29th Jun 2007 17:49
VTR PLC29 June 2007 VTR PLC Audited Results for the 7 months ended 31 March 2007 Chairman's Statement In the seven month period to 31 March 2007 group turnover was £10,604,289compared to £17,692,273 for the year ended 31 August 2006. The overall profitfor the seven month period was £1,001,813 (2006 Loss: £2,050,317). Overview I am delighted to announce a significant improvement in VTR Plc's resultscompared to this time last year. In my statement which accompanied the full yearresults to 31 August 2006, I stated that there has been a fundamental change inthe post-production sector and that VTR had to take radical steps to keep intune with these changes. Since that time we have completed an aggressivecost-cutting plan and reorganised the group from five companies into threeunique brands. The capital expenditure programme is now complete, therefurbishment programme for the buildings is coming to an end and we now have astreamlined sales process. I am particularly pleased that these results have been achieved as a standaloneUK operation in a UK Market. With the Prime Focus India integration with VTRgathering momentum from an operational and sales perspective, I do believe thatonce this is complete, VTR will see enormous benefits not only in the UK, butglobally. The next objectives for VTR in the coming year are to build upon the excellentfoundations put in place in the UK and compete for global contracts. We alsoneed to complete the Prime Focus India integration and turn our attention tointernational opportunities that we are currently exploring. The detail of our business performance is set out below by our Managing DirectorNeil Lane. Staff On behalf of the board, I would like to highlight and express our thanks for theenormous contribution and unwavering support given by all our staff throughoutthe enormous changes that have taken place over the past twelve months. Dividend No dividend has been declared this year. Your board will continue to keep thematter under review. Cashflow and Gearing There was a significant improvement in gearing for the period. It fell to 38%from 48% in the previous year i.e. as at 31 August 2006. Indebtedness continuedto fall, with net borrowings decreasing to £3.7m from £3.8m as at 31 March 2006.As at 31 March 2007, the Company had cash of £144,503. Outlook The current year has started very well and we are anticipating this to be a yearof further substantial progress. Although all markets remain competitive and westill have a long way to go, I believe VTR is now set on the right course tomeet the challenges of a UK Post Production market, as well as taking fulladvantage of the global Film Visual Effects industry. I look forward withconfidence to updating shareholders in the coming year on our progress. Namit Malhotra 29 June 2007 Managing Director's Review After finally completing all cost reductions within the group, managementintegration and repositioning of the group companies, I am happy to report thatthe VTR Group now has a focus and strategy not seen for many years. In the seven months since the last audited accounts, we have streamlined thegroup into three operating brands - Prime Focus London, blue post production andK>post. These three brands will now form the basis with which to take the groupforward and complement the exciting prospects we are seeing ahead through ourintegration with Prime Focus India. It will make our Group simpler to manageboth technically and operationally and above all provide our clients with alevel of service never seen before in the Group. Prime Focus London, led by Managing Director Simon Huhtala, has been formed fromexisting subsidiaries, Video Tape Recording Ltd, Clear (Post Production) Ltd andThe Hive Animantion Ltd. This division, operating out of a fully refurbishedbuilding in Dean Street, Soho, competes within the Film Digital Intermediate,Commercials, Visual Effects, and 3D CGI (Computer Generated Imagery) marketplace. blue post production, led by Managing Director Simon Briggs, has consolidatedits position within the Drama and Broadcast programming market, adding manyother services and will be shortly integrating The Machine Room Ltd, (theGroup's, dubbing, archival, restoration and Digital Media subsidiary), withinits offering. Now operating out of one building and with all its services underone roof, blue post production is targeted to become one of the top Broadcastone-stop shops. K>post, led by General Manager, Christian Gane, is VTR plc's West London basedCommercials facility. As well as working on Vox pops, pitches and commercials, K>post has completed various projects using sound and animatic services notpreviously undertaken at the facility. We will shortly be adding variousadditional effects services such Autodesk Flame hardware and software andoffering 3D CGI. Prime Focus London Prime Focus London (the new brand name that comprises the merged entities ofClear, the hive and VTR Ltd) has emerged after eleven