19th Apr 2007 07:01
VTR PLC19 April 2007 VTR PLC Year End Results Announcement VTR plc announces its year end results for 2006 Highlights: • Group losses were £2,050,317 (2005: £662,809) before tax and including write back of restructuring provision • Group turnover was £17.7 million (2005: £21.5 million) • Gearing down to 48% from 111% in August 2005 • Net borrowings decreased to £3.8 million from £5.8 million in 2005 • Prime Focus (India) buys controlling stake in VTR and invests in business • VTR acquires Clear, award-winning digital visual effects studio Namit Malholtra, Chairman, VTR plc comments, "This has been a year oftransformation for VTR. The company faced continuing tough market conditionsand was not structured to succeed in a fast-changing global post-productionmarket. We have introduced new management and fresh investment to attract thevery best creative talent and set the business on the right track. There is no doubt that 2006 was a difficult year for VTR but a restructuredbusiness is emerging which is equipped to compete and win global contracts. Iam excited to be leading this company and I am confident that 2007 will see VTRperforming strongly." For further information please contact: Neil Lane, Managing Director, VTR plc 020 7565 1000Philip Davies, Charles Stanley Securities 020 7149 6000Gavin Partington, Parys Communications 020 7819 2462Ryszard Bublik, Parys Communications 020 7819 2466 Chairman's Statement In the year to 31 August 2006 group turnover was £17,692,273 compared to£21,505,511 for the previous year. The overall loss for the year was £2,050,317(2005: £662,809). This included an exceptional charge of £297,735 for the costof a fundamental group restructuring (2005: credit of £37,358). Overview This is my first statement as Chairman of VTR plc (VTR) and it comes at the endof a year in which we have taken decisive steps to put the Company in a positionto exploit industry changes and new opportunities in the market. Prime Focus (India) bought a controlling stake in VTR because we had faith inthe business and believed it could flourish. It has been tough making thechanges necessary to stabilise the business and prepare it for the future.However, we are confident that the new structure we have begun to put in placeand the injection of fresh leadership and investment will deliver the successour shareholders deserve. You will be well aware of the challenges that have faced us and other businessesin the media sector as a whole. The downturn in advertising continued to have anegative effect in the last financial year. More specifically, the film industryfaced a continuing period of financial uncertainty over the issue of tax reliefon productions. Set against a backdrop of increasing global competition, with competitivetendering resulting in falling rates for post-production, it was clear thatradical steps would be required to place the business on a firm footing. It was also clear to this management that there had been a fundamental change inthe post-production market. It has become a global market, both in terms ofcreative talent and in relation to costs, with outsourcing now deliveringsignificant business advantages. If VTR was to compete successfully it required a revised structure with theright investment and creative talent in place. The ongoing restructuring, whichbegan in 2004, has been painful in personal and financial terms. But it has beencritical to the long term future of the business. It is clear that the changes we are making are putting the business in aposition to compete globally for work that has hitherto been beyond our reach.This includes longer term film projects, enabling us to build a forward orderbook which in turn gives us a more stable cash flow. As part of our strategy to invest in the business VTR acquired Clear (PostProduction) Limited (Clear), the award-winning digital visual effects and CGanimation studio, in July 2006. This acquisition is now helping us to competebetter in the higher margin commercials sector of our market. We look forward to updating you on the impact of our restructuring in duecourse. Management Changes In June 2006 VTR announced that Peter Samengo-Turner, Finance Director, would beleaving the Company to pursue another opportunity within the financial servicessector. In August 2006, following a successful management handover, Paul Tracey, GroupManaging Director, announced his resignation from the board. Neil Lane,formerly Operations Director, was appointed Managing Director. Dividend No dividend has been declared this year or in the prior year. Your board willcontinue to keep the matter under review. Cashflow and Gearing There was a significant improvement in gearing for the financial year. It fellto 48% from 111% in the previous year. Indebtedness continued to fall, with netborrowings decreasing to £3.8m from £5.8m in 2005. The detail of our business performance is set out below by our ManagingDirector, Neil Lane. Outlook The benefits of the restructuring are beginning to be felt and the Group'sperformance since the start of the current financial year has been encouraging.The Board is confident of a much improved performance in the period to 31 March2007. Namit MalhotraApril 19, 2007 Managing Director's Review This has been a challenging year for the businesses within VTR. The impact ofdifficult market conditions has been felt throughout the group. With theinvestment of Prime Focus Limited, we have been able to push ahead with therestructuring of VTR that is addressing every element of the business - sales,costs, property, marketing and branding. On the property front we are lookingat re-organising all the existing businesses, in a manner that at least 6,000square feet of space can be surrendered back or sub-leased, hence reducing theoverall cost of rent and incidental property costs. On the sales front, adedicated sales team has been put into place, for each individual business. Inaddition we have been reviewing our cost base to ensure we have the right peopleand the right equipment to cement our position as a leading post productionfacility. In terms of our individual businesses, VTR, which specialises in thepost-production of high end commercials, pop promos and feature films, felt theimpact of the downturn in advertising and poor market rates for post-production. Hive, which offers high-end CGI animation, graphic design and visual effects tothe broadcast and commercial markets, post year end has post year end mergedwith Clear following VTR's acquisition of Clear in July. Clear is anaward-winning digital visual effects studio which brings fresh creative talentto VTR in a high margin area. Blue is VTR's broadcast on-air promo and long-form programming specialist. Itmade steady progress during the year, consolidating its strong position in themarket, with a particular emphasis on drama projects. TMR (The Machine Room) provides specialist physical and digital restoration, DVDauthoring and telecine to the film, television, corporate and entertainmentmarkets. Its activities were scaled down during the year with a view tore-deploying various elements of its work throughout the Group. KRelated Shares:
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