INTANDEM FILMS PLC ("Intandem" or the "Company")
Preliminary Results for the year to 30 June 2005
HIGHLIGHTS
* One film completed in the reporting period - Return to Sender.
* Three films completed to date with an aggregate budget of �12.5 million -
Return to Sender, Stoned and Irresistible. Seven films in pre production
with budgets of �30 million.
* Four films in development with UK Film Council backed Super Slate
consortium including Toby Young's bestseller How to Lose Friends and
Alienate People.
* Established Fear Factory - a new company created in partnership with two
producers and the production and financing company Spice Factory to raise
third party equity funding for the production of a slate of low budget
psychological thriller and horror films.
* Adoption of International Financial Reporting Standards 3 years ahead of
requirement and one of the first AIM listed companies to report fully under
the new standards.
* Turnover for the year of �548,000 (2004: �184,000).
* Loss for the year to 30 June 2005 of �497,000 (2004: loss of �76,000)
equivalent to 0.77 pence per share (2004: 0.13 pence per share).
* Board looks forward to the future with considerable confidence.
CHAIRMAN'S STATEMENT
I am pleased to present the Financial Statements for Intandem Films plc for the
first time since the Company's admission to AIM in April 2005.
Intandem commenced trading in November 2003 and its first film was completed in
October 2004. Since the year end two more films have been completed and
Intandem has established itself as an executive producer and international film
sales company. The Company has commenced two initiatives to source new film
projects; the Super Slate development funding from the UK Film Council and the
establishment of Fear Factory Ltd to build a slate of commercial horror films.
Several other films are in pre-production and the Board is looking forward to
the future with confidence.
Operational Review
Executive Production
Intandem earns fees for providing the service of organising financing for the
production of films on behalf of the producer; Intandem does not use its own
funds for production finance. Since starting business in November 2003, the
Group has commenced production on three films with an aggregate budget of �12.5
million and the Group earned executive producer fees of approximately �185,000
of which �123,000 was attributable to the period to 30 June 2005.
The three films were Return to Sender (aka Convicted), Stoned and Irresistible
and further information on each film is provided below.
Return to Sender
Return to Sender was Intandem's first film. It was directed by Oscar winner
Bille August and starred the Oscar nominated actress Connie Neilsen, Kelly
Preston and Aidan Quinn. Sales to date have been approximately �1 million of
which �400,000 have been completed since the year end, the commission on which
will be included in the accounts for the year ending 30 June 2006. Although the
film cannot be considered a commercial success, Intandem has still earned a
total of over �238,000 in fees and sales commission on its sales to
distributors in most major territories in the world, including North America
which reflects the high gross margin nature of the business.
Stoned
Stoned is a powerful drama about the final three months in the life of Brian
Jones, the founder of The Rolling Stones. The film was directed by Stephen
Woolley, the producer of The Crying Game, Scandal and Interview With A Vampire
and stars Leo Gregory, Paddy Considine and David Morrissey.
Stoned was financed by Audley Films LLP, a film financing and production
partnership, who were introduced by Intandem. Sales totalling �860,000 have
been achieved to date in territories including Japan, Scandinavia, Benelux and
Brazil.
In the United Kingdom, Intandem has co-ordinated the marketing campaign for the
film's cinema release with Vertigo Films which premiered at the London Film
Festival and was released in cinemas on 18 November. The DVD will be
distributed through Sony Pictures Home Entertainment, part of Sony Pictures
Europe Ltd.
In the United States, Intandem has appointed Screen Media Ventures LLC as the
distributor. It is planned to release the film in cinemas in North America in
March 2006. Screen Media benefit from an arrangement with Universal Pictures
Home Entertainment to distribute the DVD.
Irresistible
Irresistible is a suspense drama set in Australia and stars Oscar winning Susan
Sarandon, Sam Neill and Emily Blunt. The film was completed in November 2005
and sales totalling �860,000 have been achieved to date across several
territories including the United States, Germany and the United Kingdom.
International Sales
Intandem earns commission on sales to film distributors around the world.
Distributors pay a minimum guaranteed sum ahead of the film's release therefore
Intandem's commission is not dependent on the box office success of the film.
Revenue is only recognised on films which have been completed during the
financial period.
Return to Sender was completed during the year and commission of �115,000 was
earned on sales of �635,000.
The Board's target is to represent up to eight films per annum as an
international sales company. We are in regular contact with distributors in
every major territory to ascertain the types of films they wish to acquire. Our
goal is to build a portfolio of films in different genres and with a range of
budgets. We are currently considering films with budgets from �1.5 million to �
20 million.
