TIDMIFM
22 December 2009
INTANDEM FILMS PLC
("Intandem", the "Company" or the "Group")
Results for the Year Ended 30 June 2009
Intandem (AIM: IFM), a London based international film group, today announced
its preliminary results for the year ending 30 June 2009.
Highlights:
· Elimination of overdraft
· Staff costs down 50%
· Directors' remuneration reduced by 25%
· Sale of equity stake in Radical Publishing raising GBP450,000 in cash
· Appointment by US Financial institution to represent library of 13 new films
· Advanced stage negotiations for non-cash settlement of GBP5.7milliom loan
Gary Smith, CEO of Intandem, commented:
"I am pleased to report that, despite market turmoil during the period, the
actions taken by your Board, particularly post the year end, have resulted in a
substantial reduction of overheads, an increase in the number of films
represented and the elimination of the bank overdraft. The Company is also in
advanced negotiations to eliminate a loan to the Company of GBP5.7million.
"Since the year end, Intandem has been appointed by a US based financial
institution to represent thirteen new films. These include `Johnny Mnemonic'
(Keanu Reeves), `I'll Sleep When I'm Dead' (Clive Owen) and `Nine and a Half
Weeks 2' (Mickey Rourke). This appointment is a clear indication of the high
professional standing with which we are held by members of the US financial
community.
"We are entering the new financial year in a much stronger position and look to
the future with confidence - thank you to all our staff who have worked hard to
get us here."
--ENDS--
Intandem Films plc Tel: 020 7851 3800
Gary Smith, Chief Executive
Broker and Nominated Adviser Tel: 020 7448 4400
Antony Legge, Astaire Securities PLC
Financial PR
Bishopsgate Communications Tel: 020 7652 3350
Robyn Samuelson/Siobhra Murphy
intandem@bishopsgatecommunications.com
The Report and Accounts for the Year to 30 June 2009, including the notice of
the Company's annual general meeting to be held at 114-116 Charing Cross Road,
London, WC2H 0JR on 28 January 2010 at 12:00 noon, will be posted to
shareholders on the 23 December 2009 and will be available from the Company's
website www.intandemfilms.com.
Chairman's Statement
I am pleased to report that, despite market turmoil during the period, the
actions taken by your Board, particularly post the year end have resulted in a
substantial reduction of overheads, an increase in the number of films
represented and the elimination of the bank overdraft. The Company is also in
advanced negotiations to eliminate a loan to the Company of GBP5.7million.
Intandem is in a much stronger financial position coming out of the recession
which the Board believes will benefit the Company as it builds its portfolio of
films over the next 12 months.
Results
Turnover reduced from GBP1,166,000 to GBP616,410 primarily as a result of the
reduction of GBP365,000 in library sales. Operating losses increased from GBP633,591
to GBP991,593 caused by the reduction in turnover and non-cash exchange rate
losses of over GBP300,000 as a result in the change in the sterling value of its
US loan. The employment costs actually reduced by almost GBP100,000 but there was
a GBP120,000 swing in the accounting cost of share option schemes. Pre-tax loss
rose to GBP1,906,679 from GBP1.38 million as the interest charges on the dollar loan
increased as a result of weaker sterling. This resulted in a loss per share of
2.29p compared with 1.66p in 2008.
Action taken by the Board during the year and post the year end
There were four main areas on which the Directors focussed - these include
reducing running costs, increasing working capital, increasing the number of
films represented by Intandem and eliminating the outstanding loan - all of
which are detailed below.
Reduction in running costs
The skill in reducing overheads is to achieve significant results in such a way
that the Company does not lose its efficiency. Intandem is primarily a growth
company and the Board has consistently remained focussed on continuing to bring
quality films into the Company for representation.
At the same time, we examined closely the total cost base, ranging from
Directors' and staff costs, office overheads and professional advisors. As a
result, Directors' cash costs were reduced by 25% and the staff costs are
running at 50% of last years' cost as a result of redundancies and salary
reductions. The same skill level remains within the Company.
