Critical list: Handmade films

Set up by Beatle George Harrison in 1972, it produced characterful British movies such as The Life of Brian and Lock, Stock and Two Smoking Barrels, becoming something of an institution.

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Last Updated: 31 Aug 2010

But the past few years for HandMade Films - now owned by ex-manager of Led Zeppelin and Black Sabbath Patrick Meehan - have been as full of twists as some of its movie plots. Chairman Richard Northcott was booted out after just two months in the director's chair. That wasn't in the script ...

Danger signs

HandMade asked for its shares to be suspended last month, prompting speculation about its financial position. That wasn't unexpected - it's the third time this has happened. It has been far from smooth sailing for HandMade for some time: it hasn't made a profit since coming to the AIM market in 2006. And, unfortunately, the firm was becoming almost as well known for its spiralling losses as for its films. In the six months to 30 June last year, the group recorded an operating deficit of more than £3m, compared with a mere £610,000 loss in same period in 2008. And revenues shrank at a similarly alarming pace - from nearly £3.3m in 2008 to £1.1m last year.

Prognosis

It may not be a wrap just yet for HandMade. Only a few months ago, the firm said it planned to turn a profit this year, following the success of its animated kids' film Planet 51, which has grossed $60m (£37m) worldwide. But its push into children's programming has been expensive, not helping its balance sheet. Last year, HandMade bought the TV and merchandising rights to children's books written by the Duchess of York, raised enough cash to finance a $5.6m investment in a joint venture with National Geographic Kids, and acquired Animation Collective, a US animation cartoon studio. The fact that new boss Roger Benton has a wealth of finance experience is no coincidence. If he can turn the company's finances around, and perhaps rein in the spending, a happy ending might yet be on the storyboard.

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