Intandem Films plc
("Intandem" or the "Company")
Preliminary Results
For the year ended 30 June 2008
CHAIRMAN'S STATEMENT
The year to 30 June 2008 was another year of development for Intandem, albeit at
a slower rate than your Board had expected. The positive highlights were the
completion of Intandem's biggest film to date, How to Lose Friends and Alienate
People (although release in cinemas happened after the period end), the slate of
quality commercial feature films being developed and the considerable growth in
activity at Los Angeles based Radical Publishing in which Intandem owns a 10%
stake.
There were some disappointments including several films being delayed,
principally by the threat of an actors strike in the United States; the delay in
completion of GallowWalker and the poor sales performance of And When Did You
Last See Your Father? and the library of titles acquired in 2006.
Results
The result of the year's activity was turnover reduced to �1,166,000
(2007:�1,596,000), operating loss reduced to �634,000 (2007: �731,000) a pretax
loss of �1,380,000 (2007: �1,193,000) and loss per share of 1.66p (2007: 1.43p).
The reason for the relatively high pre tax loss was a full year's interest being
charged on the loan stock issued in 2006/2007 to acquire a library of films. The
interest payable is entirely from an interest reserve account and from the
revenues of the films acquired. It is not guaranteed by the parent company and
shareholders should use the operating loss as a barometer of the company's
performance.
Strategy
The business of Intandem is divided into two principal activities, namely
Executive Production and Worldwide Sales of commercial feature films.
Executive Production
Executive production is predominantly the raising of finance for the production
of feature films but also includes the development of the film's script and
assisting with the casting of the lead actors. The Company was appointed as
executive producer on several films during the year to 30 June 2008, the major
projects being:
Islands in the Stream
This was introduced to Intandem by the William Morris Agency in Los Angeles. It
is a $30million budget action drama that will star, and be directed and produced
by Tommy Lee Jones (Men in Black 1 and 2, The Fugitive and No Country for Old
Men). Intandem has formed a very close working relationship with Mr Jones' Texas
based production company, Javelina Films. It is anticipated that the film, which
is based on the Ernest Hemingway novel, will be produced in Puerto Rico during
2009.
Blown
Blown was introduced by the ICM talent agency in Los Angeles. It has a budget of
$16million and is proposed to star Samuel L. Jackson. Set in London, Blown is a
tense thriller which pitches an MI5 agent against a manipulative billionaire
businessman. It will be directed by Martha Fiennes and is set to shoot in the
first half of 2009.
Each of the above films was anticipated to start production in the year to 30
June 2008 which would have resulted in additional executive producer fees of
�300,000, but have been delayed by the threatened actors' strike in the USA
mentioned above.
Who is Doris Payne?
This was introduced by the Paradigm talent agency in Los Angeles. With a
$25million budget, the film is based on a true story about one of the world's
most prolific female jewel thieves. It is proposed to star Halle Berry in the
lead role and is anticipated to start shooting in North America by June 2009.
Since the year end, Intandem has been appointed as the executive producer on
several other films including Promises Promises, a �5million comedy starring
Edward Burns; Mortis Rex, a $25million action thriller, (described as Alien
meets Gladiator), which is currently being cast and the films from Radical
Pictures which are discussed in more detail below.
One important initiative which the Company is taking is in the way it charges
fees for its executive production services, particularly where it is involved in
the development of the script and helping to cast lead actors. Traditionally,
the executive producer is paid on the successful raising of the film financing
on the first day of production. Companies such as Intandem may work on a film
for up to 18 months without payment, and then be paid a fee on completion of the
financing. The Company is moving towards a system of being paid a monthly
retainer by producers who wish to use Intandem's professional expertise in order
to more closely match the timing of income with expenses.
The first two contracted films based on this structure are with CDI, an India
based company which has appointed Intandem as executive producer on two films,
Eternal Love and Guru of Sex which will have total budgets, to be financed by
CDI, of over $30million. Intandem will be paid a total of $400,000 fees for its
work on the films of which a total of $120,000 will be paid on a monthly basis
during the first six months work. The Company is in talks with other producers
to implement similar terms of engagement.