The international film business is very competitive and the Board takes pride
in its marketing campaign for each of Intandem's films in order to increase the
chances of its success.
Initiatives to source film projects
The Board has a proactive policy towards sourcing film projects which it
believes will generate significant revenue and profits to the Group. The
following positive initiatives have been taken to secure a slate of films in
the future.
Development Funding through UK Film Council
Intandem is a member of a consortium, headed by Stephen Woolley's Number 9
Films, which successfully bid for development funding from the UK Film Council.
The consortium, which consists of Intandem, Channel 4 and the Irish Film Board,
will each contribute �100,000 per annum for three years towards the development
costs of film projects which will be matched by a �300,000 per annum
contribution by the UK Film Council. This total fund of �1.8 million over a
three year period is a significant amount for development and will increase the
chances of Intandem participating in commercially successful films.
Four film projects are being actively developed including an adaptation of the
best selling book by Toby Young - How to Lose Friends and Alienate People and
The Lonely Doll to be directed by Julian Schnabel.
Participation in Horror Film Slate
The Board believes that the recent commercial success of low budget horror
films such as Saw, The Grudge and The Descent offers a considerable opportunity
for profits. Intandem has decided to establish a new company called Fear
Factory Ltd along with two producers and the film production and financing
company, Spice Factory. The objective of Fear Factory is to raise third party
equity funding in the United Kingdom for the production of a slate of low
budget psychological thriller and horror films for which Intandem will be
appointed executive producer and international sales company.
In addition to the Fear Factory slate, three of the seven films currently under
negotiation are horror films including The Lodge, which will be produced by
Michel Shane, the executive producer of Studio films such as I Robot, starring
Will Smith and Catch Me If You Can, starring Leonardo di Caprio and Tom Hanks.
It is intended that Intandem will co-ordinate the cinema release of the slate
of horror films in the UK prior to the release on DVD. The Board is excited by
the potential of this new initiative and is aiming to achieve at least one
"franchise" from the many films available to the Group.
Financial review
The Statements have been prepared under International Financial Reporting
Standards (IFRS) following the Board's strategic decision to voluntarily adopt
IFRS. All AIM listed companies will be required to report under IFRS for
accounting periods commencing on or after 1 January 2007 and hence the
Company's early adoption is three years ahead of this requirement. The Board
believes that this will facilitate consistent presentation of results in the
future.
Turnover for the year to 30 June 2005 was �547,978 (8 months to 30 June 2004: �
183,642) and the loss for the year was �497,056 (8 months to 30 June 2004: �
76,106 loss)
On admission to AIM in April 2005 the Company raised approximately �860,000
after expenses of �286,000 through the placing of 23,000,000 shares at 5 pence
per share.
Since the share placement Intandem's management has attended several film
markets and festivals including the Cannes Film Festival in May 2005. Costs
incurred in attending these events are initially met by the Company but are
fully recoverable from the films that the Group represents at each market.
The company is in the stages of development and the Board do not propose the
payment of a dividend.
Current Trading
Since 30 June 2005 the Board has actively sought out new opportunities to
increase the number of films the Group represents.
Intandem is currently in negotiations to arrange the financing for seven films
with an aggregate budget of approximately �30 million on which the company is
entitled to receive executive producer fees and sales commission. Overheads
would not need to increase materially to manage this increase in films which
should accelerate the Group's move to profitability.
Film projects are offered to the Group from a variety of sources from around
the world including producers, agents and screenwriters. Of the seven films
currently under negotiation, six are set in the United States which reflects
Intandem's policy of providing the international film community with commercial
feature films.
Summary and Outlook
Intandem's strategy is very clear: the Group provides a service to film
producers in identifying sources of financing for production for which we
charge a fee. Intandem is appointed as the international sales company for a
film and charges commission on worldwide sales. The Board intends to build the
catalogue of films at the rate of between four and eight films per annum and
exploit them in the most efficient and profitable way possible. Intandem
operates on a low overhead structure with the intention that once break-even is
achieved the Board believes the Group will benefit from exceptional net profit
margins.
I want to say a big thank you to the core staff at Intandem which I regard as
one of the most committed teams in the film business and to the shareholders
who supported the Company's fundraising in April 2005. We are very proud of
Intandem and intend to grow the Group to a significant size, but in a
controlled and profitable manner.
I look forward to reporting on our continued progress in the near future.
