VTR plc announces its preliminary results for the year ended 31 August 2005

Results:

• Group Turnover £21.5m (2004: £25.3m)
• Pre-tax loss £0.78m (2004: £0.25m)
• Cash Positive in Financial Year
• Net Debt Reduced
• Shareholder approval to be sought for move to AIM
• Positive reaction to launch of E-TITLE
• New Group Managing Director appointed
• New Group Operations Director appointed
• New subsidiary managing directors appointed

Philip Lovegrove , Chairman, commented, “This has been a difficult year and the indications from the industry suggest that next year the markets in which VTR operates will not alter signific ant ly. I believe that the actions taken by the Board to develop new sources of business, in addition to the subst ant ial cost reductions which have been implemented in the second half of this year, have placed the Group in a greatly improved position to return to profitability.”

For further information please contact:
Paul Tracey , Managing Director, VTR plc 020 7437 0026
Peter Samengo-Turner , Finance Director, VTR plc 020 7437 0026

Chairman's Statement

Shareholders will be aware from the trading update released on 27 September 2005 that this has been a difficult year for the VTR Group. In the year to 31 August 2005 , turnover decreased from £25,344,737 to £21,505,511 against the previous year, resulting in an operating loss before exceptional item, interest and taxation of £279,356 compared to an operating profit last year of £1,380,560. After the exceptional credit, the loss before taxation is £779,939 compared to a loss of £251,830 last year.

Overview

After a satisfactory first half of the year, the Group experienced a severe downturn in trading which started in April 2005 and continued throughout the second half, affecting all parts of the business. The reasons for this deterioration were multiple and cumulative. The external contributory factors included the recession in UK advertising, exacerbated by the General Election, a reduction in programme budgets, an unfavourable economic and fiscal climate for the UK film industry and greatly increased competition. Each of these factors contributed to a marked reduction in activity and considerable pressure on prices.

In addition to these pressures, it is now clear to your Board that the restructuring which took place at the end of last year did not go far enough in addressing the structural changes that face the Group in today's market. The previous exercise concentrated on the cost base without taking account of the management structure of the Group and the workflow processes that also needed to be addressed. I believe that your Board has now taken the corrective action in re-aligning the Group to enable it to respond to a marketplace which has changed fundamentally in terms of activity and economic dynamics over the last five years.

Your Board believes that there is considerable future growth potential for a wide range of industries in the new media areas of asset management, content creation and distribution for mobile telephony. We are actively considering how the Group may benefit from the rapid expansion in these areas.

Management Changes

In May 2005, founding Managing Director John Banks announced his intention to retire and left the company after 21 years. The Board would like to acknowledge John's considerable contribution in building the VTR Group from a small player in an embryonic industry to one of the best recognised names in the post production sector today. We wish him well in his retirement.

On 31 August 2005 , Peter Newbald left the Board, having been a non-executive director since the early days of VTR plc. He played a major role in funding the company at its outset. The Board has valued his wise counsel over the years.

On John Banks ' departure, Paul Tracey , Corporate Development Director, was appointed Group Managing Director. Paul, a barrister, has been involved with many aspects of the development of the Group. The company he formerly owned and which was acquired by the Group now exists as blue post production.

Neil Lane , former Managing Director of The Machine Room (now TMR) was appointed to the Board on 30 June 2005 as Operations Director, bringing his considerable experience and knowledge of the industry to the board.

Further changes to the management team involve the operating companies of the Group. New managing directors have been appointed in VTR, TMR, the hive and K<POST and each has already brought new energy and focus to his or her area of responsibility.

Operations

During the year, expenses decreased to £20,261,844 (2004: £22,187,884) representing savings of £1.9m, a figure which was £150,000 greater than the £1.75m I forecast in my statement last year. The Board ant icipates further savings being achieved during the current year and reductions in staff costs have already been made.

I believe that these initiatives are beginning to take effect and the beginning of the year has produced results which may be seen as encouraging, compared to the disappointing trading record of the second half of the previous year. It is too early to determine whether this pleasing start is indicative of a sustained recovery, but I believe that we are now building on a solid base for the future.

In September, eTITLE, the Group's subtitling and automated translation product, whose development has been partially funded by an EU Gr ant , was launched at the International Broadcast Convention in Amsterdam (having been previewed there the previous year) and received a very positive reaction from potential customers. The product will now begin the beta testing phase of its development with the intention of securing the first contracts with customers during the first half of next year. eTITLE has now been transferred out of TMR into a separate division.

