Luminar Group Holdings Plc Annual Report & Accounts 2011 Luminar More Than a Nightclub

Luminar Group Holdings plc Annual Report & Accounts 2011 Luminar More Than A Nightclub

Annual Report & Accounts for the year ended 26 February 2011

Stock code: LMR

Luminar Group Holdings plc Luminar House Deltic Avenue Rooksley Milton Keynes MK13 8LW www.luminar.co.uk

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Welcome to Luminar

Working to create the UK’s leading destination entertainment business.

We run entertaining, popular venues where people can meet, eat, drink and dance. We do it responsibly and with care, creating memorable experiences that our customers love coming back to. With a branded estate of 77 venues as at 26 February 2011, we have the largest square footage of nightclub capacity in the country.

Our Strategy

 Luminar has the best venues and the best operational capability in our sector. We remain confident that these strengths will continue to serve Luminar well, and that we can continue to enhance our position as the leading operator.

 Luminar venues welcome an average of over 200,000 customers through its doors every week.

 The Group’s strategy remains clearly focused on operational excellence and responding to customer demand, which will be achieved by: improving our operational template: improving our marketing function; driving efficiency at our head office function and improving the use of our assets.

Financial Highlights

Loss before tax* Total Revenue* Sales (per head) pre-exceptional items £137.3m £12.41 £1.1m (2010: £169.0m) (2010: £12.46) (2010: Profit £5.5m)

Net cash inflow Gross margins* pre-exceptional items Net borrowings 81.4% £21.5m £82.2m (2010: 82.8%) (2010: £31.5m) (2010: £92.7m)

* Continuing operations

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During 2010, we have: Business Review  partnered with Jongleurs to run comedy 02 Chairman’s Statement 04 Business Review nights across 4 of our clubs with another 8 11 Financial Review to follow in 2011;  introduced premium brand drinks and cocktails into our clubs for the first time;  partnered with Ministry of Sound to run events under their well-known dance Governance 13 Corporate Social Responsibility brands Hed Kandi and Dance Nation; 18 Board of Directors  launched live entertainment into many of 19 Corporate Governance Statement 25 Remuneration Report our clubs which delivered tours in 2010 33 Report of the Directors from Calvin Harris, Example and Katy B; and  opened PROJECT nightclub in Norwich, our first in 2 and a half years.

Consolidated Financial Statements 39 Independent Auditors’ Report 41 Consolidated Income Statement 41 Consolidated Statement of Comprehensive Income 42 Consolidated Balance Sheet 43 Consolidated Cash Flow Statement 43 Consolidated Net Debt Statement 44 Consolidated Statement of Changes in Shareholders’ Equity 45 Principal Accounting Policies for the Consolidated Financial Statements 53 Notes to the Consolidated Financial Statements

Company Financial Statements 82 Independent Auditors’ Report 84 Company Balance Sheet 85 Principal Accounting Policies for the Company Financial Statements 89 Notes to the Company Financial Statements

Shareholder Information 97 Notice of Annual General Meeting 102 Explanatory Notes to the Notice of Annual General Meeting 104 Shareholder Information

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Chairman’s Statement

John Leach Chairman

Overview and Strategy Despite the challenging trading conditions, the “We would The late night dancing market has continued Group has made progress in catering for the to be difficult with factors such as the demands of our customers through a number of economic environment, high levels of initiatives. This is evidenced by the introduction like to thank youth unemployment and lower disposable of cocktails, premium branded drinks, branded incomes, together with a highly competitive sessions and new entertainment such as all our staff market and severe adverse weather Jongleurs comedy evenings. conditions during peak trading periods, who have contributing to the challenges. Results The results are set out in the financial The financial results for the year ended statements on pages 41 to 44. They are also risen to the 26 February 2011 reflect these trading discussed in the Business Review on pages conditions. As a result, it has been necessary 4 to 12. challenge of to impair certain tangible asset values and reduce the level of goodwill that is Corporate Social Responsibility recognised on the balance sheet. Since The Group’s Corporate Social Responsibility repositioning refinancing in December 2010, the Group Statement is set out on pages 13 to 17. has maintained its strong relationship our Company with its Banking Group, comprising Lloyds The Group’s activities are principally in the TSB, Barclays Bank plc and the Royal Bank late night market for entertaining, dancing in the of Scotland (“Banking Group”), which and drinking. The Group places considerable has continued to support the business, emphasis on developing, maintaining and the management and the strategy, monitoring policies and processes designed changed as demonstrated by them granting a to protect the well-being and welfare of prospective waiver of the financial covenants, customers and employees. The Group is also market which would fall to be tested at the end of committed to taking into account the interests May 2011. In addition, the Banking Group are of the communities in which it operates. continuing to provide flexibility to maintain environment.” the Group’s liquidity levels until 31 August Board Changes 2011 and agreed to continue dialogue with As reported in last year’s Annual Report, Luminar and to work together with the Stephen Thomas left the Board on 1 March Group with a view to agreeing by that date a 2010. He was the Chief Executive Officer longer term restructuring of the Group’s debt and founder of Luminar, Robert McDonald arrangements. These measures have been (Finance Director) left the Board on 1 June necessary to address the impact of severe 2010 and Alan Jackson stepped down as adverse weather conditions experienced Chairman on 13 July 2010. in December combined with the continued deterioration in market conditions which together have placed significant stress on financial covenants.

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Pictured: 1 Oceana Milton Keynes. 2 Oceana Plymouth.

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Simon Douglas joined the Board in March Current Trading Average footfall 2010 as Chief Executive Officer (“CEO”). Current trading remains difficult. Same outlet Simon has a strong track record in the leisure sales for the first nine weeks of the financial (per week) and entertainment sector, including various year were 13.9% below the same period last management roles at HMV, Virgin Retail and year reflecting a continued improvement in latterly as CEO in leading the MBO of Zavvi, like for like trends despite trading over the 212,000 where he extracted considerable shareholder Easter and Royal Wedding weekends. value from the business. (2010: 267,000) Dividend John Leach joined the Board as a Non- No interim dividend was paid and no final Executive Director on 30 April 2010 and dividend has been recommended. became Chairman on 13 July 2010. John has wide experience of both the leisure sector John Leach Average sales per and most recently the City where from 2003 Chairman to 2008 he was involved in various roles 11 May 2011 customer and latterly as CEO of Hermes Focus Asset Management Limited. Prior to this he was Chairman of Orbis Plc, Waterhall Group Plc and £12.41

Brent Walker Group, where he was CEO from (2010: £12.46) 1994 to 1998 and CFO from 1991 to 1994.

Philip Bowcock joined the Board as Finance Director on 1 June 2010 from Barratt Developments plc, where he was Group Financial Controller. Prior to this, he held senior finance roles at Tesco and Hilton Group.

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Business Review

Simon Douglas Chief Executive

Operational Business Review maximise the return on our assets. The “As our core As at 26 February 2011, Luminar operated initiatives include partnering with Jongleurs 77 late night venues in 72 towns and cities. to run comedy nights across 12 of our clubs, This continues to be the largest estate of its building a corporate sales team with the aim customers’ kind in the UK. Luminar clubs trade under 3 of delivering incremental business, further main brands Oceana, Liquid and Lava & Ignite diversifying the music offering by partnering prospects are and we also operate a number of nightclubs with Ministry of Sound, introducing quality outside of these brands. live acts into clubs and launching our first challenged, ever cocktail range throughout the estate. Our customers are predominantly in the We are confident that these initiatives 18–24 year age Group, including many pave the way to enable the Group to offer it is vital that students, although with the introduction of a comprehensive late night entertainment new initiatives such as Jongleurs comedy proposition. We are encouraged by early we look to nights we are attracting a wider audience. indications that these initiatives are driving footfall and spend per head. Primary income streams are from the sale broaden our of drinks (67.2%) and admission charges on In view of the challenging market conditions, entry (24.9%). the Group continues to control costs tightly. audience Capital investment was kept to a minimum During the year ended 26 February 2011, across although, during the year, we did see the with the an estate that has been reduced by 10 clubs, completion of PROJECT. PROJECT was the sales per customer were marginally down Luminar’s first new night club opening in on last year. The average retail selling price per two and a half years. PROJECT opened at the introduction measured drink (including VAT) was £2.22 Riverside Entertainment Complex in Norwich during the year, slightly higher than £2.15 in in March 2010 and, in addition to its unique of new the prior year, with broadly steady levels of cutting edge design, this nightclub is fully consumption. Gross margin was 81.4%, which, equipped to cater for Live entertainment, in part was attributed to the introduction of Jongleurs comedy nights and all of the initiatives such premium brands into the business, one of other initiatives envisaged by the a number of initiatives to enhance the management team. as Jongleurs customer proposition. The results for the year, while disappointing, Overall sales in the continuing business show some early indications of improvements Comedy.” totalled £137.3m in the year, a reduction of in like for like trends. Equally encouraging is 18.8% on the prior year, or 17.5% on a same the early evidence that initiatives introduced outlet basis across 73 venues which traded in midway through the year appear to be both years. There has been an improvement gaining traction and are diversifying our in the rate of decline on the previous year, offerings and revenue streams. with the second half showing a 14.7% decline. However, despite seeing an improvement To address our market issue, we are focused in like for like trends during the financial on supplementing our core dancing sessions year, given the current economic climate with a wider late night entertainment the outlook remains uncertain. We continue offering. During the year, the Group also to have a strong relationship with our launched a number of key initiatives aimed Banking Group, which has remained at driving the business forward. These supportive despite the challenging initiatives seek to diversify the offering, environment as described in further detail improve customer service and value and in the Financial Review.

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StrategY Review These sessions have opened clubs to a new In depth market research undertaken by audience and take place at times when they Luminar in 2010, highlighted a number would otherwise be closed. of key opportunities and reinforced the appropriateness of the operational strategy During the year, we have introduced premium now at the core of our business. drink brands into the business as part of our overall strategy of providing a high quality There are four key areas where we are value for money offering to our customers. concentrating our efforts: In addition, we have introduced a cocktail offering into clubs for the first time to 1 n Improving our operational template huge success. Research shows that customers regard appropriate music as being a key factor for a All of the initiatives outlined have, at their good night out and that they are developing core, a desire to focus heavily on customer an increasingly diverse range of musical service. We are placing great emphasis on tastes. This research also indicates that it is delivering a brand new customer experience important to customers that they are able to programme to engage staff, focusing on attend live performances by well-known acts the customer’s end to end journey from or artists. websites to in-club to aftercare. This revised programme will see a greater Over the past year, we have significantly focus on customer service training and 2 improved the quality of the music offering by the introduction of customer satisfaction refreshing our DJ’s and introducing a wide surveying to understand more about our Pictured: variety of quality live acts to perform in our customers’ opinions. 1 PROJECT, Norwich Main Room. clubs including Calvin Harris and Basshunter. 2 Calvin Harris, performing at In addition to mainstream dance sessions We continue to review our operational Oceana Brighton. and speciality nights offered at a local level, template but are reassured that the steps we have partnered with Ministry of Sound that we have taken are market leading and to address the diversity of musical tastes. their appropriateness has been reinforced Ministry of Sound is a world leading dance in recent industry studies [Source: Mintel brand and, in conjunction with them, we are Report: December 2010]. now able to offer a series of events under their well-known dance brands such as Hed Kandi and Dance Nation.

Through our partnership with Jongleurs, the UK’s leading comedy brand, we are operating comedy nights across a number of clubs. music karaoke

comedy corporate music karaoke

Industry Research* shows that music is one of the top considerations for clubbers when selecting their night out. Luminar clubs and head office constantly review their music polices to ensure they meet customer demands and stay relevant in the towns and cities music karaoke in which they trade.

*source: Mintel – Nightclubs Leisure Intelligence December 2010 music karaoke 05 comedy corporate comedy corporate 20319.04 25/05/2011 Proof 6

comedy corporate Luminar Group Holdings plc www.luminar.co.uk Annual Report 2011

Business Review Continued

Group Revenue by Brand n Improving our marketing function us to enhance the content on our Facebook We have developed strong partnerships with pages and to capitalise on strong brand / market leaders in music, comedy and premium performer associations through exclusive VIP drinks brands to make sure our offerings are competitions for our customers. fashionable and relevant for customers. We are now working closely with our search We have established a successful student engine optimisation agency to improve the brand in Fuzzy Logic and will shortly be research engine rankings of our websites and launching our urban brand, Vibe. We have also drive quality traffic to them. We have brought re-branded our underage events (formerly UK new customers to our websites through Club Culture or UKCC) to Love Social, which targeted Facebook advertising, specifically was launched at the end of 2010. identifying people who are familiar to the acts/brands now taking place at our clubs. We have centralised promotional activity and 32% run successful nationwide campaigns on key Our digital customer communications has trading nights. been streamlined by condensing promotional activity into one newsletter with consistent We have also centralised the ecommerce branding across the estate, creating an 35% platform delivering a consistent overall customer view of the communication communication message to customers, placing lifecycle to ensure maximum response rates great emphasis on social media in the process. with minimal attrition. 9% During the last financial year, we have We will continue to develop strong taken huge strides in communicating with partnerships, build upon our established our customers through the use of social brands and create new ones and will further Unbranded 24% media. We have invested in a social media develop our communication platforms to management tool to coordinate and protect ensure they are relevant for customers. our social media activity across the clubs and measure activity. This tool also assists

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productscomedy corporate

To target customers with nights relevant to their agemusi and lifestyle.c karaoke Luminar has focused on creating ‘products’ that reflect the changing demands of our customers. 2010 saw the launch of student brand ‘Fuzzy Logic’, under 18 brand ‘Love Social’, as well as a partnership with the world’s leading brand ‘Ministry of Sound’, which effectively became Luminar’s in-house dance music brand. comedy corporate

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comedy corporate Stock code: LMR Business Review Governance Consolidated Financial Statements Company Financial Statements Shareholder Information

Pictured: 1. Ice Room, Oceana Brighton. 2 PROJECT, Norwich.

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n Driving efficiency at our Head Risks and uncertainties Office function The principal risks and uncertainties that We have rationalised our head office function could affect the Group’s business are saving annual costs of £2.8m against the summarised below: prior year. The revised head office structure has a greater emphasis on supporting Risks operations, marketing our offering and Internal risks developing our partnerships. Covenant compliance and liquidity During the year, the Group signed a revised We will continue to tightly control central three year facility of £99m (the “New Facility”) costs and allocate resource sensibly to with its banking Group comprising Lloyds ensure maximum value is achieved. TSB, Barclays Capital and The Royal Bank of Scotland (the “Banking Group”). The New n Improving the use of our assets Facility was effective from 8 December 2010. During the year, we have disposed of 16 sites. These sites were either non-core or loss The New Facility comprises two term loans of making. We continue to refurbish the estate £44m and £40m repayable over three years and develop our properties in a cost effective and a revolving credit facility (RCF) of £15m. way while ensuring the offering remains The weighted average cash interest rate for modern, market leading and appealing to the New Facility is 7.8%. our customers. The main financial covenants applying to the By expanding the proposition outside of core New Facility are those of leverage (the ratio dancing sessions, we are utilising our assets of Net Debt to EBITDA as defined in the New more than ever. Facility Agreement) and fixed interest cover. The leverage covenant ratio was set at 3.8 We are developing strong working times, reducing to 2.0 times over the life of the relationships with our landlords and we New Facility, and the fixed interest cover was continue to challenge them hard to ensure set at 1.35 times rising to 1.75 times. that we are achieving value for money across the estate. We will remain focused on ensuring the estate is appropriately refreshed and utilised to its full potential.

We have approached each aspect of our strategy by making use of the best information available, seeking to build on fact rather than intuition and developing a professional rigorous methodology. Our strategy will continue to evolve and adapt to our changing market environment.

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Business Review Continued

Severe adverse weather conditions The Directors have examined all available “Luminar experienced in December combined with the evidence and have concluded that, continued deterioration in market conditions although the trading environment is still since that time have placed significant stress exceptionally challenging, and there is a provides on the financial covenants. At the February risk that discussions with the Banking Group 2011 testing date the Group continued to will not result in a successful restructuring a better operate within the required parameters. of the Group’s debt arrangements, in light However, trading conditions have remained of the supportive nature of the banking customer difficult and operating results have been relationship to date, the Directors are worse than anticipated, such that it appears satisfied that adequate financial resources likely that a covenant breach would arise will continue to be made available to the experience, when next tested at the end of May 2011 Group so as to enable it to continue to and a short-term liquidity problem may arise trade on a going concern basis. As a result, focusing on during the Summer months due to scheduled the Directors continue to adopt the going amortisation payments falling due under the concern basis in preparing the Group’s and New Facility during that period. Since signing the Company’s financial statements. The providing the New Facility the Group has maintained its financial statements do not include the strong relationship with the Banking Group adjustments that would result if the Group strong which has throughout remained supportive and the Company were unable to continue as of the business, the management and its a going concern. entertainment strategy. This has been demonstrated by the Banking Group granting a prospective High proportion of fixed overheads and waiver in respect of the financial covenants variable revenues content and which would fall to be tested at the end of A significant proportion of the Group’s cost base May 2011. In addition, the Banking Group are remains relatively constant notwithstanding reasons to continuing to provide flexibility to maintain changes to the level of revenues and therefore the Group’s liquidity levels until 31 August any significant changes in the level of the 2011 and agreed to continue dialogue with Group’s revenues could significantly affect the visit.” Luminar and work together with the Group level of earnings and cash flows. with a view to agreeing by that date a longer term restructuring of the Group’s debt Significant progress has been made in arrangements. simplifying and reducing the fixed cost base and this remains an area of focus going The Directors are of the opinion that the forward. Banking Group will remain supportive and that the ongoing discussions with the Failure to ensure brands evolve in relation to Banking Group will result in restructured changes in consumer taste debt arrangements which will allow the The market in which the Group operates is Company and the Group to continue to subject to changes in fashions and trends trade as a Going Concern and secure a more and the Group is exposed to the risk that its sustainable, longer term debt structure for innovations in venue format and content do the Group. Should the discussions with the not keep up with changes in consumer tastes. Banking Group not secure such a longer term Therefore, the Group continues to closely solution, the Group is unlikely to be able monitor changes in the marketplace so that to operate within the existing terms of the it can adapt its offering to protect and secure New Facility and it is likely that a breach of its revenues. the financial covenants would occur at the covenant testing point at the end of August 2011 and future liquidity risk would arise thereafter. In those circumstances, the New Facility could be accelerated and the debt then drawn under the New Facility could be required to be repaid immediately which would result in the business no longer being a going concern.

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Major fire Failure of internal control regarding frauds The business has suffered from three major and thefts fires since 2000, with the last being in The Group is vulnerable to the conventional 2005. These resulted in the destruction and financial threats faced by all businesses. closure of the clubs concerned. Therefore, Finance and Operations management fire prevention and fire safety are taken very continue to review, challenge and improve seriously in staff training and internal health many processes and controls. This process and safety reviews. The Group introduced is backed up by internal audit covering both specific training for all venues in the form Head Office administration/accounting and of a dedicated ‘fire safety week’, which the operating venues. 1 aimed to ensure that best practice was maintained throughout the Group. Following External risks the substantial reduction agreed in 2008 Interest rate movements to the excess payable by the Group on any Interest rate risk is being predominately one incident, the financial risk posed by any managed through swapping between major fires that might be suffered in the floating rate debt and fixed rate debt. future has been significantly reduced. This has been achieved through the use of a £50m five year fixed rate swap ending Health and safety August 2010, a £40m seven year fixed Health and safety is taken very seriously by rate swap ending August 2014 and a the Group, as detailed in the Corporate Social £50m cap and floor swap. Elements of these 2 Responsibility statement. The risk of non- swaps were terminated on the switch from compliance with health and safety legislation the old facility to the New Facility on 8 Pictured: is minimised through comprehensive training December 2010 to ensure the New Facility is 1 PROJECT, Norwich, Live Room. and an active in-house team who regularly 100% hedged. 2 Oceana, Southampton. carry out health and safety audits, and review and develop policies and procedures to maintain standards. Furthermore, the Group carries substantial public and employer’s liability insurance cover, in order to minimise the financial impact of any claim that might arise as a consequence of a failure in health and safety regulatory compliance. music karaoke

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music We have undertakenkaraoke a licensing deal with the UK’s leading comedy brand ‘Jongleurs’. Comedy nights started to run in February 2010 in Leeds, Cardiff, Newcastle and Norwich. The Jongleurs nights are driving an early door, encouraging an older age group to visit the clubs and are delivering an increasing spend per head through food and beverage sales. Jongleurs will be rolled out to an additional 8 clubs during 2011. comedy corporate

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Business Review Continued

Loss of licences The Group has a dedicated and experienced Should the spending propensity of young licensing officer, who monitors all licensing people reduce further, there is a risk that related matters and works closely with the the Group’s profitability could worsen to the operations management team, local licensing extent that we are no longer able to meet authorities and local police. This is backed up the requirements placed upon us by our with centralised incident reporting and follow- current lenders. The Board has considered up, including liaison with licensing authorities this carefully. for early warning of potential issues. The 1 Company also has access to specialist external Please see the Principal Accounting Policies licensing solicitors who provide additional in the Consolidated Financial Statement on advice as and when required. page 45 for further details on the Group’s financing arrangements. Every effort is made to ensure that managers and supervisors are fully conversant with Seasonality and weather current licensing legislation and their The number of admissions in the Group’s responsibilities under it. venues is considerably increased during holiday periods, especially Christmas and Uncertainties New Year, and over bank holiday periods. Economic downturn Similarly the admissions and revenue levels 2 The principal uncertainty facing the are generally lower in the early months of the Group is that of continued or worsening calendar year and over the summer, compared Pictured: economic uncertainty, particularly as it may with the autumn and spring periods. The 1 Oceana Brighton. affect young people. Whilst there is some Group’s revenues can also be adversely 2 Hed Kandi, Liquid Luton. evidence at national level that conditions impacted by extremes of weather conditions, are improving, any recovery remains fragile which could deter customers from visiting the and there is minimal evidence that it has yet Group’s venues. Current planning assumes impacted our core market. average seasonal weather conditions.

premiummusic karaoke drinks To satisfy the changing trends and tastes of our customers base, we have expanded our drink range to incorporate brands such as Redbull, Budweiser and Peroni, as well as adding Grey Goose and Belvedere, which combined with our focus on table service is designed to drive spend per head and enhanced music customer service. Alongside the increasedkaraoke range, a cocktail range was launched to capitalise on the increasing popularity of this type of drink. comedy corporate music karaoke

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Fluctuations in the commercial This is due to the fact that some clubs which property market are combined to trade as a multi venue site At the year end, the Group held 59 of its may have individual title deeds for each unit properties under short leaseholds, which and the inclusion of units in development and are subject to regular rent reviews. These sub-let units. rent reviews could either increase or remain the same, which could in turn affect the Terrorism economic viability of any of the Group’s units. In common with many businesses, the Group’s revenues are vulnerable to disruption from The Group also held 18 freehold properties acts of terrorism. Current planning assumes and 5 long leaseholds as at 26 February no change in the existing level of threat. The 2011 and therefore, any changes to the UK Company has issued documentation based property market could lead to changes in the on Home Office guidance to ensure that value of the Group’s property portfolio. employees are aware of these issues and The total number of trading units is lower than what to look out for. In addition, the Company the total number of leasehold and freehold purchases a specific insurance policy to cover properties held by the Group. risks from terrorist activities.

Financial review The total revenue and profitability generated by the Group is detailed below:

Total operations Revenue† EBITDA*† PBT*† 2011 2010 2011 2010 2011 2010 £m £m £m £m £m £m Continuing 137.3 169.0 22.9 35.2 (1.1) 5.5 Discontinued‡ 0.4 4.6 (0.1) (1.5) (0.1) (1.8) Total 137.7 173.6 22.8 33.7 (1.2) 3.7

† Includes units disposed of during the year. * Pre-exceptional items. ‡ Reclassified to reflect the composition of discontinued operations at the balance sheet date.

Earnings before interest, tax, depreciation In addition, increased interest receivable on Exceptional items within continuing and amortisation (“EBITDA”) from continuing deposits in the current year was offset by an operations totalled a net cost of £184.0m operations before exceptional items totalled increased interest charge as a result of the after tax for the year ended 26 February £22.9m in the year ended 26 February 2011, increase in the effective interest rate on the 2011 (2010: £104.3m). This charge followed (£12.3m or 34.9% below the previous year new facility to 7.8%. a review of balance sheet values, triggered principally due to lower admissions to our by lower profits, and the majority related to clubs). Depreciation and amortisation was The loss before tax from continuing impairment of specific asset values. The major £15.3m (2010: £22.7m) as the investment operations before exceptional items was exceptional items contributing to this charge programme remained modest and fixed £1.1m (2010: profit of £5.5m) and a taxation are described in note 8 at pages 58 and 59. asset impairment reduced the asset base. credit of £0.5m (2010: £nil credit) gave rise to The impairment review has also impacted the Net interest costs increased to £8.7m (2010: a loss for the year from continuing operations accounts of the parent Company, reducing £7.2m) despite a reduction in debt levels from before exceptional items of £0.6m (2010: distributable reserves to a deficit of £155.8m. £140.0m to £91.5m. This is in part due to us not profit £5.5m). Loss per share from continuing recognising interest receivable in respect of operations before exceptional costs was Discontinued operations contributed a post- the loan note to The 3D Entertainment Group 1.1p (2010: EPS 6.7p). Statutory loss from tax loss of £nil plus exceptional costs of £3.4m. Limited (“3DE”), which is now in administration continuing operations after exceptional items The main element of the exceptional cost was (2010: £0.9m). was £184.6m (2010: £98.8m loss), giving rise a loss on disposal of discontinued operations. to loss per share of 183.9p (2010: 119.9p loss).

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Business Review Continued

The Group continues to be cash generative, Interest rate risk Forward-looking statements with a net cash inflow after exceptional items Interest rate risk is being predominately Certain statements in this consolidated and investing activities of £10.5m for the managed through swapping between floating financial information for the year ended 26 year (2010: £13.7m). Control and reduction rate debt and fixed rate debt. This has been February 2011 are forward-looking. Although of expenditure has been strong during the achieved through a £34.5m fixed rate swap, a the Group believes that the expectations year, with capital expenditure of £5.5m £27.5m fixed rate swap and a £34.5m cap and reflected in these forward-looking (2010: £4.2m). The majority of this capital floor swap. At the year end, £91.5m of the statements are reasonable, it can give no expenditure relates to the development of bank facility was drawn down, of which all assurance that these expectations will the PROJECT nightclub in Norwich, for which was hedged. prove to have been correct. Because these insurance proceeds were received. statements involve risks and uncertainties, Currency risk actual results may differ materially from Details of the Group’s borrowings are set out The Group operates within the UK those expressed or implied by these forward- in the Principal Accounting Policies for the and substantially all transactions are looking statements. Consolidated Financial Statements on page 45. denominated in sterling; therefore, the Group does not suffer from a significant The Group undertakes no obligation to The balance sheet includes a current tax concentration of currency risk. update any forward-looking statements liability of £42.8m (2010: £42.8m) in respect whether as a result of new information, of amounts potentially due for tax years Credit risk future events or otherwise. since 2004 which remain under discussion Credit risk is managed on a Group basis. Credit with HMRC. risk arises from cash and cash equivalents, derivative financial instruments and deposits In view of current trading, the Group with banks and financial institutions, as well continues to conserve cash and in line with as credit exposures to receivables principally Board policy does not recommend a dividend recognised on sales of property assets and payment at the current time. on income received from sub-lets. The Group does not have a significant concentration of Financial risk management credit risk, and the majority of the Group’s Taxation revenues are cash based. The current approach of the UK tax authorities means that as a large corporate entity we are On 19 January 2007, the Group sold certain subject to regular tax audits, which by their trade and assets of its clubs to 3DE (an very nature are often complex and take many associate of the Group). Post-completion a years to complete. We draw a distinction transitional service agreement (“TSA”)) was between tax planning for non-commercial put in place between the Group and 3DE for reasons, and optimising the tax treatment of the provision of certain services. 3DE went commercial transactions, and we only enter into administration on 26 February 2010 and into tax planning in respect of the latter. this process is ongoing. All debtor trading balances relating to 3DE under the terms Funding and liquidity of the TSA are fully provided for. Vendor The Group’s cash and debt balances are loan notes of £19.3m (plus accrued interest managed centrally. Liquidity risk is managed totalling £5.3m) remains owed to the Group. through an assessment of short, medium and At the year end, the loan notes and accrued long-term cash flow forecasts to ensure the interest continue to be fully provided for. adequacy of debt facilities. Pensions The Group has positive cash flows from The Group contributes to a defined operating activities. Further details of contribution pension scheme for qualifying the Group’s borrowings are set out in employees. The Group has no exposure to the Principal Accounting Policies for the defined benefit pension schemes. Consolidated Financial Statements on page 45.

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As a listed business, which is also the leader in its field, we are fully aware of the effect our operations may have on the communities in which we operate. Acting in a socially responsible way is absolutely crucial for our business and accordingly, we recognise our responsibilities towards our customers, employees, investors and other stakeholders. We fully appreciate the benefits of operating in an ethical and responsible way.

