and Television School. These activities continue to increase awareness of the Cineworld brand in audiences that might not normally associate Cineworld with this kind of wider film based activity.

Access for all

Cineworld has been keen to promote a "Movies for All" policy. Increasing accessibility results in local cinemas playing a fuller role in the communities in which they operate and offer larger potential audiences. On Saturday mornings it is still possible for children to see films for £1 which is a price that has not been increased for over 14 years. Senior citizens and students also receive discounts at certain times. Free tickets are offered to helpers of wheelchair users registered with the Cinema Exhibitor Association ("CEA").

All new cinemas are designed to exceed current statutory requirements to provide buildings which are technically advanced, yet meet high operational standards in terms of public service, safety and accessibility. They are designed to remove physical features which can hinder the use of the facility by the less physically able, so that auditoriums are as accessible as possible given the restrictions of any particular location. The opportunity is also taken to enhance access within cinemas when they undergo major refurbishment as part of an on-going programme of improvements.

The business has a Disability Focus Group which meets regularly to review all aspects of disability access and the improvement in the services provided in this area which include regular screenings of subtitled and audio descriptive films, the installation of infrared systems in all new build cinemas and a programme of replacing induction loop systems in older cinemas during refurbishments. All these changes have helped to improve overall coverage for the hard of hearing within the cinemas and are linked to digital projection becoming more widespread. With an ongoing programme being implemented for the installation of digital projection to existing cinemas and full digital projection being installed in new cinemas, it will be possible to provide further improvements in our facilities for the hard of hearing and the partially sighted. By 31 December 2010, 377 screens with digital projection had been upgraded in this way with plans to complete upgrades for all cinemas by late 2012.

Film piracy

With the increase in simultaneous worldwide film releases and UK first releases, there remains a significant risk of piracy within the cinema industry. Cineworld continued to work closely with the CEA, Federation Against Copyright Theft ("FACT") and INFA©T Ireland in order to help reduce and prevent film piracy. In line with Cineworld's operational strategy, each cinema management team is responsible for ensuring that they do everything reasonably practicable, including the use of night vision technology, to protect the intellectual property rights of films and alternative content exhibited within our cinemas.

With the ever changing threat of evolving technologies and smaller undetectable recording devices, Cineworld mitigates this risk by constantly reviewing and developing its training programme, policies and procedures to ensure its staff are able to combat film piracy effectively. Each member of cinema staff is now required to complete the FACT Film Test as part of their induction and ongoing training. Cineworld also increases the level of vigilance around high-profile vulnerable titles when released.

There were a number of notable successes in 2010 such as the police in Glasgow arresting and charging an individual with five counts relating to copyright laws following a very complex investigation with FACT, the police and Cineworld working together. This investigation has now led to many further arrests in the Midlands area and the resulting prosecutions are currently on-going. In another case, Birmingham police prosecuted an individual following a recording incident at Cineworld in Broad Street earlier in the year. These successes have resulted in a number of awards for our staff including four being made by FACT to Cineworld employees for the work done in detecting piracy activity at a ceremony in September hosted by Paramount Pictures, one of the major film distributors.

Environment

Cineworld seeks to comply with all relevant environmental legislation and to operate in an environmental sensitive manner. The Directors acknowledge the impact that the business has on the environment and is operating a number of processes to reduce the quantity of paper and packaging that is used in the business. Employees are encouraged to eliminate unnecessary travel and use other methods of communication in its place. Computer and other office equipment that has reached the end of its working life is resold, recycled or donated to local organisations as appropriate.

Being a multi-site business, the Group is conscious of its total energy consumption and the amount of waste materials generated and is actively working to reduce both energy usage and the quantity of waste materials produced that cannot be recycled. The Group continues to run pilot projects to evaluate possible measures to reduce its environmental impact. One such trial which is currently being run is the installation of LED lamps, detector switches and daylight sensors at the Cardiff cinema to help reduce energy usage. The impact of such work is evaluated and rolled out to further sites if appropriate.