Dividend

No dividend has been declared for this year. Your Board will continue to keep the matter under review and the payment of future dividends will be subject to results and the outlook for the media sector as a whole.

Cashflow and Gearing

I am pleased to report that total indebtedness has fallen to £5,773,215 (2004: £6,239,499) its lowest level since 1995 and that the Group was cash positive during the period.

Gearing was 111% (2004: 107%) and capital additions were £1.8m. Capital expenditure for 2006 is budgeted at £2m.

Stock Exchange Listing

For some time now your Board has increasingly taken the view that it would be more appropriate for the Company's shares to be traded on the AIM Market than to remain fully listed on the London Stock Exchange. Accordingly, the Board intends to seek shareholder approval at the earliest opportunity for VTR plc to move to AIM. Shareholders will be contacted by a separate letter at a later date explaining the move in detail.

Staff

We have always expected, and received, a high degree of professionalism and hard work from our staff. Our employees have exceeded our expectations in rising to the many challenges asked of them this year and, on your behalf, I would like to thank them warmly for their support.

Outlook

This has been a difficult year and the indications from the industry suggest that next year the markets in which VTR operates will not alter signific ant ly. I believe that the actions taken by the Board to develop new sources of business, in addition to the subst ant ial cost reductions which have been implemented in the second half of this year, have placed the Group in a greatly improved position to return to profitability.

Philip Lovegrove

Chairman 4 NOVEMBER 2005

Consolidated Profit and Loss Account

FOR THE YEAR ENDED 31 AUGUST 2005

Turnover and operating results are derived from the Group's continuing operations.

Consolidated Balance Sheet

AT 31 AUGUST 2005

Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 AUGUST 2005

Notes to the Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 AUGUST 2005

 D Major non-cash transactions

During the year the Group entered into hire purchase arrangements in respect of assets with a total capital value at the inception of the agreements of £2,020,794 (2004 £1,638,301).

Statement of Total Recognised Gains and Losses

No separate Statement of Total Recognised Gains and Losses has been presented as all such material gains and losses have been dealt with in the Profit and Loss Account.

VTR plc
NOTES FOR THE YEAR ENDED 31 AUGUST 2005

1. The results have been prepared on the basis of the accounting policies set out in the Group accounts for the year ended 31 August 2004 . The financial information included in this announcement does not constitute statutory accounts for the years ended 31 August 2004 or 2005 within the meaning of Section 240 of the Companies Act 1985. The statutory accounts of VTR plc for the year ended 31 August 2004 have been filed with the Registrar of Companies for England and Wales and those for the year ended 31 August 2005 will be delivered following publication. The Auditors have reported on those accounts; their reports in each case for the years ended 31 August 2004 and 31 August 2005 were unqualified and did not include a statement under Section 237(2) or (3) of the Companies Act 1985.

2. Turnover and net assets

(a) Turnover by geographical markets

3. Dividends

No dividend has been declared for the year (2004: Nil).

4. Exceptional item

The exceptional item in 2005 represents the net cost of redundancies and other expenses relating to a fundamental restructuring of the Group in 2004 and 2005.

5. Taxation

The tax credit in 2005 represents the reversal on timing differences on the exceptional item made in 2004 and the carry back of losses incurred in the year.

The tax charge in 2004 represents a tax credit for the losses incurred in the year offset by a portion of the exceptional item being deferred as some of the payments would be made more than nine months after the year end.

6. Loss per share

Basic loss per share is based on a loss of £662,809 (2004: loss £452,140) and 11,038,550 (2004: 11,038,550) weighted average ordinary 5p shares that were in issue during the year.

Diluted loss per share is based on a loss of £662,809 (2004: loss £452,140) and 11,038,550 (2004: 11,038,550) weighted average ordinary 5p shares that were in issue during the year.

As the average fair value of a VTR plc share throughout the year has been less than the average exercise price for all outstanding share options, there is no dilution effect this year and basic and diluted loss per share are the same.

7. The annual report and accounts for 2005 will be posted to shareholders on 15 December 2005 . Further copies will be available after that date on request from The Secretary, VTR plc, 64 Dean Street , London , W1D 4QQ .

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