With the ever increasing focus on Corporate Social Responsibility (“CSR”), we are also aware that companies which operate to a high ethical standard are becoming more attractive to investors. We also strongly believe that ethically minded companies who care about the future are likely to be more determined to succeed and prosper. We are, therefore, proud and delighted to announce that last year we were added as a new member of the FTSE4Good index, which is a clear demonstration that we take our CSR responsibilities extremely seriously.

Ever since Luminar was formed, we have faced challenges from economic, social and legislative changes and we have seen each change as a new opportunity for our business. Thanks to the efforts of our Directors and employees, who are the most experienced operational management in our industry, we have been able to maintain our position as the leading operator in our sector.

CSR and Our Venues As far as CSR is concerned, we categorise our business in two ways. The first relates to our venues and the second to the events or ‘sessions’, which we stage in those venues. In a typical year, we would expect to run nearly 20,000 sessions.

Our main branded venues are Oceana, Liquid and Lava & Ignite. Our event or session brands include Fuzzy Logic, Vibe and Love Social.

Over the last few years we have invested in rebranding, renovating and maintaining our bars and clubs, which lead their market and, in many cases, dominate their town or city. As part of this investment, we have taken measures to ensure better accessibility to our venues. For example, in many cases we have installed low-level bars that allow ease of access for wheelchair users and assist us in complying with the Disability Discrimination legislation.

We have evaluated the implications for our new developments and adjusted our procedures to focus on energy usage and thermal efficiency. For example, although we install a high percentage of LED lighting, many areas are also fitted with low energy lighting. Equally, our heating and ventilation systems are installed with improved controls that will in turn improve the overall efficiency of our clubs. Wherever refurbishments are planned, we either apply a new approach on energy or introduce a phased replacement of our existing systems. We also continually evaluate the use of cheaper man-made materials and/or those materials that can be obtained from renewable resources.

Creating Safer Clubs All venues that have undergone a full refurbishment over the last few years have received an upgrade to their CCTV system. This has protected our venues, our employees and our customers. These systems are linked to the intruder alarm and operate 24 hours a day. In addition, all our venues have at least one mobile ‘headcam’ system in use, which provides additional support to the fixed CCTV systems and helps us to record incidents that occur outside of the coverage of those fixed systems.

Lite Patrol We are extremely conscious that since our venues can accommodate many customers, incidents or hazards may occur. To monitor these incidents and ensure that they are reported and resolved or cleared up as soon as possible, we utilise a safety system known as ‘Lite Patrol’. This system enables reports to be made at each venue and downloaded to a centralised system where software evaluates the data so that accurate ‘Incident Reports’ can be produced. This system is also used to ensure that we can comply with our obligations under the Reporting of Injuries Diseases and Dangerous Occurrences Regulations 1995 (“RIDDOR”) and are able to submit RIDDOR reports to the Health and Safety Executive and/or the local Environmental Health Authorities when necessary.

Health and Safety We recognise that the health and safety of our customers, employees, contractors and local communities is critical to our success and so, in order to promote the highest standards of safety throughout our business, we ensure that all our employees undergo appropriate training. Our Health and Safety team conduct ongoing reviews and audits of all our policies and procedures and work with our Human Resources department to ensure that the training delivered to our employees is relevant, up to date and follows best practice. Further to this, all of our venues receive a full audit from our employed Safety Advisor, who provides valuable support to all of our operational staff with respect to safety matters such as compliance with fire safety regulations in particular.

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Corporate Social Responsibility Continued

Polycarbonates and Glassware In 2007, we introduced polycarbonate plastics as an alternative to glassware in some of our venues. Since this time, we have continued to monitor our policy regarding the use of polycarbonates and/or glassware. Following a recent review, where licensing conditions allow, we have adopted a more flexible approach in some of our clubs to reflect the changing demands of our customers. We continue to vigilantly monitor the situation closely with our local licensing authorities.

Licensing In order to be able to sell alcohol and stage certain activities in our venues, we need to obtain the correct permissions or ‘licences’ from the relevant authorities. Obtaining and keeping these licences is essential for our business and so it is of the utmost importance for us to vigilantly monitor all relevant licensing legislation.

The licensing of bars and clubs in England and Wales is now governed by the Licensing Act (2003) (the “Licensing Act”), which took effect in November 2005. The Licensing Act sets out four licensing objectives, which are: n the prevention of crime and disorder; n public safety; n the prevention of public nuisance; and n the protection of children from harm.

We fully understand the importance of these objectives and so we embrace them in all our operations. We continually seek to enhance these licences by applying for variations and better conditions under which to trade. We also operate venues in Scotland and are aware of the variations in their licensing legislation. We continue to monitor the changes to licensing legislation in both England and Wales and Scotland.

CSR and Our Customers’ Experience Although providing leading venues is one aspect that allows us to ensure that our customers can enjoy themselves in a safe and secure environment, we recognise that there are other elements that contribute to an enjoyable night out as detailed below.

Dancesafe While we make every effort to ensure the safety and welfare of our customers and staff within our premises, we also encourage our customers to take a level of responsibility for themselves. We display signage about customer and staff welfare that advises them of certain risks to which they could be exposed. We call this ‘Dancesafe’ and these signs and policies deal with matters such as responsible drinking and getting home safely at the end of an evening out.

Customer Security To ensure the safety of our customers, we employ the services of third party door stewarding companies. Their staff look after the welfare of our customers both inside and outside of our venues. Their staff are trained to be pro-active in: recognising potential incidents; identifying vulnerable individuals; and providing assistance where necessary. Outside, they are responsible for issues such as preventing weapons or illegal substances being taken into a venue and they achieve this by a variety of means including the undertaking of random searches on customers. Inside, the door stewards are responsible for ensuring effective queue management, maintaining order should the need arise and controlling the dispersal of our customers at the end of an evening’s trading. These measures are designed to control behaviour and minimise disruption to residents. Getting this right, every night we trade, is a top priority as it limits any negative impact our operations might have on their surrounding communities.

The provision of door security is now a licensed and regulated industry. The legal responsibility for the licensing of Door Supervisors rests with the Security Industry Authority. The conduct of Door Supervisors is also regulated by British Standard BS7960 and it is this which we have used to form the basis of our own ‘Service Level Standards’ and ‘Incident Management Protocols’. We constantly review and develop these Standards to further improve security in our venues. We believe this approach enables us to continue to drive forward the highest standards of excellence in the security industry.

In addition to our work with door stewarding companies, we have also engaged with a supplier that provides dogs and their handlers who are specifically trained in the detection of illegal substances. All our premises receive searches from representatives of this company and the aim is to ensure that our clubs receive a higher level of protection against the presence of illegal substances than would otherwise be the case.

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Customer Service and Satisfaction Providing great service for our customers starts with our employees and we train them to achieve the highest standards in this regard. It is our policy to provide each new employee with the necessary training to enable them to deliver the highest levels of customer service and to ensure these levels are maintained throughout our business, we survey our customers to ensure we fully understand what they want and that we are able to deliver this. We monitor the performance of our employees in providing great customer service through means of league tables and reward incentives. We have established the ‘Beyond Hello’ programme, which helps us gather customer feedback, learn from it and adapt our products to ensure we remain at the forefront of our industry.

Customer Relations Although we recognise that our customers visit us to enjoy themselves within our venues, there may occasionally be times when they do not feel totally satisfied and wish to make us aware of their concerns. We take all such customer issues extremely seriously and pride ourselves on the prompt and efficient manner in which they are addressed.

Leading on Social Issues

Industry Associations During 2010, we became a member of our industry body known as NOCTIS (formerly BEDA). In view of the significant political and legislative challenges facing our industry, we consider that it is essential to work with and through NOCTIS. This is because it deals closely with a number of Government departments as well as stakeholders (both national and local) and is able to present as strong a business case as possible for the late night industry. Unfortunately, a number of legislators still hold negative views about our sector and we believe that through NOCTIS we will be able to develop effective strategies to combat those misconceptions and lobby for better conditions which will benefit both our business and our customers.

We note the establishment of the ‘Mandatory Conditions’ that were introduced in April 2010 and while we are fully supportive of these, we also recognise that the interpretation and implementation of them may vary significantly up and down the country. Therefore, in addition to our own work with local licensing authorities, we will use our membership of NOCTIS to gain greater clarification and understanding of the implementation of these laws and how they can benefit our customers and society at large.

Binge drinking and responsible retailing We recognise that alcohol misuse and binge drinking are important issues, not just for our industry (because they threaten to compromise the well-being of our customers), but also for society at large. Our employees are well positioned to influence the attitudes and behaviours of customers and are therefore trained to identify those who they consider might exceed a safe and responsible alcoholic intake. Where they deem it appropriate, they will refuse to serve any customer whom they consider has consumed enough.

Under-age drinking and misuse of identification Under-age drinking regrettably remains a major issue within our society and we continually take steps to prevent under-age persons from entering our premises. The ‘Challenge 21’ scheme, whereby any person who appears under this age is asked to produce identification as proof of age, has proved extremely effective and we will continue to stringently enforce this policy.

The Next Generation Although under-age drinking continues to be a problem for our society, we recognise that teenagers still wish to go out to nightclubs as this remains one of the experiences you cannot recreate at home.

To respond to this demand we created UK Club Culture (“UKCC”) which provides the opportunity for young people to enjoy music and dancing in our venues without having access to alcohol or other illegal substances. UKCC has recently undergone a significant rebranding exercise and was relaunched under the name ‘Love Social’.

Love Social provides a credible clubbing experience for teenagers between the ages of 13 and 17. When staging Love Social events, we work closely with local Police and Licensing Authorities to ensure a safe and friendly environment. These events help to keep youngsters off the streets by giving them an opportunity to enjoy themselves sensibly in our venues. Love Social events operate within a well-established framework that has clearly defined policies and procedures. These include strict policies for admissions and child protection.

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Corporate Social Responsibility Continued

Our People The biggest investment we make is in our employees because we know that the success of our business is the responsibility of every individual who works for our Company. Nearly 2,700 employees currently work at Luminar, the majority of whom are part-time ‘crew’ members. We believe that it is essential to provide an enjoyable, healthy and safe working environment to ensure that our employees are able to perform at their optimum in what is a highly demanding and fast-moving workplace.

We strongly believe in promotion from within and career progression is available to all who join the Company. We have launched our Crew Development Programme (“CDP”) which covers all aspects of the late night entertainment sector from operations, management, licensing legislation and health and safety, all the way through to the marketing, promoting and the staging of an actual event. The CDP demonstrates Luminar’s continued commitment to investing in our people. It also offers clear benefits in allowing us to present well-trained, competent and motivated crew that have the skills necessary to carry out their jobs to a consistent high standard.

Diversity Whilst understanding the need for strong leadership and a strong team ethic, we are also aware that individuality is a key component of a great workforce. We embrace such diversity and believe that it inspires a versatile and creative thought process throughout the business. At the time of writing this report our workforce is split equally between men and women.

Noise at Work It is a legal obligation on all employers to ensure the health, safety and welfare of its employees and this now includes ensuring that they are not exposed to levels of noise which could damage their hearing. Following the implementation of the Noise at Work Regulations we train all employees on the impact of this and providing them with Personal Protective Equipment (in the form of ear plugs). In addition, through our involvement with The Royal National Institute for Deaf People, we have also implemented a health surveillance programme to assess and monitor the effect of noise on our employees.

Charitable Activities

The Echo Trust To ensure we are able to contribute to the communities in which we operate, Luminar established its own charity, the Echo Trust, in 2002. Echo’s main aim is to benefit children’s charities across the UK and since it was established, it has raised almost £2m for children’s projects.

More recently, during the year a total of £107,000 (2010: £321,000) was donated to Echo by our customers and staff. This money was raised from collections within venues and donations made at Company organised events.

Since the registration of the Echo Trust with the Charity Commission in 2003, it has not been possible to donate all of the monies collected during the regular grant awards. Therefore, in February 2011, the Echo Trust staged the ‘Big Giveaway’ whereby the Company invited all clubs to nominate a local children’s charity to benefit from a grant. Head office staff were also invited to participate in this initiative. A total of £395,000 was given away in this event, which is the largest grant making exercise the Trust has ever carried out.

Additional information on our charity, can be found at www.echotrust.org.

Business Relationships Luminar is a significant business within the entertainment industry and we enter into valuable contracts with our suppliers. In running our business, it is important that we deal ethically with our suppliers and partners and we expect the same in return.

Our Purchasing team endeavours to develop mutually beneficial long-term relationships with reliable suppliers for goods and services who satisfy our requirements in a timely, efficient and cost-effective manner. We also expect our suppliers to apply a highly ethical approach in their dealings with Luminar and their own suppliers.

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The Environment Luminar strives to minimise any adverse effects its activities may have on the environment and we have taken various measures to ensure this continues. We have set ourselves stretching targets to ensure that we pro-actively monitor, manage and minimise such effects.

We place our environmental strategy as a high priority in all areas of our business and consider our targets when engaging in new contracts. These targets reflect our view on ‘green’ issues and our commitment to growing our business in an environmentally friendly manner.

As part of this strategy, we aim to: comply with all environmental legal requirements and regulations; monitor and quantify the environmental impact of our business; define objectives and set improvement targets; promote awareness of relevant environmental issues amongst employees, customers, suppliers and other stakeholders; and verify and publish information on environmental performance.

The Future We appreciate that operating in an ethical and socially responsible way is crucial for our business and we hope that this CSR section sets out a clear view of the philosophies that underpin our daily activities.

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Board of Directors

John Leach Simon Douglas Philip Bowcock Chairman Chief Executive officer Finance Director and company secretary John was appointed to the Board on Simon joined Luminar and the Board in 30 April 2010 and became Chairman on 13 March 2010. He held various management Philip joined Luminar and the Board on July 2010. John has wide experience of both roles at HMV, Virgin Retail and latterly as 1 June 2010 from Barratt Developments plc the leisure sector and most recently the City CEO in leading the MBO of Zavvi, where he where he was Group Financial Controller. where from 2003 to 2008 he became CEO of extracted considerable shareholder value Prior to this, he held senior finance roles at Hermes UK Focus Fund. Prior to this he was from the business. Simon has significant Tesco and Hilton Group. Philip was appointed Chairman of Orbis Plc, Waterhall Group Plc and expertise in managing multi-site, consumer as Company Secretary in March 2011. Brent Walker Group, where he was CEO from focused, branded entertainment businesses. 1994 to 1998 and CFO from 1991 to 1994.

BOARD COMMITTEES

Nominations Committee John Leach (Chairman) Debbie Hewitt John Jackson

Audit Committee John Jackson (Chairman) Debbie Hewitt

Remuneration Committee Debbie Hewitt (Chairman) Debbie Hewitt — MBE John Jackson John Jackson Non-Executive Director — Independent Non-Executive Director — Independent

Debbie was appointed to the Board on John was appointed to the Board on 1 March 14 February 2007 and chairs the 2007 and chairs the Audit Committee. He is Remuneration Committee. She is also currently the CEO of the Jamie Oliver Group currently the Non-Executive Chairman of of Companies, Senior Non-Executive Director Moss Bros Group plc and a Non-Executive of The Restaurant Group plc and Wilkinson Director of Mouchel plc; Domestic and General Hardware Ltd. Previously, he was Executive Group Limited; NCC plc; HR Owen plc; and Director of the Virgin Group, Chief Executive Redrow plc. of Semara Holdings Plc, Managing Director of The Body Shop Plc, Chairman and Managing She has previously held a variety of Executive Director of Chesebrough Ponds Limited. roles, including the role of Managing Director of RAC plc and was a Non-Executive Director of De Vere Group Plc, The Alumasc Group plc, the Office of Government Commerce and HPI Limited.

20319.04 25/05/2011 Proof 6 Stock code: LMR Business Review Governance Consolidated Financial Statements Company Financial Statements Shareholder Information Corporate Governance Statement

Application of Principles This statement describes how the Group applies the principles contained within the Combined Code on Corporate Governance published by the Financial Reporting Council in June 2008 (the “Code”) and which is available from http://www.frc.org.uk. The Board considers that it has complied with all aspects of the Code for the year ended 26 February 2011. The revised UK Corporate Governance Code which was published by the Financial Reporting Council in June 2010 (the “New Code”) will apply to the Company for the financial year due to end in 2012.

The Board continues to be pro-active in reviewing its practices and effectiveness.

The Board confirms that the business is a going concern in accordance with the FRC’s ‘Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009’ as referred to in the Report of the Directors.

Directors At 26 February 2011, the Board consisted of the Chairman, two Non-Executive Directors and two Executive Directors. The Chairman of the Board is John Leach. John Jackson is the Senior Independent Non-Executive Director. All Non-Executive Directors are considered independent Directors, according to the terms of the Code.

The structure of the Board provides a balance whereby no individual or small group can dominate the Board’s decision-making.

Simon Douglas was appointed as Chief Executive on 8 March 2010. The Chief Executive is responsible for the executive leadership and co- ordination of the Group’s business activities.

Including the appointment of Simon Douglas, there have been various changes to the Board of the Company in the last financial year. Robert McDonald, the Finance Director, stepped down from the Board on 1 June 2010. Philip Bowcock was Robert’s successor and joined the Board from Barratt Developments plc on the same day.

John Leach joined the Board as a Non-Executive Director on 30 April 2010 and was appointed as Chairman on 13 July 2010 when Alan Jackson stepped down. Details of the Chairman’s other appointments can be found on page 18, none of which involve a significant contribution on his behalf.

Details of each Director’s other Directorships are disclosed in the Board of Directors information on page 18.

The Board is responsible for setting the Group’s strategic direction, the establishment of Group policies and internal controls and the monitoring of operational performance. It meets regularly throughout the year and in addition to the routine reporting of financial and operational issues, reviews each of the trading areas and key functions in detail, including regular departmental functional reviews.

The Board has a schedule of matters specifically reserved to it for decision and delegates certain powers to the Board Committees and to the Executive Directors collectively and individually. The schedule of reserved matters is reviewed at least annually by the Board and presently includes management of Shareholder communication, annual budgets, strategic plans, approval of major capital expenditure in excess of £1.0m and significant financing.

Packs containing relevant commercial and financial details are normally provided to all Board members in the week prior to a Board meeting to enable the Directors to consider the issues for discussion and to request clarification or additional information. The Board regularly reviews the type and amount of information provided. The Board plans to meet eight times a year and in addition, has a further meeting for consideration of strategic issues facing the Group. The Board also holds additional meetings as appropriate, to fulfil the ongoing requirements of the business during the year.

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Corporate Governance Statement Continued

All Directors have access to the advice of the Company Secretary, who is responsible to the Board for ensuring that procedures are followed. The appointment and removal of the Company Secretary is reserved for the consideration of the Board as a whole. In addition, there is an agreed procedure for seeking independent professional advice at the Group’s expense.

On appointment to the Board, every Director is provided with opportunities for appropriate training to enable them to discharge their duties as a Director. In addition to the training provided on induction, the Board has introduced an enhanced procedure for ensuring that the Directors receive training on matters that are of particular relevance to the business operations of the Group. In addition, further independent training may be sought if necessary. The Company creates opportunities for the Senior Independent Director and Non-Executive Directors to meet with significant Shareholders, should this be requested by those Shareholders.

The Board has concluded a review of its effectiveness. The conclusions of the review have been discussed by the Board as a whole and deemed satisfactory and will be kept under review during the forthcoming year.

During the year ended 26 February 2011, the Non-Executive Directors evaluated the performance of the Chairman and provided him with feedback following their discussions. The Chairman has also provided feedback to the Non-Executive Directors.

Board members are appointed by the Board on the recommendation of the Nominations Committee, which is chaired by the Chairman and consists of the Non-Executive Directors, although the Chief Executive is invited to meetings, as appropriate.

Article 99 of the Articles of Association requires a Director to stand for re-election if they were not appointed or reappointed at either of the last two Annual General Meetings.

The Board has noted the provision on annual re-election of all Directors introduced by the New Code, which is a requirement for FTSE 350 companies for financial years beginning on or after 29 June 2010. The Company is not formally required by the New Code to comply with this provision and is required instead to submit Directors to re-election at intervals of no more than three years. All current Directors were submitted to election at the last Annual General Meeting and it is therefore not necessary to submit any of the Directors for re-election at the forthcoming Annual General Meeting.

John Jackson and Debbie Hewitt were reappointed at the last Annual General Meeting for a further three year term (which will expire at the latest on 20 July 2013). Their contracts are terminable on three months’ notice on either side. The appointment of the Chairman is terminable on six months’ notice on either side. No compensation is payable on the termination of their service contracts.

The Board takes significant measures to ensure that all Board members are kept aware of both the views of major Shareholders and changes in the major shareholdings of the Group. This is achieved in a variety of ways, including: n full feedback of Shareholder reviews are communicated by the Chairman, Chief Executive and Finance Director who are primarily charged with meeting Shareholders; n the Board receives regular feedback from the Group’s stockbrokers; n changes in current shareholdings are also presented to the Board on a regular basis prompting discussions on Shareholder issues; n following interim and full year announcements the Board reports to and receives feedback from analysts and Shareholders on a no-names basis; n significant Shareholder movements are notified to the Board by the Company Secretary on an ad hoc basis; n all Directors are invited to analysts’ briefings and have access, if required, to the Group’s stockbrokers; and n the Board has procedures in place for full agreement for all significant announcements to the City.

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Chairman and Chief Executive — Division of Responsibility There is a clear division of responsibility between the Chairman and the Chief Executive. The division is as follows:

The Chairman is responsible for: The Chief Executive is responsible for:

n Ensuring that the Board operates effectively by ensuring n Developing, reviewing and executing Group objectives and information flows, and facilitating contributions from Non- strategy; Executive Directors and monitoring performance; n Developing, reviewing and maintaining effective organisational n Liaising with the Chief Executive and providing support, a structure and optimising the use and adequacy of the Group’s sounding Board, advice and feedback; resources;

n Supporting the strategic process and encouraging and supporting n Developing and maintaining effective performance management; the Chief Executive with the development of strategy; n Ensuring effective planning and performance measurement; n Maintaining relations with Executive Directors and senior n Maintaining and enforcing effective internal controls, regulatory managers; issues and risk management; n Providing feedback to Non-Executive Directors and encouraging n Recruiting and managing senior executives and managing their their development; contract and performance issues (subject to Remuneration n Chairing the general meetings and Board meetings and agreeing Committee responsibilities); Board agendas; n Ensuring effective staff policies, succession and planning; n Managing any contract issues that may arise in regard to the n Implementation and monitoring of compliance with Board policies Chief Executive, reviewing and appraising his performance, and ensuring that all Group policies are followed; making recommendations to the Remuneration Committee on n the remuneration proposals for the Executive Directors and the Maintaining primary relationships with Shareholders, possible senior executives; investors and providers of debt capital and other stakeholders of the Company; n Ensuring that there are effective processes for maintaining n relations with investors and, from time to time, attending investor Identifying and executing new business opportunities; meetings when appropriate or if requested; n External and internal communications (in liaison with the n Supporting Group communications on major issues and fulfilling Chairman on major issues); and an “ambassadorial role” when necessary; and n Reliable reporting of the above to the Board. n Chairing the Nominations Committee and leading the recruitment of the Chief Executive and Non-Executive Directors.

Board Committees In accordance with the Code and corporate governance best practice, the Board has established a number of committees. All of the committees have written terms of reference, approved by the Board.

The Board has eight scheduled meetings per year, with other meetings convened for specific matters, some of which are delegated to other committees, as appropriate. The attendance of each of the Directors at the scheduled Board and committee meetings (including conference calls and quorum Board meetings), where appropriate, is shown below:

Number of meetings Audit Remuneration Nominations in the year Board Committee Committee Committee John Leach* 13 1 Debbie Hewitt 17 3 4 3 John Jackson 18 3 4 3 Simon Douglas† 18 Philip Bowcock‡ 12 Alan Jackson§ 11 2 Robert McDonald¶ 7

* Appointed to the Board on 30 April 2010. † Appointed to the Board on 8 March 2010. ‡ Appointed to the Board on 1 June 2010. § Resigned from the Board on 13 July 2010. ¶ Resigned from the Board on 1 June 2010.

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Corporate Governance Statement Continued

The Non-Executive Directors, including the Chairman, met once in the year ended 26 February 2011.

Audit Committee The Audit Committee is chaired by John Jackson and, during the financial year, also comprised Debbie Hewitt. The terms of reference for the Audit Committee provide that the Chairman is invited to attend all meetings and the Chief Executive and Finance Director are invited to attend, as appropriate.

The terms of reference for the Audit Committee are available from the Company Secretary and also appear on the corporate website at www.luminar.co.uk.

The Committee meets during the year and reports to the Board on all matters relating to the regulatory and accounting requirements that may affect the Group, together with the financial reporting and internal control procedures including the annual and interim financial statements. In addition, the Audit Committee ensures that an objective and professional relationship is maintained with the external Auditors, with particular regard to the nature and extent of any non-audit functions they provide.

The external Auditors may attend all meetings of the Audit Committee and have direct access to the Audit Committee and its Chairman at all times.

In the prior year ended 25 February 2010, the Group’s external Auditors, PricewaterhouseCoopers LLP (“PwC”), provided advice to the Group, including advice in relation to the re-financing. The fees paid to PwC for non-audit services were £0.2m excluding VAT. No such services have been provided in the current year. The Audit Committee carefully evaluates the use of PwC for non-audit work, where appropriate. Non-audit work is led by separate teams, which are segregated to the degree required to achieve the necessary independence and to maintain the Auditors’ objectivity. The Audit Committee views the independence and objectivity of the Group’s Auditors as essential and ensures that PwC are not instructed on any issues, which would prejudice this. To ensure that this occurs, the Group operates a policy under which any non-audit work is subject to competitive tender and if such work has a value in excess of £50,000, it is also referred to the Audit Committee for approval. The Audit Committee obtains written confirmation, where appropriate, on at least an annual basis of the independence of the external Auditors.

Following a review by the Audit Committee, the Board agreed to recommend to Shareholders at the Annual General Meeting, the reappointment of the external auditors. The current overall tenure of the external Auditor dates from 2003. Any decision to open the external Auditor to tender is taken on the recommendation of the Audit Committee, based on the results of the effectiveness review described below. There are no contractual obligations that restrict the Company’s current choice of external Auditor.

The Audit Committee assesses the ongoing effectiveness of the external Auditor and audit process on the basis of meetings and an internal review with finance and other senior executives. In reviewing the independence of the external Auditors, the Audit Committee consider a number of factors. These include the standing, experience and tenure of the external Auditor, the nature and level of services provided and confirmation from the external auditor that they have complied with relevant UK independence standards.

The Audit Committee also reviews the possible risks facing the Group, the risk management function and internal controls. The latter are dealt with in greater detail below. The Company uses an external consultancy firm, Icarus Wyatt Consulting Limited, who reports to the Finance Director and to the Audit Committee and is responsible for ensuring the management of the risk process across the range of the Group’s activities. The external consultant reports at least twice a year to the Audit Committee regarding risk and internal control matters and the full Board reviews risk and internal controls annually.

Steps have been taken to ensure that there is an opportunity for any employee, in confidence, to raise concerns with management about possible impropriety in financial or other matters. The Group has established an internal hotline, which is independent of line management and intends to undertake further reviews to increase awareness of the process including training for managers who may have to deal with whistle-blowing issues.

The Company has in place internal control and risk management systems in relation to the Company’s financial reporting process and the Group’s process for preparation of consolidated accounts which it monitors and evaluates on a regular basis and accords with Turnbull guidance published on the Internal Control requirements of the Code.

Remuneration Committee The Remuneration Committee is chaired by Debbie Hewitt and consists of all the Non-Executive Directors, except the Chairman. The Chairman is invited to attend all meetings. The Remuneration Report is set out on pages 25 to 32.

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The terms of reference for the Remuneration Committee are available from the Company Secretary and also appear on the corporate website at www.luminar.co.uk.

Nominations Committee The Nominations Committee is chaired by the Chairman and also consists of John Jackson and Debbie Hewitt. The Committee monitors and reviews the membership of and succession to the Board of Directors together with its effectiveness. If the Board requires additional skills, the Nominations Committee has the ability to appoint new or additional Directors or Non-Executive Directors. It makes recommendations to the Board on the identification and recruitment of potential Directors. The Nominations Committee met twice in this last financial year to consider the appointments of Philip Bowcock and John Leach.

The terms of reference for the Nominations Committee are available from the Company Secretary and also appear on the corporate website at www.luminar.co.uk.

Operational Structure

Senior Executive Management Luminar Leisure Limited provides support services to the Group’s trading subsidiaries. The Senior Executive Management (“SEM”) of Luminar Leisure Limited consists of the two Executive Directors of Luminar Group Holdings plc (Simon Douglas and Robert McDonald until 31 May 2010 and Simon Douglas and Philip Bowcock as of 1 June 2010). In addition, the SEM comprises Mark Noonan (Commercial Director) and Peter Turpin (Operations Director). The SEM exercises the day-to-day management function of the Group and is supported by divisional managers and other departments within the business including all operating support functions.