Gary Smith
Chairman
CONSOLIDATED BALANCE SHEET
YEAR ENDED 30 JUNE 2005
Group
As at 30/6/05 As at 30/6/04
� �
Assets
Non-current assets
Property, plant and equipment 34,829 -
Investments 100 100
34,929 100
Current Assets
Trade receivables 199,349 -
Other current assets 180,182 131,266
Cash and cash equivalents 472,328 189,033
851,859 320,299
Total assets 886,788 320,399
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 83,175 60,175
Share premium 840,314 -
Merger reserve 252,506 252,506
Retained earnings (562,789) (76,106)
613,206 236,575
Non-current liabilities
Deferred income 11,105 -
Current liabilities
Trade and other payables 262,477 83,824
Total liabilities 273,582 83,824
Total equity and liabilities 886,788 320,399
CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR TO 30 JUNE 2005
Group
Year ended 8 months
ended
30/06/05 30/06/04
� �
Turnover
Executive Producer fees 122,900 80,000
Commissions 114,979 -
Recoverable project costs 310,099 103,642
_______ _______
547,978 183,642
Recoverable expenses (310,099) (103,642)
Other external charges (438,667) (120,966)
Staff costs (290,364) (35,113)
Depreciation (11,609) -
_______ _______
Operating loss (502,761) (76,079)
Finance costs (96) (114)
Income from Investments 5,801 87
_______ _______
Loss before tax (497,056) (76,106)
Income tax expense - -
_______ _______
Loss for the year from continuing operations (497,056) (76,106)
Earnings per share
Basic (0.77 pence) (0.13 pence)
Diluted (0.77 pence) (0.13 pence)
CONSOLIDATED CASH FLOW STATEMENT
YEAR TO 30 JUNE 2005
Group
Year 8 months
ended ended
30/06/05 30/06/04
�
�
Cash flows from operating activities
Loss from operations (502,761) (76,079)
Adjustments for:
Depreciation of property, plant and equipment 11,609 -
Share option charge for the year 5,373 -
Charge for market value of warrants issued during 5,000 -
the year
Operating cash flows before movement in working (480,779) (76,079)
capital
Increase in receivables (248,265) (131,266)
Increase in payables 189,758 83,824
Cash generated from operations (539,286) (123,521)
Interest paid (96) (114)
Net cash used in operating activities (539,382) (123,635)
Cash flows from investing activities
Interest received 5,801 87
Purchases of property, plant and equipment (46,438) (100)
Net cash investment activities (40,637) (13)
Cash flows from financing activities
Net proceeds on issues of shares 863,314 312,681
Net cash from financing activities 863,314 312,681
Net increase in cash and cash equivalents 283,295 189,033
Cash and cash equivalents at beginning of year 189,033 -
Cash and cash equivalents at end of year 472,328 189,033
Bank balances and cash 472,328 189,033
NOTESTO THE ACCOUNTS
1. Accounting policies
The financial information contained within this document does not constitute
statutory accounts within the meaning of section 240 Companies Act 1985. The
figures for the year ended 30 June 2005 have been extracted from the annual
accounts in respect of which the auditors have not yet signed their audit
report. The audited statutory accounts for the year end 30 June 2005 will be
delivered to the Registrar of Companies in due course.
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and with those parts of the Companies Act,
1985 applicable to companies reporting under IFRS. The financial reports have
been prepared under the historical cost convention.
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 ultimately may differ
from those estimates.
2. Summary of significant accounting policies
The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the company and enterprises controlled by the Company (and its subsidiaries)
and are made up to 30 June each year. Control is achieved where the Company has
the power to govern the financial and operating policies of an investee
enterprise so as to obtain benefits from its activities.
Merger with Intandem Entertainment Limited
On 5 April 2005, Intandem Films Plc entered into an agreement with all the
shareholders of Intandem Entertainment Limited to merge their respective
businesses. The consideration for the purchase of the share capital of Intandem
Entertainment Ltd was satisfied by the allotment and issue of 60,174,000
ordinary shares of �0.001 each in Intandem Films Plc, credited as fully paid.
The financial statements have been prepared under the merger accounting rules
as permitted under IFRS 3 - Business Combinations as the combining entities
within the group were controlled by the same parties both before and after the
combination. Accordingly, the financial information for the current period has
been presented, and that for the prior period restated, as if Intandem
Entertainment Ltd had been owned by Intandem Films Plc throughout the current
and comparative accounting periods.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
other members of the group.
All significant intercompany transactions and balances between group
enterprises are eliminated on consolidation.
Revenue recognition
Revenue, which excludes value added tax, represents executive producer fees,
commissions and recoverable expenses. Executive producer fees and recoverable
expenses are recognised on a receivable basis where the contract is signed.
Sales commission is only recognised upon delivery of the film to the Company.
If receipt of the revenue is dependent on the fulfillment of future contractual
obligations, then revenue is not recognised until those future obligations have
been fulfilled.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the interest rate applicable.
