TIDMIFM
INTANDEM FILMS PLC ("Intandem" or the "Company")
Half Yearly Results to 31 December 2008
Highlights
- Revenue down but cost cutting reduces operating loss.
- Strategy to survive the recession and develop a strong slate of films for
cinema release.
- Investment in Los Angeles-based Radical Publishing a success.
CHAIRMAN'S STATEMENT
The six months to 31 December witnessed the start of the biggest worldwide
recession for many decades. The film industry traditionally performs relatively
well in such economic conditions, particularly at the cinema, as consumers
switch to lower cost forms of entertainment and seek escapes from the constant
flow of depressing news. Intandem has implemented a strategy which is aimed at
not just surviving the recession, but at coming through it in a position of
considerable strength. I summarise the strategy below, and report on progress to
date, for the benefit of shareholders.
Film Selection
The Board firmly believe that cinema income from films will be the driving force
behind sustaining the strength of the film industry. The worldwide success of
"Slumdog Millionaire" which has grossed over $200m at the box office is a clear
illustration of this.
Intandem is therefore focussing its efforts on films which will benefit from a
wide cinema release. Without such a release, in the Board's opinion, revenues
from DVD and television alone will not be sufficient to cover a film's budget.
Intandem is currently finalising films with Halle Berry, Tommy Lee Jones and
Samuel L Jackson each of which should benefit from a cinema release. In
addition, the Company is in negotiations with three separate parties to
represent different slates of films all of which are expected to receive a wide
cinema release. The objective is for Intandem to be representing at least eight
major feature films within the next 18 months with the potential to generate
significant levels of income.
Revenues
In Intandem's business model, the main source of income is commission from sales
of completed films. We receive the commission after distributors pay for the
film on delivery. This can mean that the Company works for up to 18 months
before receiving its main source of income. The Company is therefore increasing
its fees and marketing expenses in the budgets of films which will provide cash
flow until the commission is received on the films currently in pre-production.
Once the commissions start to be received, which is anticipated to be during the
second half of the year ended 30 June 2010, cashflow will be very positive. The
revenues of the worldwide film industry are denominated in US$ and the dollar
strength is therefore a benefit to the Company.
Costs
During the current period of recession and until the Company reaches critical
mass, costs have been curbed and are under control. The main costs are office
rent and salaries. Whilst staff salaries have remained constant throughout the
period, the recent remuneration committee meeting of the Company decided to
temporarily reduce the fees of directors by approximately 25% until revenues
increase significantly. Other costs such as attending film markets have also
been reduced. The Company has always adhered to a strict cash flow control
policy which is standing it in good stead during the recession.
Radical Publishing
I am delighted to report that Intandem has reached an agreement to extend its
first look arrangement with Radical Publishing to 2013. Radical is one of the
fastest growing comic book companies in North America. It has raised
approximately $8m which will be used in part to develop film scripts. Intandem
will earn considerable executive producer fees and commission for the films for
which it organises finance.
Radical has already closed two development, finance and production deals on two
films with US Studios and the company is currently actively developing six major
films which will be available to Intandem.
In addition, Intandem owns a 10% stake in Radical which is included in the
balance sheet at $300,000. Recent fundraisings by Radical's parent company,
Blatant Entertainment, has been at substantially higher values.
Results
Turnover reduced to GBP223,342 during the six months to 31 December 2008 (2007:
GBP666,073), primarily due to a downturn in the library sales. However, as a
result of the cost cutting, the operating loss was significantly reduced to
GBP224,277 (2007: GBP306,477) Loss per share was 0.74p (2007: 0.84p). As explained
in previous reports, the high finance costs of GBP402,421 (2007: GBP412,997)
predominantly relate to interest on a loan note, the repayment of which is
secured only by revenues from library of five films and is not guaranteed by the
Company. The interest is paid from an interest reserve account set up as part of
the loan note.
In conclusion, the strategy of the Company is clearly to survive the recession.
On a much more positive note, the Board is confident that Intandem will be in a
very strong competitive position within the next two years as a result of all
the effective work currently being carried out.
You can keep in touch with the activities of Intandem at www.intandemfilms.com.