The SEM considers amongst its standing agenda items: reviewing capital expenditure; revenue expenditure not authorised by the Executive Directors within their individual authority levels; regular reports from the Directors reviewing the Risk Register and management responses and a regular review of the strategic aims of the Group.

Internal Control As stated above, the Board is responsible for the ongoing process of identifying and evaluating the significant risks faced by the Group, both financial and non-financial for the purpose of maintaining a sound system of internal control to safeguard Shareholders’ investment and the Company’s assets. This responsibility includes clearly determining the control environment and reviewing its effectiveness. However, such a system can provide only reasonable and not absolute assurance against material misstatement or loss.

Approximately every quarter, a register of key risks is submitted to the SEM for approval and discussion. The SEM is responsible for the day- to-day management of risks within the Group. The register of key risks covers material controls including financial, operational and compliance controls. These discussions are minuted. Areas of concern within the register are highlighted by the Company’s external consultant, Icarus Wyatt Consulting Limited. The SEM is asked to propose any amendments to the register that it deems appropriate and to confirm that it is content that the register presents a true and fair view of the key risks facing the business together with the controls that have been implemented to assess those risks. Actions relating to certain risks are recorded as necessary. Key issues identified as a result of the risk based internal audit process are also identified within the paper.

The annual risk based internal programme is compiled using the risk register.

One-to-one meetings are held frequently with risk owners to discuss key risk issues and meetings are held with the Auditors on an ad hoc basis to discuss risk.

The effectiveness of the internal control system has been reviewed by the Board throughout the year. The ongoing process for identification, evaluation and management of significant risks accords with the Turnbull guidance published on the Internal Control requirements of the Code.

Assurance in relation to the design, operation and effectiveness of internal controls across the Group’s activities and functions is provided through a mix of mechanisms and processes, which include:

Internal Audit The Group has an Operational Risk department that carries out audits to assess various operations throughout the business. The Operational Risk department monitors a variety of issues such as health and safety, financial controls in venues and stock loss. Their work is supported by Icarus

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Corporate Governance Statement Continued

Wyatt Consulting Limited, the Company’s external appointed consultant, which assesses the adequacy and effectiveness of internal controls over key operational and financial risks and reports to the Company Secretary. This consultancy firm also has direct access to the Chairman of the Audit Committee, as appropriate. The Audit Committee also ensures that an annual review of the effectiveness of the internal audit department is undertaken and operates in compliance with best practice.

Loss Prevention In addition to their other duties, the Operational Risk department also deals with loss prevention, which is achieved by the investigation of committed and alleged criminal activity. This department further provides and enforces an Anti-Fraud and Anti-Crime culture. There is a zero tolerance of any such activity in all of the venues and throughout the business. We seek to recover all losses from criminal and negligent acts through a variety of channels, including the Criminal Courts and through Civil Recovery action. The Operational Risk department aims to raise awareness of the risks and consequences of fraud and crime. All employees are required at all times to act honestly and with integrity. The relaunch of the whistle-blowing telephone line supports and reinforces this culture. The line is monitored constantly and all calls are dealt with in a timely and appropriate manner.

Health and Safety The Operational Risk department visit the venues on a regular basis to perform audits and assist in the completion of legislative and due diligence requirements. Compliance performance of individual venues is benchmarked against the Group’s venues as a whole. Poorly performing venues requiring additional assistance are offered 1:1 support from the Health & Safety Advisor to improve compliance scores.

Supporting Health & Safety documentation provided to all venues, including template risk assessments and the Group’s Fire, Food and Health and Safety Guidance Manuals, is updated and reviewed on a regular basis by the Group H&S Advisor to ensure all venues trade to meet current legislative and best practice requirements.

The Group has adopted and installed a ‘Lite Patrol’ system in all venues. ‘Lite Patrol’ is a computerised system, which acts as an internal control, enables monitoring of activity and ensures that operational standards are as high as possible during trading hours within the Group’s venues. The system ensures the regular inspection of key areas (which is provided by scanning discs mounted in various parts of the venue, usually by floor supervision) can be proved, monitored and recorded. The Lite Patrol system has proved especially useful in ensuring the effectiveness of the safe systems of work implemented by the Company.

Legislative reform The Group carries out reviews to assess the impact of legislative and regulatory change. During the year, the Group continued to review its compliance with a wide range of new or recently introduced legislation.

Training Every employee is provided with specific training to ensure high standards of customer service. Included within this training are specific modules to enable them to understand and manage risk in the Group’s venues. These procedures are all embodied in awards available to employees on satisfactory completion of the training programme.

Finance The Finance Director provides regular financial information to the Board, which includes key performance indicators. Regular performance review meetings are held where management discuss business performance, risks to performance and internal control issues with the Executive Directors.

Public liability The Group continues to monitor and pro-actively manage its public liability exposure both by the use of the ‘Lite Patrol’ system mentioned above and adopting best practice in its venues regarding staff training and use of its external door supervisors. The Group maintains appropriate insurance cover to address specific and general risks that face the business.

Licensing To ensure that any issues arising from the operation of its venues are identified, the Group liaises with other stakeholders (including local residents’ associations and industry bodies). This process is supported by the use of incident reports generated by the venues, which are sent to appropriate divisional managers, management and executives.

The Group makes extensive use of CCTV and typically keeps records of CCTV coverage for 30 days.

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The Remuneration Committee has reviewed the remuneration policy for the Executive Directors in light of the current trading environment. Reflecting the strategic priorities of the business for 2011/12 (stabilisation of the business and its finances), the Committee determined that it is not appropriate to grant long-term incentive awards to Executives in 2011 or 2012. Instead the Committee concluded that the variable element of the remuneration package should concentrate on short-term metrics focused on stabilising the business. In line with prior years, the annual bonus for 2011/12 (worth up to 100% of salary) will be based on stretching EBITDA targets, with an underpin requiring PBT to be at least break even before any bonus is paid. In addition, for the 2011/12 financial year (and for 2012/13 if considered appropriate) there will be a further bonus opportunity (worth up to 50% of salary) based on achievement of the Company’s banking obligations and capital repayment plans. This additional bonus opportunity will be paid in shares, the receipt of which will be deferred until 2013. In parallel, no salary increases are planned for the Executive Directors in 2011/12 and the LTIP award granted to the Executive Directors in 2010 has been cancelled. Further details of the remuneration policy are set out in this Report.

This Report has been prepared by the Remuneration Committee and has been approved by the Board. It complies with Schedule 8 of the Companies Act 2006, which incorporates the requirements of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008, the reporting requirements of the Listing Rules of the UK Financial Services Authority, and in accordance with the Code. The Board considers that it has complied with all aspects of the Code for the year ended 26 February 2011. The revised UK Corporate Governance Code which was published by the Financial Reporting Council in June 2010 will apply to the Company for the financial year due to end in 2012.

This Report will be put to Shareholders for approval at the forthcoming Annual General Meeting. The Act requires the Auditors to report on certain parts of the Report and to state whether, in their opinion, those parts of the Report have been properly prepared in accordance with the Regulations. The Report has, therefore, been divided into separate sections for audited and unaudited information.

Part 1: Unaudited Information The Remuneration Committee During the year ended 26 February 2011, the Remuneration Committee comprised Debbie Hewitt (Chairman) and John Jackson, both of whom are independent Non-Executive Directors. The Chairman (John Leach) is invited to attend Remuneration Committee meetings. The Remuneration Committee has also received assistance from Simon Douglas, the Chief Executive, Philip Bowcock, Finance Director, and Tim O’Gorman, the former Company Secretary. No individual took part in discussions in respect of matters relating to their own remuneration.

Hewitt New Bridge Street (“HNBS”), a firm of independent remuneration consultants, advises the Remuneration Committee as required in relation to senior executive remuneration and employee share schemes. HNBS has no other connection with the Group other than the provision of advice on executive remuneration. HNBS were appointed by the Remuneration Committee and the terms of their engagement are available from the Company Secretary on request.

The Remuneration Committee is responsible for setting and reviewing the remuneration of the Chairman, Executive Directors and their direct reports and the operation of any share-based incentive schemes (including all employee schemes). In determining its policy, the Remuneration Committee has regard to the principles and provisions of the Code as well as the UKLA Listing Rules and associated guidance on good governance. The Remuneration Committee operates under the delegated authority of the Board and its terms of reference are available from the Company Secretary on request, and also appear on the corporate website at www.luminar.co.uk.

The Remuneration Committee is able to consider corporate performance on environmental, social and governance issues when setting remuneration of Executive Directors. The Remuneration Committee is comfortable that the incentive structure for senior management does not raise any environmental, social and governance risks by inadvertently motivating irresponsible behaviour.

Remuneration Policy The Remuneration Committee determines the Group’s policy on the remuneration of the Executive Directors. The principles which underpin the remuneration policies for the Group both for the last and forthcoming financial year are: n to ensure that senior executive rewards and incentives are directly aligned with the Group strategy and the interests of the Shareholders, in order to optimise the performance of the Group and create sustained growth in Shareholder value; n to provide the level of remuneration required to attract, retain and motivate Executive Directors of an appropriate calibre; n to ensure a proper balance of fixed and variable performance related components, linked to short and longer-term objectives and to ensure that executives are not incentivised to take inappropriate risks; n to reflect market competitiveness, taking account of the total value of all the benefit components; and n to ensure that there is no scope to reward failure.

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Remuneration Report Continued

Remuneration for the Executive Directors is structured so that the variable pay element forms a significant proportion of the overall package. Whilst the balance between the fixed and variable elements varies dependent on the performance of both the Group and the individual, at or above a ‘target’ level of performance, variable pay accounts for a significant proportion of the average total remuneration package for the two Executive Directors.

Individual Elements of Remuneration The main components of the remuneration package for Executive Directors are as follows:

(a) Salary Salaries for each Executive Director are determined by the Remuneration Committee taking into account the experience and performance of the individual and comparisons with peer group companies within its sector.

Base salaries are reviewed annually (unless responsibilities change). In setting appropriate salary levels for the Executive Directors, the Remuneration Committee takes into account pay and employment conditions of employees elsewhere in the Group.

Simon Douglas was appointed as Chief Executive on 8 March 2010, with a base salary of £300,000. Philip Bowcock was appointed Finance Director on 1 June 2010, with a base salary of £200,000.

The salaries have been reviewed and no increases are planned for the financial year 2011/12.

(b) Annual bonus The Remuneration Committee determined that both Simon Douglas and Philip Bowcock should receive a bonus equivalent to 10% of their full annual salary for 2010/11. As both Executives joined the Company after the 2009/10 financial year end, the Committee determined that it would not be fair to base their bonus opportunity on the EBITDA and PBT targets that had been set before their arrival. Accordingly, the Committee determined that any bonus payable should be based on a rounded assessment of the performance of the Company and management over the remainder of the financial year. This relatively modest bonus was awarded to recognise the very good performance of management in taking steps to stabilise the business in challenging circumstances.

For 2011/12 and 2012/13 the policy in relation to the annual bonus will be changed, recognising the strategic imperative to stabilise the business in 2011. As part of this policy change, there will be no long-term incentive award during this period (see next section).

In line with prior years’ plans, a bonus opportunity of 100% of an Executive Director’s base salary will be based on a range of stretching EBITDA targets, with an underpin requiring the PBT to at least break even before any bonus is paid. Any payments under this part of the bonus will be in cash after the year end.

In addition, for the 2011/12 and 2012/13 financial years, there will be an additional bonus opportunity worth up to 50% of base salary. In 2011/12, payment of this additional bonus opportunity will be based on the achievement of the Company’s banking obligation and annual bank capital repayment plans. To the extent that there is not full achievement of these conditions, the amount payable under this additional 50% would be reduced to zero.

These metrics provide a very sharp and clear incentive, reflecting the Board’s desire to incentivise management to deliver a financial restructuring package which stabilises the business during 2011/12. The Remuneration Committee will consider whether these, or different, targets are appropriate in 2012/13.

At the end of each of the bonus years, i.e. 2011/12 and 2012/13, any resulting bonus payable under this additional 50% of salary opportunity would be delivered in shares and deferred for a further year, subject to conditional employment. The value of dividends paid over the year (if any) would be rolled up and paid out in the form of an additional share award on vesting. At the time shares are redeemed after a year, they must continue to be retained until such time as the Executive achieves a shareholding of at least 100% of base salary (the 100% value being calculated on the share price at the time the award vests).

We believe that this approach is a pragmatic step to ensuring that Executives’ remuneration is competitively pitched in the absence of a formal long-term incentive plan, whilst reflecting the strategic priorities which are about stabilisation of the business and finances. By delivering the incentives within an annual target-setting framework, this will ensure that the total incentive opportunity (100% under the current bonus and 50% under this additional bonus) are tailored to business-specific targets, measured over a short enough period to enable target ranges to be accurately pitched.

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(c) Long-Term Incentive Plan Shareholder approval was sought last year for a one-off LTIP for the new management team. The Long-Term Incentive Plan (“LTIP”) had a strong emphasis on a five-year recovery in the market value of the Company and improvement in underlying financial performance. In light of continuing challenges facing the business, the timing of its introduction has meant that the current Executive team is most unlikely to achieve the highly stretching targets set (for instance, requiring a share price of between £1.50 and £6.50), versus the share price at issue of 12.25p and the current share price as the close of play on 11 May 2011 of 8.8p.

Following Board discussions in relation to the broader strategy of the business, the Remuneration Committee concluded that the LTIP was not providing the motivational impetus that had been hoped for, as the strategic issues facing the Company are such that management must focus on a series of short-term metrics to stabilise the business, before being able to plan more for the longer-term. Accordingly, the decision was taken to cancel the LTIP. There are no costs to the Company of cancelling it, but this does leave the Executives without any kind of long-term, share-based incentive.

In considering the alternative incentive arrangements, the Remuneration Committee recognised the risk that if another LTIP is introduced, any long-term targets set (e.g. typically three to five years) would be very difficult to calibrate, so as to provide a fair link between reward and performance and not, for instance, provide an undue windfall if there is a sharper than expected recovery.

Awards can still be made under the Performance Share Plan (the predecessor to last year’s LTIP), under which the Remuneration Committee had anticipated using a ‘regular grant’ policy once the business situation had stabilised. However, for the reasons set out above, the Committee does not feel that it is appropriate to grant awards under this plan at the current time.

Accordingly there will be no long-term incentive awards for the 2011/12 and 2012/13 financial years. Full details of outstanding awards can be found on pages 29 to 32.

(d) Pension entitlements The Remuneration Committee’s policy is to offer senior executives a salary supplement in lieu of a pension provision. Simon Douglas and Philip Bowcock receive a salary supplement of 20% and 15% of salary respectively.

Executive Directors’ Service Contracts The Remuneration Committee’s policy is to offer service contracts with notice periods of 12 months or less.

Simon Douglas’ service contract (dated 8 March 2010) is terminable on 12 months’ notice by the Company and on six months’ notice by him. Philip Bowcock’s service contract (dated 13 May 2010) is terminable on six months’ notice by either party.

Stephen Thomas’ service contract (dated 28 January 2008) was terminable on 12 months’ notice by either party. Robert McDonald’s service contract (dated 16 March 2009) was terminable on six months’ notice by either party.

Upon termination, the Executive Directors are entitled to salary and benefits for the duration of the notice period. It is the policy of the Remuneration Committee to seek to mitigate termination payments. From the date of termination, Simon Douglas is subject to a 12 month non-compete clause and Philip Bowcock to a six month non-compete clause. The Executive Directors are employed on rolling contracts with a retirement age of 65. No compensation is payable on the termination of their service contracts in lieu of the notice period.

Compensation payments to departing Executive Directors On the date of cessation of his employment (31 July 2010), Stephen Thomas received £563,000 (being an amount equivalent to 12 months’ salary, benefits and pension in line with his contractual entitlements). He received no bonus award in relation to the proportion of the financial year worked.

Robert McDonald received salary, benefits and pension up until the date of his cessation of employment (30 June 2010). He received no compensation for loss of office. Since he left shortly after the start of the new financial year, it was determined that he would not be eligible to participate in the annual bonus plan for the 2010/11 financial year.

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Remuneration Report Continued

External Directorships for Executive Directors The Executive Directors can, at the discretion of the Board, be appointed as a Non-Executive Director at other companies. Before granting permission, the Board will take into account the time commitment of the new role, the competitive status of the other Company, the Listing Rules and the Code.

As at 1 March 2010 (being the date on which Stephen Thomas ceased to be a Director of the Company), Stephen Thomas was a Non-Executive Director of The 3D Entertainment Group Limited and Non-Executive Chairman of Legion Group plc. He was also a Non-Executive Director of Saracens Limited, Premier Team Holdings Limited and a Trustee of the Royal National Institute for Deaf People.

Neither Simon Douglas nor Philip Bowcock hold any Non-Executive Directorships in other companies.

Non-Executive Directors All Non-Executive Directors are appointed initially for a three year term and, after review, will normally be proposed for a further three year term. Having been elected, in the case of John Leach, and re-elected, in the case of John Jackson and Debbie Hewitt, at last year’s Annual General Meeting, the current three year term expires on or around 20 July 2013.

Non-Executive Directors’ appointments are terminable on three months’ notice on either side save in respect of John Leach whose appointment as Chairman is terminable on six months’ notice on either side.

Details of their current three year appointments are as follows:

Appointment date Debbie Hewitt 14 February 2007 John Jackson 1 March 2007 John Leach 30 April 2010

Non-Executive Directors are not entitled to bonus payments or pension arrangements, nor do they participate in the Group’s long-term incentive schemes. Fees for the Non-Executive Directors are determined by the Board in accordance with the Articles of Association and are based on information on fees paid in similar companies, taking into account the experience of the individuals and the relative time commitments involved.

Total Shareholder Return Graph As required by legislation, reproduced below is a line graph indicating the Company’s Total Shareholder Return (“TSR”) for a shareholding in the Company (and before 19 October 2007, Luminar plc, the previous holding company of the Luminar Group) and a notional shareholding in the FTSE SmallCap Index:

200

150 ) £ 100 ue ( l a V

0 2-Mar-06 1-Mar-07 28-Feb-08 26-Feb-09 25-Feb-10 26-Feb-11

Luminar FTSE SmallCap Source: Thomson Reuters

The Directors have chosen to compare the Group’s TSR performance with the TSR of companies in the FTSE SmallCap Index. This Index has been selected because the Company has been a constituent of this index for most of the period.

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Part 2: Audited Information Executive Directors’ emoluments Full details of the emoluments of the Directors, relating to the year ended 26 February 2011, were as follows:

Salary Total Total & fees* Benefits Bonus 2010/2011 2009/10 Executive £000 £000 £000 £000 £000 Simon Douglas 355 22 30 407 — Philip Bowcock 173 15 20 208 — Stephen Thomas† 229 11 — 255 501 Robert McDonald 90 7 — 97 282 Total 847 70 — 967 828

* Notional salary for Simon Douglas includes a 20% salary supplement in lieu of pension, for Philip Bowcock a 15% supplement and for Robert McDonald (who left the Company on 1 June 2010) a 15% supplement. Notional salary in relation to Stephen Thomas includes a 22% salary supplement received in lieu of pension contributions for the portion of the year worked. Stephen Thomas left the Company on 31 July 2010. † Stephen Thomas received £563,000 (being an amount equivalent to 12 months’ salary, benefits and pension in line with his contractual entitlements on the date of the cessation of his employment (31 July 2010).

Benefits in kind include the provision of a company car or allowance, fuel and private medical insurance.

Non-Executive Directors’ emoluments Details of the emoluments of the Non-Executive Directors, relating to the year ended 26 February 2011, are as follows. The fees are paid as a combination of cash and shares (£35,000 cash and £10,000 of shares for the Non-Executive Directors and £100,000 cash and £20,000 shares in respect of the Chairman, which the Chairman received pro rata for last financial year following his appointment on 13 July 2010). Shares are purchased twice a year at the prevailing share price. The Non-Executive Director fees were last reviewed in March 2009.

Year ended Year ended 26 February 25 February 2011 2010 £’000 £’000 Alan Jackson* 78 155 Debbie Hewitt 45 45 John Jackson 45 45 John Leach† 70 — Total 238 245

* Left the Board on 13 July 2010. † John Leach was appointed Chairman from 13 July 2010.

Executive Directors’ pension provision Executive Directors receive a salary supplement in lieu of pensions (see disclosure in the Directors’ emolument table). In respect of the year ended 25 February 2010, the Company paid £86,000 by way of pension provision for Stephen Thomas.

Long-term incentive plan At last year’s Annual General Meeting, the Shareholders approved the Luminar Group Holdings plc 2010 Long-Term Incentive Plan (“LTIP”), which in summary granted options to selected senior management to purchase the Company’s shares in the future, at a price set at the outset.

As described earlier in the report, the LTIP has now been cancelled. Notwithstanding the fact that all individual rights have been cancelled, as the LTIP was in existence during the Financial Year under review we are required to summarise its key terms, which are set out below.

The total number of shares over which options were granted under the LTIP equated to 7% of the issued share capital as at 8 March 2010 (being the date of appointment of the Chief Executive). The Chief Executive received options over 40% of this LTIP pool and the Finance Director over 15%. Should the full 7% not have been allocated throughout the period of the scheme, any unallocated options would have lapsed.

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Remuneration Report Continued

The exercise price of the LTIP option was, in respect of the HMRC Approved options, 12.25 pence per share (set by reference to the share price at the time of grant) (“Part A Options”) and in respect of the remainder of the unapproved options is 36 pence per share (set by reference to the share price on 8 March 2010, being the date of appointment of the Chief Executive) (“Part B Options”).

Details of the conditional awards held by the Executive Directors under the LTIP during the year are set out below:

Part A Part B Part A Part B Options at Options Options Options Options 25 Feb granted granted Date of Forfeited at 26 Feb at 26 Feb Vesting Expiry 2010 during year during year award during year 2011 2011 date date Simon Douglas — 244,897 2,566,937 17 Sept 2010 — 244,897 2,566,937 50% 17 Sept 2020 17 Sept 2013 & 50% 17 Sept 2015 Philip Bowcock — 244,897 809,540 17 Sept 2010 — 244,897 809,540 50% 17 Sept 2020 17 Sept 2013 & 50% 17 Sept 2015

There were three performance conditions, based on share price, relative total shareholder return (“TSR”) performance and average annual Return on Capital Employed (“ROCE”) over the performance period. The share price performance condition (Step 1) required an average share price in the three months to 8 March 2015 of between £1.50 to £6.51 (for 0% to 100% vesting) and the relative TSR performance condition (Step 2) required Luminar to be ranked between the second and first quintile against a bespoke comparator (for 0% to 100% vesting). The TSR comparator group comprised Domino’s Pizza, Enterprise Inns, Fullers, Greene King, JD Wetherspoons, Marstons, M&B, Punch Taverns and Youngs. Notwithstanding the satisfaction of the performance conditions under Steps 1 and 2 above, exercise of the option required the average annual ROCE to be 8% or more.

Performance was to be measured over five years from 8 March 2010, other than the ROCE performance condition which would be measured over five financial years commencing with the 2010/11 financial year. There was an early testing opportunity after three years.

The awards were cancelled on 16 May 2011.

Performance Share Plan Details of the conditional awards held by the Executive Directors under the Luminar Group Holdings plc 2007 Performance Share Plan (“2007 PSP”) are set out below:

At At Share price 25 February Granted Forfeited Lapsed 26 February Date of Vesting Expiry on date 2010 during year during year† during year 2011 award date date of grant (£) StephenThomas* 140,019 — — (140,019) — 09/11/07 01/08/10 5.745 332,750 — (108,900) — 223,850 22/05/08 22/05/11 3.20 376,824 — (244,973) — 131,851 10/06/09 10/06/12 1.41 Total 849,593 (353,873) (140,019) 355,701 Nick Beighton† 42,884 — — (42,884) — 09/11/07 01/08/10 5.745 44,183 — — — 44,183 22/05/08 22/05/11 3.20 Total 87,067 (42,884) 44,183 Robert McDonald* 200,972 — (200,972) — — 10/06/09 10/06/12 1.41 Total 200,972 (200,972) —

* Stephen Thomas and Robert McDonald ceased to be Directors of the Company during the last financial year and accordingly certain of their options were forfeited. † Nick Beighton ceased to be a Director of the Company on 26 April 2009.

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Nick Beighton and Stephen Thomas have been treated as a ‘good leaver’ under the terms of the Performance Share Plan. Their outstanding long- term incentive awards will be capable of vesting on the third anniversary of grant subject to achievement of the performance conditions. The awards, to the extent that they vest, have been scaled back to reflect the proportion of the vesting period for which they were employed.

All the awards granted under the 2007 PSP lapsed during the last financial year due to non-fulfilment of the performance conditions.

The performance conditions for the 2008 awards to the Executive Directors are as follows: n 50% of the awards will vest based on the relative TSR performance of the Group compared with the constituents of the FTSE SmallCap Index measured over three years from the date of grant, of which 25% of this part of the award will vest if the Company’s TSR is equal to the median company’s TSR. Full vesting requires the Company’s TSR to be at or above the upper quintile. There will be incremental vesting between median and upper quintile. n The other 50% of the awards are subject to an Earnings per Share (“EPS”) target based on the growth in pre-exceptional EPS over the period of three financial years. For aggregate awards up to 100% of base salary (i.e. of which half is based on EPS), of which 25% of the award will vest if EPS growth is equal to RPI + 3% p.a. with full vesting requiring growth at RPI + 7% p.a. For awards in excess of 100% of base salary, there will be incremental vesting between RPI + 7% p.a. (0% vesting) and RPI + 10% p.a. (100% vesting) for the awards subject to the EPS performance condition (i.e. 50% of the excess).

The performance conditions for the 2009 awards to the Executive Directors are as follows: n 50% of the awards will vest based on the relative TSR performance of the Group compared with the constituents of the FTSE SmallCap Index measured over three years from the date of grant. 25% of this part of the award will vest if the Company’s TSR is equal to the median company’s TSR. Full vesting requires the Company’s TSR to be at or above the upper quintile. There will be incremental vesting between median and upper quintile. n The other 50% of the awards are subject to an Earnings per Share (“EPS”) target based on the growth in pre-exceptional EPS over the period of three financial years. 25% of the award will vest if EPS growth is equal to RPI + 3% p.a. with full vesting requiring growth at RPI + 7% p.a.

Share Option Plan Share options are exercisable between three and ten years from the date of grant. Options were originally granted subject to performance conditions requiring Earnings per Share (“EPS”) growth (calculated pre-exceptional items and tax) over a three year period. For options granted between 2000 and 2002, the EPS growth hurdle is RPI +5% per annum compound. For options granted in 2003, the EPS growth hurdle is RPI +3% per annum compound.

As disclosed in last year’s remuneration report, outstanding options held by Executive Directors (see below) were rolled over into equivalent options over shares in the Company in connection with the business capital reorganisation in 2007. However, following the technical change of control of Luminar plc in connection with the reorganisation, the Rules of the 1996 Executive Share Option Scheme prescribed that unapproved options became immediately exercisable, with performance conditions falling away (this was a standard feature in rules of this vintage). Therefore, the exercise of the rolled over unapproved options is not subject to any performance conditions. Similarly, rolled over approved options are not subject to performance conditions, as prescribed by the rules of the 1999 Company Share Option Plan (a common provision in rules of this vintage).

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Remuneration Report Continued

Details of the share options held by the Executive Directors are as follows:

Stephen Thomas

At At Date of Earliest Expiry Exercise 25 February Lapsed Exercised 26 February Grant Exercise Date Date Price 2010 during year in year 2011 1996 Executive Share Option Scheme (Unapproved) 11/07/00 11/07/03 10/07/10 6.57 543,689 543,689 — — 04/07/01 04/07/04 03/07/11 8.09 28,419 — — 28,419 22/05/03 22/05/06 21/05/13 3.73 214,261 — — 214,261 Total 786,369 242,680 1999 Company Share Option Plan (approved) 04/07/01 04/07/04 03/07/11 8.09 3,706 — — 3,706 Total 3,706 3,706

Under the terms of the option plans, Stephen Thomas will be eligible to exercise outstanding share options within two years following his cessation of employment.

Sharesave Plan The Company has introduced the Sharesave Plan 2011. This is an HMRC approved all employee share plan, whereby eligible employees, including Executive Directors, can enter into a savings contract which gives them the option to buy shares in Luminar Group Holdings plc at the end of a specified term. The scheme was launched in April 2011, with employees invited to take part in a three and/or five year savings contract with the opportunity to acquire shares at a 10% discount to the average share price over the three days prior to grant upon completion of the contract.

Directors’ Interests The beneficial interests of Directors who served at the end of the year, together with those of their families, are shown in the Report of the Directors on pages 34 and 35.

The mid-market price of the Group’s shares on 26 February 2011 was 12.25 pence and the range for the year was between 8.75 pence and 53.25 pence.

By Order of the Board Debbie Hewitt Chair of the Remuneration Committee

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The Board of Directors, details of whom are set out on page 18, present their Report for the year ended 26 February 2011.

Principal Activity The principal activity of the Group during the year was as owner and operator of themed bars and nightclubs.

