Final Results

30 September 2013

Prime Focus London plc

(the "Company")

Final Results for the Year Ended 31 March 2013

CHAIRMAN'S STATEMENT

This has been a year of transformation for the Company. It has moved decisively away from the legacy of its past and has implemented a series of restructuring measures over the year. At the same time, the management structure has been simplified, underperforming businesses have been closed, overheads have been further reduced and the activities of each of the two key trading divisions of Television Post Production and Television VFX have been refocused and invigorated.

The key focus going forward continues to be the return to overall profitability and the generation of cash and shareholder value.

I would like to thank our clients, investors, vendors and most of all our people for their trust, faith and belief in our company, and I assure you all of our commitment to ensuring that Prime Focus London plc is strongly positioned for the future.

Ramakrishnan Sankaranarayanan

Chairman

BUSINESS REVIEW

This financial year was another challenging period for the company.

As predicted in the previous year's accounts, trading remained challenging in this financial year, and the company fought hard to maintain market share.

However, the extensive restructuring which took place to eliminate loss making activities, to reduce fixed costs and thereby bring down the break even point, and in migrating fixed costs to variable in order to be able to flex overheads in line with the trading seasonality of the business have insulated the business against the industry headwinds that have been well documented in the trade press.

As a consequence the company generated an operating profit from continuing operations before exceptional items of £0.478m (previous year loss £1.541m).

Highlights for the year include:

Underlying Performance

· Group revenues of £19.866m (2012: £31.230m)

· Underlying operating profit from continuing operations before exceptional items of £0.478m (2012: loss £1.541m)

· Cash at £0.586m (2012: £1.228m)

· Total liabilities have fallen by £14.244m to £21.430m (2012: £35.674m)

Statutory Performance

· Profit before tax including discontinued operations of £0.072m (2012 Profit £0.984m)

· Diluted loss per share 0.81p (2012: EPS 2.97p)

Business Overview

· Closure of Meanwhile Limited in May 2012 and PF Broadcast and Commercials Limited in February 2013.

· Elimination of legacy balance sheet items.

· Simplified management structure and reporting lines.

· Further reduction in cost base across all units.

· Content services - the archiving, restoration, duplication of film material - has been re-aligned to come under the management of the Broadcast Post Production business.

· Nominated for an Emmy award for our TV VFX work.

· Retention and building relationships with major clients in Broadcast Post Production, Content Services and TV VFX.

Transformed, Energised and Stable

The Group has had a transformative year. It has been streamlined into two core divisions of Broadcast Post Production and Television VFX Services. Its core senior management has been reorganised to a simpler, more effective structure with clear reporting lines in order to deliver the focus and stability required to drive profitability and shareholder value.

The company was heavily restructured during the year. Headcount reduction linked to discontinued activities and general headcount reduction has reduced staff numbers by about a third to 163 at July 2013 and has removed around £4m from the annualised run rate overhead cost for salaries.

The company has coped well with the move to a new leaner operating model and is now positioned to take advantage of new opportunities for growth.

Going forward, there is a clear emphasis on the use of the most sophisticated technology available to help to produce the best quality of creative output, cash generation, growth and enhanced overall performance.

Although market conditions remain challenging we believe that by delivering solid organic development on a further reduced cost base, the company can generate improved financial returns and take advantage of wider opportunities in the future.

Broadcast Post Production

The aim of this division is to further exploit our skills at post producing high quality programming in the documentary and drama genres.

The retention and development of existing clients is a key strategy. To enable us to achieve this we aim to retain and recruit the highest calibre of employees by offering them the opportunity to work on innovative projects and to expand their skills in key niche sectors.

Seemingly unaffected by the restructure mentioned above, the reputation of the Broadcast and Content Services teams has continued to attract high profile work. The business was again ranked in the top 10 facility houses in London by both creative and capacity criteria.

The business has attracted some excellent new people, adding grading, online and audio talent to our respected teams. This has resulted in new clients being recruited as they follow their favourite operators.