As required during the year, the Group registered in the Environment Agency's Carbon Reduction Commitment Energy Efficiency Scheme ("CRC") which will track carbon emission from energy consumption of our UK cinemas. The majority of our cinemas already have half-hour read electricity meters or automated meter reading ("AMR") meters. To improve monitoring of energy usage, AMR meters are being installed in the remaining cinemas that have old style electricity meters and this is expected to be completed in the first half of 2011. The installation of AMR gas meters has also been commenced with 41 installed by the end of 2010. Cinemas that have the up-to-date meters receive a weekly consumption report which enables them to monitor actual usage against expected energy usage. In addition, an Energy Champion has been appointed at each cinema to focus on best practices in order to drive reduction in energy consumption. As a consequence of the steps already taken, over half of our cinemas used less electricity than in the prior year and the Group achieved in total a 2% reduction in electricity use across 67 comparable sites.

The conversion to digital technology, which continued during the year, further reduced Cineworld's environmental impact. The move away from 35mm celluloid prints represents a direct reduction in the use of raw materials for the production of these bulky prints using chemical processes, but also the amount of waste that is ultimately produced as these prints are shredded and are unable to be recycled at the end of their relatively short life. In addition, the distribution of digital content through small hard drives is greatly reducing the delivery costs and associated carbon footprint. Throughout the year, over 25% of film content and 100% of all alternative content was delivered in digital format. One film was successfully delivered solely by satellite to sixteen sites during the year as a trial. Ultimately cable or satellite delivery should remove the carbon impact almost completely.

The introduction of 3D technology has brought its own challenges. Throughout the UK, the use of special disposable 3D glasses to enable this format has been the norm. In early 2009, Cineworld started to recycle these glasses and this had a significant impact on the amount of wastage. In November 2009, it altered its pricing structure from a premium for 3D films with "free" glasses to a smaller premium but with customers being required to purchase glasses separately. This change has significantly encouraged customers to retain their glasses for future use and, during 2010, on average around 40% of audiences for 3D films brought with them glasses obtained from previous visits. In addition, the marketing of special 3D glasses has, and should, continue to help the level of reuse accelerate.

Retail

Cineworld takes a proactive stance on how it markets food and drink in its cinemas and continually looks to respond to the challenges of marketing responsibly through offering more healthy options and reducing its impact on the environment, whilst maintaining the wide overall choice that customers demand.

2010 saw the full roll out of two key initiatives commenced last year. Firstly, all of Cineworld's sites now serve popcorn made using GM free rapeseed oil, a much healthier option than the previous coconut oil to which customer reaction has been favourable. In addition in the first quarter, we completed the switch to the new, slimmer popcorn bag reducing raw materials by some 39% in this respect.

We are now working with our principal suppliers on improving aspects of our products and range in the area of both sizing and distribution. We are also undertaking a review of all sizes and combo packages to ensure that they meet customers' expectations and offer greater choice. As part of this review, we will also be exploring what we can offer in the way of more healthy options and how we can communicate more clearly the nutritional information for our unpackaged goods such as popcorn, hot dogs, nachos and dispensed soft drinks.

We continue to look to reduce the number of weekly deliveries into all of our sites. Each time a contract comes up for renewal, the renewal arrangements are carefully reviewed to ensure that they are not only commercially beneficial, but also that full account is taken of environmental considerations.

Our people

Cineworld's people remain central to its success and a number of Human Resources ("HR") initiatives were launched in 2010 to continue the business's on-going success. Two HR initiatives were aimed at our most senior people. The first was a leadership development programme for our Executive Directors and Senior Managers and this involved 360 degree profiling combined with bespoke development plans. The second initiative called "The Academy" has been developed over the year and will commence in March 2011. It is over and above our core development programmes and is aimed at high potential managers. The Academy will develop existing high potential talent for our largest and most critical sites by providing skills in executive management and strategic leadership and will result in delegates achieving a qualification which is the equivalent to a master's degree. It will provide a route for progression to those who want to advance and will ensure that the Group has sufficient quality candidates when vacancies arise at the largest sites.