Gary Smith
Chairman
CONSOLIDATED BALANCE SHEET
HALF YEAR ENDED 31 DECEMBER 2008
As at As at As at
31/12/08 31/12/07 30/6/08
Notes GBP GBP GBP
Assets
Non-current assets
Property, plant and equipment 4,378 9,611 3,010
Financial assets 6 2,395,643 1,934,786 1,790,335
2,400,021 1,944,397 1,793,345
Current Assets
Trade receivables 123,449 467,001 330,774
Other current assets 490,317 617,359 405,578
Cash and cash equivalents 803,667 1,124,039 800,242
1,417,433 2,208,399 1,536,594
Total assets 3,817,454 4,152,796 3,329,939
Equity and liabilities
Equity attributable to equity
holders of the parent
Share capital 4 83,175 83,175 83,175
Share premium 840,314 840,314 840,314
Merger reserve 252,506 252,506 252,506
Foreign exchange reserve (955,609) 2,823 3,990
Retained earnings (4,235,760)(2,811,655) (3,618,003)
(4,015,374)(1,632,837) (2,438,018)
Non-current liabilities
Deferred income 1,354 4,604 1,354
Loan 7 50,000 - -
Convertible loan notes 7 450,000 367,500 367,500
Borrowings 7 6,528,686 4,766,931 4,737,338
7,030,040 5,139,035 5,106,192
Current liabilities
Trade and other payables 802,788 646,598 661,765
Total liabilities 7,832,828 5,785,633 5,767,957
Total equity and liabilities 3,817,454 4,152,796 3,329,939
CONSOLIDATED PROFIT AND LOSS ACCOUNT
HALF YEAR TO 31 DECEMBER 2008
6 months 6 months Year
ended ended ended
31/12/08 31/12/07 30/06/08
Notes GBP GBP GBP
Turnover
Sales 20,308 535,919 575,100
Executive producer fees 5,546 - -
Commissions 75,317 2,647 276,185
Recoverable project costs 111,346 126,720 312,209
Other income 10,825 787 2,676
_______ _______ _______
223,342 666,073 1,166,170
Recoverable expenses (111,346) (126,720) (312,209)
Other external charges (200,201) (312,247) (661,862)
Staff costs (123,716) (228,572) (295,341)
Depreciation (1,141) (6,602) (13,203)
Amortisation of film assets (11,215) (298,409) (517,146)
_______ _______ _______
Operating loss (224,277) (306,477) (633,591)
Finance costs (402,421) (412,997) (785,558)
Income from investments 8,941 22,663 39,308
_______ _______ _______
Loss before tax (617,757) (696,811) (1,379,841)
Income tax expense - - -
_______ _______ _______
Loss for the year from (617,757) (696,811) (1,379,841)
continuing operations
Earnings per share
Basic 3 (0.74 pence)(0.84 pence)(1.66 pence)
Diluted 3 (0.74 pence)(0.84 pence)(1.66 pence)
CONSOLIDATED CASH FLOW STATEMENT
HALF YEAR TO 31 DECEMBER 2008
Note 6 months 6 months Year
ended ended ended
31/12/08 31/12/07 30/06/08
GBP GBP GBP
Cash flows from operating
activities
Cash from (used in) operating 5 266,915 547,844 692,169
activities
Interest paid (402,421) (412,997) (785,558)
Net cash (used in) operating (135,506) (134,847) (93,389)
activities
Cash flows from investing
activities
Purchases of property, plant (2,510) (1,775) (1,775)
and equipment
Purchase of film assets - - -
Investment in associated - - (75,120)
companies
Interest received 8,941 22,663 39,308
Net cash from (used in) 6,431 20,888 (37,587)
investing activities
Cash flows from financing
activities
Net proceeds on financing of - - -
film asset revenues
Repayment of loan - (17,075) (54,161)
Proceeds on issue of 132,500 175,000 175,000
convertible loan notes
Net cash from financing 132,500 157,925 120,839
activities
Net increase in cash and cash 3,425 313,660 (10,137)
equivalents
Cash and cash equivalents at 800,242 810,379 810,379
beginning of period
Cash and cash equivalents at 803,667 1,124,039 800,242
end of period
Bank balances and cash 803,667 1,124,039 800,242
NOTES TO THE ACCOUNTS
1. Accounting policies
The principal accounting policies are as set out in the June 2008 annual report.