Following the success of our work on "Merlin" last year, the new BBC One primetime Saturday drama "Atlantis" came straight to Prime Focus Broadcast Limited and this adds another series to our increasing drama slate for the Autumn period which includes "Sherlock" (BBC One), "The Guilty" (ITV), and "Edge of Heaven" (ITV).

As in previous years the company is a market leader in the UK for programmes destined for broadcast in the US. Recent examples include the highly acclaimed "The 80's: The Decade That Made Us", "Paranormal Witness" and "Martin Luther King & the March on Washington"; many of these programmes transmit on multiple broadcasters around the world.

Our reputation for factual TV allows us to deliver hundreds of programmes a year. Some examples include current affairs strand "Dispatches"; arts programmes for Arena and the National Theatre; returning series for "Island Parish", "Dara O'Briain's School of Hard Sums" and "Great British Menu"; plus observational documentaries like "Ultimate Airport" and "Midwives" to name a few.

Our Content Services team have seen a surge in work as content owners recognise the need to transfer their materials from legacy formats to digital files. Work for the V&A, Imperial War Museum, BFI, BBC, and the Associated Press has seen a need to grow the capacity of the award-winning restoration and archive team. A recent contract win, which is yet to be publicised, will provide us with steady high profile work for at least three years from this autumn.

Over the last year our new RAPTA service has been developed further and is receiving industry wide acclaim. It is being used by a variety of clients on set - helping transfer digital camera files direct to post production in a secure and effective fashion. The interest in this bespoke product has been immense and we are looking to expand the outlets through which this can be provided through contracted vendors. It highlights the ability of Prime Focus Broadcast to take on and manage the most difficult workflows that can arise, providing a key differentiator from our competition. 

Broadcast VFX

The Broadcast VFX business had a ground breaking 2012-13 working on visual effects for channel driving shows across a variety of genres.

Prime Focus Broadcast VFX was the lead VFX vendor on History Channel's flagship primetime shows "Mankind", "The Story of Us" and "World War II from Space" which received an Emmy nomination in the Outstanding Graphic Design and Art Direction Category.

Additionally, the team worked on "Supersized Earth" for BBC One, and provided over 100 minutes of CG comprising 600 shots delivered for three primetime shows on two major networks. Also for the BBC the company delivered 24 stereo VFX shots for the BBC's very first long-form drama 3D stereoscopic production, "Mr Stink". 

In addition, Prime Focus Broadcast VFX made strong headway into live event VFX, creating 8 minutes of 16K-equivalent footage for the permanent exhibit at the Perot Science and Natural History Museum, Dallas, as well as 3D stereoscopic VFX for the "Doctor Who Experience" at London's Olympia Two.

This has been a challenging journey since I took on the CEO role in April 2012. The company now has a stronger balance sheet, and the many talented individuals in each of the key businesses are clearly focussed on delivering growth through the professionalism of their endeavours and the application of their talent and experience.

Bernard Kumeta

Chief Executive Officer

Consolidated Statement of Comprehensive Income for the year ended 31 March 2013

Consolidated Statement of Financial Position at 31 March 2013

Consolidated Statement of cash flows for the year ended 31 March 2013

Consolidated statement of changes in equity

(i) Share premium - amount subscribed for share capital in excess of nominal value, net of directly attributable issue costs.

(ii) Capital redemption reserve - created as a result of a previous share buy-back.

(iii) Fair value reserve - represents cumulative gains or losses on the fair value of available for sale investments recognized in other comprehensive income.

(iv) Retained earnings - cumulative net gains and losses recognized in the consolidated statement of comprehensive income net of associated share based payment credits.

Notes to the Consolidated Accounts

1. General information and basis of preparation

Prime Focus London plc ("the Company") and its subsidiaries (together "the Group") are technology based creative service providers to the media and entertainment industry.

The Company is a public limited company which is listed on the AIM Market of the London Stock Exchange and is incorporated and domiciled in England (Registration number 01694613). The address of its registered office and principal place of business is 64 Dean Street, London W1D 4QQ.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretation Committee (IFRIC) interpretations as endorsed by the European Union, and those parts of the Companies Act 2006 as applicable to companies reporting under IFRS.