Business Review The Report of the Directors and the Corporate Responsibility Statement incorporates the Business Review set out on pages 4 to 12 of this Report and forms part of the ‘management report’ for the purpose of Rule 4.1.8 of the Disclosure and Transparency Rules and has been incorporated by reference.

The financial risk management objectives and policies of the Group, including the policy for hedging each major type of forecast transaction for which hedge accounting is used, and the Group’s exposure to price risk, credit risk, liquidity risk and cash flow risk, are set out in the Principal Accounting Policies section and also in note 22 to the Financial Statements and has been incorporated by reference.

Results and Dividends The Board recommends that there is no payment of a final dividend.

The results of the Group are summarised on page 41.

Directors The current Board of Directors is shown on page 18 of this Report.

Simon Douglas joined the Board in March 2010 as Chief Executive Officer (“CEO”). Simon has a strong track record in the leisure and entertainment sector, including various management roles at HMV, Virgin Retail and latterly as CEO in leading the MBO of Zavvi, where he extracted considerable shareholder value from the business.

John Leach joined the Board as a Non-Executive Director on 30 April 2010 and became Chairman on 13 July 2010. John has wide experience of both the leisure sector and most recently the City where from 2003 to 2008 he was involved in various roles and latterly as CEO of Hermes UK Focus Fund. Prior to this he was Chairman of Orbis Plc, Waterhall Group Plc and Brent Walker Group, where he was CEO from 1994 to 1998 and CFO from 1991 to 1994.

Stephen Thomas left the Board on 1 March 2010. He was the CEO and founder of Luminar. Robert McDonald (Finance Director) left the Board on 1 June 2010 and Alan Jackson stepped down as Chairman on 13 July 2010.

Article 99 of the Articles of Association requires a Director to stand for re-election if they were not appointed or reappointed at either of the last two Annual General Meetings.

The Board has noted the provision on annual re-election of all Directors introduced by the New Code, which is a requirement for FTSE 350 companies for financial years beginning on or after 29 June 2010. The Company is not formally required by the New Code to comply with this provision and is required instead to submit Directors to re-election at intervals of no more than three years. All current Directors were submitted to election at the last Annual General Meeting and it is, therefore, not necessary to submit any of the Directors for re-election at the forthcoming Annual General Meeting.

Appointments to the Board are recommended by the Nominations Committee and are made in accordance with the provisions of the Articles of Association.

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Report of the Directors Continued

John Jackson and Debbie Hewitt were reappointed at the last Annual General Meeting for a further three year term (which will expire at the latest on 20 July 2013). Their contracts are terminable on three months’ notice on either side. The appointment of John Leach (the Chairman) is terminable on six months’ notice on either side. No compensation is payable on the termination of their service contracts.

During the year, the Group maintained liability insurance for its Directors and Officers.

On 2 May 2008, the Board approved the Company entering into Qualifying Third Party Indemnities (“QTPIPs”) in favour of Stephen Thomas and Nick Beighton and on 29 April 2009 the same in respect of Robert McDonald. Stephen Thomas, Nick Beighton and Robert McDonald have since ceased to be Directors of the Company but the QTPIP continues to apply to them. Following the appointments of Simon Douglas and Philip Bowcock, the Company has entered into a QTPIP with each of them on similar terms. These QTPIPs were approved respectively on 30 April 2010 and 14 June 2010.

These QTPIPs provide an indemnity in respect of the Company and several of its subsidiaries. These indemnities were also provided to Tim O’Gorman, Mark Noonan, Peter Turpin and Trevor Ling in their capacity as Directors of various subsidiaries of the Company.

Following a detailed review of the Company’s circumstances, the size of the indemnity cap was agreed at £5.0m.

Although the Company acknowledges that these indemnities will cover any liabilities already incurred, the Company is not aware of any existing liabilities or of any circumstances that may be reasonably likely to give rise to any such liabilities.

No Director had a material interest in any contract or arrangement to which the Group or any subsidiary was a party.

In accordance with the Companies Act 2006, a Register of Conflicts has been established and currently no conflicts have been identified.

The interests of the Directors in the ordinary shares of the Group on 26 February 2011 and 25 February 2010 were as follows:

26 February 25 February 2011 2010 No. No. John Leach (appointed 30 April 2010) 190,700 — Simon Douglas (appointed 8 March 2010) 85,000 — Philip Bowcock (appointed 1 June 2010) — — Debbie Hewitt 76,422 14,072 John Jackson 56,741 11,191

After the year end, Simon Douglas acquired certain shares in the Company as follows: Total interests Number as at Date shares of shares 11 May acquired acquired 2011 Simon Douglas 7 March 2011 40,000 125,000

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After the year end, the Group acquired further shares for the Non-Executive Directors as part of the contractual remuneration of those Directors. The shares acquired were as follows: Total interests Number as at Date shares of shares 11 May acquired acquired 2011 Debbie Hewitt 28 February 2011 19,415 95,837 John Jackson 1 March 2011 30,975 87,716 John Leach 1 March 2011 79,025 269,725

Other than these acquisitions and the shares listed above, there have been no changes in the interests of the Directors in the share capital of the Group between 26 February 2011 and the date of signing of this Report on 11 May 2011.

No Director had any interest in the shares of any of the Group’s subsidiaries during the year ended 26 February 2011.

The interests of the Directors in share options and other long-term incentive plans are set out in the Remuneration Report on pages 29 to 32.

Share capital At the 2010 Annual General Meeting, the Shareholders gave the Company the power to issue and buy back shares. The authority to purchase and cancel its shares is limited to being up to a maximum of 10% of its own shares. This authority will expire at the conclusion of the forthcoming Annual General Meeting, at which a Special Resolution will be proposed to renew the authority for a further year.

The Board has not exercised this power during the year ended 26 February 2011. The Board did not exercise this power in the period between then and the signing of this Report on 11 May 2011. It is the intention of the Company to repeat these powers and the resolution approving it is found in the Notice of the Annual General Meeting in resolution 7.

As part of its refinancing, on 8 December 2010, the Group issued Lending Banks equity warrants over 5,021,130 Ordinary Shares, representing 5% of the ordinary issued share capital of the Company as at 11 May 2011. If the existing authority given at the last Annual General Meeting and the authority being sought at this year’s Annual General Meeting were to be used in full, these would represent 6.25% of the Company’s ordinary issued share capital.

The subscription price per warrant share is equal to the current nominal value of 25 pence per share, exercisable in cash at any time up to the seventh anniversary of the agreement.

On 30 April 2010, the Company redeemed and cancelled its Deferred Share Capital.

Substantial Shareholders At 11 May 2011 (the last practical date before the approval of this Report), the Group had been notified of the following significant shareholdings and interests in the shares of the Group, pursuant to Section 793 of the Companies Act 2006:

Name of Number of % Shareholder shares shareholding Schroder Investment Management 27,145,711 27.0 Hermes Pensions Management 15,105,254 15.0 Newton Investment Management 7,108,684 7.1 Morgan Stanley Investment Management 6,745,233 6.7 Gartmore Investment Management 6,108,776 6.1

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Report of the Directors Continued

As at 11 May 2011, there are 100,422,654 ordinary shares with a nominal value of 25 pence each in issue. There are no restrictions on the transfer of these shares or on the voting rights attached to them.

The Company is not aware of any agreements between holders of securities known to the Company which may result in restrictions on the transfer of securities or voting rights.

No person holds shares with specific rights regarding control of the Company.

There are no agreements between the Company and its Directors or employees which provide for compensation for loss of office or employment that occurs because of a takeover bid.

Contracts Although the Company has a few contracts that may be subject to change of control provisions, all of these contracts were recently assigned or novated as part of an earlier restructure and Scheme of Arrangement and no significant problems have been encountered in regard to changing the contracting parties.

Employment Policies Luminar has a strategy of People Excellence achieved through: n attracting and retaining talented individuals; n communication and engagement; n reward and recognition; and n training, learning and development.

We have a number of managers who graduated last year with a foundation degree in Leadership and Management (Late Night Entertainment). This means that the business has professionally qualified managers in place within its venues. Luminar also runs a training programme, which forms part of a career path whereby individuals undertake different levels of training to help them progress into management roles within our venues. As the Group develops new initiatives, we will review our training programmes to ensure that our management population have the necessary skills to push the business forward.

The Group wholeheartedly supports the principle of Equal Opportunities and does not discriminate between employees or potential employees on the grounds of colour, race, nationality, ethnic or national origin, sex, sexual orientation, religion or similar belief, marital status, age or disability. Consideration is given to all applicants for employment from candidates with disabilities where the requirements of the job can be covered. If employees become disabled, every effort is made to ensure their employment continues with appropriate training and reasonable adjustments being made.

The Group’s in-house Weekly Activity Bulletin, known as the WAB, staff notice Boards, employee forums and team briefings all illustrate that employees are both well informed and able to feed back and contribute towards the running of the business.

Finally, reward and recognition is achieved through a variety of different methodologies including, incentives, bonus arrangements and SAYE schemes. Annual appraisals also provide the opportunity for constructive feedback, recognition and succession planning.

As disclosed in the Remuneration Report, the Company has introduced the Sharesave Plan 2011. This is an HMRC approved all employee share plan, whereby eligible employees, including Executive Directors, can enter into a savings contract which gives them the option to buy shares in Luminar Group Holdings plc at the end of a specified term. The scheme was launched in April 2011, with employees invited to take part in a three and/or five year savings contract with the opportunity to acquire shares at a 10% discount to the average share price over the three days prior to grant upon completion of the contract.

Supplier payment policy and practice The Group’s policy with regard to the payment of suppliers is to agree terms of payment at the start of business with each supplier, to ensure that the supplier is made aware of the standard payment terms. Such terms include an undertaking to pay suppliers within an agreed period subject to terms and conditions being met by suppliers. Creditor days for the Group at the year end amounted to 48 days (2010: 42 days) of total supplies for the year. Since the Company is a holding company and does not ‘trade’, creditor days have not been disclosed.

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Research and development All businesses within the Group continue to be active in developing new ways of working for the benefit of the business and our customers.

Charitable and political donations To ensure we are able to contribute to the communities in which we operate, Luminar established its own charity, the Echo Trust, in 2002. Echo’s main aim is to benefit children’s charities across the UK and since it was established, it has raised a huge amount of money for children’s projects.

More recently, during the year a total of £107,400 (2010: £342,000) was donated to Echo by our customers and staff. This money was raised from collections within venues and donations made at Company organised events.

Additional information on our charity can be found at www.echotrust.org.

No direct contributions for charitable purposes were made during the year (2010: £nil). No political donations were made during the year (2010: £nil).

Post-Balance Sheet Events There are no post balance sheet events.

Statement of Directors’ responsibilities in respect of the Annual Report, the Directors’ Remuneration Report and the financial statements The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to: n select suitable accounting policies and then apply them consistently; n make judgements and accounting estimates that are reasonable and prudent; n state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and parent Company financial statements respectively; n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed in the Annual Report confirm that, to the best of their knowledge: n the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group; and n the Business Review includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces. 37

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Report of the Directors Continued

Going Concern During the year the Group signed the New Facility (being a revised three year facility of £99m) with the Banking Group. The New Facility became effective from 8 December 2010.

The New Facility comprises two term loans of £44m and £40m respectively, both repayable over three years and a revolving credit facility (RCF) of £15m. The weighted average cash interest rate for the New Facility is 7.8%.

The main financial covenants applying to the New Facility are those of leverage (the ratio of Net Debt to EBITDA as defined in the New Facility Agreement) and fixed interest cover. The leverage covenant ratio was set at 3.8 times, reducing to 2.0 times over the life of the New Facility, and the fixed interest cover was initially set at 1.35 times rising to 1.75 times.

Severe adverse weather conditions experienced in December combined with the continued deterioration in market conditions since that time have placed significant stress on the financial covenants. At the February 2011 testing date, the Group continued to operate within the required parameters. However, trading conditions have remained difficult and operating results have been worse than anticipated, such that it appears likely that a covenant breach would arise when next tested at the end of May 2011 and a short-term liquidity problem may arise during the Summer months due to scheduled amortisation payments falling due under the New Facility during that period. Since signing the New Facility, the Group has maintained its strong relationship with the Banking Group which has throughout remained supportive of the business, the management and its strategy. This has been demonstrated by the Banking Group granting a prospective waiver in respect of the financial covenants which would fall to be tested at the end of May 2011. In addition, the Banking Group are continuing to provide flexibility to maintain the Group’s liquidity levels until 31 August 2011 and agreed to continue dialogue with Luminar and work together with the Group with a view to agreeing by that date a longer term restructuring of the Group’s debt arrangements.

The Directors are of the opinion that the Banking Group will remain supportive and that the ongoing discussions with the Banking Group will result in restructured debt arrangements which will allow the Company and the Group to continue to trade as a Going Concern and secure a more sustainable, longer term debt structure for the Group. Should the discussions with the Banking Group not secure such a longer term solution, the Group is unlikely to be able to operate within the existing terms of the New Facility and it is likely that a breach of the financial covenants would occur at the covenant testing point at the end of August 2011 and future liquidity risk would arise thereafter. In those circumstances, the debt drawn under the New Facility could be required to be repaid immediately which would result in the Company and the Group no longer being a going concern.

The Directors have examined all available evidence and have concluded that, although the trading environment is still exceptionally challenging, and there is a risk that discussions with the Banking Group will not result in a successful restructuring of the Group’s debt arrangements, in light of the supportive nature of the banking relationship to date, the Directors are satisfied that adequate financial resources will continue to be made available to the Group so as to enable it to continue to trade on a going concern basis. As a result, the Directors continue to adopt the going concern basis in preparing the Group’s and the Company’s financial statements. The financial statements do not include the adjustments that would result if the Group and the Company were unable to continue as a going concern.

Disclosure of information to auditors So far as the Directors are aware, there is no relevant audit information (that is, information needed by the Group’s Auditors in connection with preparing their report) of which the Group’s Auditors are unaware, and the Directors have taken the steps that they ought to have taken as Directors, in order to make themselves aware of any relevant audit information and to establish that the Group’s Auditors are aware of that information.

Auditors PricewaterhouseCoopers LLP have indicated their willingness to continue in office, and a resolution for their reappointment will be proposed to the Annual General Meeting.

By Order of the Board

Philip Bowcock Company Secretary 11 May 2011 (Registered number: 06239034)

20319.04 25/05/2011 Proof 6 Stock code: LMR Business Review Governance Consolidated Financial Statements Company Financial Statements Shareholder Information Independent Auditors’ Report to the Members of Luminar Group Holdings plc

We have audited the Group financial statements of Luminar Group Holdings plc for the year ended 26 February 2011 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Net Debt Statement, the Consolidated Statement of Changes in Equity, the Principal Accounting Policies for the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Respective responsibilities of Directors and Auditors As explained more fully in the Directors’ Responsibilities Statement, 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 Group 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.

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on financial statements In our opinion, the Group financial statements: n give a true and fair view of the state of the Group’s affairs as at 26 February 2011 and of its loss and cash flows for the year then ended; n have been properly prepared in accordance with IFRSs as adopted by the European Union; and n have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the lAS Regulation.

Emphasis of matter – going concern In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in the Principal Accounting Policies for the Consolidated Financial Statements concerning the Group’s ability to continue as a going concern.

Trading conditions since December have been more difficult and results lower than originally anticipated. The Group has obtained a covenant waiver at the end of May 2011 and capital repayment waivers from the Banking Group until 31 August 2011.

The Directors are currently in negotiations with the Banking Group to vary the terms of the Existing Facility to provide additional covenant and liquidity headroom beyond 31 August 2011. Should the Banks not agree to reset covenants and or capital repayment and interest deferrals, the Group is unlikely to be able to operate within the terms of existing facilities. This is likely to result in a breach of covenants at the next covenant test point at the end of August 2011 with future liquidity risks thereafter. In these circumstances the debt could be called for immediate repayment which, in the absence of alternative funding, would result in the Group no longer being a going concern.

These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Opinion on other matters prescribed by the Companies Act 2006 In our opinion: n the information given in the Directors’ Report for the financial year for which the Group financial statements are prepared is consistent with the Group Financial Statements; and n the information given in the Corporate Governance Statement set out in the Annual Report with respect to internal control and risk management systems and about share capital structures is consistent with the financial statements.

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Independent Auditors’ Report Continued to the Members of Luminar Group Holdings plc

Matters on which we are required to report by exception We have nothing to report in respect of the following:

Under the Companies Act 2006, we are required to report to you if, in our opinion: n certain disclosures of Directors’ remuneration specified by law are not made. n we have not received all the information and explanations we require for our audit; or

Under the Listing Rules, we are required to review: n the Directors’ statement, in relation to going concern; n the part of the Corporate Governance Statement relating to the Company’s compliance with the UK Corporate Governance Code specified for our review; and n certain elements of the report to shareholders by the Board on Directors’ remuneration.

Other matter We have reported separately on the parent Company financial statements of Luminar Group Holdings plc for the year ended 26 February 2011 and on the information in the Directors’ Remuneration Report that is described as having been audited.

That report also includes an emphasis of matter regarding Going Concern.

Owen Mackney (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors St Albans 11 May 2011

20319.04 25/05/2011 Proof 6 Stock code: LMR Business Review Governance Consolidated Financial Statements Company Financial Statements Shareholder Information Consolidated Income Statement for the year ended 26 February 2011

Year ended 25 February 2010 Year ended 26 February 2011 (reclassified†) Pre- Exceptional Pre- Exceptional exceptional items exceptional items items (note 8) Total items (note 8) Total Note £m £m £m £m £m £m

Continuing operations Revenue 1,2 137.3 — 137.3 169.0 — 169.0 Cost of sales (25.6) — (25.6) (29.1) — (29.1)

Gross profit 111.7 — 111.7 139.9 — 139.9 Administrative expenses (104.9) (187.3) (292.2) (127.2) (114.6) (241.8) Other operating income 2 0.8 — 0.8 — — —

Profit/(LOSS) from operations 7.6 (187.3) (179.7) 12.7 (114.6) (101.9) Finance income 3 0.8 — 0.8 1.1 — 1.1 Finance costs 3 (9.5) (9.5) (19.0) (8.3) — (8.3)

(LOSS)/Profit before taxation (1.1) (196.8) (197.9) 5.5 (114.6) (109.1) Tax credit/(charge) on (loss)/profit 5 0.5 12.8 13.3 — 10.3 10.3

(LOSS)/Profit for the year from continuing operations attributable to equity shareholders (0.6) (184.0) (184.6) 5.5 (104.3) (98.8)

Loss from discontinued operations* 9 — (3.4) (3.4) (0.8) (23.5) (24.3)

(LOSS)/ProfiT for the year attributable to equity shareholders (0.6) (187.4) (188.0) 4.7 (127.8) (123.1)

LOSS per share from continuing operations 7 Basic (183.9) (119.9) Diluted (183.9) (119.9) loss per share from continuing and discontinued operations 7 Basic (187.3) (149.4) Diluted (187.3) (149.4)

* The loss from discontinued operations is stated post-tax. † Reclassified to reflect the composition of discontinued operations at the latest balance sheet date.

The accompanying accounting policies and notes form an integral part of these financial statements. Consolidated Statement of Comprehensive Income for the year ended 26 February 2011

26 February 25 February 2011 2010 £m £m

Loss for the year (188.0) (123.1) Other comprehensive income Cash flow hedges (net of tax) (3.7) (0.5)

Other comprehensive Income from the period, net of tax (3.7) (0.5)

Total Comprehensive Income for the year attributable to equity shareholders (191.7) (123.6)

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Consolidated Balance Sheet at 26 February 2011

26 February 25 February 2011 2010 Note £m £m

Non-current assets Goodwill 10 33.8 130.8 Other intangible assets 11 1.8 2.6 Property, plant and equipment 12 124.6 226.9 Other non-current assets 13 1.5 1.9

161.7 362.2 Current assets Inventories 15 1.5 1.5 Trade and other receivables 16 4.2 5.6 Cash and cash equivalents 17 9.3 37.3 Monies on deposit 17 — 10.0

15.0 54.4 Assets classified as held for sale 9 4.5 2.1

19.5 56.5 Current liabilities Trade and other payables 19 (17.7) (14.1) Borrowings and loans 18 (12.5) — Current tax liabilities 20 (42.8) (42.8) Deferred income 21 (0.5) (0.5) Provisions 24 (1.9) (2.3)

(75.4) (59.7) Liabilities classified as held for sale 9 (6.1) (0.7)

(81.5) (60.4) Net current liabilities (62.0) (3.9)

Total assets less current liabilities 99.7 358.3 Non-current liabilities Borrowings and loans 18 (79.0) (139.9) Derivative financial instruments 22 (7.6) (13.8) Deferred income 21 (5.3) (6.1) Obligations under finance leases 23 (2.7) (7.9) Provisions 24 (2.0) (2.9) Deferred tax liabilities 25 — (7.9)

(96.6) (178.5) Net assets 3.1 179.8

Capital and reserves Share capital 26 25.1 131.8 Share premium 28 25.8 25.8 Capital redemption reserve 28 148.8 42.1 Equity reserve 28 2.2 1.7 Cash flow hedge reserve 28 1.9 — Retained earnings 28 (200.7) (21.6)

Shareholders’ equity 28 3.1 179.8

The financial statements were approved by the Board of Directors on 11 May 2011.

Philip Bowcock Finance Director

20319.04 25/05/2011 Proof 6 Stock code: LMR Business Review Governance Consolidated Financial Statements Company Financial Statements Shareholder Information Consolidated Cash Flow Statement for the year ended 26 February 2011

Year ended Year ended 26 February 25 February 2011 2010 Note £m £m

Cash flows from operating activities Net cash inflow from operations 29 15.5 23.3 Finance costs paid (7.7) (8.2) Tax received — 2.2

7.8 17.3

Cash flows from investing activities Purchase of property, plant and equipment (5.5) (3.9) Purchase of intangible assets — (0.3) Net proceeds from sale of property, plant and equipment 7.4 0.5 Finance income received 0.8 0.1

2.7 (3.6)

Cash flows from financing activities Repayment of long-term borrowings (142.5) (30.0) Drawdown of new facility (post-issue costs) 94.0 — Monies withdrawn from/(placed on) deposit 10.0 (10.0) Net proceeds from issue of shares — 35.7

(38.5) (4.3)

Net (decrease)/increase in cash and cash equivalents (28.0) 9.4 Cash and cash equivalents at beginning of year 17 37.3 27.9

Cash and cash equivalents at end of year 9.3 37.3

Consolidated Net Debt Statement for the year ended 26 February 2011

The movement in net debt in the year was analysed as follows: Year ended Year ended 26 February 25 February 2011 2010 Note £m £m

Decrease/(Increase) in cash in the year 28.0 (9.4) Cash inflow from increases in debt (post-issue costs) 94.0 — Cash inflow/(outflow) from monies being placed on deposit 10.0 (10.0) Cash outflow from repayment of debt (142.5) (30.0)

Movement in net debt in the year (10.5) (49.4) Opening net debt 100.6 150.0

Closing net debt* 30 90.1 100.6

*The closing Net Debt figure includes the finance leases of £7.9m (2010: £7.9m).

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Consolidated Statement of Changes in Shareholders’ Equity for the year ended 26 February 2011

Capital Cash flow Share Share redemption Equity hedge Retained capital premium reserve reserve reserve earnings Total £m £m £m £m £m £m £m

Brought forward at 27 February 2009 121.9 — 42.1 1.2 — 102.1 267.3 Total comprehensive income for the year — — — — — (123.6) (123.6) Share-based payment charge — — — 0.5 — — 0.5 Issue of shares (net of costs) 9.9 25.8 — — — — 35.7 Purchase of shares through Employee Benefit Trust — — — — — (0.1) (0.1)

Carried forward at 25 February 2010 131.8 25.8 42.1 1.7 — (21.6) 179.8

Brought forward at 26 February 2010 131.8 25.8 42.1 1.7 — (21.6) 179.8 Cancellation of deferred shares (106.7) — 106.7 — — — — Total comprehensive income for the year — — — — — (191.7) (191.7) Recycle hedging reserve under old facility — — — — — 12.6 12.6 Fair value gains on cash flow hedges in year — — — — 1.9 — 1.9 Share-based payment/share warrants charge — — — 0.5 — — 0.5

Carried forward at 26 February 2011 25.1 25.8 148.8 2.2 1.9 (200.7) 3.1

20319.04 25/05/2011 Proof 6 Stock code: LMR Business Review Governance Consolidated Financial Statements Company Financial Statements Shareholder Information Principal Accounting Policies for the Consolidated Financial Statements for the year ended 26 February 2011

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and International Financial Reporting Interpretations Committee (IFRIC) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs. The Group has complied with those IFRSs or IFRIC interpretations where the implementation date is relevant to the financial year ended 26 February 2011. No IFRSs or IFRIC interpretations have been early adopted.

The financial statements have been prepared on a historical cost basis, except for non-current assets and disposal groups and investments held for sale measured at their fair value less costs to sell and financial assets and liabilities recorded at fair value.

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates.

During the year the Group signed the New Facility (being a revised three year facility of £99m) with the Banking Group. The New Facility became effective from 8 December 2010.

Should the discussions with the Banking Group not secure such a longer term solution, the Group is unlikely to be able to operate within the existing terms of the New Facility and it is likely that a breach of the financial covenants would occur at the covenant testing point at the end of August 2011 and future liquidity risk would arise thereafter. In those circumstances, the debt drawn under the New Facility could be required to be repaid immediately which would result in the Company and the Group no longer being a going concern. The Directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the Company’s ability to continue as a going concern. Nevertheless, the Directors are of the opinion that the Banking Group will remain supportive and that the ongoing discussions with the Banking Group will result in restructured debt arrangements which will allow the Company and the Group to continue to trade as a Going Concern and secure a more sustainable, longer term debt structure for the Group.

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Principal Accounting Policies for the Consolidated Financial Statements for the year ended 26 February 2011

Impact of new accounting standards The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 26 February 2010:

Amendment to IAS 39, ‘Financial instruments: Recognition and measurement’, on Eligible hedged items. This amended standard requires the Group to split the fair value of the cap and floor swap between intrinsic and time value, with the time value element no longer eligible to be hedged and therefore potentially increasing volatility in the Income Statement.

The following standards, amendments and interpretations are mandatory for the first time for the current accounting period but have had no impact on the Group’s operations:

Amendment to IAS 32, ‘Financial instruments: Presentation’ on classification or rights issues. This amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer (effective 1 February 2010).

Amendments to IFRS 2, ‘Share-based payments’ on Group cash-settled transactions. This amendment incorporates IFRIC 8 and IFRIC 11 into one standard and provides clarification over the definitions included within IFRS 2 (effective 1 January 2010).

IFRS 3 (revised), ‘Business combinations’. The main changes to this standard are that directly attributable costs such as advisers’ fees and stamp duty will be charged to the income statement, revisions to contingent cash consideration in the period following the acquisition will be recorded in the income statement and any difference between the fair value of the consideration in the buyout of minority interests and the value of their reported minority interest will be recorded against equity rather than goodwill (effective 1 July 2009).

IAS 27 (revised) ‘Consolidated and separate financial statements’. The revised standard requires the impact of all transactions with non-controlling interests to be recorded in equity if there is no change in control and also clarifies the accounting for when control is lost (effective 1 July 2009).

IFRIC 17 ‘Distributions of non-cash assets to owners’. This interpretation clarifies the measurements of distributions of non-cash assets in the form of dividends to owners (effective 1 July 2009).

Impact of accounting standards issued but not adopted The following new standards and interpretations to existing standards have been published that are mandatory for the Group’s future accounting but which the Group has not early adopted:

Amendments to IFRS 7 on derecognition (effective 1 July 2011, therefore impacting financial year from February 2012). This amendment will improve transparency in the reporting of transfer transactions and improve the understanding of the risk exposures relating to transfers of financial assets. Management are currently evaluating the expected impact of this accounting standard.

IFRS 9 ‘Financial instruments’ on classification and measurement, replacing IAS 39 (effective 1 January 2013, therefore impacting from financial year starting February 2013). Management are currently evaluating the expected impact of this accounting standard.

IFRIC 19 ‘Extinguishing financial liabilities with equity instruments’ (effective 1 July 2010, therefore impacting financial year from 26 February 2011). This interpretation clarifies the accounting when the terms of debt are renegotiated with the result that the liability is extinguished through the debtor issuing its own equity instruments to the creditor. Management are currently evaluating the expected impact of this interpretation.

Exceptional items The Group classifies items of income and expense as exceptional items, where the nature of the item, or its size, is likely to be material so as to assist the user of the financial statements to better understand the results of the operations of the Group.

Basis of consolidation The consolidated financial statements incorporate the financial statements of the Group and entities controlled by the Group.

Control is achieved where the Group has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. Control is normally evidenced when the Group either directly or indirectly owns more than 50% of the voting rights or potential voting rights of a Group’s share capital.

Business combinations Under the requirements of IFRS 3 (revised), Business combinations, all business combinations are accounted for using the purchase method (“acquisition accounting”). The cost of a business combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, equity instruments issued by the acquirer and any costs directly attributable to the business combination.

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On acquisition of a subsidiary, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair value at that date. Any excess of the cost of acquisition over the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the Consolidated Income Statement in the period of acquisition.