Worldwide Sales of Films
Intandem sells films to distributors around the world, including the major US
studios. The distributors pay a minimum guarantee (advance) ahead of the film
being released in the cinema and Intandem earns a commission of between 5% and
20% on all sales achieved. Intandem will be the sales company on each of the
films on which it is appointed as Executive Producer.
The marketing, selling and delivery of How to Lose Friends and Alienate People
was the highlight of the Company's sales efforts during the year to 30 June
2008. The film was sold into all major territories except Japan and France
during the year and it has subsequently been sold to France. In total, sales of
over $14million have been achieved from minimum guarantees.
Since the year end, the film has been released in cinemas in several countries
including the UK and North America. Whilst the $3 million box office in North
America by MGM was very disappointing, the performance achieved by Paramount
Pictures in the UK, Australia and South Africa should result in additional
revenues (overages) to the minimum guarantee being received after the release of
the DVD and television sales.
Radical Publishing ("Radical")
Los Angeles based Radical is a publisher of comic books, graphic novels and
novels. After 12 months of development, Radical commenced its publishing
programme in May 2008 with the successful comic book release of Hercules and
Caliber. It plans to release at least one new comic book property a month
through to 2010.
The objective is to turn the main intellectual properties into feature films.
During the year, Intandem converted a loan of $150,000 to Radical into equity
taking the Company's stake to 10%. Since the year end, Radical's parent company,
Blatant Entertainment has raised $7.5 million, principally for investment into
Radical's working capital and intellectual property, for a stake of
approximately 17%. This investment will allow Radical to pay for feature film
scripts based on its comic book and graphic novel content, thereby keeping
ownership of the intellectual property.
Radical and Intandem are working closely together to develop and finance a slate
of films based on Radical's intellectual properties. The first four are
anticipated to be City of Dust, Caliber, Aladdin and Freedom Formula.
City of Dust was created by Steve Niles (30 Days of Night). The comic book was
published in September 2008. A first draft film script has been written and the
film is expected to commence production in the second half of 2009. The
anticipated budget is $45million.
Caliber was published in May 2008 and was created by Sam Sarkar of Infinitum
Nihil, Johnny Depp's production company. Sam is currently writing the screenplay
for the film. John Woo (Red Cliff, Mission Impossible II and Face/Off) has
indicated his intention to direct the film which is anticipated to commence
production in late 2009 or early 2010. The anticipated budget is in the range of
$80million - $90million.
Aladdin will be published in February 2009 as a comic book. It will be a
"grittier" version of the popular tale and the indications are that it will be
Radical's biggest property on their current slate. The intention is to create a
franchise of three films and the first script is currently being written. The
budget of the first film is estimated to be at least $80million and is expected
to commence production during 2010.
Freedom Formula was published in November 2008 and was created by Edmund Shern.
It has been described as a cross between Transformers and Fast and the Furious.
The film script is being developed and it is intended to create a franchise of
at least three films. The budget is anticipated to be approximately $60million
and is targeted for production in 2010.
Radical's intention is that each of the above films will benefit from computer
game releases and other ancillary revenues which will add to the value of its
intellectual property assets.
As the above four films progress to production, Radical will be developing its
slate of at least ten additional properties into feature films.
Intandem is preparing a financial structure for the financing of the above
films. The structure, if successful, will involve a major US Studio investing in
and distributing the films in North America and several other territories around
the world. Intandem will earn executive producer fees and commission on revenue
generated by the films. The Company's involvement with Radical is very exciting
and promises to make a valuable contribution to its financial results from the
year to 30 June 2010 as the films move into production.
Current Trading and Outlook
The slow progress made on certain of our films and the relatively modest
performance of How to Lose Friends and Alienate People has been a disappointment
to the Board. However, it is fair to say that the slate of films currently being
developed is the most exciting since the Company started five years ago.