After the year end, the Company's office lease came up for renewal and we moved
office in November 2009 at an annual cost saving of GBP30,000 (excluding an eight
month rent free period).
Overall approximately GBP300,000 has been taken out of the cost base since the
start of last financial year and this should be reflected in the operating
results for the current financial year.
Increase in working capital
The primary goal was to eliminate the bank overdraft on the basis that banks
were under pressure and when a company is at the mercy of banks, it increases
its risk profile. Therefore the Board took the decision to sell the Company's
equity stake in the Los Angeles based comic book publisher, Radical Publishing
Inc in September 2009. It received approximatelyGBP450,000 cash for the shares,
representing a profit of approximately GBP300,000 which will be reflected in the
current year's accounts.
The Board is pleased to report that the Company has never breached its overdraft
facility and has now eliminated the facility altogether.
Chairman's Statement
Increase the number of films represented
Intandem earns fees from representing films and commissions on all sales
generated. During the year to 30 June 2009, only two new films commenced
production although the Company has been appointed to represent many other
films. The problem in the year to June was the tightening of financing sources
for film production as a result of the credit crunch which meant that the
production of films has been delayed. This is an industry-wide problem but there
are signs that the sources of funds for film production are starting to
increase.
I am also pleased to report that since the year end, Intandem has been appointed
by a US based financial institution to represent a library of thirteen films
which were previously managed by another film company. The films include Johnny
Mnemonic (Keanu Reeves) and I'll Sleep When I'm Dead (Clive Owen). This
appointment is a clear indicator of the high professional standing with which
Intandem is held by members of the US financial community.
The Company has been appointed to represent some large US based films for which
it is negotiating production finance. These include Your Perfect Angel, a $25
million romantic comedy to be directed by Donald Petrie (Miss Congeniality,
starring Sandra Bullock, and How to Lose a Guy in Ten Days, starring Kate
Hudson) and produced by Bill Mechanic (ex President of Twentieth Century Fox)
and Arnold Rifkin (former partner of Bruce Willis).
Elimination of loan
In 2006, the Company took out a loan from a US based financial institution to
acquire five films at a cost of $9.63 million. The loan was secured against the
revenues of the five films and an interest reserve was established to cover the
estimated interest cost for the three year term of the loan. The interest on the
loan, which has been 15% for the last two years, had to be charged to the
Group's profit and loss account, even though it did not affect the Group's
operating cash position as it was paid from the interest reserve.
The Board has examined several options to repay the loan and I am pleased to
report we are currently in advanced negotiations with the financial institution
for a non-cash settlement of this debt. A further announcement will be made to
shareholders in due course.
Summary
While the losses reported in these financial statements are disappointing, I am
confident about what the future holds for Intandem. The Board has taken a
prudent view in preparing the accounts and has provided for all possible
doubtful debts and accrued for any deferred salary costs. Many of the costs in
these accounts are non-recurring, such as the high interest cost on the US
dollar loan.
I am very satisfied with the actions we have taken during the course of these
very difficult global trading conditions; I am confident these will result in a
much stronger set of accounts starting with the six months ending 31 December
2009.
I would like to thank all my Board colleagues and members of staff, both past
and present, for their excellent attitude, hard work and total belief in our
strategy. I look forward to reporting improved results for the next financial
period.
Shareholders can follow the Company's progress via its website at
www.intandemfilms.com.