The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the effective date of acquisition or up to the effective date of disposal.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-current assets held for sale Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than continuing use. This condition is regarded as met only when a sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Disposal groups are groups of assets, and liabilities directly associated with those assets, that are to be disposed of together as a group in a single transaction.

Non-current assets (and disposal groups) classified as held for sale are initially measured at the lower of carrying value and fair value less costs to sell. At subsequent reporting dates, non-current assets (and disposal groups) are remeasured to the latest estimate of fair value less costs to sell. As a result of this remeasurement, any impairment is recognised as a charge in the Consolidated Income Statement. Any increase in fair value is credited to the Consolidated Income Statement to the extent of previous impairment charges.

Discontinued operations Discontinued operations represent cash generating units or groups of cash generating units that have either been disposed of or classified as held for sale, and represent a separate major line of business or are part of a single co-ordinated plan to dispose of a separate major line of business. Cash generating units forming part of a single co-ordinated plan to dispose of a separate major line of business are classified within continuing operations until they meet the criteria to be held for sale.

The post-tax profit or loss of the discontinued operation is classified as a single line on the face of the Consolidated Income Statement, together with any post-tax gain or loss recognised on the remeasurement to fair value less costs to sell or on the disposal of the assets or disposal group constituting the discontinued operation.

On changes to the composition of groups of units comprising discontinued operations, the presentation of discontinued operations within prior periods is restated to reflect consistent classification of discontinued operations across all periods presented.

Financial instruments The Group has applied IAS 32, Financial instruments: Disclosure and presentation, IAS 39, Financial instruments: Recognition and measurement, IFRS 7, Financial instruments: Disclosures, and the complementary amendment to IAS 1, Presentation of financial statements — Capital disclosures.

Financial assets and liabilities — measurement basis Financial assets and liabilities are recognised on the date on which the Group becomes a party to the contractual provisions of the instrument giving rise to the asset or liability. Financial assets and liabilities are initially recognised at fair value plus transaction costs. Any impairment of a financial asset is charged to the Consolidated Income Statement when incurred. Financial assets are derecognised when the Group’s rights to cash inflows from the asset expire; financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire.

Financial assets are classified according to the purpose for which the asset was acquired. The Group’s financial assets are classified as either:

— trade and other receivables — these are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides goods or services directly to a debtor, or advances money, with no intention of trading the loan or receivable. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the consolidated income statement within ‘administrative expenses’. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against ‘administrative expenses’ in the income statement.

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Principal Accounting Policies for the Consolidated Financial Statements for the year ended 26 February 2011

— cash and cash equivalents — these comprise deposits with an original maturity of three months or less with banks and financial institutions, bank balances and cash on hand. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

— monies on deposit — these comprise deposits with an original maturity of more than three months, with banks and financial institutions. These balances are shown within current assets on the Balance Sheet and within cash flows from financing activities in the cash flow statement.

The Group’s financial liabilities are classified as either current liabilities or non-current liabilities. These are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. They arise when the Group receives goods or services directly from a creditor or supplier, or borrows money, with no intention of trading the liability. This category includes:

— trade and other payables — these are typically non-interest bearing and following initial recognition at cost, are included in the balance sheet at amortised cost using the effective interest method.

— bank loans — these are initially recorded at fair value based on proceeds received. Costs incurred as a result of obtaining new finance are expensed immediately to exceptional finance charges with the income statement. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Finance charges are accounted for on an accruals basis and charged to the Consolidated Income Statement using the effective interest rate method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date, at which point they are classified as non-current liabilities.

Derivative financial instruments and hedge accounting — measurement basis The Group’s activities expose it to the financial risks of changes in interest rates and the Group uses interest rate swaps to manage these exposures. The use of derivative financial instruments is approved by the Board of Directors.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).

The Group documents at the inception of the transaction the relationship between the hedging instrument and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes are disclosed in note 22. Movements on the hedging reserve in Shareholders’ equity are shown in note 22(d). The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item matures in more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within ‘finance costs’.

Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement within ‘finance costs’. The gain or loss relating to the ineffective portion is recognised in the income statement within ‘finance costs’.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity, is immediately transferred to the income statement within ‘finance costs’.

The Group has no embedded derivatives that are not closely related to the host instrument.

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Provisions Provisions for onerous lease commitments, public liability insurance claims and other provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of economic benefits will be required to settle the obligation; and the amount can be measured reliably.

Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets and liabilities of the acquired business at the date of acquisition. Goodwill is recognised as an asset and is reviewed for impairment at least annually and goodwill is allocated to cash generating units for the purpose of impairment testing at the level of reportable segment. Any impairment is recognised immediately in the income statement and is not subsequently reversed. Goodwill is carried at cost less aggregated impairment losses.

Other intangible assets Acquired trademarks are included at purchase cost and amortised over their finite useful economic lives on a straight-line basis.

Intangibles acquired separately and through business combinations, i.e. licences and other intangible assets, where material, are included at cost or fair value respectively and amortised over their useful economic lives, being the shorter of the term of the lease to which they are attached or the licence.

Acquired software assets not integral to the operation of the related hardware are included at cost and amortised over their estimated finite useful economic lives — three years on a straight-line basis.

The Group does not carry out research and development activities that may lead to the recognition of internally generated intangible assets. The Group’s internally generated brands represent commercially valuable intangibles but are not eligible for recognition as assets under IAS 38, Intangible Assets.

Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts recoverable by the Group for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

(a) Sale of goods Sales of goods are recognised when goods are provided and the title has passed, at the point of cash receipt.

(b) Admission and services revenue Admission revenue is recognised when the service is provided.

(c) Sub-lease rental income Sub-lease rental income is recognised on a straight-line basis over the life of the related sub-lease agreement.

(d) Commission income Commission income is recognised on an accruals basis in accordance with the substance of the relevant agreement.

Interest income Interest income is accrued by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are dealt within the income statement in the period in which they are incurred.

Equity dividends Final dividends are recognised in the Group’s financial statements in the period in which the dividends are approved by shareholders. Interim dividends are recognised in the period they are paid.

Dividend income Dividend income from investments is recognised when the Shareholders’ rights to receive payment have been established.

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Principal Accounting Policies for the Consolidated Financial Statements for the year ended 26 February 2011

Property, plant and equipment All classes of property, plant and equipment are stated at cost, net of depreciation and any recognised impairment losses. Cost includes other directly attributable costs, e.g. professional fees, and, for qualifying assets, borrowing costs capitalised. Depreciation is not charged during the period of construction, and commences when the assets are ready for their intended use.

Depreciation is calculated to write down the cost or valuation, less the estimated residual value of all assets, other than land, by equal annual instalments over their estimated useful lives.

The periods generally applicable are: n Freehold and long leasehold buildings and related structural fixtures and fittings — 50 years n Short leasehold buildings and related structural fixtures and fittings — over the period of the lease n Other fixtures and fittings, furniture and equipment — between two years and ten years n Motor vehicles — three years

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or, where shorter, the term of the relevant lease.

The assets’ residual values and useful economic lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An assessment is made at each reporting date if there is any indication that an asset may be impaired. If any indications are deemed to exist, the relevant assets are tested for impairment. Any impairment is determined as the difference between the higher of value in use, calculated by discounting an estimate of future cash flows by the Group’s pre-tax weighted average cost of capital, and fair value less costs to sell, compared to the carrying value of the relevant asset. Fair value less costs to sell is estimated by qualified surveyors and valuers and by applying the knowledge and experience of management, together with external market indicators. If the recoverable amount is less than the carrying value of the asset, then the carrying value is reduced to recoverable amount, and the resulting impairment charge is recognised in the income statement.

Investment in associates and joint ventures An associate is an entity over which the Group exercises, or is in a position to exercise, significant influence, but not control or joint control, through participation in the financial or operating policy of the investee.

Where material, the results and assets and liabilities of associates are incorporated in the financial statements using the equity method of accounting, except when these associates are classified as held for sale. Investments in associates are carried in the balance sheet at cost adjusted by any material post-acquisition changes in the net assets of the associates, less any impairment of value in the individual investments.

When the associate is classified as held for sale, the investment is held at the lower of adjusted cost (as described above) and fair value less costs to sell and is no longer equity accounted for, after the date the investment is classified as held for sale.

Inventories Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first in, first out method.

Taxation The tax expense represents the sum of the current tax and deferred tax.

The current tax is based on the taxable profit for the year. Taxable profit differs from profit before taxation as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Where taxation computations submitted to the taxation authorities are yet to be agreed, the Group’s estimate of tax liabilities reflects the uncertainty as to the amount of tax that may ultimately be payable.

Deferred tax is the tax accounted for in respect of temporary differences between the carrying amounts of assets and liabilities in the financial statements, and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the recognition of goodwill or the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

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IAS 12, Income taxes, requires that the measurement of deferred tax should have regard to the tax consequences that would follow from the manner of expected recovery or settlement, at the balance sheet date, of the carrying amount of its assets and liabilities. In calculating its deferred tax liability the Group’s policy is to regard the depreciable amount of the carrying value of its property, plant and equipment to be recovered through continuing use in the business, unless included within assets held for sale where the policy is to regard the carrying amount as being recoverable through sale.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the Consolidated Income Statement within finance costs, unless they are directly attributable to qualifying assets, in which case they are capitalised.

Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease.

Benefits received and receivable as an incentive to enter into an operating lease are included within deferred income and recognised in the Consolidated Income Statement on a straight-line basis over the lease term. Premiums paid on entering into the lease of certain leasehold land and buildings are classified as other non-current assets and amortised to the Consolidated Income Statement over the life of the relevant lease.

Leased assets that are sub-let to third parties are classified according to their substance as either finance or operating leases. All such arrangements the Group has entered into as lessor are operating leases. Income received as a lessor is recognised on a straight-line basis over the lease term and is classified in the Consolidated Income Statement as revenue.

Leases that are entered into following the sale of assets by the Group (i.e. “sale and leaseback transactions”) are classified according to the risk and rewards of the lease. All such arrangements entered into by the Group are operating leases. Where the proceeds on sale of the asset exceed the asset’s fair value, and the asset is leased back as an operating lease, any surplus over the fair value is treated as deferred income and recognised in the income statement over the term of the lease on a straight-line basis.

Segmental reporting Segment information is presented in accordance with IFRS 8. The management approach required by IFRS 8 stipulates that the internal reporting organisation used by management for making decisions on operating matters should be used to identify the Company’s reportable segments and the internal performance measure should be used as the segment result.

Employee benefits Retirement benefit costs Payments made to defined contribution retirement benefit schemes are charged as an expense when they fall due. The Group has no defined benefit or other retirement benefit schemes.

Share-based compensation The Group has applied the requirements of IFRS 2, Share-based payment. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005.

The Group issues some equity instruments where the counter-party has the choice of either cash or equity settlement, and some equity instruments where the settlement can only be in equity.

Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at grant date is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will actually vest, with a corresponding credit entry directly to equity reserves. Fair value is measured by means of a Stochastic model.

A liability is recognised at current fair value at each balance sheet date for cash settled share-based payments, with changes in the fair value recognised in the Consolidated Income Statement.

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Principal Accounting Policies for the Consolidated Financial Statements for the year ended 26 February 2011

Shares held in Employee Share Option Plan (“ESOP”) trusts are presented as a deduction from equity. Transactions between the Group and the ESOP trust are eliminated on consolidation.

Critical accounting policies and estimates Income taxes Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises the liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due.

In addition, any reduction in the corporation tax liability as a result of business activities undertaken in a tax efficient manner is provided for in accordance with the techniques identified by IAS 37, Provisions, contingent liabilities and contingent assets. Where significant progress has been made towards agreement with the relevant tax authority the total expected value approach is utilised. In all other cases the most likely outcome approach is used.

Deferred tax The Group has made provision for deferred tax arising following the requirements of IAS 12, Income taxes, using estimates based on the current manner of recovery of the assets’ value of property, plant and equipment not eligible for capital allowances, i.e. recovery of the depreciable amount through continued use in the business unless the assets are held for sale. This method assumes that no tax relief will be available until the value of the asset is recovered through sale rather than continued use.

Upon any change to the manner of recovery of the assets’ value, the change to the level of deferred tax provided will be recognised through the income statement during the period in which the change in the method of recovery occurs. Any changes to the expected manner of recovery could result in a significant change to the deferred tax charge or credit to the income statement.

Impairment of property, plant and equipment and goodwill The Group has tested property, plant and equipment and goodwill for impairment following the requirements of IAS 36, Impairment of assets. These impairment tests are dependent on estimates of value in use and fair value less costs of sale to determine the recoverable amounts of cash generating units.

Fair value less costs of sale is determined using external and internal estimates of the value of the Group’s units. Value in use is calculated using estimated earnings and cash flows derived by internal management estimates, and a discount applied to these cash flows.

Any changes to the level of forecast earnings or cash flows could impact upon the value-in-use of these cash generating units. Management have performed the annual impairment review of goodwill as required by IAS 36 (see note 10, ‘Goodwill’).

Onerous lease provisions The Group provides for its onerous obligations under operating leases where the property is closed or vacant, and the Group believes that it is more likely than not that the property will not be redeveloped for use in the Group’s business. Provision is made for rent and other property related costs for the period management believe a sub-let or assignment of the lease is not possible.

Where the Group believes the lease is likely to be assigned, provision is made for the Group’s best estimate of the reverse lease premium payable, if this represents the least cost to the Group from exiting from the obligation.

The estimated timings and amounts of cash flows are determined using the experience of internal and external property experts; however, any changes to the estimated method of exiting from the property could lead to significant changes to the level of the provision recorded.

20319.04 25/05/2011 Proof 6 Stock code: LMR Business Review Governance Consolidated Financial Statements Company Financial Statements Shareholder Information Notes to the Consolidated Financial Statements for the year ended 26 February 2011

1 Segmental reporting The Group adopted IFRS 8 ‘Operating segments’ in the year ended 26 February 2009.

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker (CODM) to allocate resources to the segments and to assess their performance.

We report our segment information on the same basis as our internal management reporting structure, which drives how our Company is organised and managed.

The Group is principally engaged as owner, developer and operator of nightclubs and themed bars in the UK. The CODM has been identified as the Senior Executive Management (SEM) that exercises the day-to-day management function of the Group. Operational and financial information, which is reported at an individual venue level and aggregated on a geographical basis, is received by the CODM on a monthly basis. As the geographical segments meet the aggregation criteria defined in IFRS 8 and the unit information does not meet the quantitative thresholds as required by IFRS 8, management have judged it appropriate to aggregate the financial information relating to all units into a single reportable segment.

2 Revenue and (loss)/profit from operations for the year An analysis of the Group’s revenue for the year is as follows:

Year ended 26 February 2011 Year ended 25 February 2010 Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m Sale of goods 96.0 0.3 96.3 117.3 3.8 121.1 Admission and services revenue 39.8 0.1 39.9 50.1 0.8 50.9 Sub-lease rental income 0.7 — 0.7 0.6 — 0.6 Commission income 0.8 — 0.8 1.0 — 1.0 137.3 0.4 137.7 169.0 4.6 173.6

All revenue results from transactions with external customers.

A further analysis of the Group’s results for the year is as follows:

Year ended 26 February 2011 Year ended 25 February 2010 Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m Revenue 137.3 0.4 137.7 169.0 4.6 173.6 Cost of sales (25.6) (0.1) (25.7) (29.1) (1.2) (30.3) Gross profit 111.7 0.3 112.0 139.9 3.4 143.3 Administrative expenses (292.2) (3.8) (296.0) (241.8) (31.7) (273.5) Other operating income 0.8 — 0.8 — — — Loss from operations (179.7) (3.5) (183.2) (101.9) (28.3) (130.2)

Continuing administrative expenses include £187.3m (2010: £114.6m) of exceptional items (see note 8). Discontinued administrative expenses include £3.4m (2010: £26.5m) of exceptional items (see note 8).

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

2 Revenue and (loss)/profit from operations for the year (continued) Profit/(loss) from operations for the year is stated after:

Year ended 26 February 2011 Year ended 25 February 2010 Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m Auditors’ remuneration: — Audit of the financial statements pursuant to legislation 0.1 — 0.1 0.1 — 0.1 — Other services relating to taxation — — — 0.2 — 0.2 — Other services provided pursuant to legislation — — — 0.1 — 0.1 Depreciation of property, plant and equipment (see note 12): — owned assets 14.5 — 14.5 21.7 0.1 21.8 — finance leased assets 0.1 — 0.1 0.1 — 0.1 Amortisation of intangibles (see note 11) 0.6 — 0.6 0.8 — 0.8 Amortisation of other non-current assets (see note 13) 0.1 — 0.1 0.1 — 0.1 Operating lease rentals of land and buildings 12.9 0.3 13.2 13.4 0.2 13.6 Sub-lease rents receivable and other income (0.7) — (0.7) (0.6) (0.1) (0.7) Costs of inventories recognised as an expense 25.6 0.1 25.7 30.2 0.1 30.3 Net impairment of property, plant and equipment: — owned assets 73.2 0.1 73.3 63.8 0.3 64.1 — finance leased assets 4.6 — 4.6 — — — Goodwill impairment (see note 10) 97.0 — 97.0 41.1 — 41.1 Costs of reorganisation and rationalisation 1.4 0.2 1.6 1.5 — 1.5

3 net finance costs Net finance costs relating to continuing operations were as follows:

Year ended Year ended 26 February 25 February 2011 2010 £m £m Interest payable on bank borrowings (8.9) (7.7) Interest payable on obligations under finance leases (0.5) (0.4) Amortisation of issue costs of the bank loan (note 18) (0.1) (0.2) Finance costs (pre-exceptional items) (9.5) (8.3) Exceptional finance costs: Hedge reserve recycled through income statement and recognition of new derivative financial instrument liability upon refinancing (9.5) — Finance costs (post-exceptional items) (19.0) (8.3) Income on bank deposits 0.5 0.1 Interest on loan to associate — 0.9 Other interest receivable 0.3 — Fair value movement on derivatives not hedge accounted for — 0.1 Finance income 0.8 1.1 net finance costs (pre-exceptional items) (8.7) (7.2) Net finance costs (post-exceptional items) (18.2) (7.2)

Finance costs related to discontinued operations totalled £nil (2010: £nil).

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4 Directors and employees Employee costs charged during the year were as follows:

Year ended 26 February 2011 Year ended 25 February 2010 Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m Wages and salaries 24.9 0.1 25.0 29.4 0.1 29.5 Social security costs 1.6 — 1.6 2.2 — 2.2 Expense recognised in respect of share-based payments 0.1 — 0.1 0.5 — 0.5 Pension costs 0.2 — 0.2 0.5 — 0.5 26.8 0.1 26.9 32.6 0.1 32.7

The Group operates defined contribution pension schemes. The assets of these schemes are held separately from those of the Group. The pension cost is shown above.

The average monthly number of employees (including weekly paid staff) of the Group, for both continuing and discontinued operations, during the year was:

Year ended 26 February 2011 Year ended 25 February 2010 Continuing Discontinued Total Continuing Discontinued Total Administration centre 95 — 95 134 1 135 Operations 2,604 6 2,610 2,943 14 2,957 2,699 6 2,705 3,077 15 3,092

Remuneration in respect of key management of the Group (including Directors) was as follows:

Year ended Year ended 26 February 25 February 2011 2010 £000 £000 Aggregate emoluments 1,721 2,547 Group contributions to money purchase pension schemes 46 230 1,767 2,777 Expense recognised in respect of share-based payments 98 201 1,865 2,978

All remuneration relating to key management is recorded within continuing operations.

During the year, key management consisted of 12 managers (including Directors) (2010: 16).

Remuneration in respect of Directors (including Non-Executive Directors) of Luminar Group Holdings plc was as follows:

Year ended Year ended 26 February 25 February 2011 2010 £000 £000 Aggregate emoluments 1,238 1,073 Group contributions to money purchase pension schemes — 92 1,238 1,165

For details of exceptional remuneration paid to Directors during the year, which is not reflected in the above figures, refer to the Remuneration Report on pages 25 to 32.

During the year, the Group had eight (2010: six) Directors, including Non-Executive Directors, providing services. During the year, no Directors (2010: two) participated in a defined contribution pension scheme.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

4 Directors and employees (continued) During the year, none of the Directors exercised share options (2010: no Directors) and no Directors were awarded shares.

The amounts set out above include remuneration of the highest paid Director as follows:

Year ended Year ended 26 February 25 February 2011 2010 £000 £000 Aggregate emoluments 407 501 Group contributions to money purchase pension schemes — 86 407 587

More detailed audited information concerning remuneration of Directors is included in the Remuneration Report on pages 25 to 32.

5 tax on (loss)/profit (a) Analysis of charge in period The taxation charge is based on the loss for the year and represents: Year ended Year ended 25 February 26 February 2010 2011 (Reclassified*) £m £m Current tax credit/(charge) Continuing operations: — Current period — (3.3) — Adjustments from prior periods — 2.1 Discontinued operations: — Current period 0.1 3.3 — 2.1 Deferred tax credit — Continuing operations 13.3 11.5 — Discontinued operations — 0.7 13.3 12.2 Total taxation credit/(charge) — Continuing operations 13.3 10.3 — Discontinued operations 0.1 4.0 13.4 14.3

(b) Tax on items (charged)/credited to equity Year ended Year ended 26 February 25 February 2011 2010 £m £m Derivative financial instruments 4.9 (0.2) 4.9 (0.2)

The amounts charged (2010: credited) to equity relate to deferred taxation.

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5 tax on (loss)/profit (continued) (c) Factors affecting tax charge for period The tax assessed for the period is higher (2010: higher) than the standard rate of corporation tax in the UK. The differences are explained as follows:

Year ended Year ended 25 February 26 February 2010 2011 (Reclassified*) £m £m Loss on ordinary activities from continuing operations before tax (197.9) (109.1) Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 28% (2010: 28%) 55.4 30.5 Effects of: Non-deductible exceptional items (41.4) (15.2) Adjustments in respect of the prior year — 2.1 Remeasured of tax change in UK tax rate 0.3 — Depreciation on non-qualifying assets (1.0) (7.1) Total tax credit/(charge) from continuing operations for the year 13.3 10.3

* Reclassified to reflect the composition of discontinued operations at the latest balance sheet date.

6 Dividends As reported in the Interim Report approved on 20 October 2010, the Board did not recommend an interim dividend for the half year ended 26 August 2010.

7 (Loss)/Earnings per share The basic earnings per share (EPS) is calculated by dividing the earnings attributed to equity shareholders by the weighted average number of shares in issue during the year. For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has two classes of dilutive potential ordinary shares: share options granted to Directors and employees where the exercise price is less than the average market price of the Group’s ordinary shares during the year, and the contingently issuable shares under the Group’s long-term incentive plan. At the year-end an assessment is made as to whether the performance criteria for the vesting of awards under the share option schemes of the Group is likely to be met and any potential shares unlikely to be exercised are excluded from the diluted EPS calculation.

An alternative measure of earnings per share has also been presented below, that being earnings per share from continuing operations pre- exceptional items, as the Directors believe that this measure of pre-exceptional earnings from continuing operations is more reflective of the ongoing trading of the Group.

Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below:

Year ended 26 February 2011 Weighted average number Per share Loss of shares amount £m (in millions) (pence) Basic and diluted EPS Loss attributable to ordinary shareholders (188.0) 100.4 (187.3) Basic and diluted EPS from continuing operations (184.6) 100.4 (183.9) Basic and diluted EPS from discontinued operations (3.4) 100.4 (3.4) EPS from continuing operations pre-exceptional items Basic and diluted EPS from continuing operations pre-exceptional items (1.1) 100.4 (1.1)

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

7 (Loss)/Earnings per share (continued) At 26 February 2011, as the Group is loss-making, any share options in issue are considered to be ‘anti-dilutive’ and as such, the calculation is the same for both basic and diluted earnings per share.

Year ended 25 February 2010 Weighted average number Per share (Loss)/Earnings of shares amount £m (in millions) (pence) Basic and diluted EPS Loss attributable to ordinary shareholders (123.1) 82.4 (149.4) Basic and diluted EPS from continuing operations (98.8) 82.4 (119.9) Basic and diluted EPS from discontinued operations (24.3) 82.4 (29.5) EPS from continuing operations pre-exceptional items Basic and diluted EPS from continuing operations pre-exceptional items 5.5 82.4 6.7

At 25 February 2010, as the Group is loss-making, any share options in issue are considered to be ‘anti-dilutive’ and as such, the calculation is the same for both basic and diluted earnings per share.

All amounts included in the column headed ‘(Loss)/Earnings’ are taken from the face of the Consolidated Income Statement on page 41.

8 exceptional items (a) Continuing operations The Group incurred exceptional items on continuing operations as follows: Year ended Year ended 26 February 25 February 2011 2010 £m £m Exceptional items Impairment of property, plant and equipment (77.8) (63.8) Provision for loss on liquidation of supplier — (0.8) Costs relating to reorganisation and rationalisation (1.4) (1.5) Impairment of goodwill (97.0) (41.1) Impairment of lease premiums (0.3) (1.9) Realised loss on disposal (2.8) — Net movement on provision for onerous lease commitments (0.3) (3.5) Provision against carrying value of memorabilia stock — (0.6) Provision against receivable due from associate — (0.7) Refinancing costs (7.7) — Costs relating to aborted projects — (0.7) Finance costs (9.5) — Pre-tax exceptional items relating to continuing operations (196.8) (114.6) Tax on exceptional items 12.8 10.3 Post-tax exceptional items relating to continuing operations (184.0) (104.3)

The impairment of property, plant and equipment of £77.8m (2010: £63.8m) and impairment of lease premiums of £0.3m (2010: £1.9m) reflects the difference between the value in use of the units and their carrying value, or in the case of assets held for sale, the difference between fair value less costs to sell and their carrying value. An impairment review was triggered on these assets due to the tough trading conditions seen through the year, resulting in reduced profit contributions.

Included within refinancing costs of £7.7m are the following related costs, £3.1m associated with breaking hedges, £2m amendment fee and £2.3m professional fees.

Costs of reorganisation and rationalisation of £1.4m (2010: £1.5m) primarily relate to redundancy and termination costs incurred in respect of internal restructures. The prior year costs related mainly to previous restructures.

The impairment of goodwill of £97.0m (2010: £41.1m) has arisen following the annual impairment test, which compared the carrying value of units to their recoverable value (their value in use). 58

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8 exceptional items (continued) The charges arising from onerous lease commitments of £0.3m (2010: £3.5m) were to recognise the obligation for rent, rates and other property related holding costs on currently vacant or closed units, where the likelihood of assignment of the lease or sub-let of the property is unlikely in the short term. These units are closed or vacant due to them being unprofitable and unsuitable for rebranding.

(b) Discontinued operations The Group incurred exceptional items relating to discontinued operations as follows: Year ended Year ended 26 February 25 February 2011 2010 £m £m Impairment of property, plant and equipment (0.1) (0.3) Impairment of investment in associate — (3.6) Provision against receivable due from associate — (23.7) Costs relating to reorganisation and rationalisation (0.2) — Net movement on provision for onerous lease commitments (0.2) 0.3 Realised (loss)/profit on disposals (2.9) 0.3 (3.4) (27.0) Costs associated with the disposal of companies: Indemnity provision — 0.5 — 0.5 Pre-tax exceptional items relating to discontinued operations (3.4) (26.5) Tax on exceptional items — 3.0 Post-tax exceptional items relating to discontinued operations (3.4) (23.5)

The impairment of property, plant and equipment of £0.1m (2010: £0.3m) reflects the difference between the value in use of the units and their carrying value.

In the prior year, a non-cash impairment of £3.6m was recognised against the carrying value of the Group’s investment in 3DE, reflecting the fact that the company went into administration on 26 February 2010. A further £23.7m was provided against the carrying value of the vendor loan note and related accrued interest.

The credit in relation to the disposal of companies in the prior year of £0.5m related to a release of brought forward provisions, for which the relative amounts are no longer payable, due to the companies disposed of having been placed into liquidation and administration in the prior year.

9 Discontinued operations and non-current assets held for sale (a) Results of discontinued operations The results of discontinued operations, which comprise those of the units sold to Cavendish Bars Limited for which the sale did not complete prior to this financial year and other non-core units, either disposed of or held for sale, forming part of the Group’s plan to exit from non-core operations, included within the Consolidated Income Statement were as follows:

Year ended Year ended 26 February 25 February 2011 2010 £m £m Revenue 0.4 4.6 Cost of sales and administrative expenses (0.5) (6.4) Loss before tax pre-exceptional items (0.1) (1.8) Attributable tax credit 0.1 1.0 Loss after tax pre-exceptional items — (0.8) Exceptional items (see note 8) (3.4) (26.5) Attributable tax credit — 3.0 Loss from discontinued operations (3.4) (24.3)

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

9 Discontinued operations and non-current assets held for sale (continued) (b) Cash flow from discontinued operations The Consolidated Cash Flow Statement on page 43 includes the following cash flows arising from discontinued operations:

Year ended Year ended 26 February 25 February 2011 2010 £m £m Net cash flows from operating activities (0.1) (5.3) Net cash flows from investing activities 2.6 (0.1) 2.5 (5.4)

(c) Assets and liabilities of units held for sale As at 26 February 2011, twelve units (2010: five units) were classified as held for sale, of which one (2010: four) of the units was reported within discontinued operations, and the remaining units were reported within continuing operations as they are not part of a disposal group.

