Neil Williams FCCA, FD of Odeon & UCI cinemas

This article was first published in the January 2016 UK edition of Accounting and Business magazine.

It is 10 o’clock on a Thursday morning and the Odeon cinema in London’s Leicester Square, where Ridley Scott’s The Martian will have its world premiere that evening, is a hive of activity. Technicians are teeming through the building, setting up cameras and organising what appears to be miles of cable. A handful of impressively intimidating security guards stand outside the auditorium, keeping prying eyes (and smartphones) away as the cinema staff carry out a sound and picture check. Outside the hotel next door, a couple of photographers are lurking in the hope of catching a glimpse of Matt Damon, the guest of honour.

In the middle of all this hoopla sits Neil Williams, FD of Odeon and UCI cinemas in the UK and Ireland, and you just have to ask: Neil, do you have the best job in accountancy? ‘Well, I’m a film fan so this is a perfect job for me,’ he laughs. ‘One of the best things about it is working in a sector where I can really identify with the product. I work for Odeon but I’m a customer, too.’ Like many forty-somethings, Williams’ enthusiasm for the movies can be partly attributed to Star Wars, and the conversation quickly turns to the latest in the franchise, The Force Awakens, which opened in mid-December: ‘I grew up with Star Wars so that’s tremendously exciting. The film could be the biggest in the UK so far, and I hope it will be.’

Assuming it lives up to expectations, The Force Awakens should be the icing on the cake for what has been one of the best years for film exhibitors in recent times. Fast and Furious 7, Avengers: Age of Ultron, Fifty Shades of Grey, Inside Out and Jurassic World all performed exceptionally well, and the latest Bond film, Spectre, broke box-office records in its first week.

It is a relief for the sector, as 2014 was less impressive, thanks partly to the FIFA World Cup but also to a dearth of inspiring films. Higher attendances are reflected in Odeon’s results; the group as a whole (there are six regions across Europe, of which the UK and Ireland is the largest) reported EBITDA of £47.1m for the first nine months of 2015 – 104.7% more than in the first nine months of 2014 – and paid attendance was up 13.4%. ‘It’s been a very bold year and the films are a major factor in our success,’ says Williams, ‘but once customers are in through the door it’s about engaging with them to make [cinema-going] a habit.’

Cinema admissions in the UK peaked in 1946, when more than 1.6 billion tickets were sold. Mass-produced television sets decimated the sector over the next four decades, and admissions hit their low-point in the early 1980s, when fewer than 60 million tickets were sold. Since then, though, the trend has been steadily upwards in spite of successive predictions that video, DVDs, digital television, LoveFilm, Netflix and on-demand streaming would keep us all at home, on the sofa with a bag of microwave popcorn. ‘That upward trend in customer numbers since 1983 comes down to the customer experience,’ says Williams. ‘Things have changed in terms of how content is consumed but that hasn’t affected us. In fact, we see Netflix consumers as a good target audience for us because they’re more likely to be people who want to come to the cinema.’

On the up

In fact, cinemas are on the up. There are now 3,947 screens (936 of them owned by Odeon & UCI) in the UK and Ireland, compared with 3,475 a decade ago.

Competition is fierce, though, so why would someone choose Odeon over any other multiplex? ‘We’ve done a lot of research into what customers want and it comes down to comfort, good sound and picture quality,’ Williams says. ‘Our focus is very much on the customer experience. We’ve gone to great lengths to invest in picture and sound technology, as well as comfortable seating.’ And there are a range of ‘experiences’ available, from plush screening rooms perfect for a small group to the cavernous 1,700-seat screen at the Odeon in Leicester Square.

The investment in picture and sound technology was forced to a large extent by the advent of digital technology. The replacement of the old analogue technology not only improved sound and picture quality but transformed the ability of cinemas to plan programming. Films are now delivered on hard drive or streamed, rather than on reel, and any that prove to be box-office flops can (in theory at least) be replaced immediately, as can the posters and other marketing content. Odeon has also introduced live streaming of events. ‘We can do things today that were inconceivable before. Tonight, for example, we’re broadcasting the premiere live to our cinemas all over Europe.’

But digital projection has been a huge investment; in the case of Odeon, the conversion of its screens, which was completed in 2012, cost upwards of £100m.