Gary Smith
Chairman
21 December 2009.
Consolidated and Company Balance Sheet
as at 30 June 2009
Group Company
2009 2008 2009 2008
Notes GBP GBP GBP GBP
Assets
Non-current assets
Property, plant and equipment 10 3,237 3,010 - -
Investment in subsidiaries 11 - - 223,152 223,152
Financial assets 12 2,006,676 1,790,335 - -
Intercompany loan - - 1,139,167 961,120
__________ __________ __________ __________
2,009,913 1,793,345 1,362,319 1,184,272
Current assets
Trade receivables 13 257,212 330,774 - -
Other receivables 13 237,076 405,578 1 1
Cash and cash equivalents 13 314,017 800,242 - -
__________ __________ __________ __________
808,305 1,536,594 1 1
__________ __________ __________ __________
Total assets 2,818,218 3,329,939 1,362,320 1,184,273
__________ __________ __________ __________
__________ __________ __________ __________
Equity and liabilities
Capital and reserves
Share capital 83,175 83,175 83,175 83,175
Share premium 840,314 840,314 840,314 840,314
Merger reserve 252,506 252,506 - -
Foreign exchange reserve 18,367 3,990 - -
Retained earnings (5,780,672) (3,618,003) (255,396) (197,292)
__________ __________ __________ __________
(4,586,310) (2,438,018) 668,093 726,197
Non-current liabilities
Deferred income - 1,354 - -
Intercompany loan - - 157,876 157,876
Convertible loan notes 15 450,000 367,500 450,000 292,500
Loan 181,785 50,000 -
Loan note 16 5,722,085 4,737,338 - -
__________ __________ __________ __________
6,353,870 5,106,192 657,876 450,376
Current liabilities
Trade and other payables 18 1,050,658 661,765 36,351 7,700
__________ __________ __________ __________
1,050,658 661,765 36,351 7,700
__________ __________ __________ __________
Total liabilities 7,404,528 5,767,957 694,227 458,076
__________ __________ __________ __________
__________ __________ __________ __________
Total equity and liabilities 2,818,218 3,329,939 1,362,320 1,184,273
__________ __________ __________ __________
__________ __________ __________ __________
The financial statements were approved by the Board of Directors and signed on
its behalf on 21 December 2009.
Consolidated Income Statement
for the year ended 30 June 2009
Group
2009 2008
Notes GBP GBP
Revenue
Sales 210,664 575,100
Executive producer fees 59,788 -
Commissions 113,586 276,185
Recoverable project costs 210,434 312,209
Other income 21,938 2,676
________ ________
616,410 1,166,170
Cost of sales
Recoverable expenses (210,434) (312,209)
Amortisation of film asset (126,156) (517,146)
________ ________
Gross profit 279,820 336,815
Overheads
Staff costs 4 (329,638) (295,341)
Depreciation (2,283) (13,203)
Other external charges (939,492) (661,862)
________ ________
Loss from operations 5 (991,593) (633,591)
Finance costs 6 (925,407) (785,558)
Interest income 7 10,321 39,308
________ ________
Loss before tax (1,906,679)(1,379,841)
Income tax expense 8 - -
________ ________
Loss for the year from (1,906,679)(1,379,841)
continuing operations ________ ________
________ ________
Loss per share 9
Basic (2.29pence)(1.66pence)
Diluted (2.29pence)(1.66pence)
All the amounts derive from continuing operations.