The major classes of assets and liabilities comprising the units classified as held for sale were as follows:

26 February 25 February 2011 2010 £m £m Property, plant and equipment 3.7 2.0 Deferred tax assets 0.5 — Inventories 0.1 — Trade and other receivables 0.2 0.1 Total assets classified as held for sale 4.5 2.1

Trade and other payables — (0.1) Finance lease creditor (5.2) — Provisions (0.9) (0.5) Deferred tax liabilities — (0.1) Total liabilities classified as held for sale (6.1) (0.7) Net (liabilities)/assets classified as held for sale (1.6) 1.4

The total loss of £10.5m (2010: £1.6m) incurred in writing these assets down to fair value less costs to sell has been included in continuing exceptional items within impairment of property, plant and equipment (see note 8).

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10 Goodwill 2011 £m Cost Brought forward at 26 February 2010 183.6 At 26 February 2011 183.6 Accumulated impairment losses Brought forward at 26 February 2010 52.8 Impairment in the year 97.0 At 26 February 2011 149.8 Carrying amount At 26 February 2011 33.8

2010 £m Cost Brought forward at 27 February 2009 183.6 At 25 February 2010 183.6 Accumulated impairment losses Brought forward at 27 February 2009 11.7 Impairment in the year 41.1 At 25 February 2010 52.8 Carrying amount At 25 February 2010 130.8

The majority of the Group’s goodwill arose from the acquisition of units from either Allied Leisure plc on 6 December 1999 or from Northern Leisure Plc on 11 July 2000, excluding the £8.1m of goodwill that arose on the acquisition of 13 units from The Nightclub Company (“TNC”) in 2005, and the £0.6m of goodwill on acquisitions in 2008.

No acquisitions occurred during the year giving rise to goodwill additions.

A Cash Generating Unit (“CGU”) is deemed to be an individual operating unit, as each unit generates profits and cash flows that are largely independent from other units. Where multiple CGUs are acquired as part of a single business combination, the goodwill arising from the business combination is attributed to individual CGUs, but is grouped together. Accordingly, CGUs have been grouped together for the purpose of the annual impairment review of goodwill at total operating segment level.

Impairment of goodwill In assessing whether a write-down of goodwill is required to the carrying value of the related asset, the carrying value of the combined CGUs, is compared with its recoverable amount. The recoverable amount for each CGU, and collectively for the combined CGUs, has been measured based on value in use (“VIU”), with the exception of those units that were held for sale at the balance sheet date, where the recoverable amount for these units has been based on the lower of cost and fair value less costs to sell.

For the purposes of the annual impairment review, the recoverable amount has been estimated on the VIU basis.

The Group estimates the VIU of its CGUs using a discounted cash flow model (“DCF”), which adjusts the cash flows for risks associated with the assets, and are discounted using a pre-tax rate of 12.9% (2010: 11.4%).

The VIU calculations have not included the benefits arising from any future asset enhancement expenditure, as this is not permitted by IAS 36. The VIU calculations, therefore, exclude any benefits anticipated from future asset enhancing refurbishments, together with the related capital expenditure.

Management have performed the annual impairment review of goodwill as required by IAS 36. As a result, an impairment of £97.0m has been booked in the year to 26 February 2011 (2010: £41.1m). None of this impairment (2010: £nil) of goodwill was in relation to units held for sale.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

10 Goodwill (continued) Key assumptions The key assumptions are based upon our own historical experience. The calculation of VIU is most sensitive to the following assumptions:

n Sales and EBITDA — this is based on reasonable forecasts for the first year. These have then been forecast for years two to seven based on expected sales trends; n Discount rate — this reflects the Directors estimate of an appropriate rate of return, taking into account the relevant risk factors; and n Growth rate used to extrapolate beyond the budget period and for terminal values — based upon the long-term average growth rate of the UK of 2.2%. Management recognise that the leisure market growth rates fluctuate both above and below this rate.

Sensitivity to changes in assumptions The impairment calculation is sensitive to changes in the above assumptions, primarily in relation to EBITDA forecast assumptions, a 5% decrease in EBITDA forecast would result in a further impairment being required of £21.2m.

11 other intangible assets 2011 Software Trademarks Licences Total £m £m £m £m Cost Brought forward at 26 February 2010 5.4 0.1 0.4 5.9 At 26 February 2011 5.4 0.1 0.4 5.9 Amortisation Brought forward at 26 February 2010 3.2 — 0.1 3.3 Charge 0.6 — — 0.6 Impairments 0.2 — — 0.2 At 26 February 2011 4.0 — 0.1 4.1 Net book amount at 26 February 2011 1.4 0.1 0.3 1.8

2010 Software Trademarks Licences Total £m £m £m £m Cost Brought forward at 27 February 2009 5.1 0.1 0.4 5.6 Additions 0.3 — — 0.3 At 25 February 2010 5.4 0.1 0.4 5.9 Amortisation Brought forward at 27 February 2009 2.4 — 0.1 2.5 Charge 0.8 — — 0.8 At 25 February 2010 3.2 — 0.1 3.3 Net book amount at 25 February 2010 2.2 0.1 0.3 2.6

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12 pRoperty, plant and equipment 2011 Fixtures, Long Short fittings, Freehold land leasehold land leasehold land furniture and Motor and buildings and buildings and buildings equipment vehicles Total £m £m £m £m £m £m Cost Brought forward at 26 February 2010 54.4 3.7 106.2 319.0 0.9 484.2 Transfers 22.0 15.5 (18.2) (19.3) — — Additions — — — 5.5 — 5.5 Disposals (13.7) (1.7) (5.3) (37.6) (0.9) (59.2) Net transfers to assets held for sale (16.5) (5.6) (0.1) (17.8) — (40.0) At 26 February 2011 46.2 11.9 82.6 249.8 — 390.5 Depreciation Brought forward at 26 February 2010 20.8 3.1 46.3 186.2 0.9 257.3 Transfers 1.2 3.6 6.2 (11.0) — — Depreciation charge 1.4 0.3 1.9 11.0 — 14.6 Impairment 4.3 5.4 12.8 45.3 — 67.8 Disposals (8.2) (1.7) (3.8) (31.3) (0.9) (45.9) Net transfers to assets held for sale (7.9) (5.3) (0.1) (14.6) — (27.9) At 26 February 2011 11.6 5.4 63.3 185.6 — 265.9 Net book amount at 26 February 2011 34.6 6.5 19.3 64.3 — 124.6

2010 Fixtures, Long Short fittings, Freehold land leasehold land leasehold land furniture and Motor and buildings and buildings and buildings equipment vehicles Total £m £m £m £m £m £m Cost Brought forward at 27 February 2009 54.4 3.7 106.2 319.7 0.9 484.9 Additions — — — 3.8 — 3.8 Disposals — — — (0.6) — (0.6) Net transfers to assets held for sale — — — (3.9) — (3.9) At 25 February 2010 54.4 3.7 106.2 319.0 0.9 484.2 Depreciation Brought forward at 27 February 2009 4.1 1.3 32.5 137.2 0.9 176.0 Depreciation charge 1.7 0.6 3.2 16.4 — 21.9 Impairment 15.0 1.2 10.6 35.6 — 62.4 Disposals — — — (0.3) — (0.3) Net transfers to assets held for sale — — — (2.7) — (2.7) At 25 February 2010 20.8 3.1 46.3 186.2 0.9 257.3 Net book amount at 25 February 2010 33.6 0.6 59.9 132.8 — 226.9

The impairment of property, plant and equipment of £67.8m (2010: £62.4m) reflects the difference between the value in use of the units and their carrying value. An impairment review was triggered on these assets due to the continued tough trading conditions seen through the year, resulting in reduced profit contributions. Value in use has been calculated using a post-tax discount rate of 12.9% and a long-term growth rate of 2.2%, and has been calculated on an individual unit basis.

During the year, management have transferred assets within categories to best reflect their nature, with no material impact to the depreciation charge.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

12 pRoperty, plant and equipment (continued) Assets held under finance leases have the following net book amount: 26 February 25 February 2011 2010 £m £m Cost 7.3 7.3 Accumulated depreciation and impairment losses (5.4) (1.0) Net book value transferred to held for sale (0.2) — Net book amount 1.7 6.3

Assets held under finance leases relate to the building component of properties held under long leases.

13 other non-current assets 26 February 25 February 2011 2010 £m £m Other non-current assets 1.5 1.9

Other non-current assets relate to lease premiums paid in relation to property leases.

An impairment of £0.3m (2010: £1.9m) has been charged during the year (see note 8, ‘Exceptional Items’). This impairment arose due to the tough trading conditions seen during the year, resulting in reduced discounted cash flows being generated by units.

14 pRIncipal subsidiaries, associates and joint ventures Subsidiary undertakings The Group’s principal subsidiary undertakings, all of which are wholly owned and which have been consolidated into these financial statements, are listed below together with details of their businesses:

Class of Proportion Nature of share capital held business Luminar Holdings Limited Ordinary 100% Holding Company Luminar Oceana Limited Ordinary 100% Licensed premises Luminar Lava Ignite Limited Ordinary 100% Licensed premises Luminar Liquid Limited Ordinary 100% Licensed premises Luminar Gems Limited Ordinary 100% Licensed premises Luminar Leisure Limited (formerly Luminar Properties Limited) Ordinary 100% Licensed premises and Group service provider Luminar Finance Limited Ordinary 100% Financing Company Luminar Dancing Finance Ordinary 100% Holding Company Luminar Finance (2006) Limited Ordinary 100% Financing Company Luminar Entertainment (2006) Limited Ordinary 100% Holding Company Luminar Dancing (2006) Limited Ordinary 100% Holding Company Luminar Entertainment Finance Ordinary 100% Financing Company Luminar Project Holdings Limited (formerly Jam House Holdings Limited) Ordinary 100% Holding Company Luminar Holdings 2 Limited Ordinary 100% Holding Company Evered Employee Benefit Trustees Limited (registered in Jersey) Ordinary 100% Trustee Company Luminar Brands Limited Partnership Incorporated (registered in Guernsey) Partnership interest 100% Brand ownership

Unless otherwise stated, all subsidiaries are registered in England and Wales. Luminar Group Holdings plc is registered and domiciled in England and Wales.

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14 pRIncipal subsidiaries, associates and joint ventures (continued) Investment in associate 26 February 25 February 2011 2010 £m £m Cost 27.7 27.7 Accumulated impairment losses (27.7) (27.7) Carrying value — —

Interests in associates represents the Group’s interest in the issued ordinary share capital of 3DE (49%), which was equity accounted for in accordance with IAS 28, Investments in associates, up to the date the investment was classified as held for sale, and Eminence Leisure Limited (20%), which was equity accounted for in accordance with IAS 28, Investments in associates, up to the date the company went into liquidation. All of the Group’s associated undertakings are registered in England and Wales.

The 3D Entertainment Group Limited The 3D Entertainment Group Limited went into administration on 26 February 2010, resulting in the Group’s carrying value of its investment in the associate being fully impaired as at the financial year end of 25 February 2010. This impairment was disclosed within discontinued operations as the investment was classified as held for sale in the prior year and hence, no share of the profits and losses of 3DE have been recorded.

Eminence Leisure Limited The cost of investment, the cumulative post–acquisition share of the after tax profit and the cumulative post-acquisition share of reserve movements of this associate was less than £50,000 and accordingly when rounded does not appear in the presentation of these financial statements.

Eminence Leisure Limited went into liquidation on 30 September 2009. As a result, the outstanding receivable balance was fully provided against in the financial statements for the year ended 25 February 2010.

Interests in joint ventures In 2005/2006, the Group entered into an arrangement with Lucien Barriere to form a joint venture company called Waterimage Limited, a company incorporated in the UK. Both parties own a 50% shareholding in the company, representing one £1 share each. No trading took place in the company during the year or the prior year.

15 Inventories 26 February 25 February 2011 2010 £m £m Goods held for resale 1.5 1.5

16 tRade and other receivables 26 February 25 February 2011 2010 £m £m Trade receivables 0.6 1.5 Other debtors 0.4 0.8 Prepayments and accrued income 3.2 3.3 4.2 5.6

Receivables from related parties comprise a £19.3m unsecured loan note and £5.3m accrued interest receivable from 3DE. On 26 February 2010, 3DE was placed into administration. The administration process is ongoing. From the date of administration, the Group no longer accrues any interest on the 3DE loan notes. All debtor balances relating to 3DE were fully provided for in the accounts for the year ended 25 February 2010 and remain fully provided for at 26 February 2011.

The carrying value less the impairment provision of trade receivables approximates their fair values. The carrying value of receivables from related parties and other debtors approximates their fair values.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

16 tRade and other receivables (continued) Trade receivables are analysed on a case by case basis for the purpose of identifying any impairments and are disclosed net of any such impairments. The majority of trade debtors are on 30 day terms post-invoice date. The ageing analysis of these trade receivables was as follows:

26 February 25 February 2011 2010 £m £m Not past due: Within 30 days after invoice date 0.2 0.4 Past due: 31–60 days after invoice date — 0.4 61–90 days after invoice date — 0.3 Over 90 days after invoice date 0.4 0.4 0.4 1.1 TOTAL 0.6 1.5

Included within trade receivables at the year end was a balance of £1.0m (2010: £1.0m) with 3DE relating to recharges for the Group’s services. This balance has been provided for in full (net of VAT) as the company is in administration.

Trade receivables that have not been provided against at the year end are not considered impaired. There are agreed payment profiles for the older debtors. Trade receivables are spread over a number of counter-parties and as such overall credit risk is perceived to be low.

Movements on the Group provision for impairment of trade receivables were as follows: 26 February 25 February 2011 2010 £m £m Brought forward at the start of the year 0.9 — Charged to income statement — 0.9 Balance carried forward at the end of the year 0.9 0.9

£0.8m of the provision for impairment of trade receivables relates to 3DE (net of VAT), which is in administration. All of this balance was over 90 days past the invoice date.

A further provision of £0.1m exists for other balances due from third parties, all of which were over 90 days past the invoice date.

17 Cash, cash equivalents and monies on deposit 26 February 25 February 2011 2010 £m £m Cash at bank and in hand 9.3 37.3

Of this balance, £0.1m (2010: £0.1m) relates to rental deposits held on behalf of sub-let tenants. 26 February 25 February 2011 2010 £m £m Monies on deposit — 10.0

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18 borrowings and loans 26 February 25 February 2011 2010 £m £m Current: Bank loans 12.5 — Non-current: Bank loans 79.0 140.0 Issue costs — (0.1) 91.5 139.9

Borrowings mature in December 2013 and bear interest of LIBOR, reset every month, plus a margin of up to 12.0%. The bank loans are secured via a floating charge over all of the Group’s assets.

The fair value of bank borrowings at 26 February 2011 equalled the bank loan balance of £91.5m (2010: £140.0m) plus accrued interest of £1.7m (2010: £nil).

The Group’s undrawn floating facilities at the balance sheet date were as follows: 26 February 25 February 2011 2010 £m £m Expiring after two years 5.0 35.0

Included within the total bank loan facility of £99.0m (2010: £175.0m), the Group also has an overdraft facility of £5.0m (2010: £5.0m) which as outlined above was undrawn at the year end.

19 tRade and other payables 26 February 25 February 2011 2010 £m £m Trade payables 3.6 4.8 Social security and other taxes 3.1 2.2 Accruals 10.4 6.2 Other creditors 0.6 0.9 17.7 14.1

The carrying value of trade payables are not materially different to their fair values.

20 Current tax liabilities 26 February 25 February 2011 2010 £m £m Current tax liabilities 42.8 42.8

Current tax liabilities include amounts provided for as a result of business activities undertaken in a tax efficient manner, pending agreement with the relevant tax authority. The amount provided will be paid or released to the consolidated income statement in accordance with the techniques identified by IAS 37, Provisions, contingent liabilities and contingent assets.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

21 Deferred income Deferred income has been analysed between current and non-current as follows: 26 February 25 February 2011 2010 £m £m Current 0.5 0.5 Non-current 5.3 6.1 5.8 6.6

Deferred income includes the deferred profit represented by the excess of consideration received above the assessed fair value on the sale and leaseback transactions completed in prior years, together with the deferred lease incentives and rent-free periods received on the Group’s operating leases.

22 Financial instruments Financial Risk Management Financial Risk Factors The Group’s activities expose it to a variety of financial risks: market risk (predominantly cash flow interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

(a) Market risk (i) Currency risk The Group operates predominantly within the UK and substantially all transactions are denominated in sterling; therefore, the Group does not suffer from a significant concentration of currency risk.

(ii) Price risk The Group is not exposed to equity security price risk or commodity price risk.

In addition to the financial instruments described in the measurement basis sections above, the Group also has the following financial instruments for which additional disclosures are included in the notes to the financial statements:

n cash and cash equivalents; n trade and other receivables (including loan notes); n finance lease obligations; and n accruals.

Due to the predominantly cash-based nature of the Group’s operations, the only financial instruments that materially expose the Group to any of the financial risks detailed in the notes below are debt financing and related interest rate swaps, and the disclosures that follow relate principally to these items.

The Group uses derivative financial instruments in order to reduce its exposure to financial risk. The use of such financial instruments constitutes an integral part of the Group’s funding strategy. The Group manages its derivative financial instrument credit risk by only undertaking transactions with relationship banks, with good credit ratings. Such transactions are governed by Board policies and procedures.

(iii) Cash flow and fair value interest rate risk As the Group has no significant interest-bearing assets aside from cash and cash equivalents and short-term deposits, the Group’s income and operating cash inflows are substantially independent of changes in market interest rates.

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (primarily monthly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional amounts.

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22 Financial instruments (continued) During the year ended 26 February 2011, if interest rates on UK denominated borrowings had been 0.5% higher with all other variables held constant, pre-tax profit for the year would have been £0.7m lower (2010: £0.7m lower) based on an unhedged position, as a result of a higher interest expense on floating rate borrowings. Taking the hedges into account, pre-tax profit for the year would have been £0.5m lower (2010: £0.5m lower). This will have a consequential effect on equity, excluding any change in the fair value of the derivatives as a result of the interest rate change.

(b) Credit risk Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to receivables principally recognised on sales of property assets and on income received from sub-lets. The Group does not have a significant concentration of credit risk, and the majority of the Group’s revenues are cash-based.

Vendor loan notes totalling £19.3m in aggregate (plus accrued interest of £5.3m) with 3DE is receivable on the earlier of a subsequent sale of the business, refinancing or January 2014. This balance was provided for in full in the year ended 25 February 2010 as 3DE is in administration and therefore recoverability of the loan is perceived to be a high credit risk.

The Group’s funding is provided by banks with an AAA credit rating.

(c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

Management monitor rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow. In addition, the Group’s liquidity management policy involves monitoring balance sheet liquidity ratios against internal and external regulatory requirements, and maintaining debt financing plans. Liquidity risk is managed through an assessment of short, medium and long-term cash flow forecasts to ensure the adequacy of committed debt facilities and monitoring compliance with banking covenants, which are formally assessed twice yearly.

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.

26 February 2011 25 February 2010 Less than Between Between Less than Between Between 1 year 1–2 years 2–5 years Total 1 year 1–2 years 2–5 years Total £m £m £m £m £m £m £m £m Borrowings 12.5 10.0 69.0 91.5 1.7 1.7 149.1 152.5 Derivative financial instruments — 3.9 3.7 7.6 4.6 4.6 4.6 13.8

Financial instrument disclosures (a) Interest rate exposure of financial assets and liabilities The interest rate exposure of the Group’s financial assets, being cash and cash equivalents and monies on deposit, is as follows:

Floating Fixed rate at year end Fixed rate Floating rate Total interest rate Interest rate Time period £m £m £m % % Years 26 February 2011 — 9.3 9.3 0.5 — — 25 February 2010 10.0 37.3 47.3 0.5 2.7 1.0

The trade receivables and other debtors balances totalling £1.0m (2010: £2.3m) were non-interest bearing and therefore have been excluded.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

22 Financial instruments (continued) After taking into account the various interest rate swaps entered into by the Group, the interest rate profile of the Group’s financial liabilities is as follows:

Floating Fixed rate weighted average Fixed rate Floating rate Total interest rate Interest rate Time period £m £m £m % % Years 26 February 2011 69.9 34.5 104.4 2.43 5.6 8.4 25 February 2010 97.9 50.0 147.9 3.25 5.6 7.0

The fixed rate debt included £62.0m (2010: £90.0m) in relation to the fixed rate hedged element of the bank loan, including £5m undrawn overdraft facility. The floating rate debt includes £34.5m (2010: £50.0m) in relation to the element of the bank loan, which is subject to an interest rate cap and floor derivative instrument (see note d for more details on derivative financial instruments). The floating rate debt bears interest of LIBOR, reset every month, plus a margin of up to 12.0%.

(b) Maturity analysis of financial assets and liabilities The maturity profile of the Group’s financial assets was as follows:

26 February 2011 25 February 2010 Short-term Loans and Short-term Loans and Cash deposits receivables Total Cash deposits receivables Total £m £m £m £m £m £m £m £m Within one year or on demand 9.3 — 1.0 10.3 37.3 10.0 2.3 49.6 Between two and five years — — — — — — — — Over five years — — — — — — — — 9.3 — 1.0 10.3 37.3 10.0 2.3 49.6

Short-term deposits in the prior year relate to monies placed on deposit, which mature in more than three months but less than two years.

The maturity profile of the Group’s financial liabilities was as follows:

26 February 2011 25 February 2010 Bank Finance Bank Finance and other lease and other lease borrowings liabilities Total borrowings liabilities Total £m £m £m £m £m £m Included within liabilities held for sale — 5.2 5.2 — — — Within one year 12.5 — 12.5 — — — Between two and five years 79.0 — 79.0 140.0 0.1 140.1 Over five years — 2.7 2.7 — 7.8 7.8 91.5 7.9 99.4 140.0 7.9 147.9

Trade and other payables of £4.7m (2010: £5.7m) are payable within one year.

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22 Financial instruments (continued) (c) Fair values of financial assets and liabilities 26 February 2011 25 February 2010 Book value Fair value Book value Fair value £m £m £m £m Primary financial instruments held or issued to finance the Group operations Cash and cash equivalents (i) 9.3 9.3 37.3 37.3 Monies on deposit (ii) — — 10.0 10.1 Loan note receivable (iii) — — — — Trade receivables and other debtors (iv) 1.3 1.3 2.3 2.3 Long-term borrowings (v) (91.5) (91.5) (140.0) (140.0) Finance lease obligations (vi) (7.9) (5.3) (7.9) (5.3) Derivative financial instruments held to manage the interest rate and currency profile Cash flow hedges (vii) (7.6) (7.6) (13.8) (13.8)

The fair value of other financial assets and liabilities included in notes 16, 19 and 24 approximate their carrying value.

i) Cash at bank, including deposits made for short durations (less than one month); given the short maturity periods there is no significant difference between the book value and fair value of these deposits.

ii) Short-term deposits relate to monies placed on deposit which mature in greater than three months but less than two years. Fair value of the deposits at the prior year end includes effective accrued interest of £0.1m.

iii) The loan note receivable of £24.6m (2010: £24.6m) including accrued interest of £5.3m (2010: £5.3m) was fully provided against in the prior year. This was due to the counter-party having been placed into administration on 26 February 2010, resulting in a net book value of £nil. The fair value approximates to book value.

iv) The fair value of trade receivables and other debtors approximates to book value.

v) Drawings made under the Group’s floating rate facility. The fair value excludes the interest accrual reported within accruals and deferred income of £1.7m (2010: £nil).

vi) Finance lease liabilities at fixed rate; given the length of time to maturity of these liabilities and the length of time since inception of the lease, the fair value of these liabilities at the balance sheet date is lower than current book value.

vii) The fair value of cash flow hedges has been determined with reference to market rates at the balance sheet date. At 26 February 2011 the book value of these swaps equated to their fair value as these derivatives were stated at their fair value under IAS 39.

Effective from 27 February 2009, the Group adopted the amendment to IFRS 7 for financial instruments that are measured in the Balance Sheet at fair value. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

— quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); — Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (that is as prices) or indirectly (that is derived from prices) (level 2); and — Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3)

All items disclosed above are considered to be level 2.

(d) Derivative financial instruments The Group has three cash flow hedges in place at the year end, hedging the majority of the interest rate risk of the Group’s borrowings. The notional principal amounts of the outstanding interest rate swap contracts at 26 February 2011 was £62.0m for two fixed rate swaps and £34.5m for a cap and floor swap. The fixed interest rates on the swaps were 5.54% (on the £27.5m swap) and 5.56% (on the £34.5m swap). The cap and floor was triggered throughout the year, due to the LIBOR rate being below the floor rate of 4.48%.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

22 Financial instruments (continued) The Group’s swaps were fair valued at £7.6m liability at the year end (2010: £13.8m liability), determined using discounted cash flow valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date.

The table below reconciles the movement in the fair value of the hedges during the year: Fair value £m Brought forward at 26 February 2010 (13.8) Increase in the mark-to-market value (2.7) Amount recycled through income statement 8.9 Carried forward at 26 February 2011 (7.6)

There was no ineffectiveness to be recorded from the cash flow hedges.

(e) Financial instruments held for trading purposes The Group does not trade in financial instruments.

23 obligations under finance leases The minimum lease payments under finance leases fall due as follows: 26 February 25 February 2011 2010 £m £m Within one year 0.5 0.5 In the second to fifth years inclusive 1.9 1.9 After five years 26.7 27.2 29.1 29.6 Less future finance charges (21.2) (21.7) Present value of lease obligations 7.9 7.9 Less amount due for settlement within one year — — Amount due for settlement after more than one year 7.9 7.9 Split by: Amounts included within liabilities held for sale 5.2 — Amount due for settlement within second to fifth years inclusive — 0.1 Amount due for settlement after five years 2.7 7.8

All finance lease obligations represent liabilities for the building element of properties used in the Group’s business. The lease agreements include rent review clauses at periodic intervals of a kind that are usual for property leases.

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24 Provisions Public Onerous liability Other leases insurance provisions Total £m £m £m £m Brought forward at 26 February 2010 4.1 0.7 0.9 5.7 Charge for the year 0.3 0.5 0.2 1.0 Released during the year — — — — Utilised during the year (1.2) (0.6) (0.2) (2.0) At 26 February 2011 3.2 0.6 0.9 4.7 At 26 February 2011 classified as: Held for sale 0.7 — 0.2 0.9 Continuing operations 2.5 0.6 0.7 3.8 At 25 February 2010 classified as: Held for sale 0.4 — 0.1 0.5 Continuing Operations 3.7 0.7 0.8 5.2

Provisions within continuing operations have been analysed between current and non-current as follows: 26 February 25 February 2011 2010 £m £m Current 1.9 2.3 Non-current 2.0 2.9 3.9 5.2

Onerous lease provisions have been discounted using a post-tax discount rate of 4.4%. No other provisions have been discounted as the effect of discounting would not be material.

Onerous leases Provisions for onerous leases represent onerous commitments on operating leases for properties currently vacant or for closed units, where assignment of the lease or sub-let of the property is unlikely in the short term.

Provision is made for rent and related property costs for the period management estimate the property would not be sub-let, or until assignment of the lease is probable, and ranges up to five years.

Where the property is deemed likely to be assigned, provision is made for the best estimate of the reverse lease premium payable on the assignment, if this represents the least cost to exit from the commitment.

The amount and timing of the cash outflows relating to onerous leases are subject to variations. In estimating the amount and timing of cash flows, management utilise the skills and experience of both internal and external property specialists, and are satisfied that the resulting estimated provision is appropriate.

Public liability insurance Provision for public liability insurance is made for the estimated exposure of the Group to claims, based upon experience of historical claims. This provision is expected to be utilised within two years.

Other provisions Other provisions represent £0.1m in relation to expected final costs to be incurred in respect of the disposal of five subsidiary companies to Cavendish Bars Limited, £0.2m in relation to final costs to be incurred in respect of the disposal of certain properties and £0.6m in relation to costs in respect of Eminence Limited, an associate of the Group, that went into liquidation during the year ended 25 February 2010.

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

25 Deferred tax £m Brought forward at 26 February 2010 8.0 Credit recognised in income statement (note 5) (13.3) Charge recognised in equity (note 5) 4.9 At 26 February 2011 (0.4)

The cumulative deferred taxation in equity is £nil (2010: £3.9m). 26 February 25 February 2011 2010 £m £m Held for sale (0.4) 0.1 Continuing operations — 7.9 (0.4) 8.0

The analysis of the year end deferred tax position was as follows: 26 February 25 February 2011 2010 £m £m On property, plant and equipment (0.4) 10.6 Other temporary differences — (2.6) (0.4) 8.0

Deferred taxation provided for in the financial statements at the year end represents provision at 27% (2010: 28%) on the temporary differences between the accounting net book amount of property, plant and equipment, and the tax base of those assets.

