VTR plc is pleased to announce the acquisition of Machine Effects Limited, the visual effects company founded by John Lockwood and Steve Street, for a total consideration of £2,050,000 (the “Acquisition”). The Acquisition strengthens VTR’s offer in the UK visual effects market and underpins the continued international expansion of the Prime Focus Group of companies.
Machine Effects Limited is a leading visual effects business offering a full range of services to film and broadcast. Its impressive list of credits includes Fred Claus, Elizabeth: The Golden Age and Harry Potter and the Prisoner of Azkaban. Both John Lockwood and Steve Street will remain with the business and continue to work with VTR plc.

The total consideration for the Acquisition of £2,050,000 constitutes a payment in cash of £1,025,000 (the “Cash Consideration”) and the issue of 1,025,000 new ordinary shares in VTR (the “Consideration Shares”) to John Lockwood and Steve Street, the vendors of Machine Effects Limited (the “Vendors”).

Each of the Vendors has undertaken not to sell any of the Consideration Shares for the first 12 months after completion of the Acquisition and to sell no more than 50% of the Consideration Shares in the two years following completion of the Acquisition.

The Cash Consideration for the Acquisition has been funded by an inter-group loan 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 made available a £1,000,000 credit facility to VTR (the “Loan”). Interest will accrue 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 VTR to PFL, conditional upon obtaining the requisite shareholder approvals to allot. Failure to obtain such shareholder approvals will require VTR to repay the Loan 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 as a 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 are fair and reasonable insofar as the shareholders of VTR are concerned.

PFL has separately guaranteed to the Vendors that the Consideration Shares will have a closing bid price of not less than 100 pence per share after a period of 30 months from completion of the Acquisition has elapsed (the “Guarantee”). Should the closing bid price be less than 100 pence per share after this 30-month period, PFL will, without recourse to VTR, pay the difference to the Vendors. VTR will, in return for the Guarantee, and subject to obtaining the requisite shareholder approvals to allot, issue 505,050 new ordinary shares in VTR to PFL.

Application has been made for the Consideration Shares to be admitted to trading on AIM and it is anticipated that admission will become effective and that dealings will commence on 29 January 2008. The Consideration Shares will rank pari passu with the existing shares of the Company. Following this allotment, the total issued share capital of the Company will increase to 30,106,276 ordinary shares.

Namit Malhotra, Chairman of VTR plc and Prime Focus Group, said: “This acquisition adds to the group’s global breadth, strengthening our visual effects capabilities and helping to grow our offer. Machine Effects is a strong brand with an impressive track record in the industry and I am pleased that it will be joining VTR plc and in turn part of the growing group of companies in the Prime Focus Group.”

Neil Lane, Managing Director, VTR plc said: “Steve and John are experts in the visual effects market and will compliment Prime Focus London’s existing capabilities in that area. We are excited to have them joining our team and look forward to working together.”

John Lockwood said of the acquisition: “Machine Effects integration into the group will allow us to concentrate on what we do best whilst participating in the future success of VTR plc.”

And Steve Street added: “We are thrilled to be joining the Prime Focus Group of companies and to have access to its global resources in London, India, Canada and the United States.”