Consolidated and Company Statement of Changes in Equity
for the year ended 30 June 2009
Group Share Share Merg Foreign Retained
Capital Premium Reserve Exchange Earnings Total
Reserve
GBP GBP GBP GBP GBP GBP
Balance as at 1 July 2007 83,175 840,314 252,506 8,791 (2,124,338) (939,552)
Changes in equity for the
year to 30 June 2008
Exchange differences on - - - (4,801) - (4,801)
translation of foreign
currency balances
Credit on issue of share options - - - - (113,824) (113,824)
Loss for the year - - - - (1,379,841) (1,379,841)
_____________________________________________________________________
Total recognised income and - - - (4,801) (1,493,665 (1,498,466)
expense for the year _____________________________________________________________________
Balance as at 30 June 2008 83,175 840,314 252,506 3,990 (3,618,003) (2,438,018)
Changes in equity for the
year to 30 June 2009
Exchange differences on - - - (247,207) - (247,207)
translation of foreign
currency balances
Credit on issue of share - - - - 5,594 5,594
options
Loss for the year - - - -(1,906,679) (1,906,679)
_____________________________________________________________________
Total recognised income and - - - (247,207)(1,901,085) (2,148,292)
expense for the year _____________________________________________________________________
Balance as at 30 June 2009 83,175 840,314 252,506 (243,217)(5,519,088) (4,586,310)
_____________________________________________________________________
_____________________________________________________________________
Company Share Share Retained
Capital Premium Earnings Total
GBP GBP GBP GBP
Balance as at 1 July 2007 83,175 840,314 (149,775) 773,714
Changes in equity for the
year to 30 June 2008
Loss for the year - - (47,517) (47,517)
__________________________________________
Total recognised income and - - (47,517) (47,517)
expense for the year __________________________________________
Balance as at 30 June 2008 83,175 840,314 (197,292) 726,197
Changes in equity for the
year to 30 June 2009
Loss for the year - - (58,104) (58,104)
__________________________________________
Total recognised income and - - (58,104) (58,104)
expense for the year __________________________________________
Balance as at 30 June 2009 83,175 840,314 (255,396) 668,093
__________________________________________
__________________________________________
Consolidated and Company Cash Flow Statement
for the year ended 30 June 2009
Group Company
2009 2008 2009 2008
Notes GBP GBP GBP GBP
Cash flows from operating
activities
Cash (used in)/from 21 167,086 692,169 (178,849) (84,600)
operating activities
Interest paid (925,407) (785,558) (28,651) (15,400)
___________________________________________
(758,321) (93,389) (207,500) (100,000)
Cash flows from investing
activities
Purchases of property, (2,510) (1,775) - -
plant and equipment
Investment in film assets - - - -
Investment in associate company - (75,120) - -
Investment in subsidiary company - - - -
Interest received 10,321 39,308 - -
___________________________________________
Net cash (used in)/from 7,811 (37,587) - -
investing activities
Cash flows from financing
activities
Net proceeds from financing 16 - - - -
of film assets
Repayment of loan - (54,161) - -
Issue of new loan 181,785
Proceeds on issue of 15 82,500 175,000 - -
convertible loan notes ___________________________________________
Net cash from financing 264,285 120,839 - -
activities
Net increase/(decrease) in (486,225) (10,137) - -
cash and cash equivalents
Cash and cash equivalents 800,242 810,379 - -
at beginning of year ___________________________________________
Cash and cash equivalents 314,017 800,242 - -
at end of year ___________________________________________
___________________________________________
Bank balances and cash 314,017 800,242 - -
___________________________________________
___________________________________________
Notes to the Consolidated Financial Statements
for the year ended 30 June 2009
1. 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, 2006 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.
Accordingly, the directors wish to draw attention to the nature of the
production of feature films, which is a project related business, and are
therefore prone to postponements and cancellations of planned projects. The
cash forecast of the group builds upon the premise of a certain number of
production starts in the upcoming 12 months and therefore the ability of the
group to generate income and cash flows is dependant on these projects coming
to fruition. Similarly, the future income streams of recently completed
films cannot be always be reliably ascertained at the Balance Sheet date, but
management has a reasonable expectation that the group will have adequate
resources to continue its operations for the foreseeable future and therefore
provide the necessary support to the company. For this reason, the Directors
have determined that the financial statements should continue to be prepared
on the going concern basis.
2. 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,
profitability 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 flow 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.
3. Segmental reporting
The Group is organised into four main business segments: Film sales,
Executive producer fees, Sales commission and Recoverable project costs.
