FOR IMMEDIATE RELEASE:
TUESDAY 21 NOVEMBER 2006
INTANDEM FILMS PLC ("Intandem" or the "Company")
Annual Results for the Year Ended 30 June 2006
HIGHLIGHTS
The announcement of Intandem's results for the year ended 30 June 2006
coincides with significant progress in the realisation of the Company's vision
as a major international feature film executive producer and sales and
distribution company:
* And When Did You Last See Your Father, the first film as part of the Number 9
Films/UK Film Council Superslate, completes production this week. The film
stars Colin Firth and Jim Broadbent.
* GallowWalker, Intandem's largest film to date with a budget of approximately
US$14 million, commenced production in Namibia in October, with Wesley Snipes
in the lead role.
* Loan notes of US$7.2 million have been issued to a third party funder,
secured against the revenues of four new films, with cash released to the Group
of US$2.9 million. (A separate, simultaneous, announcement with details of this
transaction has been issued today Tuesday, 21 November 2006.)
* The number of films represented by Intandem which will be completed during
the current financial year has increased from three to fifteen, with budgets in
excess of US$50 million.
Gary Smith, Executive Chairman comments
"The outlook for the Company has strengthened considerably over the last six
months and your Board is determined to maximise the revenues and profits from
the array of opportunities which are being presented to the Group."
Contacts:
Intandem Films plc
Gary Smith, Executive Chairman, 07834965323
Alastair Kennedy, Finance Director, 020-7851 3800
City Financial Associates Limited
Ross Andrews, 020-7090 7800
CHAIRMAN'S STATEMENT
This is Intandem's second annual report and accounts since floating on AIM in
April 2005 and coincides with the Group's third anniversary.
The results for the year ended 30 June 2006 were marginally better than the
previous year. Turnover was �563,962 against �547,978; loss before tax was �
477,372 against �497,056; and loss per share was 0.57p against 0.77p. After the
investment of time and effort to date, the Group has seen significant progress
in the realisation of its vision since the year end. The main factors behind
the transformation are:
i. The issue of $7.2million of Loan Notes to acquire distribution rights in
four completed films. This transaction increases the net cash position of the
Group by $2.9million (�1.55million) after all acquisition and transaction
costs. The Group expects to conclude further transactions of a similar nature
in the near future.
ii. The production of the first film under the Company's participation in the
UK Film Council's Superslate, headed by Number 9 Films and the prospect of at
least two more films commencing production under the arrangement during 2007.
iii. The commencement of production of GallowWalker, which at a budget of
approximately $14million is Intandem's biggest film to date. The film stars
Wesley Snipes and is currently filming in Namibia.
iv. The increase in the number of films represented by Intandem which will be
completed during the current financial year from three to fifteen with budgets
in excess of $50million.
Issue of loan notes
Intandem has issued loan notes of $7.2million to a third party funder. The loan
notes are secured against the revenue of four new films, the distribution
rights to which have been acquired by Intandem. After deducting the costs of
the transaction and the cost of the four films, cash released to the Group is
$2.9million of which $1.08million will be retained in an interest reserve
account and $1.81million will be available to the Company. No corporate
guarantees have been given in respect of repayment of the loan notes other than
from the revenues generated by the four films acquired. Intandem has developed
a solid relationship with Capitoline Global Finance Inc who arranged the
funding and is in negotiations to complete transactions of a similar nature in
the future.
New films
Intandem has been very active in securing sales rights in new films and
considerable effort was expended during the year to 30 June 2006, the benefits
of which are now accruing to the Group. Two of the exciting films that Intandem
is representing are outlined below:
And When Did You Last See Your Father
This film is the first to commence production as part of the Number 9 Films/UK
Film Council Superslate consortium of which Intandem is a member, along with
Number 9 films, Channel 4 and the Irish Film Board. The film stars Colin Firth
and Jim Broadbent and commenced principal photography in the United Kingdom in
October 2006 and will be completed by 25th November 2006. Sales achieved to
date on which Intandem will earn commission exceed $2million, including sales
to Sony PicturesClassics in North America and Latin America, Buena Vista in the
United Kingdom and Icon in Australia. The film is scheduled to be released in
UK cinemas in September 2007.