The deferred tax liability has been calculated using estimates based on the current manner of recovery of the assets’ value on property, plant and equipment not eligible for capital allowances, i.e. recovery through continued use in the business unless the asset is held for sale. This method assumes no tax relief will be available; therefore, no tax base is available for inclusion within the calculation of the deferred tax liability unless the assets’ value is recovered through sale rather than continued use.

The key assumptions in the calculation of deferred tax are set out below:

— Capital expenditure — The percentage of the Group’s capital expenditure that would qualify for tax relief, incurred by each unit, has been estimated based on prior periods historical experience of the split between qualifying and non-qualifying expenditure.

— Impairments — The impairments to property, plant and equipment have been apportioned between assets qualifying for tax relief and those that do not.

— Depreciation — The rate of depreciation for assets that do not qualify for the initial recognition exemption has been estimated based on actual data for the most recent accounting periods.

A review of the deferred tax liability will be performed at each balance sheet date and adjustments made in the event of a change in any key assumptions.

At the balance sheet date, the Group has estimated unused capital gains tax losses of £101.0m (2010: £101.0m) available for offset against future taxable profits from capital disposals and £3.0m estimated unused taxable losses available for offset against future taxable operating profits. No deferred tax asset has been recognised in respect of these losses due to the unpredictability of future profit streams available to offset these losses.

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26 Share capital 26 February 25 February 2011 2010 Number £m £m Authorised Ordinary shares of 25 pence each (2010: 25 pence each) 513,957,217 128.5 128.5 (2010: 513,957,217) Deferred shares of £1.75 each (2010: £1.75 each) Nil (2010: 60,948,969) — 106.7 128.5 235.2 Issued, called up and fully paid Ordinary shares of 25 pence each (2010: 25 pence each) 100,422,654 (2010: 100,422,654) 25.1 25.1 Deferred shares of £1.75 each (2010: £1.75 each) Nil (2010: 60,948,969) — 106.7 25.1 131.8

The Deferred Share Capital was redeemed and cancelled on 30 April 2010. This resulted in a reduction in Share Capital of £106.7m with a corresponding increase in the Capital Redemption Reserve.

Potential issues of ordinary shares at the year end were as follows:

1996 Executive Share Option Scheme Number of Exercise ordinary shares price Date of grant under option £ Exercise period 04/07/01 28,419 8.09 04/07/04 to 03/07/11 09/07/01 3,442 8.22 09/07/04 to 08/07/11 09/12/02 122,749 3.85 09/12/05 to 08/12/12 22/05/03 214,261 3.73 22/05/06 to 21/05/13 14/07/04 27,572 3.86 14/07/07 to 13/07/14 25/07/05 119,503 4.82 25/07/08 to 24/07/15 25/07/06 174,871 5.23 25/07/09 to 24/07/16

Luminar Group Holdings 2007 Performance Share Plan Number of Exercise ordinary shares price Date of grant under option £ Exercise period 22/05/08 343,198 — 22/05/11 to 21/05/12 10/06/09 372,369 — 10/06/12 to 09/06/15

1999 Company Share Option Plan Number of Exercise ordinary shares price Date of grant under option £ Exercise period 04/07/01 3,706 8.09 04/07/04 to 03/07/11 09/07/01 2,395 8.22 09/07/04 to 08/07/11 25/07/03 18,680 4.15 25/07/06 to 24/07/13 25/07/05 30,981 4.82 25/07/08 to 24/07/15 25/07/06 20,950 5.23 25/07/09 to 24/07/16

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

26 Share capital (continued) 2010 Luminar Group Holdings plc Long Term Incentive Plan Number of Exercise ordinary shares price Date of grant under option p Exercise period 10/09/10 489,794 (Part A) 12.25 10/09/15 to 9/09/20 10/09/10 3,376,477 (Part B) 36.00 10/09/15 to 9/09/20

27 Share-based payments The Group has followed the transitional arrangements within IFRS 2, Share-based payment, and has adopted the exemption from full retrospective application of all share-based payment awards, and has only applied the measurement requirements of IFRS 2 to awards made after 7 November 2002. However, the following disclosures include all share-based payment awards, therefore including those equity-settled awards granted prior to 7 November 2002.

The Group operates the following share-based payment plans:

(a) 1996 Executive Share Option Scheme & 1999 Company Share Option Plan Options granted under the 1996 Scheme (which are unapproved options) and the 1999 Plan (which are HM Revenue & Customs approved options) are exercisable between three and ten years from the grant date, subject to the employee remaining in the service of the Group. Options were originally granted subject to performance conditions requiring Earnings Per Share (EPS) growth over a three year period. Outstanding options were rolled over into equivalent options over shares in Luminar Group Holdings plc in connection with the Reorganisation in 2007. Following the technical change of control of Luminar plc in connection with the Reorganisation, the Rules of the 1996 Scheme prescribed that unapproved options became immediately exercisable, with performance conditions falling away, resulting in an exceptional charge during that year. Therefore, the exercise of the rolled over unapproved options is not subject to any performance conditions. Similarly, rolled over approved options are not subject to performance conditions, as prescribed by the rules of the 1999 Plan. This is a common provision in rules of this vintage. During the year, 583,561 options awarded under the 1996 scheme and a further 2,547 awarded under the 1999 scheme lapsed.

(b) Luminar Group Holdings 2007 Performance Share Plan This was approved by shareholders at the 2007 AGM. Under the terms of the Performance Share Plan, Executives can be awarded conditional awards of free shares which are capable of vesting subject to performance and continued service over a three year period. The first grants under the plan were made in November 2007 and vested on 1 August 2010. As a result of the non-fulfilment of the performance conditions, 257,515 awards were lapsed during the year. Additional grants were made under the plan in May 2008, which will vest on 22 May 2011, and in June 2009, which will vest on 10 June 2012.

The awards granted to Executive Directors and other senior Executives under the plan are subject to performance conditions relating to Total Shareholder Return (50% of the award) and strategic milestone targets (50% of the award). See pages 30 and 31 of the Remuneration Report for further details of these targets. The awards granted to other employees are subject to a sliding scale of operating profit targets based on Group and/or unit/area performance.

In the event of a change of control, awards will vest early subject to performance and time prorating (although the Remuneration Committee has the discretion not to apply time prorating if it considers it inappropriate to do so).

(c) Luminar Group Holdings plc 2010 Long Term Incentive Plan At last year’s Annual General Meeting, the Shareholders approved the Luminar Group Holdings plc 2010 Long Term Incentive Plan (“LTIP”), which in summary, granted options to selected senior management to purchase the Company’s shares in the future, at a price set at the outset. As described in page 30 of the Remuneration Report, the LTIP has now been cancelled. Notwithstanding the fact that all individual rights have been cancelled, as the LTIP was in existence during the Financial Year under review we are required to summarise its key terms, which are set out below.

The total number of shares over which options were granted under the LTIP equated to 7% of the issued share capital as at 8 March 2010 (being the date of appointment of the Chief Executive Officer (“CEO”)). The CEO received options over 40% of this LTIP pool and the Finance Director over 15%. Should the full 7% not have been allocated throughout the period of the scheme, any unallocated options would have lapsed.

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27 Share-based payments (continued) The exercise price of the LTIP option is, in respect of the HMRC Approved options, 12.25 pence per share (set by reference to the share price at the time of grant) and in respect of the remainder of the unapproved options is 36 pence per share (set by reference to the share price on 8 March 2010, being the date of appointment of the CEO). On the date of grant, the fair value of the shares was deemed to be 1.02 pence.

(d) Share warrants On 8 December 2010, as part of its refinancing, the Group issued Lending Banks equity warrants over 5,021,130 Ordinary Shares. The subscription price per warrant share is equal to the current nominal value of 25 pence per share, exercisable in cash at any time up to the seventh anniversary of the agreement.

The share warrants are akin to share options for accounting purposes and have been accounted for under this basis. The warrants have been independently valued at £0.4m as at 8 December 2010. This amount has been recognised as a one-time exceptional charge to the income statement and recorded directly to Equity reserves.

Reconciliations of the number and weighted average exercise price by option scheme are presented below (including grants of options prior to 7 November 2002):

Performance 1996 & Number of shares share plan 1999 Scheme Warrants 2010 LTIP At 27 February 2009 765,093 1,277,309 4,066,322 — Adjust for share issue 66,777 111,575 355,309 — Granted 901,403 — — — Forfeited (65,847) (34,018) — — Lapsed — (1,589) (4,421,631) — Exercised — — — — At 25 February 2010 1,667,426 1,353,277 — — Granted — 5,021,130 3,866,451 Forfeited (694,344) (1,565) — — Lapsed (257,515) (593,014) — Exercised — — — — At 26 February 2011 715,567 758,698 5,021,130 3,866,451 Exercisable at end of the year — 26 February 2011 — 758,698 5,021,130 — — 25 February 2010 — 1,353,277 — —

Weighted average Performance 1996 & exercise price (£) share plan 1999 scheme Warrants 2010 LTIP At 27 February 2009 — 5.94 6.68 — Granted — — — — Forfeited — (5.31) — — Lapsed — (0.55) (6.68) — Exercised — — — — At 25 February 2010 — 5.94 — — Granted — — 0.25 0.33 Forfeited — (4.15) — — Lapsed — (6.61) — — Exercised — — — — At 26 February 2011 — 4.57 0.25 0.33 Exercisable at end of the year — 26 February 2011 — 4.57 0.25 — — 25 February 2010 — 5.94 — —

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

27 Share-based payments (continued) Weighted average Performance 1996 & exercise price (£) share plan 1999 scheme Warrants 2010 LTIP For share options exercised during the year: Average exercise price for options exercised — YEAR to 26 February 2011 — — — — — year to 25 February 2010 — — — —

For share options outstanding at the end of the year: Range of exercise prices — year to 26 February 2011 — 3.73–8.22 0.25 0.12–0.36 — year to 25 February 2010 — 3.73–8.22 — —

Weighted average remaining contractual life (in years) — YEAR to 26 February 2011 0.4 1.6 6.8 9.6 — year to 25 February 2010 1.4 2.6 — —

The fair value for options granted during the year has been determined using a Stochastic model in the case of the 2010 LTIP and the Black– Scholes model in the case of the share warrants. The assumptions and inputs to the model for options granted during the year were as follows:

2010 Share LTIP warrants Weighted average market value of options at grant date £0.0102 £0.0803 Weighted average exercise price £0.33 £0.25 Expected volatility 74.6% 65.2% Option life 5 years 7 years Risk-free interest rate 1.79% 2.71% Expected dividend growth 0% 0%

The expected volatility is estimated using the historical volatility of the Group’s shares over a period equivalent to the expected life of the option.

The Group recognised a total charge within administrative expenses of £0.1m (2010: £0.5m charge) related to share-based payment transactions and exceptional items of £0.4m (2010: £nil) relating to share warrants, all of which were accounted for as equity-settled share- based payment arrangements with a corresponding credit direct to equity reserves. The cumulative credit to equity reserves in respect of share-based payments totalled £2.2m (2010: £1.7m).

28 Reserves The reconciliation of movements in reserves is presented, as a Consolidated Statement of Changes in Shareholders’ Equity, on page 44. Within this reconciliation the Group has presented the following reserves:

n The share premium which arose on the issue of new share capital during the year ended 25 February 2010, net of £1.2m related issue costs;

n The capital redemption reserve which arose as a result of the share buy-backs and cancellation of shares carried out during prior years and the cancellation of deferred shares during the current year; and

n The equity reserve which arises on recognition of share-based payment expenses following the requirements of IFRS 2, Share-based payment.

The share premium, capital redemption, and equity reserves are all non-distributable reserves.

Of the closing retained earnings reserve of £(200.7)m, £1.8m (2010: £1.8m) related to treasury share adjustments.

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29 Cash flow from operating activities (a) Reconciliation of net cash inflow from operating activities Year ended Year ended 26 February 25 February 2011 2010 £m £m Profit before taxation — continuing operations (197.9) (110.2) Loss before taxation — discontinued operations (3.5) (27.2) Loss before taxation (201.4) (137.4) Depreciation and amortisation 15.2 22.7 Amortisation of lease premiums 0.1 0.1 Amortisation of issue costs 0.1 0.2 Net impairment of property, plant and equipment 78.2 64.0 Impairment of other intangible assets 0.2 — Impairment of goodwill 97.0 41.1 Impairment of other non-current assets 0.3 1.9 Impairment of investment in associate — 3.6 Provision against receivables due from associate — 24.4 Movement in exceptional provisions 1.0 — Hedge reserve recycled through income statement and recognition of new derivative financial instrument liability upon refinancing 9.5 — Loss/(profit) on sale of property, plant and equipment 5.7 (0.5) Non-cash charges for share-based payments 0.5 0.5 Net finance costs 8.7 7.2 15.1 27.8 Increase/(decrease) in inventories (0.1) 0.6 Decrease in receivables 1.5 1.1 Increase/(decrease) in trade and other payables 1.0 (4.0) Decrease in provisions (2.0) (2.2) Net cash inflow from operations 15.5 23.3

(b) Cash flows from continuing operations To assist in the understanding of cash flows relating to the ongoing business of the Group, the following tables outline the cash flows relating to discontinued operations and exceptional items to be excluded in order to present operating cash flows that relate to the Group’s continuing business:

Year ended Year ended 26 February 25 February 2011 2010 £m £m Cash flows from operating activities 7.8 17.3 Add: net cash flows from operating activities — discontinued operations (including exceptional cash items) 0.1 5.3 Cash flows from operating activities — continuing operations 7.9 22.6 Add: net exceptional cash flows from operating activities — continuing operations 5.9 2.9 Pre-exceptional cash flows from operating activities — continuing operations 13.8 25.5

Year ended Year ended 26 February 25 February 2011 2010 £m £m Net cash inflow from operations 15.5 23.3 Add: net cash flows from operating activities — discontinued operations (including exceptional cash items) 0.1 5.3 Net cash inflow from operations — continuing operations 15.6 28.6 Add: net exceptional cash flows from operations — continuing operations 5.9 2.9 Net pre-exceptional cash inflow from operations — continuing operations 21.5 31.5

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Notes to the Consolidated Financial Statements for the year ended 26 February 2011

30 Capital risk management The Group’s capital base is primarily used to finance working capital requirements, the key component of which is trade receivables. Trade receivables in the staffing and support services sectors are managed according to a range of DSO targets. In the vendor procurement and certain of the Group’s managed services businesses, the amounts payable are not due until shortly after the receipt of the associated receivable.

The Group has committed facilities that ensure there is sufficient liquidity to meet ongoing business requirements. The primary objectives of the Group’s capital management are, therefore, to ensure that it maintains a good credit rating in order to support its business, to maximise shareholder value and to safeguard the Group’s ability to continue as a going concern.

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for Shareholders and benefits for the other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to Shareholders, return capital to Shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings including finance leases less cash and cash equivalents. Total capital is calculated as Shareholders’ equity as shown in the consolidated balance sheet.

The net debt position is shown on page 43. The movement in net debt in the year is analysed as follows:

25 February Non-cash 26 February 2010 Cash flow flows 2011 £m £m £m £m Cash and cash equivalents 37.3 (28.0) — 9.3 Cash on deposit 10.0 (10.0) — — Loans due in 1 year (140.0) 127.5 — (12.5) Loans due in more than 1 year (79.0) (79.0) (92.7) 10.5 — (82.2) Finance leases (7.9) — — (7.9) Net debt (100.6) 10.5 — (90.1)

With total capital of £3.1m, the gearing ratio was 2,906% at 26 February 2011 (25 February 2010: 56%). This has resulted from the significant reduction in the Shareholders’ equity during the year.

31 operating lease commitments — minimum lease payments The Group had total commitments under non-cancellable operating leases in relation to land and buildings and motor vehicles as follows:

26 February 25 February 2011 2010 £m £m Payable in less than one year 12.6 18.0 Payable between one and five years 50.0 61.8 Payable in over five years 139.9 198.1 202.5 277.9 Less total of future minimum sub-lease payments expected to be received (6.3) (6.5) Total commitment 196.2 271.4 Sub-lease payments recognised as an expense in the year 1.3 1.2 Sub-lease units income recognised during the year (0.7) (0.7) Net sub-lease payment 0.6 0.5

The Group leases various properties relating to trading units or office and warehouse accommodation; these leases have various terms, escalation values and renewal rights.

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32 Pensions The Group operates defined contribution schemes for the benefit of Directors and employees. The schemes are administered by trustees and the assets are held in a fund independent from those of the Group. The cost to the Group of pension contributions is included in note 4.

33 Contingent assets and contingent liabilities There are no material contingent assets or liabilities at 26 February 2011.

34 Capital commitments The Group had capital commitments relating to property, plant and equipment of £0.2m at 26 February 2011 (2010: £0.3m).

35 Related party transactions The Group holds a debtor balance with Eminence Leisure Limited of £0.8m in respect of services provided in prior periods. Eminence Leisure Limited is an associate of the Group and has gone into liquidation. The debtor balance was fully provided for at 25 February 2010 and remains fully provided at 26 February 2011.

On 19 January 2007 the Group sold certain trade and assets of its units to 3DE. Post-completion on 19 January 2007 a transitional services agreement (“TSA”) was in place between the Group and 3DE (an associate of the Group) for the provision of certain services. Vendor loan notes of £19.3m (plus accrued interest totalling £5.3m) remain owed to the Group. On 26 February 2010, 3DE was placed into administration. The administration process is ongoing. From the date of administration, the Group no longer continues to accrue any interest on the 3DE loan notes and have provided no further services under the TSA. All debtor balances relating to 3DE were fully provided for in the accounts for the year ended 25 February 2010 and remain fully provided for at 26 February 2011.

During the period, three properties were sold to No Saints Limited. Stephen Thomas, who resigned from the Board on 1 March 2010, is a director of that company. The transactions were in the ordinary course of business and at arm’s length. Net sales proceeds of £2.1m were received and the balance outstanding at 26 February 2011 was £nil.

36 post-balance sheet events There are no post-balance sheet events.

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Independent Auditors’ Report to the Members of Luminar Group Holdings plc

We have audited the parent Company financial statements of Luminar Group Holdings plc for the year ended 26 February 2011 which comprises the Company Balance Sheet, the Principal Accounting Policies for the Company Financial Statements and the Notes to the Company Financial Statements. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of directors and auditors As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the parent Company 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 parent Company 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.

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the parent Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on financial statements In our opinion, the parent Company financial statements: n give a true and fair view of the state of the Company’s affairs as at 26 February 2011; n have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and n have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of Matter – Going Concern In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in the Principal Accounting Polices for the Company Financial Statements concerning the Company’s ability to continue as a going concern.

The Company is a named guarantor to the New Facility signed by Luminar Group Holdings plc and its subsidiaries (“the Group”) and therefore the Company’s ability to continue to trade as a going concern is dependent on the financial position of the Group.

These conditions indicate the existence of a material uncertainty for the Group and the Company which may cast significant doubt on the Company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

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Opinion on other matters prescribed by the Companies Act 2006 In our opinion: n the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and n the information given in the Directors’ Report for the financial year for which the parent Company financial statements are prepared is consistent with the parent Company 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: n 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 n the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or n certain disclosures of Directors’ remuneration specified by law are not made; or n we have not received all the information and explanations we require for our audit.

Other matter We have reported separately on the Group financial statements of Luminar Group Holdings plc for the year ended 26 February 2011.

That report also includes an emphasis of matter regarding Going Concern.

Owen Mackney (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors St Albans 11 May 2011

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Company Balance Sheet at 26 February 2011

26 February 25 February 2011 2010 Note £m £m

Fixed assets Investments 4 — 118.2

Current assets Debtors 5 56.2 132.3

56.2 132.3 Creditors: amounts falling due within one year 6 (6.3) (16.7)

Net current assets 49.9 115.6

Provisions 7 (0.7) (0.9)

Net assets 49.2 232.9

Capital and reserves Share capital 9 25.1 131.8 Share premium 11 25.8 25.8 Equity reserve 11 5.3 4.8 Capital redemption reserve 11 148.8 42.1 Profit and loss reserve 11 (155.8) 28.4

Shareholders’ funds 12 49.2 232.9

The financial statements were approved by the Board of Directors on 11 May 2010.

Philip Bowcock Finance Director

Basis of preparation These financial statements present financial information for Luminar Group Holdings plc as a separate entity, and are prepared in accordance with the historical cost convention, the Companies Act 1985 and UK Accounting Standards (UK Generally Accepted Accounting Practice). The Company’s Consolidated Financial Statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, are separately presented. The principal accounting policies adopted in these Company financial statements are set out below and, unless otherwise indicated, have been consistently applied for the periods presented.

In accordance with FRS 18, Accounting Principles, the Directors have reviewed the accounting policies of the Company as set out below and consider them to be appropriate.

The financial statements of the Company as an entity are prepared under UK Generally Accepted Accounting Principles and are presented separately from these consolidated financial statements on pages 41 to 44 within this Annual Report.

The financial statements have been prepared on a historical cost basis, except for non-current assets and disposal Groups and investments held for sale measured at their fair value less costs to sell and financial assets and liabilities recorded at fair value.

Luminar Group Holdings plc is the parent company of the Luminar Group Holdings plc. During the year the Group signed the New Facility (being a revised three year facility of £99m) with the Banking Group. The New Facility became effective from 8 December 2010. Luminar Group Holdings plc is a named guarantor on the New Facility.

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Principal Accounting Policies for the Company Financial Statements

Cash flow statement and related party transactions The Company has taken advantage of the exemption from preparing a cash flow statement under FRS 1 (Revised 1996), Cash flow statements. The Company is also exempt under the terms of FRS 8, Related party disclosures, from disclosing related party transactions with entities that are part of the Luminar Group Holdings plc Group.

Impact of new accounting standards The Company has considered all new accounting standards in issue, which are required to be adopted for this year end, none of which are deemed applicable to the Company.

Turnover Turnover is the total amount receivable by the Company for management and other services, provided to other Group companies, excluding VAT and is recognised on performance of these services.

Investments Investments in subsidiary undertakings and associates are stated at cost less amounts written off for impairment. Amounts advanced to subsidiary undertakings with no intention of being repaid in the foreseeable future are classified as investments.

Basis of impairment On an annual basis the Company performs a review of its investments to determine whether there have been any impairment trigger events. If such a trigger event is considered to be a permanent diminution in value, rather than a temporary diminution in value, then the recoverable amount of the asset, or where appropriate group of assets, in cash generating units that comprise the investment, is estimated and compared to the carrying amount of the asset. The recoverable amount is the higher of the value in use to the Company of the asset and the net realisable value from disposal of the asset. Value in use is estimated by calculating the net present value of the estimated future cash flows relating to the cash generating units that comprise the investment after applying a discount factor. Net realisable value is estimated by applying the knowledge and experience of management, together with external market indicators. If the recoverable amount is below the carrying value of the asset then the carrying value of the asset is reduced to its recoverable amount, and the resulting charge is taken to the profit and loss account.

Retirement benefit costs Payments made to defined contribution retirement benefit schemes are charged as an expense when they fall due. The Company has no other retirement benefit schemes.

Financial instruments The Company has applied FRS 25, Financial instruments: Disclosure and presentation, and FRS 26, Financial instruments: Measurement. The Company has taken advantage of the exemption in paragraph 2d of FRS 29, Financial Instruments: Disclosure, and not presented information required by that standard as the Group’s consolidated financial statements, in which the Company is included, provide equivalent disclosures for the Group under IFRS 7, Financial Instruments: Disclosures.

Financial assets and liabilities — measurement basis Financial assets and liabilities are recognised on the date on which the Company becomes a party to the contractual provisions of the instrument giving rise to the asset or liability. Financial assets and liabilities are initially recognised at fair value plus transaction costs. Any impairment of a financial asset is charged to the profit and loss account when incurred. Financial assets are derecognised when the Company’s rights to cash inflows from the asset expire; financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire.

Financial assets are classified according to the purpose for which the asset was acquired. The Company’s financial assets are classified as:

— debtors — these are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Company provides goods or services directly to a debtor, or advances money, with no intention of trading the loan or receivable. Subsequent to initial recognition loans and receivables are included in the balance sheet at amortised cost using the effective interest method less any amounts written off to reflect impairment, with changes in carrying amount recognised in the profit and loss account.

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The Company’s financial liabilities are classified as either Creditors: amounts falling due within one year or Creditors: amounts falling due after more than one year. These are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. They arise when the Company receives goods or services directly from a creditor or supplier, or borrows money, with no intention of trading the liability. This category includes:

— trade creditors — these are typically non-interest bearing and following initial recognition are included in the balance sheet at amortised cost.

— bank loans — these are initially recorded at fair value based on proceeds received, net of issue costs. Finance charges are accounted for on an accruals basis and charged to the profit and loss account using the effective interest rate method. Financial instruments — other disclosures The Company’s debt financing and other activities expose it to a variety of financial risks that include the effects of changes in the following:

Interest rate risk The Company has intercompany balances with some of its subsidiaries. Some of the outstanding balances are interest bearing loans, which bear arm’s length interest at 0.75% above LIBOR.

Currency risk The Company operates within the UK and substantially all transactions are denominated in sterling; therefore, the Company does not suffer from a significant concentration of currency risk.

Credit risk The Company does not have a significant concentration of credit risk. All receivables arise from transactions in the ordinary course of business with trading subsidiaries.

Liquidity risk Liquidity risk is managed through an assessment of short, medium and long-term cash flow forecasts to ensure the adequacy of committed debt facilities.

Price risk The Company is not exposed to equity security price risk or commodity price risk.

Share-based payments The Company has applied the requirements of FRS 20, Share-based payment. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005.

Where equity instruments are granted to employees of subsidiary undertakings for the services provided by the employees to those companies, the fair value at the grant date of the equity instrument represents an additional investment in the subsidiary undertaking by the parent.

The Company issues some equity instruments where the counter-party has a choice of either cash or equity settlement and some equity instruments, where the settlement can only be in equity.

Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at grant date is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of the shares that will actually vest. Fair value is measured by means of a binomial model.

A liability equal to the portion of the goods or services received is recognised at the current fair value at each balance sheet date for cash settled share-based payments.

Shares held in Employee Share Option Plan (“ESOP”) trusts are presented as a deduction from equity. Transactions between the Group and the ESOP trust are eliminated on consolidation.

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Principal Accounting Policies for the Company Financial Statements

Taxation UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred at the balance sheet date. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured at the average tax rates and laws that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets and liabilities recognised have not been discounted.

Equity dividends Final dividends are recognised in the Company’s financial statements in the period in which the dividends are approved by Shareholders. Interim dividends are recognised in the period they are paid.

Dividend income Dividend income from investments is recognised when the Shareholders’ rights to receive payment have been established.

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1 Loss for the financial year The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own ‘Profit and Loss Account’ or ‘Statement of Total Recognised Gains and Losses’ (STRGL) in these financial statements. The Company’s loss after tax for the year ended 26 February 2011 under UK GAAP was £184.2m (2010: £132.3m).

Audit fees for the year were £0.1m (2010: £0.1m), with additional fees of £nil (2010: £0.3m) relating to taxation, other assurance and non-audit services. A breakdown of these fees is shown below:

Year ended Year ended 26 February 25 February 2011 2010 £m £m Auditors’ remuneration: — Audit of the financial statements pursuant to legislation 0.1 0.1 — Other services relating to taxation — 0.2 — Other services provided pursuant to legislation — 0.1 0.1 0.4

2 Directors and employees Employee costs charged during the year were as follows: Year ended Year ended 26 February 25 February 2011 2010 £m £m Wages and salaries 0.7 1.0 Social security costs 0.1 0.1 Share-based payment 0.1 0.3 Pension costs — 0.1 0.9 1.5

During the year, the Company had eight Directors (2010: six), including Non-Executive Directors, providing services to the Company. There were no other employees.

Remuneration in respect of Directors (including Non-Executive Directors) of Luminar Group Holdings plc was as follows:

Year ended Year ended 26 February 25 February 2011 2010 £000 £000 Aggregate emoluments 1,238 1,073 Company contributions to money purchase pension schemes — 92 1,238 1,165

Aggregate emoluments disclosed above include amounts paid by other Group companies. During the period no (2010: two) Directors participated in defined contribution pension schemes.

The amounts set out above include remuneration of the highest paid Director as follows: Year ended Year ended 26 February 25 February 2011 2010 £000 £000 Aggregate emoluments 407 501 Company contributions to money purchase pension schemes — 86 407 587

More detailed audited information concerning remuneration of Directors is set out in the Remuneration Report on pages 25 to 32.

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Notes to the Company Financial Statements

3 Dividends As reported in the Interim Report approved on 20 October 2010, the Board did not recommend an interim dividend for the half year ended 26 August 2010.

4 Investments Shares in Employee subsidiary share-based undertakings payments Total £m £m £m As at 26 February 2010 117.4 0.8 118.2 Additions during the period — 0.1 0.1 Impairment (117.4) (0.9) (118.3) At 26 February 2011 — — —

The carrying value of investments has been subjected to an impairment review as at 26 February 2011 on a Value In Use (“VIU”) basis. The VIU calculations considered forecast future cash flows, discounted at a post-tax WACC of 9.4%, combined with a terminal value at year 7, applying a 2.2% long-term growth.