Primary reporting format - business segments
2009 Film Executive Sales Recoverable Total
sales producer commissions project Unallocated Group
fees cost
GBP GBP GBP GBP GBP GBP
Revenue 210,664 59,788 113,586 210,434 21,938 616,410
Operating 84,508 59,788 113,586 - (1,249,473) (991,593)
profit/(loss)
Interest expense - - - - (925,407) (925,407)
Interest income - - - - 10,321 10,321
Profit/(loss) before tax 84,508 59,788 113,586 - (2,164,559)(1,906,679)
Income tax - - - - - -
Profit/(loss) for the year 84,508 59,788 113,586 - (2,164,559)(1,906,679)
from continuing operations _________________________________________________________________________
Segment assets 2,818,218 2,818,218
_________________________________________________________________________
Segment liabilities 1,050,658 1,050,658
_________________________________________________________________________
Other segment items:
Capital expenditure 2,510 2,510
_________________________________________________________________________
Depreciation 2,283 2,283
_________________________________________________________________________
Other non cash expenses 5,594 5,594
_________________________________________________________________________
_________________________________________________________________________
Primary reporting format - business segments
2008 Film Executive Sales Recoverable Total
sales producer commissions project Unallocated Group
fees cost
GBP GBP GBP GBP GBP GBP
Revenue 575,100 - 276,185 312,209 2,676 1,166,170
Operating 257,954 - 276,185 - (1,167,730) (633,591)
profit/(loss)
Interest - - - - (785,558) (785,558)
expense
Interest - - - - 39,308 39,308
income
Profit/(loss) 257,954 - 276,185 - (1,913,980)(1,379,841)
before tax
Income tax - - - - - -
Profit/(loss) 257,954 - 276,185 - (1,913,980)(1,379,841)
for the year
from continuing
operations ___________________________________________________________________________
Segment assets 3,529,939 3,529,939
___________________________________________________________________________
Segment 661,765 661,765
liabilities
Other segment items:
Capital expenditure 1,775 1,775
___________________________________________________________________________
Depreciation 13,203 13,203
Other non cash expenses - -
___________________________________________________________________________
___________________________________________________________________________
Unallocated costs represent corporate expenses.
Segment assets include property, plant and equipment, receivables and operating cash.
Segment liabilities comprise operating liabilities and exclude corporate borrowings.
Capital expenditure comprises additions to property, plant and equipment.
Secondary reporting format - geographic segments
The Group manages its geographic segments on a global basis. The UK is the
home country of the parent.
2009 2008
GBP GBP
Revenue 616,410 1,166,170
Assets 2,818,218 3,529,939
Capital expenditure 2,510 1,775
____________________
____________________
4. Staff costs
Staff costs for the Group during the year:
2009 2008
GBP GBP
Wages and salaries 309,428 368,297
Social security costs 14,616 40,868
Cost of employee share schemes 5,594 (113,824)
____________________
Total staff costs 329,638 295,341
____________________
____________________
The average number of people (including executive directors) employed by the
Group during the year was:
2009 2008
No. No.
Head office and administration 9 10
____________________
____________________
5. Loss from operations
Loss from operations has been arrived at after charging:
2009 2008
GBP GBP
Depreciation 2,283 13,203
Auditors' remuneration
Audit services 13,927 16,424
Other services 895 989
____________________
____________________
The other services comprises tax compliance work (year ended 30 June 2008:
tax compliance work).
6. Finance costs
2009 2008
GBP GBP
Interest paid on bank overdrafts and 925,407 785,558
loans ____________________
____________________
7. Interest income
2009 2008
GBP GBP
Interest on bank deposits 10,321 39,308
8. Income tax expense
2009 2008
GBP GBP
Current tax - -
Deferred tax (note 17) - -
____________________
Taxation attributable to the Company - -
and its subsidiaries ____________________
____________________
Domestic income tax is calculated at 30 per cent of the estimated assessable
profit for the year.
The charge for the year can be reconciled to the profit per the income
statement as follows.