While some cinema chains joined forces with the biggest Hollywood studios to fund and manage the transition to digital, Odeon took on the task alone. The presence of venture capital money in the exhibitor sector in the UK has certainly worked in its favour; Guy Hands' private equity firm Terra Firma bought Odeon Cinemas in September 2004 for €650m and UCI Cinemas a month later for €350m, while its main rival, Vue, was owned by venture capitalists until its management buyout in 2006. Williams says that being owned by Terra Firma means that ‘we can be more dynamic; the speed of decision-making is much quicker’.

The digital conversion was by far the biggest investment Odeon had ever attempted – and Williams, who was head of its digital finance team at the time, had responsibility for funding it. The transformation needed went well beyond the complex technical requirements: ‘The skills we need as a group have also had to evolve considerably,’ he says.

‘Door wide open’

In fact, Williams had returned to Odeon after leaving the company a year earlier because he felt unchallenged as group financial planning and analysis (FP&A) manager. ‘I joined Odeon originally in 2007 but left two years later to set up the finance team at HSS Hire.’ As it turned out, the timing was unfortunate as the construction sector virtually collapsed shortly afterwards. Nine months into his new job, the phone rang. ‘I believe that if you have to leave a job, you leave with the door wide open. I’d always had a good relationship with the CFO at Odeon, and he called me and said that he had a different role that I might be interested in. So I went back.’

In 2014 he was made FD of the UK and Ireland and says he was ‘ready. An FD role had always been the aim.’ After graduating from Manchester University with a degree in economics and statistics, he worked for the Danish publisher Egmont, the home of Mr Men. His Qualification has, he says, been crucial. ‘I wanted to have a professional qualification after leaving university and I’d always had a commercial orientation towards business, so accountancy seemed like the natural progression.

The ACCA was right for me; I always knew I wasn’t an auditor and I lean towards financial accounting rather than management accounting.’ In 2000 he moved to GE Capital, with the intention of developing his skills on the analytical side of business: ‘The joy of GE is the variety of roles,’ he says. ‘I was there seven years and worked in procurement and FP&A, led an IT project and ran an analytics team. It’s a brilliant organisation in which to spread your wings and learn.’

At Odeon, Williams runs a finance team of 45, based in Manchester. ‘The core of the team is commercial finance and accounting, and transaction processing, but also a shared responsibility for group FP&A,’ he says. ‘We are organised like any other retail-orientated, customer-focused business.’

His own role, he says, is concentrated heavily around management information. The most important figure is the box-office take, particularly on a Monday. ‘The weekend trading numbers are very important and we always want to see if they reflect our forecasting,’ he says. Even though digital technology means that the booking of films is no longer static, the success of any exhibitor depends to a huge extent on the films it » chooses to show and its ability to spot a winner (or a dud).

‘A lot of science goes into the booking of films,’ says Williams. ‘We don’t get it wrong very often. We track what’s going on on social media, which gives us some insight into what customers want. It’s an intelligent approach to tracking demand. Geography comes into it, too – Legend [about the Kray twins], for example, did very well in London but not so well elsewhere.’

Tense relationship

It is not only about customer demand, though. While some independent films do well thanks to word of mouth, generally those that do best are the films that are most widely shown – which means those made by the largest Hollywood studios that have the money to invest in distribution (often through their own distribution arm). As a result, the relationship between distributors and exhibitors has the potential to be tense. ‘Our relationship with the studios is crucial, but it’s not a simple supplier/buyer relationship,’ says Williams.

The agreement to show each film and the conditions attached to the deal are negotiated between exhibitor and distributor on a film-by-film basis. The two often work together, jointly marketing films to build as large an audience as possible; when it goes well, both studio and cinema win. But things can also go the other way, and occasionally we get glimpses in the press of how finely balanced the relationship between distributor and exhibitor can be. In 2008, for example, Odeon refused to show the latest Rambo film at any of its screens after failing to agree commercial terms with its distributor, Sony Pictures Releasing. It is impossible to estimate exactly what the decision cost the film, but industry analysts said at the time that it halved the film’s potential takings.

Although Odeon & UCI has been put up for sale twice in recent years – in 2011 and 2013 – without success, and an alternative route of listing on the stock exchange has also been mooted, Williams dismisses any suggestion that the uncertainty might be distracting. ‘The private equity cycle inevitably means they will exit at some point,’ he says. So business carries on as usual – even if business, in this case, is leisure.

Liz Fisher, journalist