months in the making, as anew post production company providing a high end integrated service for theAdvertising, Film and Broadcasting markets. The year started with several major challenges: the merger of the activitiespreviously carried out in three separate companies with the resultantrestructuring, re-engineering and streamlining of processes that was required;the refurbishment of the existing floors at 37 Dean Street to create one unifiedbuilding over four floors; the re-brand of the merged entity and an increasedworkload due to PFL winning several major film projects. We have seen the installation and total upgrade of twelve effects suitescomprising state of the art Autodesk 2k compositing systems, which allow thesmooth flow of work between suites to improve our efficiencies, and also reducethe time needed by our engineers to look after many different suites working onmultiple platforms. We have recently commissioned a Central London first Lustredata grading suite for our growing DI work. In addition, the installation ofThomson's Spirit 4K dramatically improves our high speed scanning capabilitiesand the installation of a suite of Digital Fusion graphics workstations willsatisfy the demands of film and project based visual effects. Prime Focus London is the Group's Visual Effects specialist facilityconcentrating on its core strength. It has completed some significant projectsin the past period. These included the rebrand of both BBC1 and BBC2 along withnotable work for the Edwardian season for our Red Bee clients. AdditionallyRobbie, Pink, The Scissor Sisters, Gnarls Barkley, Just Jack, Paul McCartney andFaithless have all used our facilities to produce some excellent musicpromotions. The commercials front has seen quality clients such as Hyundai,Samsung, Hiscox, the Independent, Muller, VW and Rimmel working with us, as wellas seeing the first commercials coming in from India, thanks to our newinternational presence, with several substantial jobs for Fido Dido (7up) andUnitech, which required extensive work from our CG team. The workload of the computer graphics studio has grown substantially over thislast year to feed the increasing hunger for animation and CG based VFX. Prime Focus London completed a raft of shots for the British zombie thriller 28Weeks Later as well as completing the whole Digital Intermediate process on thefilm. Whilst the project was extremely demanding and put significant strain onour nascent film infrastructure and film pipeline (including the Indian end), wecompleted some of our best work to date, and it helped establish the processesrequired to work at the top level. These new found strengths have also been employed to work on two more FeatureFilms which will complete this Summer. These projects will rely very heavily onthe London - India pipeline and as a result of key members of staff relocatingto India and some international appointments, the process is now running verysmoothly. Once these projects have been completed, proof of the post productionglobal model will have been proved as a concept and we hope to sell this conceptto other clients as well. The collaboration with our sister company, blue post production, to offer thecomplete post production service from film development to digital or filmdelivery is also bearing fruit with several projects being run out across bothfacilities, each process dovetailing with the next. This allows us to be ableto turn around projects at a speed other houses cannot compete with hencemaximising the budget the client has at their disposal for the project. This has been a year of change in processes, cost cutting, attitude, facilitiesand focus. Once the refurbishment and infrastructure modifications are completewe will be able to satisfy the needs of all clients at many price points andreally push the global model to the market for films, broadcast and commercials. Simon HuhtalaPrime Focus London Managing Director Blue Post Production blue, the Group's broadcast television specialist facility, has been through anexciting year that has encompassed senior management change, capital investment,integration and consolidation whilst expanding its client base and itsreputation for high-end broadcast post production. blue's profile and reputation for creative work was further enhanced with awardsthroughout the period with blue providing creative input to seven Gold and eightSilver Promax award-winning projects, five Creative Circle winners, an Aerialaward-winning radio commercial and two BAFTA award-winning programmes in thedocumentary and comedy categories. Our short-form creative team worked on a number of on-air projects includingElvis: What an Amazing Line-up (BBC Radio 2), The Big Give (five), CSI Vegas(Flextech/Virgin Media TV), NickToons on-air branding (Nickelodeon) and RobinHood (BBC). They also worked on music promos for Jack Penate (Spit at Stars),Girls Aloud and Sugababes (Walk This Way for Comic Relief). blue's enviable