Additionally, our ongoing learning and development programmes ensure that every employee receives a thorough induction and thereafter further development opportunities are available to help them progress within the Group. For site managers, a series of bespoke "core courses" ensure continual professional development, ensuring that learning is at the heart of the cinema operation. Our annual learning and development "event" course focuses on a particular aspect of the business with a film based theme. Our most recent event course, aimed at General Managers, was called "The Greatest Show on Earth". It centred on customer service and recognised that, when people visit our cinemas, they should have the best experience possible.

In 2009, Cineworld introduced work based vocational qualifications ("NVQs") into the business and developed this programme over 2010 with candidates being provided with support and encouragement to complete qualifications during work time. At present, 49 employees have completed qualifications with a further 77 learners on programmes at the beginning of 2011. It provides a route for progression for those people at lower levels in the organisation who want to advance and helps to ensures that the Group has the skills in its workforce which are key to its ongoing success.

Cineworld is proud that a high proportion of management and supervisory positions are held by employees who have started within the organisation at lower levels. To ensure staff are engaged, motivated, developed and retained there is a performance management framework in place. All Head Office and site management employees have objectives set followed by a number of performance review discussions to support and stretch their performance allowing their full potential to be achieved. As part of this, development opportunities are identified and, in the summer of 2010, a "learning at work" day was launched for our Head Office people with 75 people attending sessions such as "Lead and Succeed", "The Communication Edge", "Win Win Negotiating Skills" and "Timetastic Time Management Skills".

All employees participate in the success of Cineworld through bonus schemes and Cineworld is proud that for the 16th consecutive year bonuses were paid to all qualifying staff in 2010. Cineworld is also committed to increasing the number of employees who hold shares in the Group. In December, 75 staff benefited from the first maturity of the SAYE Share Option Scheme, initially offered in 2007, and were able to acquire shares at £1.60, a price well below the prevailing market value.

All of our HR initiatives are aimed at ensuring Cineworld remains a great place to work and in turn, a great place to watch films. A number of focus groups were held throughout the year to ensure that working practices are continuously developed and, as part of this, employees were encouraged to share their views. Employees are also able to share their views and make suggestions to management at any time via a dedicated email address. Good ideas are captured and incorporated into ways of working going forward for the benefit of all.

Safety

The ongoing management of the day-to-day health, safety and welfare of Cineworld's customers, staff and contractors is of prime concern with over 47 million customer visits a year. Further steps have been taken this year to ensure that each cinema management team has the knowledge, understanding and tools necessary to effectively manage health and safety to a high standard within its site to keep all our staff, customers and other visitors as safe as possible.

During the 2009/10 year, all cinemas were again subject to a Fire, Food and Health and Safety Audit and overall achieved an average mark of 86% (with 85% now being considered the acceptable level of performance - up from 70% the previous year). The process was overseen and verified by external consultants. Follow-up audits were undertaken at sites where standards were not found to be at the level expected by the Group and regular monthly compliance monitoring was completed for all remaining sites by way of reviewing monthly audit update submissions.

To strengthen further the safety regime, in the last quarter of 2010, new compliance audits were introduced for all General Managers. These audits were followed by compliance audits undertaken by the Regional Managers. These two tiered audits were aimed at providing the General Managers of each cinema with a means of focusing on the major fire, food, health and safety and maintenance issues arising within their cinemas and to help the identification of any new issues arising as well as confirming how existing issues are being managed.

Early indications from the 2010/11 year audit cycle are that site standards have once again improved on last year's results with an average pass mark in excess of the previous figure. Like the audits in 2009/10, this year's audits are being undertaken on an unannounced basis in order to reflect the true operation of health and safety at each site.

An annual review of documented health and safety policies and procedures was also carried out in the latter part of the year to ensure that they reflected changing legislative standards as well as recommended good practices.