Group 2009 % 2008 %
GBP GBP
Loss before tax (1,906,679) (1,379,841)
Tax on the domestic income tax (572,004) 30 (413,952) 30
rate of 30% (2008:30%)
Tax effect of:
- expenses that are not 4,495 3,133
deductible in determining
taxable profit
- charge in respect of options 1,678 -
and warrants issued during the
year
- losses carried forward to 565,831 410,819
future years _________________________________
Tax expense and effective tax - - - -
rate for the year _________________________________
9. Loss per share
2009 2008
GBP GBP
Loss for the purpose of basic loss per share (1,906,679) (1,379,841)
Loss for the purpose of diluted loss per share (1,906,679) (1,379,841)
__________________________
__________________________
Number of shares 2009 2008
No. No.
Weighted average number of ordinary shares:
- for the purposes of basic loss per share 83,175,000 83,175,000
- for the purposes of diluted loss per share 83,175,000 83,175,000
__________________________
__________________________
10.Property, plant and equipment
Group Fixtures Office
and equipment Total
fittings
GBP GBP GBP
Cost
At 1 July 2008 39,825 12,989 52,814
Additions - 2,510 2,510
Disposals - - -
___________________________
At 30 June 2009 39,825 15,499 55,324
___________________________
___________________________
Accumulated depreciation
At 1 July 2008 38,929 10,875 49,804
Charge for the year 709 1,574 2,283
Disposals - - -
___________________________
At 30 June 2009 39,638 12,449 52,087
___________________________
___________________________
Carrying amount
At 30 June 2009 187 3,050 3,237
___________________________
___________________________
At 1 July 2008 896 2,114 3,010
___________________________
___________________________
11.Investments in subsidiaries
Group Company
2009 2008 2009 2008
GBP GBP GBP GBP
Shares in subsidiary
undertakings
At 1 July - - 223,152 223,152
Additions - - - -
__________________________________
At 30 June - - 223,152 223,152
__________________________________
__________________________________
Details of the Company's subsidiaries at 30 June 2009 are as follows:
Name of Place of Proportion Proportion Principal
subsidiary incorporation of ownership of voting activity
and interest power
operation held
Intandem Pictures Ltd England & Wales 100 100 Film sales & marketing
Intandem Entertainment Ltd England & Wales 100 100 Dormant company
Intandem Film fund 1 LLC USA 100 100 Film rights ownership
12.Financial Assets
Group Company
2009 2008 2009 2008
GBP GBP GBP GBP
Available-for-sale 150,717 150,717 - -
At fair value through profit and loss 1,855,959 1,639,618 - -
_____________________________________________
2,006,676 1,790,335 - -
_____________________________________________
_____________________________________________
Available-for-sale financial assets consist of investment in unquoted shares,
which by their nature have no fixed maturity date or coupon rate.
Financial assets held at fair value through profit and loss comprise
ownership of films, all of which are denominated in US dollars.
Post Balance Sheet Event
Since 30 June 2009, the above available-for-sale financial assets include a 10%
stake in Radical Publishing Inc which makes up the majority of available-for-sale
financial assets and was disposed on 11 September 2009 for a total consideration
of $750,000. The stake was originally acquired in two equal instalments in July
2007 and January 2008 for a total cost of GBP150,617 ($300,000). As a result the
disposal represents a profit of approximately GBP300,000 on the investment.
Intandem will continue its close working relationship with Radical and is
developing a number of films based on its intellectual property.
13.Other financial assets
Group
2009 2008
GBP GBP
Trade receivables 257,212 330,774
____________________
____________________
Other receivables:
Recoverable sales and marketing expenses 82,746 231,848
Pre production advances 89,340 87,429
Rent deposit 34,300 34,300
Prepayments 20,314 20,314
Other debtors 10,376 31,687
____________________
237,076 405,578
____________________
____________________
The directors consider that the carrying amount of trade and other
receivables approximates their fair value.
Bank balances and cash comprise cash and short-term deposits held by the
Group treasury function. The carrying amount of these assets approximates
their fair value.
Credit risk
The Group's credit risk is primarily attributable to its trade receivables.
The amounts presented in the balance sheet are net of any allowances for
doubtful receivables, estimated by the Group's management based on prior
experience and the current economic environment.
