Quarterly Report Iii / 2005 Intertainment
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INT_QB3-05_D_11.05 30.11.2005 14:06 Uhr Seite 1 QUARTERLY REPORT III / 2005 INTERTAINMENT Aktiengesellschaft INT_QB3-05_Eng_12.05 05.12.2005 17:17 Uhr Seite 2 Key indicatores 2005 2004 SituationStatusbericht Report Konzern QuartalsberichtQuarterly Report II/2003 III/2005 (million euros) 1/1/-30/9/ 1/7/-30/9/ 1/1/-30/9/ 1/7/-30/9/ Sales 1.0 0.5 17.4 0.1 EBIT 4.3 -0.9 1.4 -1.8 Net result for the period 3.0 -1.0 0.9 -1.4 Earnings per share (euros) 0.26 -0.09 0.08 -0.12 Intertainment Group: Situation Report Average number of employees 10 13 for the first three quarters of 2005 Key data for the share A. Business performance After Intertainment returned to profit during the first six months, the Group pos- ISIN DE0006223605 As in the first six months of the current ted a loss of -1.0 million euros in the third Share capital 15,005,155.09 euros fiscal year, performance at the Intertain- quarter of 2005 following -1.4 million Number of shares 11,739,013 ment Group during the third quarter of euros in the equivalent prior period. How- 2005 continued to be determined to a con- ever, during the first nine months of 2005, Issue price 8/2/1999 36.00 euros siderable extent by the legal disputes in the Intertainment generated net income for after split (1:2) 18.00 euros USA. The arbitration proceedings between the period of 3.0 (prior period: 0.9) million Closing price* at 30/9/2005 1.32 euros INTERTAINMENT Licensing GmbH, and euros. Earnings before Interest and Taxes Comerica Bank and other parties consti- (EBIT) rose during the first nine months of High* for 1st nine-months 2005 (13/4/2005) 2.70 euros tuted the focus of attention between July 2005 to 4.3 million euros. During the pe- Low* for 1st nine-months 2005 (22/9/2005) 1.30 euros and September. riod from January to the end of September 2004, Intertainment still achieved an EBIT Shareholder structure at 30/9/2005 Rüdiger Baeres After the end of the third quarter, Intertain- of 1.4 million euros. Earnings per share (directly and undirectly) 52.87 % ment was also faced with a legal dispute in reached 0.26 euros following 0.08 euros in Management, Supervisory Board** 0.20 % Germany, because HypoVereinsbank filed the prior period. a partial claim within the scope of a procee- Family Baeres 6.21 % ding for documentary evidence against Exchange-rate effects were primarily res- Free float 40.72 % INTERTAINMENT Licensing GmbH and ponsible for the improvement in earnings, *Closing prices in Xetra electronic trading **exklusive Rüdiger Baeres Intertainment AG, seeking payment of 10 together with strict cost-savings implemen- million euros. The presiding judge in the ted within the Group in conjunction with Regional Court (Landgericht) Munich I has the reorganization measures carried out in set the date for handing down a decision 2004. The rise in the value of the US dollar Corporate calendar on December 22, 2005. If the judge hands compared with the euro on the balance- down a judgment in favor of HypoVereins- sheet date of September 30, 2005 meant Publication of Annual Report 2005 April 30, 2006 bank and also permits HypoVereinsbank to that Intertainment reported receivables Publication of 1st Quarterly Report 2006 May 31, 2006 enforce the judgment, Intertainment will from legal disputes amounting to 66.7 mil- Publication of 2nd Quarterly Report 2006 August 31, 2006 have to file for bankruptcy. lion euros. At the end of 2004, Intertain- Publication of 3rd Quarterly Report 2006 November 30, 2006 ment had reported 59.1 million euros. On the operating side, Intertainment was able to exploit key parts of the existing film library. In this connection, Intertainment Contact concluded a contract for the sale of Ger- man-language film rights relating to a com- prehensive package of films with the Tele- Intertainment AG Phone: +49 (0)89 21699-0 München Group. Investor Relations Fax: +49 (0)89 21699-11 Frauenplatz 7 www.intertainment.de D-80331 Munich E-Mail: [email protected] 3 INT_QB3-05_Eng_12.05 05.12.2005 17:17 Uhr Seite 4 Situation Report Situation Report Quarterly Report III/2005 Sales at Intertainment amounted to 1.0 judgment was entered, most of the parties 1. Suit filed by HypoVereinsbank (Landgericht) on October 21, 2005 and (prior period: 17.4) million euros during the found liable filed for insolvency pursuant to In mid-September 2005, HypoVereinsbank November 10, 2005. The presiding judge first nine months of 2005, of which 0.5 Chapter 11 of the US Bankruptcy Code. filed a partial claim for payment of 10 mil- set the date for handing down a decision (0.1) million euros resulted from the period This gave them protection against credi- lion euros