Dividend income from investments is recognised when the shareholders' rights to
receive payment have been established.
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.
Foreign currencies
Transactions in foreign currencies are initially recorded at the rates of
exchange prevailing on the dates of the transactions. Monetary assets and
liabilities denominated in such currencies are retranslated at the rates
prevailing on the balance sheet date. Profits and losses arising on exchange
are included in the net profit or loss for the period.
Taxation
The charge for current tax is based on the results for the year as adjusted for
items which are non-assessable or disallowed. It is calculated using rates that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of taxable profit. In
principle, deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that 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 goodwill (or negative
goodwill) or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction which affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interest in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is calculated at the rates that are expected to apply when the
asset or liability is settled. Deferred tax is charged or credited in the
income statement, except when it relates to items credited or charged directly
to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes
levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation.
Depreciation is charged so as to write off the cost or valuation or assets over
their estimated useful lives, using the straight-line method, on the following
bases.
Fixtures and equipment 25%
Office equipment 25%
Impairment
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets with finite lives to determine whether there is
any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where it is not possible
to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. Impairment losses
are recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the relevant
asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. However, impairment
losses relating to goodwill may not be reversed.
Trade receivables
Trade receivables are stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts.
Trade payables
Trade payables are stated at their nominal value.
Equity instruments
Equity instruments are recorded at the proceeds received, net of direct issue
costs.
Provisions
Provisions are recognised when the Group has a present obligation as a result
of a past event which it is probable will result in an outflow of economic
benefits that can be reasonably estimated.
Share based payments
The Group has applied the requirements of IFRS 2 Share-based Payments.
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of equity-settled
share-based payments is expensed on a straight-line basis over the exercise
period, based on the Group's estimate of shares that will eventually vest.
Fair value is measured by use of the Black Scholes Model. The expected life
used in the model has been adjusted, based on management's best estimate, for
the effect of non-transferability, exercise restrictions, and behavioural
considerations.
Earnings per share
Group
Earnings Year ended 8 months
ended
30/06/05 30/06/04
�
�
Earnings for the purpose of basic earnings per (497,056) (76,106)
share (net loss for the year)
Earnings for the purpose of diluted earnings per (497,056) (76,106)
share
Number of shares Year ended 8 months
ended
30/06/05
30/06/04
Weighted average number of ordinary shares for 64,522,945 60,175,000
the purposes of basic earnings per share
Weighted average number of ordinary shares for 64,522,945 60,175,000
the purposes of diluted earnings per share
The dilutive effect of share options and warrants issued during the year have
been ignored as the average market value of ordinary shares during the period
did not exceed the exercise price of the options or warrants issued.
Share capital
Group
30/06/05 30/06/04
� �
Authorised:
Ordinary shares of �0.001 each 200,000 200,000
Issued and fully paid:
Ordinary shares of �0.001 each 83,175 60,175
Reported as at 1 July or on incorporation 60,175 1
Issue of shares 23,000 60,174
Reported as at 30 June 83,175 60,175
The Company was incorporated on 10 February 2005 as Broomco (3710) Limited with
an authorised share capital of �1,000 divided into 1,000 ordinary shares of �1
each, of which 1 share was issued on incorporation. On 5 April 2005, the
authorised share capital was increased to �200,000 by the creation of 199,000
further ordinary shares of �1 each. On the same date, each of the issued and
unissued ordinary shares of �1 each were subdivided in to 1,000 ordinary shares
of �0.001 each, all such shares ranking pari passu in all respects.
On 5 April 2005, the Company entered into an agreement with all the
shareholders of Intandem Entertainment Limited to acquire its entire share
capital, the consideration for which was satisfied by the allotment and issue
of 60,174,000 ordinary shares of �0.0001 each, credited as fully paid, in the
Company.
On 22 April 2005, the Company raised �1,150,000 before expenses of �286,686
through the placing of 23,000,000 new ordinary shares of nominal value �0.001
each at a placing price of �0.05 each with institutional and other investors.
This represented 28% of the enlarged issued share capital of the company.
At 30 June 2005, options over 4,500,000 ordinary shares under the Intandem
Enterprise Management Incentive (EMI) Plan and warrants over 3,000,000 ordinary
shares were outstanding.
Date of At Granted Exercised Forfeits At Exercise Exercise/Vesting
grant / Share date
1 July /vested 30 June price
2004 2005 From To
Options
22.04.05 - 4,500,000 - - 4,500,000 5.0p 22.04.08 22.04.15
Warrants
22.04.05 - 3,000,000 - - 3,000,000 5.0p 22.04.05 22.04.08
END
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