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Interim Results - for the six months ending 28 February 2006

12 May 2006

As anticipated in the Chairman’s statement of 4 November 2006, the difficult trading conditions affecting all areas of the group continued into the first half of the present year. Turnover for the six months to 28 February 2006 was £9.6m compared to £9.8m in the previous 6 months and £11.7m during the same period last year, resulting in a loss before tax for the half year of £0.52m (2005: profit £0.47m). As a result of our continued tight control of costs, expenses fell by £1.2m to £9.1m, compared to the first half of last year.

Net debt fell by £0.54m during the period and capital expenditure amounted to £0.57m, a portion of which was attributed to the setting up of a new subsidiary, United Sound & Vision Limited, a small facility which serves the post production requirements of a leading UK advertising agency and which has been profitable since inception.

In December 2005, the grant aided phase of eTITLE, the Group’s subtitling and automated translation project, was completed after two years and has been successfully signed off by the EU. We are currently assessing and planning the optimum commercial exploitation for this exciting product.

For some time, we have been seeking additional finance and I am very pleased to report that at the EGM held on 24 April 2006, shareholders approved the £4.7m strategic investment by Prime Focus Limited more fully described in the Chairman’s letter to shareholders of 31 March 2006. This transaction has resulted in an inflow of £4.2m in cash into the Company, with Prime Focus holding 55% of the enlarged equity of VTR plc. Our association with Prime Focus will enable us to invest in potential growth opportunities and commence building the Group in the international marketplace.

Following the investment by Prime Focus, Philip Lovegrove has resigned from the board after more than 20 years as Chairman. The Company owes an enormous debt of gratitude to Philip, who has provided guidance to the business through many changes throughout the years. Justin Dukes has also left the board and our thanks are also due to him for his assistance and advice since 1993. We send them both our best wishes for the future.

I am very pleased to welcome Namit Malhotra, Managing Director of Prime Focus, to the board as Chairman. I also welcome Prime Focus directors Naresh Malhotra and Rivkaran Chadha, as non-executive directors, each of whom is experienced in Asian business and financial markets and will bring additional breadth to the experience of your board. Owing to other commitments, Mr. Chandir Gidwani, who had anticipated joining the board as a non-executive director, will not, at the present time, be taking up his appointment and has resigned with immediate effect.

I believe that the association with Prime Focus will bring with it the greatest opportunity for growth that VTR has enjoyed for a number of years. I look forward to keeping shareholders informed as our plans for future development progress.

Notes to the Interim Financial Statements
FOR THE SIX MONTHS TO 28 FEBRUARY 2006

1. Preparation of the interim financial statements
The interim financial statements, which do not constitute statutory accounts within the meaning of S.240 of the Companies Act 1985, have been prepared on the basis of the accounting policies set out in the statutory accounts of the Group for the year ended 31 August 2005. The interim financial statements, which have been approved by the directors, are unaudited but have been reviewed in accordance with Auditing Practices Board Bulletin "Review of Interim Financial Information" by the auditors.

Comparative figures for the year ended 31 August 2005 are an abridged version of the Group's full accounts which carry an unqualified audit report and have been delivered to the Registrar of Companies.

3 Exceptional item
The exceptional item in February and August 2005 represents the writeback of the excess portion of the cost of redundancies as a result of the fundamental restructuring of the Group in August 2004.

4 Taxation
Due to the losses made in the year to 31 August 2005 and the six months to 28 February 2006 no taxation is due.

5 (Loss)/earnings per share
The (loss)/earnings per share is calculated on a loss of £523,437 (6 months to 28 February 2005: profit £303,814, year to 31 August 2005: Loss: £662,809) and on 11,038,550 weighted average ordinary 5p shares in issue during the period (6 months to 28 February 2005 and year to 31 August 2005: 11,038,550).

Basic diluted (loss)/earnings per share is calculated on the loss of £523,437 (6 months to 28 February 2005: profit: £303,814, year to 31 August 2005: Loss: £662,809) and 11,038,550 (six months to 28 February 2005: 11,149,383, year to 31 August 2005: 11,038,550) shares including the dilutive effect of share options.

FRS14 requires presentation of diluted EPS when a company could be called upon to issue shares that would increase net loss per share. For a loss making company with outstanding share options, net loss per share would only be increased by the exercise of out-of-the-money options. Since it seems inappropriate to assume option holders would act irrationally no adjustment has been made to diluted EPS for out-of-money share options.

6 Dividends
There is no proposed interim dividend (28 February 2005: Nil).

7 Post balance sheet event
At the EGM held on 24 April 2006 the Company received the approval of Shareholders to raise £4.2 million by way of a Placing of 12,062,990 New Ordinary Shares at a price of 35 pence per New Ordinary Share and to issue a further 1,428,571 New Ordinary Shares in exchange for the transfer of certain assets valued at 35 pence per New Ordinary Share. The Placing Shares have been placed with Prime Focus Limited, one of India’s largest integrated post production facilities based in Mumbai. The Company’s enlarged share capital is 24,530,111 5p Ordinary Shares with a nominal value of £1,226,506.

Following the Placing of New Ordinary Shares the Company and its subsidiaries intend to change their reporting year end to 31 March, in line with Prime Focus Limited. The first such period to be reported on will be the seven months to 31 March 2007.

8 Interim statement
Copies of this interim statement are being sent to shareholders and will be available from the company at 64 Dean Street, London W1D 4QQ.

Statement of the Directors
The interim financial statements for the six months ended 28 February 2006 have been approved by the directors and have been prepared on a basis consistent with the audited financial accounts for the year ended 31 August 2005.

The interim financial statements were approved by the board of directors on 12 May 2006 and are unaudited but have been reviewed by Baker Tilly.

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