PFO.L Regulatory News (PFO)

22 Jan 2008 07:00

VTR PLC22 January 2008 22 January, 2008 VTR plc acquires Machine Effects Limited VTR continue to grow their capabilities VTR plc is pleased to announce the acquisition of Machine Effects Limited, thevisual effects company founded by John Lockwood and Steve Street, for a totalconsideration of £2,050,000 (the "Acquisition"). The Acquisition strengthensVTR's offer in the UK visual effects market and underpins the continuedinternational expansion of the Prime Focus Group of companies. Machine Effects Limited is a leading visual effects business offering a fullrange of services to film and broadcast. Its impressive list of credits includesFred Claus, Elizabeth: The Golden Age and Harry Potter and the Prisoner ofAzkaban. Both John Lockwood and Steve Street will remain with the business andcontinue to work with VTR plc. The total consideration for the Acquisition of £2,050,000 constitutes a paymentin cash of £1,025,000 (the "Cash Consideration") and the issue of 1,025,000 newordinary shares in VTR (the "Consideration Shares") to John Lockwood and SteveStreet, the vendors of Machine Effects Limited (the "Vendors"). Each of the Vendors has undertaken not to sell any of the Consideration Sharesfor the first 12 months after completion of the Acquisition and to sell no morethan 50% of the Consideration Shares in the two years following completion ofthe Acquisition. The Cash Consideration for the Acquisition has been funded by an inter-grouploan from Prime Focus Limited ("PFL"), which is a majority shareholder in VTR.VTR and PFL entered into a loan agreement on 21st January 2008 which madeavailable a £1,000,000 credit facility to VTR (the "Loan"). Interest willaccrue on the Loan at a rate of 8% per annum. The Loan will be satisfied by the issue of 2,020, 202 new ordinary shares in VTRto PFL, conditional upon obtaining the requisite shareholder approvals to allot.Failure to obtain such shareholder approvals will require VTR to repay theLoan in cash within 18 months of the date of the loan agreement. With the exception of any director involved in the arrangements set out above asa related party (as defined in the AIM rules), the directors of VTR consider,having consulted with Charles Stanley Securities, that the terms of the Loan arefair and reasonable insofar as the shareholders of VTR are concerned. PFL has separately guaranteed to the Vendors that the Consideration Shares willhave a closing bid price of not less than 100 pence per share after a period of30 months from completion of the Acquisition has elapsed (the "Guarantee").Should the closing bid price be less than 100 pence per share after this30-month period, PFL will, without recourse to VTR, pay the difference to theVendors. VTR will, in return for the Guarantee, and subject to obtaining therequisite shareholder approvals to allot, issue 505,050 new ordinary shares inVTR to PFL. Application has been made for the Consideration Shares to be admitted to tradingon AIM and it is anticipated that admission will become effective and thatdealings will commence on 29 January 2008. The Consideration Shares will rankpari passu with the existing shares of the Company. Following this allotment,the total issued share capital of the Company will increase to 30,106,276ordinary shares. Namit Malhotra, Chairman of VTR plc and Prime Focus Group, said: "Thisacquisition adds to the group's global breadth, strengthening our visual effectscapabilities and helping to grow our offer. Machine Effects is a strong brandwith an impressive track record in the industry and I am pleased that it will bejoining VTR plc and in turn part of the growing group of companies in the PrimeFocus Group." Neil Lane, Managing Director, VTR plc said: "Steve and John are experts in thevisual effects market and will compliment Prime Focus London's existingcapabilities in that area. We are excited to have them joining our team and lookforward to working together." John Lockwood said of the acquisition: "Machine Effects integration into thegroup will allow us to concentrate on what we do best whilst participating inthe future success of VTR plc." And Steve Street added: "We are thrilled to be joining the Prime Focus Group ofcompanies and to have access to its global resources in London, India, Canadaand the United States." Further information on Machine Effects Limited Detailed below is the financial performance of the business during the year to31 March 2007 and the seven months to 31 October 2007. The figures for the year to 31 March 2007 are unaudited as the company is exemptfrom an audit under s249A(1) of the Companies Act 1985. The figures for the seven months to 31 October 2007 are the unaudited managementaccounts for the company to that date. The figures have been prepared under UK Generally Accepted Accounting Principlesusing the historical cost convention and in accordance with the FinancialReporting Standards for Smaller Entities (effective June 2022). Profit and Loss Account 7 months ending Year ending 31 October 2007 31 March 2007 unaudited unaudited £ £ Turnover 854,457 392,005 Cost of sales (314,928) (7,308) Gross profit 539,529 384,697 Administrative expenses (156,493) (199,858) Operating profit 383,036 184,839 Bank interest - net 2,833 0 Profit after interest 385,869 184,839 Tax on profit on ordinary activities (77,174) (36,038) Profit for the financial year 308,695 148,801 Dividends 0 (78,500) Retained profit for the financial year 308,695 70,301 Balance Sheet As at As at 31 October 2007 31 March 2007 £ £ Fixed Assets 98,248 70,301 Current assetsDebtors 69,737 32,000Cash at bank and in hand 469,907 15,063 539,644 47,063 Creditor: amounts falling due within one year (219,129) (47,063)Net current assets 320,515 0 Net assets 418,763 70,301 Capital and reservesShare capital 100 0Other reserves 39,667 0Profit and loss account 378,996 70,301 418,763 70,301 ENDS Machine Effects Limited offers a full range of visual effects services andsupervision for feature films and broadcast work: script breakdown andbudgeting, pre-production, pre-visualisation and design, vfx supervision (on-setand digital), 3D animation (character and fx), compositing, matte paintings,digital grading, title design. VTR plc (Prime Focus UK) is the holding company of the Prime Focus UK Group, oneof Europe's leading high-end media services groups. Based in Soho, London, themain divisions - Prime Focus London and blue post production - cover betweenthem every aspect of professional post-production, and each company hasestablished an international reputation in its chosen field. The Prime Focus UK Group produces work of the highest quality across all areasof the post-production industry, including: high-end visual effects and digitalintermediate (DI) for cinema releases; television commercials; long-form andshort-form broadcast projects; CGI animation; design and motion graphics; poppromos; sound design, mixing and composition; and film and video restoration. In addition the group designs, builds and implements online interactivecommunication tools for a wide variety of clients. Its portfolio includesdigital asset management systems, state-of-the-art encoding services, websitedesign and hosting, mobile content encoding and delivery, and professional DVDauthoring facilities. VTR plc's (Prime Focus UK) majority shareholder is Prime Focus Limited, India'sforemost integrated end-to-end post-production and visual effects servicesfacility. As the largest Autodesk Fire / Smoke site in the world, the largestsite for Thomson Spirit in the Asia-Pacific region, and with its recentacquisitions in London, Prime Focus Limited has emerged as a major force in theinternational post-production industry. Contacts Ryszard Bublik Parys Communications 020 7622 9951Catriona McDermott Neil Lane VTR plc, Managing director 020 7437 0026 Philip Davies Charles Stanley Securities 020 7149 6000(Nominated Adviser) This information is provided by RNS The company news service from the London Stock Exchange