track record in broadcast programming continued with major,high-profile projects in both factual documentary and drama genres. Projectsincluded Great British Menu (Optomen Television for BBC), Daphne (BBC Arts), TheMadness of Boy George (Spun Gold for Channel 4), Nuremberg (3BM for Channel 4)and Freaky Eaters (Betty Television for BBC). The period has seen significant investment in order to further solidify blue'sposition as one of Soho's leading broadcast post production houses. The offlineediting capacity has been increased from twelve to twenty-six suites, enablingblue to take on larger scale projects, address previous bottlenecks and feedwork throughout the rest of the facility. The investment extended to the audio department where an upgrade to the mixingcapabilities of all suites was undertaken in line with a commitment to 5.1 audiomixing, whilst further investment in HD infrastructure and suites was alsoundertaken to underline blue's focus in catering for the delivery demands of themodern broadcasting landscape. blue also underwent the integration of sister company TMR (The Machine RoomLimited) into its Old Compton Street and Dean Street buildings. The Machine Roomhad been the Group's duplication, archive and online specialist for over 15years and brings with it a core experienced operational team and a client basethat includes BFI, IWM, IOC, adidas, Getty Images, Tag, RBS 6 Nations, COI andParamount. This now allows blue to offer a range of additional services including digitalasset management and encoding, video and audio restoration and expansivededicated duplication facilities, all under the 'blue' banner and complementingthe existing post production services. These combined services will not only bepresented to new business contacts but will also be up-sold to the existingclient base. blue will now also provide film rushes, synching and treatment by running afacility out of film processing specialist, ILab. This service enables the Groupto offer end-to-end services from processing and rushes transfer (within Soho)all the way through to final post production for the broadcast, commercials andfeature film markets. This investment and integration programme has been essential in positioning blueonce again as a powerful player in the ever-changing broadcast market andallowing it to provide a wider range of expansive facilities to both domesticand worldwide markets as a standalone company and also in conjunction withsister company, Prime Focus London. Simon BriggsManaging Director - blue VTR plc group outlook In the last seven months, we have successfully integrated our brands, completedour cost reductions, streamlined our management reporting, completed our firstUK/India projects and completely revamped our sales process. This has given theGroup a renewed confidence allowing us to compete aggressively for projectslocally in the UK, as well as offering a global alternative using the operatingstructure we have set up using both Indian and UK resources. I believe the outlook for VTR group is one of stability, excitement, focus andcompetitiveness. I look forward to updating you on our performance later in theyear. Neil Lane, VTR plc Group Managing Director29 June 2007 For further information please contact: Neil LaneManaging DirectorVTR plc 020 7565 1000 Philip DaviesCharles Stanley SecuritiesNominated Adviser & Broker 020 7149 6000 Gavin PartingtonParys Communications 020 7819 2462 Ryszard BublikParys Communications 020 7819 2466 INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF VTR PLC We have audited the financial statements on pages 19 to 40. This report is made solely to the Company's members, as a body, in accordancewith section 235 of the Companies Act 1985. Our audit work has been undertakenso that we might state to the Company's members those matters we are required tostate to them in an auditor's report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the Company and the Company's members as a body, for our audit work,for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the Annual Report and thefinancial statements in accordance with applicable law and United KingdomAccounting Standards (United Kingdom Generally Accepted Accounting Practice) areset out in the Statement of Directors' Responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and International Standards onAuditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a trueand fair view and are properly prepared in accordance with the Companies Act1985. We also report to you whether in our opinion the information given in theDirectors' Report is consistent with the financial statements. We also report toyou if, in our opinion, the Company has not kept proper accounting records, ifwe have not received all the information and explanations we require for ouraudit, or if information specified by law regarding directors' remuneration andother transactions is not disclosed. We read other information contained in the Annual Report, and consider whetherit is consistent with the audited financial statements. This other informationcomprises only the Directors' Report, the Chairman's Statement, the ManagingDirector's Review, the Corporate Governance Statement and the RemunerationReport. We consider the implications for our report if we become aware of anyapparent misstatements or material inconsistencies with the financialstatements. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board, except that the scopeof our work was limited as explained below. An audit includes examination, on a test basis, of evidence relevant to theamounts and disclosures in the financial statements. It also includes anassessment of the significant estimates and judgments made by the directors inthe preparation of the financial statements, and of whether the accountingpolicies are appropriate to the Group's and Company's circumstances,consistently applied and adequately disclosed. We planned our audit so as to obtain all the information and explanations whichwe considered necessary in order to provide us with sufficient evidence to givereasonable assurance that the financial statements are free form materialmisstatements, whether caused by fraud or other irregularity or error. However,the evidence available to us was limited because we were appointed auditors on23 May 2007 and in consequence we were unable to carry out auditing proceduresnecessary to obtain adequate assurance on the opening balances appearing on thegroup's and company's balance sheet as at 31 August 2006. This was despite thefact numerous requests were made for the release of information from ourpredecessors. In forming our opinion, we also evaluated the overall adequacy of thepresentation of information in the financial statements. Qualified opinion arising from limitation in audit scope Because of the significance of the above matter in relation to the results ofthe company's operation for the period to 31 March 2007, we are not in aposition, and do not express an opinion on the results of the group's operationsfor the period then ended. In our opinion, the balance sheet gives a true and fair view of the financialposition of the company as at 31 March 2007 and have been properly prepared inaccordance with the Companies Act 1985 and information given in the Directors'Report is consistent with the financial statement. In respect solely of the limitation of our work relating to the openingbalances: - we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and - we were unable to determine whether proper accounting records had been maintained. SterlingChartered AccountantsRegistered Auditor505 Pinner Road,HarrowMiddlesex HA2 6EH 29 June 2007 Consolidated Profit and Loss AccountFOR THE SEVEN MONTH PERIOD ENDED 31 MARCH 2007 September 1 2006 2006 to March 31 2007 £ £ Turnover 10,604,289 17,692,273 Cost of sales (798,731) (1,805,211) Gross profit 9,805,558 15,887,062 Administrative expenses (8,564,454) (17,419,373) Operating Profit / (Loss) 1,241,104 (1,532,311) Exceptional item - fundamental Group restructuring - (297,735) Interest receivable 12,894 32,799 Interest payable and similar charges (249,689) (444,559) Profit/ (Loss) on ordinary activities before taxation 1,004,309 (2,241,806) Prior periods tax adjustment / 2,496 191,489 (Tax credit on loss on ordinary activities) Profit / (Loss) for the year 1,001,813 (2,050,317)Basic and diluted profit / (loss) per share 3.6 p (12.8)p Turnover and operating results are derived from the Group's continuingoperations. Consolidated Balance SheetAS AT 31 MARCH 2007 31 March 31 August 2007 2006 £ £ £ £Fixed assetsIntangible assets 1,395,748 1,437,861Tangible assets 10,881,362 9,154,690Investments 258,980 58,980 12,536,090 10,651,531 Current assetsStock 26,632 31,436Debtors 6,484,442 5,641,700Cash at bank and in hand 144,503 588,488 6,655,577 6,261,624 Creditors: amounts falling due within one yearBank loans and overdrafts 1,643,356 2,777,037Hire purchase creditors 740,256 1,194,445Trade and other creditors 5,359,278 3,353,443Corporation tax 37,988 47,489 7,780,878 7,372,414 Net current liabilities (1,125,301) (1,110,790) Total assets less current liabilities 11,410,789 9,540,741 Creditors: amounts falling due after more than one year (1,318,892) (450,657) Provisions for liabilities (637,545) (637,545) 9,454,352 8,452,539 Capital and reservesShare capital 1,387,814 1,387,814Share premium account 8,556,624 8,556,624Capital redemption reserve 270,000 270,000Profit and loss account (760,086) (1,761,899) Funds attributable to equity shareholders 9,454,352 8,452,539 Consolidated Cash Flow StatementFOR THE SEVEN MONTH PERIOD ENDED 31 MARCH 2007 2007 2006 £ £Net cash flow from operating activities 3,242,607 (433,874) Returns on investments and servicing of finance (236,795) (411,760) Taxation (2,495) (25,807) Capital expenditure and financial investment (2,727,665) (327,592) Acquisitions (note 9(c)) 0 (403,604) Cash (outflow) / inflow before financing 