Financing has been provisionally agreed for Islands in the Stream and Blown
using a financing structure which can be replicated on the Company's other films
which will result in a much quicker turnaround from script to production.
However, cashflow is currently challenging ( principally owing to difficulties
in collecting cash due to the Company from How to Lose Friends and Alienate
People and the delay in production of certain of the Company's films as
highlighted above) and there is no doubt that the current economic climate
presents additional challenges. The Board believes that Intandem's policy of
managing its business based on low overheads and low levels of corporate debt
will help the Company during the next six months. As part of this policy of low
and flexible overheads, the directors have deferred some of their salaries and
fees on a temporary basis until the slate of films progresses to production.
In conclusion, while the current situation is challenging, the Board views the
future positively based on the quality of films in development and its low and
flexible cost base. The Company's investment in Radical is very exciting and
represents a valuable asset to the Company. I would finally like to say a big
`thank you' to Intandem's employees whose contribution has been a real team
effort. Everyone has worked hard over the last 12 months and I am confident that
their efforts will be rewarded in the future.
Shareholders can follow the Company's progress via its website at www.intandemfilms.com.
Gary Smith
Chairman
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2008
Group
2008 2007
Notes � �
Assets
Non-current assets
Property, plant and equipment 10 3,010 14,438
Investment in subsidiaries 11 - -
Financial assets 12 1,790,335 2,228,719
Intercompany loan - -
1,793,345 2,243,157
Current assets
Trade receivables 13 330,774 945,950
Other receivables 13 405,578 706,852
Cash and cash equivalents 13 800,242 810,379
1,536,594 2,463,181
Total assets 3,329,939 4,706,338
Equity and liabilities
Capital and reserves
Share capital 83,175 83,175
Share premium 840,314 840,314
Merger reserve 252,506 252,506
Foreign exchange reserve 3,990 8,791
Retained earnings (3,618,003) (2,124,338)
(2,438,018) (939,552)
Non-current liabilities
Deferred income 1,354 4,604
Intercompany loan - -
Convertible loan notes 15 367,500 192,500
Loan note 16 4,737,338 4,783,056
5,106,192 4,980,160
Current liabilities
Trade and other payables 18 661,765 665,730
661,765 665,730
Total liabilities 5,767,957 5,645,890
Total equity and liabilities 3,329,939 4,706,338
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
Group
2008 2007
Note � �
s
Revenue
Sales 575,100 935,140
Executive producer fees - 266,425
Commissions 276,185 47,830
Recoverable project costs 312,209 298,948
Other income 2,676 47,213
1,166,170 1,595,556
Cost of sales
Recoverable expenses (312,209) (298,948)
Amortisation of film asset (517,146) (568,331)
Gross profit 336,815 728,277
Overheads
Staff costs 4 (295,341) (400,584)
Depreciation (13,203) (12,882)
Other external charges (661,862) (1,045,382)
Loss from operations 5 (633,591) (730,571)
Finance costs 6 (785,558) (492,483)
Interest income 7 39,308 30,427
Loss before tax (1,379,841) (1,192,627)
Income tax expense 8 - -
Loss for the year from (1,379,841) (1,192,627)
continuing operations
Loss per share 9
Basic (1.66 pence) (1.43 pence)
Diluted (1.66 pence) (1.43 pence)
All the amounts derive from
continuing operations.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2008
Share Share Merger Foreign Retained Total
Capital Premium Reserve Exchange Earnings
Reserve
� � � � � �
Balance as at 1 83,175 840,314 252,506 - (998,026) 177,969
July 2006
Changes in equity
for the year to
30 June 2007
Exchange - - - 8,791 - 8,791
differences on
translation of
foreign currency
balances
Credit on issue - - - - 66,315 66,315
of share options
Loss for the year - - - - (1,192,627) (1,192,627)
Total recognised - - - 8,791 (1,126,312) (1,117,521)
income and
expense for the
year
Balance as at 30 83,175 840,314 252,506 8,791 (2,124,338) (939,552)
June 2007
Changes in equity
for the year to
30 June 2008
Exchange - - - (4,801) - (4,801)
differences on
translation of
foreign currency
balances
Credit on issue - - - - (113,824) (113,824)
of share options
Loss for the year - - - - (1,379,841) (1,379,841)
Total recognised - - - (4,801) (1,493,665) (1,498,466)
income and
expense for the
year
Balance as at 30 83,175 840,314 252,506 3,990 (3,618,0 03) (2,438,018)
June 2008
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