against Intertainment AG and on Thursday, December 22, 2005. under review. Revenues for the quarter tors. During the period under review, the Intertainment Licensing GmbH in a procee- were generated by the sale of rights in post trial motions relating to the trial for ding for documentary evidence. The partial If the judge presiding in the proceeding for older film licenses. By contrast, revenues damages were being negotiated in court. claim relates to a residual loan amounting documentary evidence hands down a judg- during the prior year were largely attribu- One of the tactics of the opposing party to around 14 million euros taken out by ment in favor of HypoVereinsbank and also table to one-off effects arising from was to endeavor to have the court procee- Intertainment Licensing GmbH from HVB, permits HypoVereinsbank to enforce the exploitation of the license to the thriller dings rescheduled. for which Intertainment AG had given a judgment, Intertainment will have to file for “Twisted”, which reached the movie theat- surety. bankruptcy. res in 2004. The arbitration proceeding against Come- rica Bank and other parties in the USA was Intertainment presented its legal position in 2. Post Trial Motions in the case The liquidity position of Intertainment was being pursued in the discovery phase relation to the loan in the Annual Report of Franchise Pictures extremely tense at the end of the quarter. during the entire reporting period. The two 2004 and other documents. Intertainment In the context of the legal proceedings Liquid assets amounted to 0.1 million euros bond companies Film Finances and Film is assuming that HVB and Intertainment against Franchise Pictures, the production on September 30, 2005 following 1.7 mi- Finances (1998) Canada are no longer had made an arrangement to achieve final companies and Elie Samaha, both sides llion euros on December 31, 2004. The among the defendants in this case. Inter- legal clarity in relation to the settlement of filed post trial motions after the entry of the Board of Management of the Intertainment tainment reached an out-of-court settle- an alleged residual debt. The new arrange- judgment. A total of five petitions are pen- Group is assuming a positive forecast for ment with these parties in March 2005. ment provides for HVB issuing a debt wai- ding before the court, with only one petiti- the Group’s ability to continue as a going ver on a deferred debt basis. Within the on filed by INTERTAINMENT Licensing concern on the basis of a detailed financial This quarterly report will present the deve- scope of this deferred debt, the loan ori- GmbH. Elie Samaha and Glickson Invest- plan. The risks endangering the company’s lopments in the individual proceedings ginally due on June 30, 2004 was written ment LLC, also found liable, submitted a ability to continue as a going concern, during the first half yearnine months of down in the balance sheet for the business petition in April 2005 requesting that the which are referred to in item IV.9 in the 2005 as well as the events up to the con- year ending 2003 in the amount of 13.6 judgment should be declared null and void Notes to the Financial Statements, are clusion of this situation report. A compre- million euros and reported under reserves. and a complete retrial be ordered since new undiminished. hensive account of the details and back- A legal opinion was obtained for appraisal evidence against Intertainment had alle- ground of the legal disputes in the USA is of the facts. This formed the basis for the gedly come to light. Franchise Pictures and provided in the Management Report and assessment by the management of Inter- the production companies of Franchise Pic- B. Legal disputes the Notes to the Financial Statements for tainment. tures currently subject to insolvency pro- the business year 2004. ceedings and also found liable acceded to INTERTAINMENT Licensing GmbH has HVB had called in the loan a number of this petition. been involved in protracted legal disputes Intertainment has also been involved in a times, including June 30, 2004, despite the in the USA since the end of 2000. In this legal dispute in Germany with HypoVer- new arrangement. In the opinion of Inter- At a hearing on May 16, 2005, the presi- context the company won a damages suit einsbank since mid-September 2005. tainment, this was no longer possible on ding judge rejected all the post trial motions against Franchise Pictures, 16 production account of the new arrangement. in a written tentative ruling. She had not companies and the former CEO of Franch- reached a final decision on the petitions by ise Pictures, Elie Samaha, in the summer of Within the scope of the documentary pro- completion of this quarterly report.