The financial information in this announcement does not constitute the Company's statutory accounts for the years ended 31 March 2013 or 31 March 2012, but is derived from those accounts. The statutory accounts for the year ended 31 March 2012 have been delivered to the Registrar of Companies and those for the year ended 31 March 2013 will be delivered following the Company's 2013 annual general meeting. The auditor has reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain any statements under s498(2) or (3) of Companies Act 2006.

2. Tax expense

The difference between the tax charge and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is shown below.

3. Trade and other receivables

The average credit period for trade receivables at the end of the year is 53 days. (2012: 54 days). The carrying amounts of the Group's trade and other receivables are denominated in sterling.

Trade receivables that are less than 3 months past due are not considered impaired. As of 31 March 2013, trade receivables of £0.349m (2012: £2.520m) were past due and impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of all trade receivables is as follows:

An analysis of the movement in the provision for impairment of trade receivables is provided below:

4. Deferred tax

The movement for the year in the Group's net deferred tax asset provided at the UK company rate of corporation tax of 23% (2012: 26%) was as follows:

5. Trade and other payables

6. Income tax liabilities

7. Borrowings

Bank loans are secured by a fixed and floating charge over the assets of the Group.

The maximum facility available as per the Bibby Factors Manchester Limited Invoice discounting loan is £1.5 million (2012: £1.5 million). Interest is charged at 4% (2012: 2%) above 3 month LIBOR (subject to a minimum 3 month LIBOR rate of 1%).

8. Related party transactions

The following transactions with companies within the Group headed by Prime Focus World NV ("PFW group"), a fellow subsidiary company, occurred during the year:

Prime Focus North America Inc

- Prime Focus North America Inc, a company registered in USA, and fellow subsidiary of the parent company paid a sum equivalent of £24,646 (2012: £58,144) on behalf of the Group ("PFL PLC") to third parties in respect of operational and capital expenditure.

- Prime Focus North America Inc charged PFL PLC the equivalent of £3,608 for travel expenses (2012: £45,892).

- PFL PLC charged Prime Focus North America Inc £58,932 (2012: £220,762) for loan interest incurred by the company. Costs of £nil (2012 £172,194) were incurred by PFL PLC in relation to fixed assets. Additionally, costs in relation to travel and other business expenses totalling £88,431 (2012: £202,053) were incurred by PFL PLC.

- PFL PLC carried out post production work for Prime Focus North America Inc. The total fee paid by Prime Focus North America Inc to PFL PLC was £2,000 (2012: £978,736).

- At 31 March 2013 the balance due from Prime Focus North America Inc was a sum of £nil (2012: £1,991,990).

Frantic Film VFX Inc

- PFL PLC paid a sum of £nil (2012: £68,553) to third parties in respect of capital expenditure by

Frantic Film VFX Inc, a company registered in Canada, being a fellow subsidiary of the parent company. Additionally, costs in relation to travel and other business expenses totalling £955 (2012: £171,237) were incurred by PFL PLC. Frantic Film VFX Inc incurred costs of £nil (2012: £58,617) on behalf of PFL PLC.

- At 31 March 2013 the balance due to Frantic Films VFX Inc was a sum of £nil (2012: £410,817).

Prime Focus World NV

- The balance outstanding at the end of the year receivable from Prime Focus World NV was £nil (2012: £3,462).

Prime Focus International Services UK Limited

- Prime Focus International Services UK Ltd, a company registered in UK, being a fellow subsidiary of the parent company paid a sum equivalent to £9,347 (2012: £50,000) on behalf of PFL PLC to third parties in respect of both operational and capital expenditure.

- PFL PLC charged Prime Focus International Services UK Ltd for Costs of £nil (2012: £5,658,013) incurred by PFL PLC in relation to fixed asset expenditure. Additionally, costs in relation to general business expenses totalling £2,421,713 (2012 £4,803,576) were incurred by PFL PLC. During the year Prime Focus International Services UK Ltd paid £2,473,109 to PFL PLC for the fixed asset expenditure and business expenses incurred by PFL PLC.