GallowWalker
GallowWalker is Intandem's biggest film to date, with a budget of approximately
$14million. It is a supernatural action/horror film with a spaghetti western
setting starring Wesley Snipes, the star of the successful Blade trilogy of
films which grossed in excess of $1billion at the worldwide box office.
Shooting commenced in Namibia in October 2006 and the film should be delivered
by 30 June 2007. Intandem has already achieved sales of $2.4million based on
the script and cast. Intandem's management is very excited about the prospects
for GallowWalker.
The four films acquired through the Loan Note issue are Incubus, True True Lie,
Snuff Movie and Supergator. The Group is in discussions with regards to
representing several other films which should commence production during the
current financial year.
The Number 9 Superslate consortium
The Group continues to participate in the Superslate consortium in partnership
with Number 9 Films, Channel 4 and the Irish Film Board. During the year
Intandem contributed �44,418 to the development of films through the
consortium. In total, five films are in active development in addition to And
When Did You Last See Your Father. Two of these films are expected to commence
production during the next 12 months and they are:
* How To Lose Friends and Alienate People, based on Toby Young's best selling
book. American director Bob Weide is attached and Simon Pegg (Shaun of the
Dead) is set to play the lead role.
* The Lonely Doll has been written by American writer Caroline Thompson (Edward
Scissorhands, Corpse Bride and The Secret Garden) and will be directed by
Julian Schnabel (Before Night Falls, Basquia) and produced by New York based
Killer Films and Elizabeth Karlsen of Number 9 Films.
The Superslate is an important source of films for Intandem and we are pleased
with the progress made to date and with the working relationship with our
partners in the consortium.
Personnel
The last 12 months have been a period of strong development and progress for
Intandem. The core management team has worked together for over twelve years
and most of the rest of the team for over five years. We are totally committed
to achieving the Company's objectives of building a profitable and growing
international film business and I would like to say a big thank you to all
members of staff for their hard work. The challenge for the next 12 months
includes managing the growth of the business as we introduce more films and
production relationships to the Group, but it is a challenge we relish.
Outlook
The outlook for the Company has strengthened considerably over the last six
months and your Board is determined to maximise revenues from the array of
opportunities which are being presented to the Group.
Gary Smith
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 30 JUNE 2006
2006 2005
� �
Turnover
Executive Producer fees 27,436 122,900
Commissions 258,219 114,979
Recoverable project costs 260,261 310,099
Other Income 18,046 -
563,962 547,978
Recoverable expenses (260,261) (310,099)
Other external charges (463,781) (438,667)
Staff costs (310,465) (290,364)
Depreciation (12,354) (11,609)
Loss from operations (482,899) (502,761)
Finance costs (1,869) (96)
Income from Investments 7,396 5,801
Loss before tax (477,372) (497,056)
Income tax expense - -
Loss for the year from continuing operations (477,372) (497,056)
Earnings per share
Basic (0.57 pence) (0.77 pence)
Diluted (0.57 pence) (0.77 pence)
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2006
2006 2005
� �
Assets
Non-current assets
Property, plant and equipment 25,452 34,829
Investments 100 100
25,552 34,929
Current Assets
Trade receivables 65,815 199,349
Other receivables 339,827 180,182
Cash and cash equivalents 130,906 472,328
536,548 851,859
Total assets 562,100 886,788
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 83,175 83,175
Share premium 840,314 840,314
Merger reserve 252,506 252,506
Retained earnings (998,026) (562,789)
177,969 613,206
Non-current liabilities
Deferred income 7,855 11,105
Convertible loan notes 192,500 -
200,355 11,105
Current liabilities
Trade and other payables 183,776 262,477
Total liabilities 384,131 273,582
Total equity and liabilities 562,100 886,788
CONSOLIDATED CASH FLOW STATEMENT
TO 30 JUNE 2006
2006 2005
� �
Cash flows from operating activities
Cash generated from operating activities (536,472) (539,286)
Interest paid (1,869) (96)
(538,341) (539,382)
Cash flows from investing activities
Purchases of property, plant and equipment (2,977) (46,438)
Interest received 7,396 5,801
Net cash (used in) investment activities 4,419 (40,637)
Cash flows from financing activities
Net proceeds on issues of share - 863,314
Proceeds on issue of convertible loan notes 192,500 -
Net cash (used in)/from financing activities 192,500 863,314
Net increase/(decrease) in cash and cash (341,422) 283,295
equivalents
Cash and cash equivalents at beginning of year 472,328 189,033
Cash and cash equivalents at end of year 130,906 472,328
Bank balances and cash 130,906 472,328
STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2006
Group Share Share Merger Retained Total
Capital Premium Reserve Earnings
� � � � �
Balance as at 1 July 2004 60,175 - 252,506 (76,106) 236,575
Changes in equity for the
year to 30/6/05
Credit on issue of share - - - 5,373 5,373
options
Credit on issue of warrants - - - 5,000 5,000
Loss for the year - - - (497,056) (497,056)
Total recognised income and - - - (486,683) (486,683)
expense for the year
Issue of share capital 23,000 1,127,000 - - 1,150,000
Issue and start up costs (286,686) - - (286,686)
Balance as at 30 June 2005 83,175 840,314 252,506 (562,789) 613,206
Changes in equity for the
year to 30/6/06
Credit on issue of share - - - 42,135 42,135
options
Loss for the year - - - (477,372) (477,372)
Total recognised income and - - - (435,237) (435,237)
expense for the year
Balance as at 30 June 2006 83,175 840,314 252,506 (998,026) 177,969
NOTES TO THE ACCOUNTS
Presentation of financial statements
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.
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.
The financial statements have been prepared under the merger accounting rules
as permitted under IFRS 3 - Business Combinations.
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. Revenue comprises the fair value of the
consideration received or receivable for the sale of goods and services
provided in the ordinary course of the Company's activities. Revenue derived
from the Company's principal activities is recognised as follows:
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 fulfilment 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.
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 re-translated 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 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 25%
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the disposal proceeds
with the carrying amount and are included in the income statement.
Investments
The Group classifies its investments depending on the purpose for which the
investments were acquired. Management determines the classification of its
investment at initial recognition and re-evaluates this designation at every
reporting date.
The fair value of unquoted investments is based on valuation techniques. The
Group assesses at each balance sheet date whether there is objective evidence
that a financial asset or a group of financial assets is impaired.
Trade receivables
Trade receivables are recognised initially at fair value less provision for
impairment. A provision for impairment of trade receivables is established when
there is objective evidence that the Company will not be able to collect all
amounts due according to the original terms of receivables. 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 effective interest
rate. The amount of the provision is recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. Cash and
cash equivalents comprise cash in hand, deposits held at call with banks, other
short term, highly liquid investments with original maturities of three months
or less, and bank overdrafts. Bank overdrafts are included within borrowings in
current liabilities on the balance sheet.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost. Any difference
between 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 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.
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.
Share based compensation
The fair value of employee share option schemes is measured by a Black-Scholes
pricing model. In accordance with IFRS 2 `Share-based Payments' the resulting
cost is charged to the income statement over the vesting period of the options.
The value of the charge is adjusted to reflect expected and actual levels of
options vesting.
The Group operates an equity-settled, long term incentive plan designed to
align management interests with those of shareholders. The fair value of the
employee's services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for example, pro*
tability and sales growth targets). Non-market vesting conditions are included
in assumptions about the number of options that are expected to become
exercisable. At each balance sheet date, the entity revises its estimates of
the number of options that are expected to become exercisable. It recognises
the impact of the revision of original estimates, if any, in the income
statement, and a corresponding adjustment to equity. The proceeds received net
of any directly attributable transaction costs are credited to share capital
(nominal value) and share premium when the options are exercised.
Fair value estimation
The nominal value less impairment provision of trade receivables and payables
are assumed to approximate their fair values. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to
the Group for similar financial instruments.
EARNINGS PER SHARE
Earnings 2006 2005
� �
Earnings for the purpose of basic earnings per (477,372) (497,056)
share (net profit for the year)
Earnings for the purpose of diluted earnings per (477,372) (497,056)
share
Number of shares 2006 2005
No. No.
Weighted average number of ordinary shares:
- for the purposes of basic earnings per share 83,175,000 64,522,945
- for the purposes of diluted earnings per share 83,175,000 64,522,945
END
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