The credit risk on liquid funds is limited because the counterparties are
banks with high credit ratings assigned by international credit-rating
agencies.
14.Share-based payment
At 30 June 2009, options over 16,100,000 ordinary shares under the Intandem
Enterprise Management Incentive (EMI) Plan were outstanding.
Date At Granted Exercised/ Forfeits At Exercise/ Exercise/
of 1 July vested 30 June Share price Vesting
grant 2008 2009 date
From To
Options
01.05.09 - 16,100,000 - - 16,100,000 0.84p 01.05.12 01.05.19
______________________________________________________________________________________________________
- 16,100,000 - - 16,100,000
______________________________________________________________________________________________________
______________________________________________________________________________________________________
Employee share options
Options over shares in the Company are awarded to eligible employees and
directors of the Group. There are no employees of the Company, Intandem Films
Plc, and any share option cost is charged to Intandem Pictures Limited.
The options exercise period commences on the third anniversary of the date of
the grant of the option and ends on the day which is the day before the tenth
such anniversary. Exceptionally, and subject to the discretion of the Board,
options may be exercised earlier than three years following grant on the
cessation of the option holder's employment.
For options granted on 01 May 2009 no option may be exercised unless the
profit before tax as disclosed in the published consolidated accounts for any
one of the financial years ending 30 June 2010, 30 June 2011, 30 June 2012,
30 June 2013 is greater than GBPNIL.
The estimated fair value of each option granted in the EMI share option plan
was calculated by applying the Black-Scholes option pricing model. The
assumptions used in the calculation were as follows:
Date of grant 01 May 2009
Share price at grant date 0.84 pence
Exercise price 0.84 pence
Number of employees 9
Shares under option 16,100,000
Expected volatility 169%
Expected dividend Nil
Contractual life 10 years
Risk free rate 1%
Estimated fair value of each option GBP0.008339
___________________________________________________
___________________________________________________
Further details of the share option plan are as follows:
Group 2009 2008
Number Weighted Number Weighted
of options average of options average
price GBP price GBP
Outstanding at the - - 8,950,000 0.0387
start of the period
Granted during the period 16,100,000 0.0084 - -
Forfeited - - (8,950,000) 0.0387
Exercised - - - -
Outstanding at the 16,100,000 0.0387 - -
end of the period
Exercisable at the - - - -
end of the period ___________________________________________
___________________________________________
Expenses charged to the profit and loss in the year in respect of share based
payments are as follows:
Group Company
2009 2008 2009 2008
GBP GBP GBP GBP
Expenses arising from:
- share option plans 5,594 60,514 - -
- Reversal of lapsed share options - (174,338) - -
- issue of share option warrants - - - -
___________________________________
___________________________________
15.Convertible loan notes
During the year ended 30 June 2009 the Company repaid all convertible loan
notes issued previously and has issued new convertible loan notes of GBP450,000
of unsecured, non-transferable convertible loan notes to one investor, the
details of which are as follows:
- the loan notes may be irrevocably converted in full into 10,000,000 new
ordinary shares of the Company, or a lower amount pro rata at a price of 4.5
pence, at any time other than the Company's close periods in each year until
31 December 2011.
- interest is payable on the loan notes at 6% per annum (was originally 8%
until 1 December 2008).
- any new shares allotted on conversion will rank pari passu with existing
ordinary shares in issue other than for dividends declared and with a record
date prior to conversion.
- at any time after 31 December 2009, the investor may request repayment of
all or part of the loan together with any interest due, upon giving one
complete calendar month's notice in writing to the Company.
- in the event that part of the loan is repaid by the Company, the investor
may still elect to convert the outstanding balance into new ordinary shares
and the number of new shares issued on conversion will reduce pro-rata from
10,000,000.
- the Company may repay the loan at any time after 31 December 2011 upon
giving one complete calendar month's notice in writing to the investor.