275,652 (1,602,637) Financing (719,637) 2,510,557 Increase in cash in the year (443,985) 907,920 Reconciliation of net cash flow to movement in net debt Increase in cash in the year (443,985) 907,920 Cash flow from decrease in debt and lease financing 719,637 1,820,372 Change in net debt resulting from cash flows 275,652 2,728,292 Loans and finance leases acquired with subsidiary - (321,618) New hire purchase agreements - (467,110) Movement in net debt in the year 275,652 1,939,564 Net debt at 1 September 2006 (3,833,651) (5,773,215) Net debt at 31 August 2006 3,557,999 (3,833,651) Notes 1. The results have been prepared on the basis of the accounting policiesset out in the Group accounts for the year ended 31 August 2006. The financialinformation included in this announcement does not constitute statutory accountsfor the years ended 31 August 2006 or of the period ended 31 March 2007 withinthe meaning of Section 240 of the Companies Act 1985. The statutory accounts ofVTR plc for the year ended 31 August 2006 have been filed with the Registrar ofCompanies for England and Wales and those for the period ended 31 March 2007will be delivered following publication. 2. Reconciliation of operating loss to net cash (outflow)/inflow 2007 2006 from operating activities £ £ Operating loss 1,241,104 (1,532,311) Depreciation 791,860 2,813,241 Profit on disposal of tangible fixed assets 9,142 (122,348) (Increase) / Decrease in debtors (872,743) (860,804) Decrease in creditors 2,026,327 (459,398) Exceptional items - (297,735) (Increase) / Decrease in stock 4,804 (5,535) Investment impairment 42,113 25,000 Amortisation of goodwill 6,016 3,242,607 (433,874) 3. Segmental Reporting September 1 2006 to March 31 2007 2006 £ £(a) Turnover by geographical marketsUnited Kingdom 9,932,013 16,954,689Rest of Europe 592,170 470,495Other 80,106 267,089 Total 10,604,289 17,692,273 (b) Profit / (Loss) before taxation by geographical marketsUnited Kingdom 940,639 (2,148,346)Rest of Europe 56,083 (59,617)Other 7,587 (33,843) Total 1,004,309 (2,241,806) Turnover to third parties by geographical destination is not materiallydifferent from geographical split by origin shown above. 2007 2006 £ £(c) Net asset by geographical marketsUnited Kingdom 9,343,927 8,334,539Other 108,425 118,000 9,452,352 8,452,539Total 4. Dividends No dividend has been declared for the current period (2006: £Nil) 5. Loss per share Basic and diluted loss per share is based on a profit of £1,001,813 (2006: loss£ 2,050,317) and 27,756,276 (2006: 15,985,984) weighted average number ofordinary 5p shares in issue during the period. The outstanding share options, do not give rise to any dilution and thereforethe basic and diluted loss per share are the same. 6. Contingent liabilities The bank loans of the Group undertakings are secured by cross-guarantees betweenGroup companies. At 31 March 2007 the liability of the bank loans was borne bythe Company at a value of £1,643,356 (2006 £1,620,851). The company is a member of a Group VAT registration and is jointly and severallyliable for any debts by member of the registration as at the period ended 31March 2007. The total group liability amounted to £ 580,344. Mr John Banks, the former Managing Director of the Company has issued legalproceedings claiming £358,363 by way of damages for breach of his Contract ofEmployment. These proceedings are being defended by the Company. 7. Related party balances The Company has taken advantage of the exemption conferred by FRS8 not todisclose related party transactions with subsidiary undertakings 90% or more ofwhose voting rights are controlled within the Group. During the year, the company has purchased capital equipment, part payment ofwhich has been made by Prime Focus Limited. Also during the year, the companyhas made payments for certain equipment on behalf of Prime Focus Limited. Thenet effect of these transactions is an amount owing to Prime Focus Limited bythe company of £181,078 as on the date of this balance sheet. As reported in last years accounts under the non-monetary transactions, one ofthe companies equipment is retained in India, for the use of the Group's tradingactivities. No charge has been made by Prime Focus Limited, for rent,maintenance and operation of the equipment. The management and staff of Prime Focus Limited have spent considerable amountof time in managing the Group's activities for which no management fee orsalaries has been charged to the Group as of the date of this Balance Sheet. 8. Ultimate controlling party The directors believe Prime Focus Limited, a company incorporated in India to bethe ultimate controlling party. 9. Copies of the audited Report & Accounts will be posted to allshareholders this weekend on and are available from the Company's office at 64Dean Street, London. An electronic copy of the Report & Accounts will be available this afternoonfrom the Company's website - www.vtrplc.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
PFO.L