- Prime Focus International Services UK Ltd carried out post production work on PFL PLC clients. The total fee paid by PFL PLC to Prime Focus International Services UK Ltd was £nil (2012: £1,200,206).

- PFL PLC carried out post production work on Prime Focus International Services UK Ltd clients. The total fee paid by Prime Focus International Services UK Ltd to PFL PLC was £36,712 (2012: £1,551,200).

- At 31 March 2013 the balance due to Prime Focus International Services UK Ltd was a sum of £66,548 (2012: £42,517).

The following transactions with the other related parties occurred during the year:

Prime Focus International Limited

- PFL PLC charged Prime Focus International Ltd, a company registered in the UK, being a fellow subsidiary of the parent company, a total of £1,800,000 (2012: £nil) in relation to fixed asset expenditure. Additionally, costs in relation to travel and other business expenses totalling £301,168 (2012 £nil) were incurred by PFL PLC. During the year, Prime Focus International Ltd paid £675,428 to PFL PLC for fixed asset expenditure and business expenses.

- At 31 March 2013 the balance due from Prime Focus International Limited was a sum of £6,193,562 (2012: £4,767,822).

Prime Focus Motion Pictures Limited

- At 31 March 2013 the balance due from Prime Focus Motion Pictures Limited, a company registered in India, being a fellow subsidiary of the parent company was a sum of £9,055,000 (2012: £9,055,000) towards sale of film rights.

Prime Focus Technologies Limited

- The balance outstanding at the end of the year receivable from Prime Focus Technologies Ltd, a company registered in India, being a fellow subsidiary of the parent company was £69,409 (2012: £69,409).

Prime Focus Technologies UK Limited

- Costs in relation to travel and other business expenses totalling to £102,353 (2012 £nil) were incurred by PFL PLC on behalf of Prime Focus Technologies UK Ltd, a company registered in UK, being a fellow subsidiary of the parent company.

- At 31 March 2013 the balance due from Prime Focus Technologies UK Limited was £510,328 (2012: £407,975).

Aashni & Co Limited

- PFLPLC paid a sum of £471,240 (2012: £nil) to a third party on behalf of Aashni & Co. Limited, a company registered in UK, being a company owned by relative of former Director (Anshul Doshi) of a subsidiary company. During the year Aashni & Co Limited returned £285,581 to PFLPLC.

- The balance outstanding at the end of the year receivable from Aashni & Co. Limitedwas £185,629 (2012: £nil). The balance has been cleared post the year end.

Doshi Consultancy Limited

- PFL PLC paid a sum of £63,623 (2012: £84,156) to Doshi Consultancy Limited, a company registered in UK, for providing Consultancy Services to PFL PLC. The Consultancy agreement with Doshi Consultancy Limited was terminated on 1 July, 2012.

- The balance outstanding at the end of the year payable to Doshi Consultancy Limited was £nil (2012: £nil).

The following transactions with the Parent Company (Prime Focus Limited India) occurred during the year:

- Parent Company charged PFL PLC for operational related expenditure relating to PFL PLC's activities in the sum of £127,772 (2012 : £246,113);

- PFL PLC paid a sum of £848 (2012: £48,357) to third party on behalf of the Parent Company;

- Parent Company carried out post production work on PFL PLC clients. The total fee charged by PFL PLC to the Parent Company was £360,131 (2012: £2,658,206). During the year PFL PLC paid £4,006,647 to the Parent Company against the post production work done for PFL PLC clients.

- PFL PLC carried out post production work on the Parent Company clients. The total fee charged by PFL PLC to the Parent Company was £41,280 (2012: £154,886).

- The balance outstanding at the end of the year receivable from the Parent Company was £360,473 (2012: payable £3,200,400)

- Parent Company has an underlying loan to PFL PLC of £13,488,982 (2012: £7,367,618).

- The Parent Company has indemnified against all foreign exchange gains and losses.

9. Availability of Report and Accounts

The full report and accounts of the Company for the year ended 31 March 2013 will be posted to shareholders later today and will shortly be available to download from the Company's website www.pflplc.com.