16.Loan notes
On 21 November 2006, the Group issued loan notes of $7.2 million secured
against the revenues of four new films. After deducting the costs of the
transaction and the cost of the four films, cash released to the Group was
$2.90 million of which $1.08 million was retained in an interest reserve
account and $1.75 million was available to the Group. No corporate guarantees
have been given in respect of repayment of the loan notes other than from the
revenues from the four films acquired.
On 22 January 2007, the Group issued loan notes of $2.43 million secured
against the revenues of one new film. After deducting the costs of the
transaction and the cost of the film, cash released to the Group was $0.79
million of which $0.36 million was retained in an interest reserve account
and $0.43 million was available to the Group. No corporate guarantees have
been given in respect of repayment of the loan notes other than from the
revenues from the film acquired.
17.Deferred tax
At the balance sheet date, the Group has unused tax losses of GBP1,591,697
available for offset against future profits. No deferred tax assets have been
recognised in respect of this amount due to the unpredictability of future
profit streams.
18.Other financial liabilities
Trade and other payables principally comprise amounts outstanding for
purchases and ongoing costs.
The directors consider that the carrying amount of trade payables
approximates to their fair value.
19. Operating lease commitments
Lessee activity
Group Company
2009 2008 2009 2008
GBP GBP GBP GBP
Minimum lease payments 65,881 64,342 - -
under operating leases
recognised in loss for
the period ________________________________
________________________________
At the balance sheet date, the Group had outstanding commitments under non-
cancellable leases, which fall due as follows.
Group Company
2009 2008 2009 2008
GBP GBP GBP GBP
Within one year 42,145 61,750 - -
In the second to fifth 6,885 36,637 - -
years inclusive
After five years - - - -
_________________________________
49,030 98,387 - -
_________________________________
_________________________________
Operating lease payments represent rentals payable by the Group for its
office property and equipment.
The property rental lease is for a five year term and rentals are fixed for
the term of the lease. The initial rent free period is amortised on a
straight line basis over the full term of the lease.
The lease terms on office equipment is for three years and rentals are fixed
for the term of the lease.
20.Related party transactions
Directors' and executives' remuneration
Remuneration paid to directors and other members of key management during the
year was as follows:
Group Company
2009 2008 2009 2008
GBP GBP GBP GBP
Salaries 162,505 261,466 11,200 11,200
Consultancy fees 132,533 171,850 13,200 13,200
________________________________
________________________________
Gary Smith, a director of the Company supplied services to the business
through his company, Edge Venture Capital Limited. The total value of his
services charged to the profit and loss account for the period ended 30 June
2009 amounted to GBP119,333 (year ended 30 June 2008: GBP142,650).
John James, a non-executive director of the Company supplied services to the
business. The total value of his services charged to the profit and loss
account for the period ended 30 June 2009 amounted to GBP13,200 (year ended 30
June 2008: GBP13,200).
All intergroup transactions between group enterprises were eliminated on
consolidation.
21. Note to the cash flow statement
Group 2009 2008
GBP GBP
Loss for the year (1,906,679) (1,379,841)
Adjustments for:
- Finance expense/(income) 915,086 746,250
- Depreciation 2,283 13,203
- Amortisation of financial asset held for resale 126,156 517,146
- Movement in foreign exchange reserve 395,043 -
Changes in working capital:
- Charge for share options/warrants issued during the year 5,594 (113,824)
- Increase in trade and other receivables 242,064 916,450
- Increase/(decrease) in trade and other payables 387,539 (7,215)
__________________________________________________________________________________
Cash used in operations 167,086 692,169
__________________________________________________________________________________
__________________________________________________________________________________
Company 2009 2008
GBP GBP
Loss for the year (58,104) (47,517)
Adjustments for:
- Finance expense/(income) 28,651 15,400
Changes in working capital:
- Increase in trade and other receivables (178,047) (60,183)
- Increase/(decrease) in trade and other payables 28,651 7,700
__________________________________________________________________________________
Cash used in operations (178,849) (84,600)
__________________________________________________________________________________
__________________________________________________________________________________
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