Group
2008 2007
Note � �
s
Cash flows from operating
activities
Cash (used in)/from 21 692,169 (851,500)
operating activities
Interest paid (785,558) (492,483)
(93,389) (1,343,983)
Cash flows from investing
activities
Purchases of property, (1,775) (1,868)
plant and equipment
Investment in film assets - (2,712,762)
Investment in associate (75,120) (75,397)
company
Investment in subsidiary - -
company
Interest received 39,308 30,427
Net cash (used in)/from (37,587) (2,759,600)
investing activities
Cash flows from financing
activities
Net proceeds from financing 16 - 4,815,000
of film assets
Repayment of loan (54,161) (31,944)
Proceeds on issue of 15 175,000 -
convertible loan notes
Net cash from financing 120,839 4,783,056
activities
Net increase/(decrease) in (10,137) 679,473
cash and cash equivalents
Cash and cash equivalents 810,379 130,906
at beginning of year
Cash and cash equivalents 800,242 810,379
at end of year
Bank balances and cash 800,242 810,379
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008
1. 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 of Intandem Films Plc have been prepared in
accordance with the International Financial Reporting Standards (IFRS). These
financial reports have been prepared under the historical cost convention.
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 fittings and office equipment are stated at cost less
accumulated depreciation.
Depreciation is charged so as to write off the cost or valuation of assets
over their estimated useful lives, using the straight-line method, on the
following bases:
Fixtures and fittings 25%
Office equipment 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.
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.
Rentals under operating leases are charged to the income statement on a
straight-line basis over the period of the lease.
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.
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.
Financial instruments
The Company classifies its financial instruments in the following categories:
at fair value through profit or loss, held to maturity, loans and
receivables, and available-for-sale. The classification depends on the
purpose for which the financial instrument was acquired. Management
determines the classification of its financial instruments at initial
recognition and re-evaluates this designation at each financial year end.
When financial assets are recognised initially, they are measured at fair
value, being the transaction price plus directly attributable transaction
costs.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets
held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term. Assets
are carried in the balance sheet at fair value with gains or losses on
financial assets at fair value through profit or loss recognised in the
income statement.
Loans and receivables
Loans and receivables are non derivative financial assets with fixed or
determinable payments that are not quoted in an active market, do not qualify
as trading assets and have not been designated as either fair value through
profit or loss or available-for-sale. Such assets are carried at amortised
cost using the effective interest rate method. Gains and losses are
recognised in income when the loans and receivables are derecognised or
impaired, as well as through the amortisation process.
Held to maturity investments
Non derivative financial assets with fixed or determinable payments and fixed
maturity are classified as held to maturity when the Company has the positive
intention and ability to hold to maturity. Held to maturity investments are
carried at amortised cost using the effective interest rate method. Gains or
losses are recognised in income when the investment is derecognised or
impaired, as well as through the amortisation process. Investments intended
to be held for an undefined period are not included in this classification.
Available-for-sale financial assets
After initial recognition available-for-sale financial assets are measured at
fair value with gains and losses being recognised as a separate component of
equity until the investment is derecognised or until the investment is
determined to be impaired at which time the cumulative gain or loss
previously reported in equity is included in the income statement.
The fair value of unquoted investments is based on appropriate valuation
techniques. These include using recent arm's length transactions, discounted
cash flow analysis and pricing models. Otherwise assets will be carried at
cost.