Subsidiary undertakings The Company’s direct principal subsidiary undertakings are listed below together with details of their businesses.

Class of Proportion Nature of share capital held business Luminar Finance Limited Ordinary 100% Financing Company Luminar Holdings Limited Ordinary 59.5% Holding Company

All subsidiaries are registered in England and Wales. Other principal subsidiaries, which the Company indirectly owns, are included in note 14 to the Consolidated Financial Statements.

5 Debtors 26 February 25 February 2011 2010 £m £m Amounts owed by Group undertakings 55.6 131.4 Other debtors 0.6 0.9 56.2 132.3

All amounts owed by Group undertakings are repayable on demand. During the year, an impairment of £64.9m was recognised against amounts owed by Group undertakings.

6 Creditors: amounts falling due within one year 26 February 25 February 2011 2010 £m £m Amounts owed to Group undertakings 2.1 13.1 Trade creditors 0.1 — Social security and other taxes 0.3 0.3 Corporation tax 2.1 2.1 Accruals and deferred income 1.7 1.2 6.3 16.7

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7 Provisions £m As at 26 February 2010 0.9 Utilised during the year (0.2) At 26 February 2011 0.7

On 16 April 2008 the Luminar Group Holdings plc Group agreed to sell five individual companies to Cavendish Bars Limited. The disposal companies are responsible for all of the leases of the units being sold and are contingently liable as guarantors for a number of other non-core units, including all of the leases relating to units that were sold in previous periods.

As part of the transaction, the Company entered into indemnities capped at £4.2m in favour of Cavendish Bars Limited in relation to the guarantees and made provision for other related costs which were expected to be incurred. At the year end, £0.1m (2010: £0.1m) of these provisions remain in place in relation to expected legal and similar costs.

During the year ended 25 February 2010, an additional provision of £0.8m was made for amounts owed by Eminence Leisure Limited, an associate of the Company, due to Eminence Leisure Limited having gone into liquidation. An amount of £0.2m was utilised during the year.

8 Financial Instruments The Luminar Group Holdings plc Group (“the Group”) uses derivative financial instruments in order to reduce its exposure to financial risk. The Group’s bank borrowings and financial instruments are transacted between a third party bank and a subsidiary of the Group.

As all the Company’s operations are transacted in the reporting currency, there is no currency exposure.

Short-term debtors and creditors have been excluded from all the following disclosures as their fair value at the year end approximates their carrying value.

(a) Interest rate exposure of financial assets and liabilities The interest rate exposure of the Company’s financial assets, being amounts owed by Group undertakings, was as follows:

Floating rate weighted Fixed rate Floating rate Total average £m £m £m % 26 February 2011 — 55.6 55.6 2.03 25 February 2010 — 131.4 131.4 1.00

The floating rate debt includes balances of £2.4m (2010: £37.2m), which were interest free and are included in the weighted average interest rate calculations.

Other debtors are excluded from the analysis since they are interest free.

There are no financial liabilities subject to interest (2010: £nil).

(b) Fair values of financial assets and liabilities The book values of the financial assets and liabilities disclosed above approximate their fair values.

The fair value of other financial assets and liabilities included in notes 5, 7 and 8 approximates their carrying value.

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Notes to the Company Financial Statements

9 Share capital 26 February 25 February 2011 2010 Number £m £m Authorised Ordinary shares of 25 pence each (2010: 25 pence each) 513,957,217 (2010: 513,957,217) 128.5 128.5 Deferred shares of £1.75 each (2010: £1.75 each) Nil (2010: 60,948,969) — 106.7 128.5 235.2 Issued, called up and fully paid Ordinary shares of 25 pence each (2010: 25 pence each) 100,422,654 (2010: 100,422,654) 25.1 25.1 Deferred shares of £1.75 each (2010: £1.75 each) Nil (2010: 60,948,969) — 106.7 25.1 131.8

The Deferred Share Capital was redeemed and cancelled on 30 April 2010. This resulted in a reduction of Share Capital of £106.7m with a corresponding increase in the Capital Redemption Reserve.

Potential issues of ordinary shares at the year end were as follows:

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9 Share capital (continued) 2010 Luminar Group Holdings plc Long Term Incentive Plan Number of Exercise ordinary shares price Date of grant under option £ Exercise period 10/09/10 489,794 (Part A) 12.25 10/09/15 to 9/09/20 10/09/10 3,376,477 (Part B) 36.00 10/09/15 to 9/09/20

10 Share-based payments The following share-based payment plans (with the exception of the performance share plan) were in existence in Luminar plc. Following the reorganisation, these plans are now in operation in Luminar Group Holdings plc.

The Group has followed the transitional arrangements within FRS 20, Share-based payment, and has adopted the exemption from full retrospective application of all share-based payment awards, and has only applied the measurement requirements of FRS 20 to awards made after 7 November 2002. However, the following disclosures include all share-based payment awards, therefore including those equity-settled awards granted prior to 7 November 2002.

The Group operates the following share-based payment plans:

(b) Luminar Group Holdings 2007 Performance Share Plan This was approved by Shareholders at the 2007 AGM. Under the terms of the Performance Share Plan, Executives can be awarded conditional awards of free shares which are capable of vesting subject to performance and continued service over a three year period. The first grants under the plan were made in November 2007 and vested on 1 August 2010. As a result of the non-fulfilment of the performance conditions, 257,515 awards were lapsed during the year. Additional grants were made under the plan in May 2008, which will vest on 22 May 2011, and in June 2009, which will vest on 10 June 2012.

The total number of shares over which options were granted under the LTIP equated to 7% of the issued share capital as at 8 March 2010 (being the date of appointment of the Chief Executive Officer (“CEO”)). The CEO received options over 40% of this LTIP pool and the Finance Director over 15%. Should the full 7% not have been allocated throughout the period of the scheme, any unallocated options would have lapsed.

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Notes to the Company Financial Statements

10 Share-based payments (continued) The exercise price of the LTIP option is, in respect of the HMRC Approved options, 12.25 pence per share (set by reference to the share price at the time of grant) and in respect of the remainder of the unapproved options is 36 pence per share (set by reference to the share price on 8 March 2010, being the date of appointment of the CEO). On the date of grant, the fair value of the shares was deemed to be 1.02 pence.

(d) Share warrants On 8 December 2010, as part of its refinancing, the Group issued Lending Banks equity warrants over 5,021,130 Ordinary Shares, representing 5% of the ordinary issued share capital of the Company as at 11 May 2011. The subscription price per warrant share is equal to the current nominal value of 25 pence per share, exercisable in cash at any time up to the seventh anniversary of the agreement.

Reconciliations of the number and weighted average exercise price by option scheme are presented below:

Performance 1996 & Number of shares share plan 1999 Scheme Warrants 2010 LTIP At 27 February 2009 765,093 1,353,277 (4,066,322) — Adjust for share issue 66,797 111,575 (355,309) — Granted 901,403 — — — Forfeited (65,864) (34,031) — — Lapsed — (1,589) (4,421,631) — Exercised — — — — At 25 February 2010 1,667,426 1,353,277 — — Granted — — 5,021,130 3,866,451 Forfeited (694,344) (1,565) — — Lapsed (257,515) (593,014) — — Exercised — — — — At 26 February 2011 715,567 758,698 5,021,130 3,866,451 Exercisable at end of the year — 26 February 2011 — 758,698 5,021,130 — — 25 February 2010 — 1,353,277 — —

Weighted average Performance 1996 & exercise price (£) share plan 1999 Scheme Warrants 2010 LTIP At 27 February 2009 — 5.94 6.68 — Granted — — — — Forfeited — (5.31) — — Lapsed — (0.55) (6.68) — Exercised — — — — At 25 February 2010 — 5.94 — — Granted — — 0.25 0.33 Forfeited — (4.15) — — Lapsed — (6.61) — — Exercised — — — — At 26 February 2011 — 4.57 0.25 0.33 Exercisable at end of the year — 26 February 2011 — 4.57 0.25 — — 25 February 2010 — 5.94 — —

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10 Share-based payments (continued) Weighted average Deferred Performance 1996 & exercise price (£) bonus plan share plan 1999 Scheme Warrants 2010 LTIP For share options exercised during the year: Average exercise price for options exercised — YEAR to 26 February 2011 — — — — — — year to 25 February 2010 — — — — —

For share options outstanding at the end of the year: Range of exercise prices — YEAR to 26 February 2011 — — 3.73–8.22 0.25 0.12–0.36 — year to 25 February 2010 — — 3.73–8.22 — —

Weighted average remaining contractual life (in years) — YEAR to 26 February 2011 — 0.4 1.6 6.8 9.6 — year to 25 February 2010 — 1.4 2.6 — —

The fair value for options granted during the year has been determined using a Stochastic model. In the case of the 2010 LTIP and the Black– Scholes model in the case of the share warrants. The assumptions and inputs to the model for options granted during the year were as follows:

The expected volatility is estimated using the historical volatility of the Group’s shares over a period equivalent to the expected life of the option.

The Company recognised a total charge within administrative expenses of £0.1m (2010: £0.3m) related to share-based payment transactions, and exceptional items at £0.4m (2010: £nil) relating to the share warrants all of which were accounted for as equity-settled share-based payment arrangements with a corresponding credit direct to equity reserves. The cumulative credit to equity reserves in respect of share- based payments totalled £2.2m (2010: £1.7m).

11 Capital and reserves Capital Share Share Equity redemption Profit and loss capital premium reserve reserve reserve Total £m £m £m £m £m £m Brought forward at 26 February 2010 131.8 25.8 4.8 42.1 28.4 232.9 Cancellation of deferred shares (106.7) — — 106.7 — — Loss for the financial year (note 1) — — — — (184.2) (184.2) Share-based payment charge — — 0.5 — — 0.5 At 26 February 2011 25.1 25.8 5.3 148.8 (155.8) 49.2 Distributable reserves — — — — (155.8) (155.8) Non-distributable reserves 25.1 25.8 5.3 148.8 — 205.0

The loss for the year of £184.2m (2010: £132.3m) includes a £118.3m (2010: £132.6m) write-down in the investment value.

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Notes to the Company Financial Statements

12 Reconciliation of movements in Shareholders’ funds £m Opening Shareholders’ funds at 26 February 2010 232.9 Loss for the financial year (note 1) (184.2) Share-based payment charge 0.5 Closing Shareholders’ funds at 26 February 2011 49.2

13 Contingent liabilities The Company is a guarantor of the Group’s New Facility Agreement, which became effective on 8 December 2010.

14 Capital commitments The Company had no capital commitments at 26 February 2011 (2010: None).

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Notice is hereby given that the Annual General Meeting of Luminar Group Holdings plc (“the Company”) will be held at the Company’s registered office, Luminar House, Deltic Avenue, Rooksley, Milton Keynes, MK13 8LW on Tuesday 12 July 2011 at 1.00 pm for the transaction of the following business:

1 To receive and consider the audited accounts for the year ended 26 February 2011 and the reports of the Directors and the Auditors thereon. 2 To approve the Directors’ Remuneration Report for the year ended 26 February 2011. 3 To reappoint PricewaterhouseCoopers LLP as Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the next general meeting at which accounts are laid before the Company. 4 To authorise the Directors to determine the Auditors’ remuneration.

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

5 THAT the Directors be generally and unconditionally authorised, in accordance with section 551 of the Companies Act 2006 (the “Act”), to allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company:

(a) up to an aggregate nominal amount of £8,368,554 (such amount to be reduced by the nominal amount allotted or granted under paragraph (b) below in excess of such sum); and

(b) up to an aggregate nominal amount of £16,737,108 in the form of equity securities (within the meaning of section 560(1) of the Act) (such amount to be reduced by any allotments or grants made under paragraph (a) above) in connection with an offer by way of a rights issue, open for acceptance for a period fixed by the Directors:

(i) to holders of ordinary shares in proportion (as nearly as may be practicable) to their existing holdings; and

(ii) to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary,

and so that the Directors may impose any limits or restrictions and make any arrangements which they deem necessary or expedient to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems arising in, or under the laws of, any overseas territory, the requirements of any regulatory body or stock exchange or any other matter whatsoever,

such authorities to expire (unless previously varied, revoked or renewed by the Company in a general meeting) at the conclusion of the Annual General Meeting of the Company in 2012 or, if earlier, at the close of business on 12 October 2012, except that the Company may at any time before such expiry make offers and enter into agreements which would or might require shares to be allotted or rights to subscribe for or convert securities into shares to be granted after the expiry of the authority and the Directors may allot shares or grant rights to subscribe for or convert securities into shares in pursuance of any such offer or agreement as if the authority conferred by this resolution had not expired.

To consider and, if thought fit, pass the following resolutions as special resolutions:

6 THAT, subject to the passing of resolution 5 above, the Directors be given power to allot equity securities (as defined in the Act) for cash pursuant to the authority conferred on them by resolution 5 above and/or to sell equity securities held by the Company as treasury shares for cash, in each case as if section 561 of the Act did not apply to any such allotment or sale, provided that this power shall be limited:

(a) to the allotment of equity securities and sale of treasury shares for cash in connection with an offer of, or invitation to apply for, equity securities (but in the case of the authority granted under paragraph (b) of resolution 5, by way of a rights issue only):

(i) to holders of ordinary shares in proportion (as nearly as may be practicable) to their existing holdings, and (ii) to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary,

(b) in the case of the authority granted under paragraph (a) of resolution 5 and/or in the case of any sale of treasury shares for cash, to the allotment (otherwise than under paragraph (a) of this resolution) of equity securities or sale of treasury shares up to an aggregate nominal value of £1,255,283,

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Notice of Annual General Meeting

such power to expire (unless previously varied, revoked or renewed by the Company in a general meeting) at such time as the general authority conferred on the Directors by resolution 5 above expires, except that the Company may at any time before such expiry make offers and enter into agreements which would or might require equity securities to be allotted or equity securities held as treasury shares to be sold after the expiry of the authority and the Directors may allot equity securities and sell equity securities held as treasury shares in pursuance of any such offer or agreement as if the power conferred by this resolution had not expired.

7 THAT the Company be and is hereby authorised for the purposes of section 701 of the Act to make one or more market purchases (within the meaning of section 693(4) of the Act) of ordinary shares in the capital of the Company (“Ordinary Shares”) on such terms and in such manner as the Directors shall determine and to cancel or hold in treasury such shares, provided that:

(a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 10,042,265;

(b) the minimum price (excluding expenses) which may be paid for each Ordinary Share is an amount equal to 75% of the average of the closing mid-market prices for the Ordinary Shares (derived from the Daily Official List of the London Stock Exchange) for the five business days immediately preceding the date of purchase; and

(c) the maximum price (excluding expenses) which may be paid for each Ordinary Share is an amount equal to the highest of (i) 105% of the average of the closing mid-market prices for the Ordinary Shares of the Company (derived from the Daily Official List of the London Stock Exchange) for the five business days immediately preceding the date on which the Ordinary Share is contracted to be purchased; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out at the relevant time,

such authority to expire (unless previously renewed, varied or revoked by the Company in a general meeting) at the conclusion of the Annual General Meeting of the Company in 2012 or, if earlier, at the close of business on 12 October 2012, except that the Company may before such expiry enter into a contract to purchase Ordinary Shares which will or may be completed or executed wholly or partly after the power ends and the Company may purchase Ordinary Shares pursuant to any such contract as if the authority conferred by this resolution had not expired.

8 THAT a general meeting of the Company, other than an Annual General Meeting, may be called on not less than 14 clear days’ notice.

The Directors believe that the proposals in resolutions 1 to 8 are in the best interests of the Company and Shareholders as a whole. The Directors unanimously recommend that you vote in favour of all the resolutions as they intend to do in respect of their own beneficial holdings.

By Order of the Board

Philip Bowcock Company Secretary 11 May 2011 Registered Office: Luminar House Deltic Avenue Milton Keynes Buckinghamshire MK13 8LW (Co. No. 6239034)

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NOTES Entitlement to Attend and Vote 1 To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by the Company of the votes they may cast), Shareholders must be registered on the Company’s register of members:

n at 1 pm on 8 July 2011; or n if the meeting is adjourned, by 1 pm on the day two working days prior to the adjourned meeting.

Changes to the Company’s register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.

Website giving information regarding the meeting 2 A copy of this Notice and other information required by section 311A of the Companies Act 2006 (“Act”) is available at www.luminar.co.uk.

Attending in person 3 If you wish to attend the meeting in person, details of the date, venue and time of the meeting are set out in paragraph 21 below.

Appointment of proxies 4 Shareholders are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting (whether by show of hands or on a poll). A Shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that Shareholder. A proxy need not be a Shareholder of the Company. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form. A Form of Proxy which may be used to make such appointment and give proxy instructions accompanies this Notice. If you do not have a Form of Proxy and believe that you should have one, or if you require additional forms, please contact Capita Registrars Limited, the Company’s registrars, on 0871 664 0300 (calls cost 10p per minute plus network extras); or +44 208 639 3399 (if calling from overseas). 5 To be valid, the Form of Proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be deposited at the offices of Capita Registrars Limited, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU by no later than 1 pm on 8 July 2011. 6 The return of a completed Form of Proxy or any CREST Proxy Instruction (as described in paragraphs 11 to 14 below) will not prevent a Shareholder attending the Annual General Meeting and voting in person if he/she wishes to do so. 7 A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for and against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter that is put before the Annual General Meeting.

Electronic appointment of proxies 8 As an alternative to completing the hard-copy proxy form, you can appoint a proxy electronically at www.capitashareportal.com. For an electronic proxy appointment to be valid, your appointment must be received by Capita Registrars Limited by no later than 1 pm on 8 July 2011.

Nominated Person 9 Any person to whom this Notice is sent who is a person nominated under section 146 of the Act to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the Shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the Shareholder as to the exercise of voting rights. 10 The statement of the rights of Shareholders in relation to the appointment of proxies in paragraphs 4 and 5 above does not apply to Nominated Persons. The rights described in these notes can only be exercised by Shareholders of the Company.

Appointment of proxies using CREST 11 CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual (available via www.euroclear.com/CREST). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

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Notice of Annual General Meeting

12 In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications, and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA10) by 1 pm on 8 July 2011. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. 13 CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. 14 The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended).

Joint Holders 15 In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).

Corporate Representatives 16 Any corporation which is a Shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a Shareholder provided that they do not do so in relation to the same shares.

Issued Shares and Voting Rights 17 As at 11 May 2011 (being the latest practicable date prior to the publication of this Notice) the Company’s issued share capital consists of 100,422,654 ordinary shares carrying one vote each. Therefore, the total voting rights in the Company as at 11 May 2011 are 100,422,654. As at the date of this Notice the Company does not hold any shares in treasury.

Website publication of audit concerns 18 Under section 527 of the Act, Shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the Auditors’ report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Act. The Company may not require the Shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must forward the statement to the Company’s Auditors not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the Act to publish on a website.

Answering Questions 19 Any Shareholder attending the meeting has the right to ask questions. The Company must cause to be answered any question relating to the business being dealt with at the meeting unless:

n answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; n the answer has already been given on a website in the form of an answer to a question; or n it is undesirable in the interests of the Company of the good order of the meeting that the question be answered.

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Documents for Inspection 20 Copies of the Executive Directors’ service contracts are available for inspection during normal business hours on any weekday (public holidays excepted) at Luminar House, Deltic Avenue, Milton Keynes, Buckinghamshire, MK13 8LW. In addition, copies of letters of appointment of the Non-Executive Directors will also be available for inspection for at least 15 minutes prior to the Annual General Meeting until the day and time the Annual General Meeting concludes.

Annual General Meeting Information 21 The meeting is due to be held on Tuesday 12 July 2011 at the Company’s registered office at Luminar House, Deltic Avenue, Milton Keynes, Buckinghamshire, MK13 8LW. The meeting will start at 1.00 pm. Please arrive no later than 12.50 pm for registration. Tea, coffee and light refreshments will be served from 12.30 pm. 22 You may not use any address (including electronic addresses) provided in this Notice to communicate for any purpose other than those expressly stated.

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Explanatory Notes to the Notice of Annual General Meeting

The notes on the following pages give an explanation of the proposed resolutions.

Resolutions 1 to 5 are proposed as ordinary resolutions.

Resolution 1 — Directors’ Report and Accounts The Directors are required by the Companies Act 2006 to present to the meeting the Directors’ and Auditors’ Reports and the audited accounts for the year ended 26 February 2011. The report of the Directors and the audited accounts have been approved by the Directors, and the report of the Auditors has been approved by the Auditors, and a copy of each of these documents may be found in the annual report and accounts, starting at page 33.

Resolution 2 — Directors’ Remuneration Report The Directors are also required to present the Directors’ Remuneration Report for approval. The Remuneration Report for the year ended 26 February 2011 is set out in the annual report and accounts, starting at page 25. The vote is only advisory, however, and should Shareholders vote against the Remuneration Report the Directors will still be paid but the Remuneration Committee will reconsider its policy.

Resolutions 3 and 4 — Appointment and Remuneration of Auditors These resolutions propose the reappointment of PricewaterhouseCoopers LLP as the Company’s Auditors and, following normal practice, authorise the Directors to determine their remuneration.

Resolution 5 — Authority to Allot Shares The existing authorities given to the Directors at the last Annual General Meeting to allot unissued share capital and to allot shares for cash in limited circumstances expire at the conclusion of this year’s Annual General Meeting (as proposed to be held on 12 July 2011). It is proposed that further authorities be granted under this resolution which shall expire on the date of the Annual General Meeting of the Company in 2012 or, if earlier, at the close of business on 12 October 2012.

Paragraph (a) of this resolution would give the Directors the authority to allot shares or grant rights to subscribe for or convert any securities into shares up to an aggregate nominal amount equal to £8,368,554. This amount represents approximately one-third of the issued ordinary share capital of the Company as at 11 May 2011, the latest practicable date prior to publication of this Notice.

In line with guidance issued by the Association of British Insurers (“ABI”), paragraph (b) of this resolution would give the Directors authority to allot shares or grant rights to subscribe for or convert any securities into shares in connection with a rights issue in favour of Shareholders up to an aggregate nominal amount equal to £16,737,108, as reduced by the nominal amount of any shares issued under paragraph (a) of this resolution. This amount (before any reduction) represents approximately two-thirds of the issued ordinary share capital of the Company as at 11 May 2011, the latest practicable date prior to publication of this Notice.

Passing resolution 5 will ensure that the Directors continue to have the flexibility to act in the best interests of Shareholders, when opportunities arise, by issuing new shares. The Directors have no present intention to exercise either of the authorities sought under this resolution, except as required to satisfy the exercise of options under the Company’s employee share incentive schemes. However, if they do exercise the authorities, the Directors intend to follow the ABI recommendations concerning their use (including as regards the Directors standing for re-election in certain cases).

Resolutions 6 to 8 are proposed as special resolutions.

Resolution 6 — Disapplication of Pre-Emption Rights This special resolution, which requires a 75% majority of votes to be cast in its favour, would authorise the Directors to allot shares (or sell any shares which the Company elects to hold in treasury) for cash without first offering them to existing Shareholders in proportion to their existing shareholdings, and to modify statutory pre-emption rights to deal with legal, regulatory or practical problems that may arise on a rights issue. The authority would be limited to an aggregate nominal amount of £1,255,283 which represents approximately 5% of the Company’s issued share capital as at 11 May 2011, being the latest practicable date prior to the publication of this Notice.

If passed, this authority will expire at the same time as the authority to allot shares given pursuant to resolution 5.

The Directors confirm their intention to follow the provisions of the Pre-Emption Group’s Statement of Principles in that they do not intend to issue more than 7.5% of the issued share capital on a non-pre-emptive basis in any rolling three-year period without prior consultation with Shareholders.

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Resolution 7 — Authority to Purchase Own Shares This special resolution would renew the authority given by Shareholders to the Company at last year’s Annual General Meeting to acquire its own shares (subject to the parameters set out in the resolution). The Company purchased no ordinary shares in the period from last year’s Annual General Meeting to 11 May 2011 under the existing authority.

The Directors have no present intention of exercising the authority to make market purchases; however, the authority provides the flexibility to allow them to do so in the future. The Directors would exercise this power only if satisfied that it was in the best interests of the Company, and of its Shareholders generally, to do so and that it could be expected to result in an increase in earnings per share of the Company. Any shares purchased in accordance with this authority will subsequently be cancelled. The effect of any cancellation would be to reduce the number of shares in issue.

The buy-back authority would be limited to purchases of up to 10,042,265 ordinary shares, representing 10% of the issued share capital of the Company as at 11 May 2011, the latest practical date prior to the publication of this Notice. The resolution specifies the maximum price at which the shares may be bought. The Company is required to state a minimum price at which shares may be purchased by the Company. In order to provide maximum flexibility, the Directors propose that the authority permits a minimum buy-back price equal to 75% of the average of the closing mid- market prices for the ordinary shares of the Company (derived from the Daily Official List of the London Stock Exchange) for the five business days immediately preceding the date of purchase.

As at 11 May 2011, being the latest practicable date prior to the publication of this Notice, exercisable options were outstanding to subscribe for a total number of 758,698 ordinary shares, or 0.76% of the Company’s issued share capital. If the existing authority given at the last Annual General Meeting and the authority now being sought were to be used in full, the exercisable options would represent 0.84% of the adjusted, reduced issued share capital.

The Company has issued warrants over 5,021,130 Ordinary Shares, representing 5% of the Company’s ordinary issued share capital as at 11 May 2011. If the existing authority given at the last Annual General Meeting and the authority now being sought were to be used in full, these would represent 6.25% of the Company’s ordinary issued share capital.

The authority shall expire on the date of the Annual General Meeting of the Company in 2012 or, if earlier, at the close of business on 12 October 2012.

Resolution 8 — Notice to Call a General Meeting Passing this resolution will authorise the Company to hold general meetings (other than Annual General Meetings) on 14 clear days’ notice as required by the Companies (Shareholders’ Rights) Regulations (the “Regulations”). The shorter notice period would not be used as a matter of routine for such meetings but only where the flexibility is merited by the business of the meeting and is thought to be to the advantage of Shareholders as a whole.

Note that the Regulations require that, in order to be able to call a general meeting on less than 21 clear days’ notice, the Company must meet certain requirements for electronic voting to be made available to all Shareholders for that meeting.

If granted, the approval will be effective until the Company’s next Annual General Meeting, when it is intended that a similar resolution will be proposed.

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Shareholder Information

Annual General Meeting Registrars 12 July 2011, 1.00 pm at the Registered Office of Luminar Group Capita Registrars Holdings plc located at Luminar House, Deltic Avenue, Rooksley, Milton Northern House Keynes, Buckinghamshire, MK13 8LW. Woodsome Park Fenay Bridge Timetable for Results Huddersfield For the year ending — 25 February 2012 West Yorskshire HD8 0GA Interim Management Statement circulated — 12 July 2011 Stockbrokers Interim Results announced and Interim Statement Circulated Numis Securities Limited — 20 October 2011 10 Paternoster Square London Interim Management Statement circulated — 12 January 2012* EC4M 7LT

Preliminary announcement of full year results — 10 May 2012* Altium Capital Limited 30 St James’s Square Annual Report circulated — June 2012* London EC4M 4AL Dividend Payments If any dividends are declared for the year ended 25 February 2012, the Auditors expected payment dates would be: PricewaterhouseCoopers LLP 10 Bricket Road Interim Dividend — January 2012* St Albans Final Dividend — July 2012* Hertfordshire AL1 3JX Shareholder Services On the Group’s behalf, Natwest Stockbrokers Limited operates a low cost Solicitors share dealing service in Luminar Group Holdings plc shares. Details are Slaughter and May available on telephone 08700 6002050 or email on contactees@natwest. One Bunhill Row com quoting reference: Luminar. London EC1Y 8YY Private Shareholders If you have a query about your holdings of Luminar Group Holdings plc shares or need to change your details, for example, your address, please contact the Registrars at the address shown below.

Website Further details of the Group’s activities and products can be found on its website at www.luminar.co.uk.

Company Secretary and Registered Office Philip Bowcock Luminar House Deltic Avenue Rooksley Milton Keynes MK13 8LW Telephone: 01908 544100 Facsimile: 01908 203596

Registration Luminar Group Holdings plc is registered in England and Wales (no. 6239034).

* Proposed dates only.

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Welcome to Luminar

Working to create the UK’s leading destination entertainment business.

Our Strategy

 Luminar venues welcome an average of over 200,000 customers through its doors every week.

Financial Highlights

Loss before tax* Total Revenue* Sales (per head) pre-exceptional items £137.3m £12.41 £1.1m (2010: £169.0m) (2010: £12.46) (2010: Profit £5.5m)

Net cash inflow Gross margins* pre-exceptional items Net borrowings 81.4% £21.5m £82.2m (2010: 82.8%) (2010: £31.5m) (2010: £92.7m)

* Continuing operations

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Annual Report & Accounts for the year ended 26 February 2011

Stock code: LMR

Luminar Group Holdings plc Luminar House Deltic Avenue Rooksley Milton Keynes MK13 8LW www.luminar.co.uk

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