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. Status of financial information
The interim results for the 6 months ended 31 December 2008 and the 6 months
ended 31 December 2007 are unaudited and do not constitute statutory accounts
within the meaning of section 240 Companies Act 1985. The figures for the year
ended 30 June 2008 have been extracted from the audited annual accounts.
3. Earnings per share
Earnings 6 months 6 months
ended ended Year ended
31/12/08 31/12/07 30/06/08
GBP GBP GBP
Earnings for the purpose of (617,757) (696,811) (1,379,841)
basic earnings per share
(net loss for the year)
Earnings for the purpose of (617,757) (696,811) (1,379,841)
diluted earnings per share
Number of shares 6 months 6 months
ended ended Year ended
31/12/08 31/12/07 30/06/08
Weighted average number of 83,175,000 83,175,000 83,175,000
ordinary shares for the
purposes of basic earnings
per share
Weighted average number of 83,175,000 83,175,000 83,175,000
ordinary shares for the
purposes of diluted
earnings per share
4. Share capital
6 months 6 months
ended ended Year ended
31/12/08 31/12/07 30/06/08
GBP GBP GBP
Authorised:
Ordinary shares of GBP0.001 200,000 200,000 200,000
each
Issued and fully paid:
Ordinary shares of GBP0.001 83,175 83,175 83,175
each
Reported at beginning of 83,175 83,175 83,175
period
Reported at period end 83,175 83,175 83,175
5. Note to the cash flow statement
6 months 6 months
ended ended Year ended
31/12/08 31/12/07 30/06/08
GBP GBP GBP
Loss for the year (617,757) (696,811) (1,379,841)
Adjustment for:
- Finance credits 393,480 390,334 746,250
- Depreciation 1,141 6,602 13,203
- Amortisation 11,215 298,409 517,146
- Movements in foreign 215,227
exchange reserve
Changes in working capital:
- Charge for share options - - (113,824)
issued during the year
- Increase in trade and 122,586 568,442 916,450
other receivables
- Increase in trade and 141,023 (19,132) (7,215)
other payables
Cash from (used in) 266,915 547,844 692,169
operations
6. Financial assets
6 months 6 months
ended ended Year ended
3 1/12/08 31/12/07 30/06/08
GBP GBP GBP
Available-for-sale
financial assets
Beginning of the period 1,790,335 2,228,719 2,228,719
Additions - - 75,221
Amortisation (13,450) (293,933) (518,568)
Movements due to foreign 618,758 - 4,963
exchange
End of year 2,395,643 1,934,786 1,790,335
Available-for-sale financial assets include the following:
6 months 6 months
ended ended Year ended
31/12/08 31/12/07 30/06/08
GBP GBP GBP
Unlisted securities:
Investment in Audley Films 100 100 100
Ltd
Investment in film library 2,244,926 1,859,289 1,639,618
Investment in Radical 150,617 75,397 150,617
Publishing
2,395,643 1,934,786 1,790,335
Available-for-sale financial assets are denominated in the following currencies:
6 months 6 months
ended ended Year ended
31/12/08 31/12/07 30/06/08
GBP GBP GBP
Pound 100 100 100
United States Dollar 2,395,543 1,934,686 1,790,235
2,395,643 1,934,786 1,790,335
7. Borrowings
6 months 6 months
ended ended Year ended
31/12/08 31/12/07 30/06/08
GBP GBP GBP
Loan 50,000 - -
Convertible loan notes 450,000 367,500 367,500
Loan note for film library 6,528,686 4,766,931 4,737,338
7,028,686 5,134,431 5,104,838
The new convertible loan notes totalled GBP450,000 and are convertible into a
maximum of 10,000,000 new ordinary shares in the Company at any time until 31
December 2011. Interest is payable at 8% per annum.
Contact details:
Gary Smith, Chairman and Chief Executive
Intandem Films PLC
Tel: +44 (0) 20 7851 3800
Fax: +44 (0) 207 851 3830
Email: info@intandemfilms.com
www.intandemfilms.com
James Caithie
Director, Dowgate Capital Advisers
Tel: +44 (0) 20 7492 4777
Fax: +44 (0) 20 7492 4774
Ruari McGirr, Broker
St Helen's Capital
Tel: +44 (0) 20 7628 5582
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