The Company assesses at each balance sheet date whether there is objective
evidence that a financial asset or a group of financial assets is impaired.
If there is objective evidence that an impairment loss on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be
reliably measured has been incurred, the amount of the loss is measured as
the difference between the asset's carrying amount and the present value of
estimated future cash flows discounted at the current market rate of return
for a similar financial asset.
Impairment of non-financial assets
Non-current assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
value exceeds its recoverable amount. The recoverable amount is the higher
of an asset's fair value less costs to sell and value in use. Value in use
is based on the present value of the future cash flows relating to the asset.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows.
Impairment of financial assets
Available-for-sale financial assets
If an available-for-sale financial asset is impaired, an amount comprising
the difference between its cost and its fair value is transferred from equity
to the income statement. Any reversal of an impairment of an equity
instrument classified as available-for-sale is not recognised in the income
statement.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and
receivables carried at amortised cost has been incurred, the amount of the
loss is measured as the difference between the asset's carrying amount and
the present value of estimated future cash flows discounted at the financial
asset's original effective interest rate. The carrying amount of the asset
is reduced, with the amount of the loss recognised in administration costs.
If in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the
impairment charge was recognised, the previously recognised impairment loss
is reversed. Any subsequent reversal of an impairment loss is recognised in
the income statement, to the extent that the carrying value of the asset does
not exceed its amortised cost at the reversal date.
Assets carried at cost
If there is objective evidence that an impairment loss on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be
reliably measured, has been incurred, the amount of the loss is measured as
the difference between the asset's carrying amount and the present value of
estimated future cash flows discounted at the current market rate of return
for a similar financial asset.
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 Group 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 twelve
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.
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 compensation
The fair value of employee share option schemes is measured by a Black-
Scholes pricing model. Further details are set out in note 14. 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.
Financial risk management
The Group uses a limited number of financial instruments, comprising cash,
short-term deposits, bank loans and overdrafts and various items such as
trade receivables and payables, which arise directly from operations. The
Group does not trade in financial instruments.
Financial risk factors
The Group's activities expose it to a variety of financial risks: currency
risk, credit risk, liquidity risk and cash ?ow interest rate 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.
a) Currency risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the UK
pound and US dollar. Foreign exchange risk arises from future commercial
transactions, and recognised assets and liabilities. Foreign exchange risk
arises when future commercial transactions or recognised assets or
liabilities are denominated in a currency that is not the Group's functional
currency.
b) Credit risk
The Group has no significant concentrations of credit risk and has policies
in place to ensure that sales are made to customers with an appropriate
credit history.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
available funding through an adequate amount of committed credit facilities.
The Group ensures it has adequate cover through the availability of bank
overdraft and loan facilities.
d) Cash flow interest rate risk
The Group finances its operations through a mix of cash flow from current
operations together with cash on deposit and bank and other borrowings.
Borrowings are generally at floating rates of interest and no use of interest
rate swaps has been made.
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.
2. Loss per share
2008 2007
� �
Loss for the purpose of basic loss (1,379,841) (1,192,627)
per share
Loss for the purpose of diluted loss (1,379,841) (1,192,627)
per share
Number of shares 2008 2007
No. No.
Weighted average number of ordinary
shares:
- for the purposes of basic loss per 83,175,000 83,175,000
share
- for the purposes of diluted loss 83,175,000 83,175,000
per share
3. Other Information
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 June 2008 or 2007. Statutory
accounts for 2007 have been delivered to the registrar of companies and those
for 2008 will be delivered in due course.
This preliminary statement is not being posted to shareholders. The Report &
Accounts for the year ended 30 June 2008 will be posted to shareholders in
due course.
For further information please contact:
Intandem Films plc
Gary Smith 020 7851 3800
Dowgate Capital Advisers Limited
James Caithie 020 7492 4777
St Helen's Capital plc
Ruari McGirr/Mark Anwyl 020 7628 5582
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